Eminent Domain Law

Property Properly Valued In Combination with Neighboring Parcel

Matter of City of Long Beach v. Sun NLF Limited Partnership

NYLJ 1/16/15, p. 26. col. 5

AppDiv, Second Dept.

(memorandum opinion)

In a condemnation proceeding, condemnor appealed from Supreme Court's judgment awarding claimant $11,800,000 for the condemned property. The Appellate Division affirmed, holding that Supreme Court had properly valued the property in combination with other property not owned by condemnee.

The city condemned properties constituting the Long Beach “Superblock.” Claimant owned three noncontiguous parcels on the Superblock. Two of the parcels, 11 and 13, were separated by parcel 12, a narrow parcel between them. Claimant sought compensation, contending that parcels 11, 12, and 13 together, if assembled, were suitable for multi-family development which, according to claimant, would constitute the highest and best use of the parcels. The city, by contrast, contended that parcels 11 and 13 should be valued separately, especially because the parties had not assembled the parcels before the condemnation proceeding. Supreme Court disagreed and concluded that the highest and best use of the parcels was as assembled with parcel 12 for multi-family development. The city appealed.

In affirming, the Appellate Division held that claimant was entitled to have the property valued for multi-family development in light of expert testimony that it was not practical to construct single or two-family homes on parcels 11 or 13, which are located on the city's boardwalk. The court emphasized that the fact that claimant had not assembled the parcels with parcel 12 did not undercut the argument that the properties were more valuable if assembled, noting that a building moratorium in effect before the condemnation reduced the incentive to assemble the parcels. As a result, Supreme Court properly considered the assemblage value of the property, and properly applied a discount to that value.

COMMENT

Courts value a condemnee's property as if assembled with other property if there is a reasonable probability that, absent the condemnation, the properties would have been assembled in the near future. Courts generally find that assembling the properties is reasonably probable if the condemnee took concrete steps to assemble the properties. In In Re Metropolitan Transportation Authority, 86 A.D. 3d 314, the First Department upheld a valuation of the condemnees' properties as if the properties were assembled. The court accepted condemnees' appraisals because condemnees showed that they had: 1) negotiated with each other about a potential combined development; and 2) hired architects, lawyers and consultants to prepare for a combined development.

By contrast, courts generally reject valuing the condemnee's property as if assembled with other property if the other property is unavailable for assembly. Absent evidence that assembling the properties was possible, courts deem the condemnee's proposed assembly as merely speculative. For instance, in City of Rochester v. Iman, 51 A.D.2d 651, the Fourth Department refused to allow valuing condemnee's property as part of a redevelopment with adjoining properties. That some of the area's properties were assembled and developed was insufficient to establish that condemnee's proposed development was reasonably probable. Because there was no evidence that the specific adjoining properties were available for assembly with condemnee's property, the court rejected condemnee's appraisal.

Although the adjoining properties in City of Long Beach were also unavailable for assembly, they were unavailable solely because the condemnor (anticipating the condemnation) forbid assembly. The court held City of Rochester inapplicable in this fact situation.

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Property Properly Valued In Combination with Neighboring Parcel

Matter of City of Long Beach v. Sun NLF Limited Partnership

NYLJ 1/16/15, p. 26. col. 5

AppDiv, Second Dept.

(memorandum opinion)

In a condemnation proceeding, condemnor appealed from Supreme Court's judgment awarding claimant $11,800,000 for the condemned property. The Appellate Division affirmed, holding that Supreme Court had properly valued the property in combination with other property not owned by condemnee.

The city condemned properties constituting the Long Beach “Superblock.” Claimant owned three noncontiguous parcels on the Superblock. Two of the parcels, 11 and 13, were separated by parcel 12, a narrow parcel between them. Claimant sought compensation, contending that parcels 11, 12, and 13 together, if assembled, were suitable for multi-family development which, according to claimant, would constitute the highest and best use of the parcels. The city, by contrast, contended that parcels 11 and 13 should be valued separately, especially because the parties had not assembled the parcels before the condemnation proceeding. Supreme Court disagreed and concluded that the highest and best use of the parcels was as assembled with parcel 12 for multi-family development. The city appealed.

In affirming, the Appellate Division held that claimant was entitled to have the property valued for multi-family development in light of expert testimony that it was not practical to construct single or two-family homes on parcels 11 or 13, which are located on the city's boardwalk. The court emphasized that the fact that claimant had not assembled the parcels with parcel 12 did not undercut the argument that the properties were more valuable if assembled, noting that a building moratorium in effect before the condemnation reduced the incentive to assemble the parcels. As a result, Supreme Court properly considered the assemblage value of the property, and properly applied a discount to that value.

COMMENT

Courts value a condemnee's property as if assembled with other property if there is a reasonable probability that, absent the condemnation, the properties would have been assembled in the near future. Courts generally find that assembling the properties is reasonably probable if the condemnee took concrete steps to assemble the properties. In In Re Metropolitan Transportation Authority, 86 A.D. 3d 314, the First Department upheld a valuation of the condemnees' properties as if the properties were assembled. The court accepted condemnees' appraisals because condemnees showed that they had: 1) negotiated with each other about a potential combined development; and 2) hired architects, lawyers and consultants to prepare for a combined development.

By contrast, courts generally reject valuing the condemnee's property as if assembled with other property if the other property is unavailable for assembly. Absent evidence that assembling the properties was possible, courts deem the condemnee's proposed assembly as merely speculative. For instance, in City of Rochester v. Iman, 51 A.D.2d 651, the Fourth Department refused to allow valuing condemnee's property as part of a redevelopment with adjoining properties. That some of the area's properties were assembled and developed was insufficient to establish that condemnee's proposed development was reasonably probable. Because there was no evidence that the specific adjoining properties were available for assembly with condemnee's property, the court rejected condemnee's appraisal.

Although the adjoining properties in City of Long Beach were also unavailable for assembly, they were unavailable solely because the condemnor (anticipating the condemnation) forbid assembly. The court held City of Rochester inapplicable in this fact situation.

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