Supreme Court, Rockland County Agrees with Claimant’s Highest & Best Use, Awards $741,671.00 in Just Compensation

The Supreme Court of Rockland County recently decided the case of Ferguson Management Company, LLC v The Village of Haverstraw, in which it awarded Claimant $721,671.00 as just compensation for the taking of its property.

The subject property was located at 2 Dr. Girling Drive in Haverstraw and was acquired on July 26, 2006 by the Village as part of its effort to develop the waterfront with residential units known as the “Harbors at Haverstraw.” The site was improved with a one-story mezzanine warehouse/garage building consisting of finished office and three truck bays. The building was occupied by the trade fixture Claimant, Executive Touch Landscaping & Construction, LLC.

An advance payment was paid in the amount of $575,000 to the Claimant; however at trial the Village introduced an appraisal valuing the property at  as $316,500, or $258,500 less than its advance payment. A recent article in the Lohud Journal discussed how this tactic, known as “sandbagging,” is utilized by Condemnors to scare property owners out of pursuing their claim for just compensation. If the Court had awarded the lower amount proffered at trial, Claimant would have been faced with paying a refund to the Village from the advance payment award.

At trial, Claimant’s appraiser valued the property at $800,000 utilizing a highest and best use of conversion into office space. In agreeing with this method, the Court stated:

The Court is inclined to credit the Claimant’s proof on the issue of the highest and best use; to wit, office. In so doing, the Court notes that Condemnor argues that there are no offices in the immediate area, but Claimant adequately supports the conclusion that as of July 26, 2006, the area was ripe for the introduction of office space into this area that is admitted in the process of transformation away from light industrial.

In comparison, the Condemnor’s appraiser opined that the existing use of light industrial was the highest and best use of the property, and valued it using the comparable sales approach. In discrediting his approach, the Court wrote:

Condemnor testified that in looking for comparable properties for both light industrial and office use, he did not venture out of “the Haverstraws.” He readily admits that there was nothing preventing his looking beyond the immediate area, particularly for office use. It would appear that in limiting his search area, he identified properties as comparables that raised legitimate questions as to their comparability.

Further, during cross examination of Condemnor’s expert appraiser conceded that some of the comparables were not really comparable in that the proffered comparables did not resemble the subject in significant characteristics. In one instance [] Condemnor proffers a church as an office comparable. He further conceded that he did not enter that structure and therefore knows not if it is anything other than a church. All of the above raise questions as to the reliability of the data, and thereafter, conclusions reached by the Condemnor’s expert.

After concluding that the highest and best use was for office space and making appropriate adjustments, the Court concluded that the market value under the market approach was $879,000.00 as of July 26, 2006.

The Court then subtracted out the cost to convert the existing building to office use. The Court declined to credit the Condemnor’s conversion cost report, noting that:

His “report” of seven pages consisted of his Curriculum Vitae (4 pages), cover sheet (1 page), cover letter (1 page) and cost of conversion (1 page.) The cost of conversion has 26 words and an equation and a column of numbers with a total. He admittedly amplified the amount of information through testimony, there are some aspects that are unclear. (sic). For instance, why he employed an adjuster for Kingston, New York when the project was to be in Haverstraw, New York.

. . .

On the whole, the Claimant has provided more competent evidence to support his calculations than Condemnor. Finally, noting that there is concession that their respective final conversion estimates are relatively close, the Court will credit the testimony of Claimant’s appraiser on the issue of cost to convert to $157,329.

Thus, after deducting the cost to convert from the market value, the Court concluded that Claimant should be awarded $721,671.00 as just compensation for the taking of their property.

 

Posted in Advance Payments, Appraisers, Highest and Best Use, New York, Offer & Compensation, Recent cases, Valuation
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