Posted by: Patricia Salkin | January 6, 2018

NY Appellate Court Finds Highest and Best Use of Parcel that was Condemned and Adjoining Parcel was Light Industrial Use, Not Retail Development of Maximum Allowable Density

This post was authored by Matthew Loeser, Esq.

On September 5, 2003, the Town of Oyster Bay condemned a 14.03–acre parcel of land located at 55 Motor Avenue in Farmingdale (“parcel 1”) in order to expand an abutting public park. Parcel 1 was owned by the respondents/claimants, who also owned two other parcels of land that adjoined with parcel 1 – a 7.51–acre parcel to the east of parcel 1 (“parcel 2”), and a 8.7–acre parcel of land to the east of parcel 2 (“parcel 3”), which were not acquired by the Town at that time. In April 2002, one of the claimants, 55 Motor Avenue Company, LLC, entered into a ground lease with the Stop & Shop Supermarket Company to build and operate a store on parcel 3. In August 2006, the claimants filed a claim for just compensation, seeking direct damages for the loss of parcel 1, and consequential damages for parcels 2 and 3. The Supreme Court found that parcels 1, 2, and 3 should be valued as one economic unit, and that the highest and best use of the subject property on the date of the taking “was retail development of the maximum allowable density … so as to accommodate big box retailers.” The claimants were awarded the principal sum of $20,700,000, and the Town appealed.

On appeal, the claimants failed to demonstrate that there was unity of use between parcel 1 and parcel 3 on the vesting date. Here, 17 months before the vesting date, 55 Motor Avenue Company, LLC, entered into a ground lease with Stop & Shop for parcel 3. This lease included a non-integration clause, which granted Stop & Shop the right to “erect a fence” around parcel 3 “as may be reasonably necessary to prevent” any “persons occupying or having business with any other land adjacent to or near” parcel 3 from using any portion of parcel 3. Accordingly, the trial court was found to have erred in determining that parcel 3 should be valued as one economic unit with parcels 1 and 2.

The court also found that the claimants failed to establish that there was a reasonable probability that they would have been granted a special use permit to develop parcels 1 and 2 as a large-scale multi-tenant retail development in accordance with CP–1. While the record indicated the claimants proffered the testimony and report of their expert planner, the planner did not review the history of any special use permit applications to the Town Board, or reference any largescale retail developments that were located on the vesting date in the immediate area of the subject property. Furthermore, the special use permit that was granted in 2008 for the Stop & Shop to operate on parcel 3 did not provide sufficient evidence that, as of the vesting date, there was a reasonable probability that the Town Board would have granted a special use permit for big box retail development on parcels 1 and 2. Here, parcels 1 and 2 were more than twice the size of parcel 3, yet the square footage of the retail buildings that were depicted in CP–1, and proposed to be built on parcels 1 and 2, were more than three times the size of the square footage of the supermarket on parcel 3. The court therefore reversed and remitted the matter to the Supreme Court, Nassau County, to determine the fair market value of parcel 1 with a highest and best use of light industrial development, and whether parcel 2 sustained any consequential damages when its proposed highest and best use was industrial.

In the Matter of the Town of Oyster Bay, 156 A.D. 3d 704 (NYAD 2 Dept. 12/13/2017)

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