Molly, Inc. v County of Onondaga
Annotate this CaseDecided on December 18, 2007
Supreme Court, Onondaga County
Molly, Inc. and Murbro Parking, Inc., Claimants
against
County of Onondaga, Respondent
2004-0049
For Petitioner:
Hiscock & Barclay, LLP
Mark R. McNamara, Esq.
Emanuela D'Ambrogio, Esq.,
of Counsel
For Respondent:
Hancock & Estabrook, LLP
John R. Varney, Esq.
David G. Linger, Esq.,
of Counsel
Anthony J. Paris, J.
Claimants owned and/or operated (and continue to operate without ownership interest) a surface parking lot on the real property commonly known and designated as 422-434 Harrison Street, Syracuse, New York ( hereinafter referred to as the "Property" or "Lot 17"), which is located within the confines of the County of Onondaga.
Prior to the purchase of the property in 1996 by JOHN D. MURPHY, SR., Claimant MURBRO and/or various members of the MURPHY family operated the Property as a parking [*2]lot under lease arrangements with its owner, City of Syracuse Urban Renewal Agency. Immediately upon acquisition of title from the City of Syracuse Urban Renewal Agency in 1996, MR. MURPHY, SR. conveyed title to Claimant, MOLLY, INC. (a corporate entity made up of the six MURPHY children as shareholders), which in turn executed a long term lease with Claimant, MURBRO to continue the parking lot operation on the Property.
Subsequently, in April 2000, Respondent notified Claimants of its intent to acquire the property by eminent domain, and in January 2004, a proceeding was initiated by Respondent under Article 4 of the EDPL to acquire the Property. Pursuant to an Amended Order of Condemnation, Respondent acquired the Property on or about March 10, 2004.
On or about June 23, 2004, under Article 5 of the EDPL, Claimants filed a Claim for Just Compensation. In accordance with the various provisions of the statute, the parties filed their respective appraisal reports concerning the fair market value of the Property. Claimants' appraisal report (Exhibit No. 5) was prepared by JOHN R. MAKO, MAI, SRA of Summit Associates. Respondent's appraisal report (Exhibit No. CC) was prepared by DAVID F. PEATFIELD, MAI.
This matter came on to be heard by this Court for the purpose of determining and assessing the measure of relief to be awarded to Claimants, i.e., the compensation to which Claimants are entitled as reflected by the fair market value of the property at its highest and best use as of the date of taking.
Claimants have contended that the highest and best use of the Property on March 10, 2004
was a surface parking lot, and that its fair market value as of that date was $4,750,000.00.
Respondent has contended that as of the date of taking, the highest and best use of the Property
was potential commercial development and that surface parking was only an interim use.
Respondent further contended that the fair market value of the Property on the date of taking was
$2,100,000.00.
STIPULATIONS REGARDING ENVIRONMENTAL FACTORS
Prior to the commencement of testimony, counsel stipulated (See Exhibit No. 1) to the admission of the report of the Palmerton Group, LLC dated May 10, 2005, entitled "Assessment of Environmental Contamination at Lot 17" as prepared by DAVID L. PALMERTON. Counsel further stipulated that if MR. PALMERTON was called to testify his testimony would mirror the facts and conclusions concerning the environmental factors as set forth in said report (Exhibit No. 1-A). In addition, it was stipulated that certain language and information pertaining to environmental factors in the appraisal report prepared by MR. MAKO would be redacted.
The language and information in said documents pertaining to environmental factors such as
alleged contamination and/or remediation have not been considered by the Court in the
determination of essential facts upon which the Court has arrived at the fair market value of the
Property as of the date of taking. The Court has not set off any amount attributable to any type of
remediation. In any event, such set off figure, if any, would be the subject of a separate action.
Therefore, the Court has valued the Property "as if remediated" without consideration of these
environmental factors. MATTER OF CITY OF SYRACUSE INDUSTRIAL [*3]DEVELOPMENT AGENCY (ALTERM, INC.), 20 AD3d
168 (4th Dept., 2005).
TRIAL MOTION TO STRIKE PORTION OF CLAIMANTS APPRAISAL
During the
course of the trial, Respondent, on the basis of 22 NYCRR 202.59(g)(2) and 202.61(a)(1), moved
to strike and exclude a certain portion of the property appraisal prepared on behalf of Claimants
by MR. MAKO. Specifically, Respondent seeks to strike that portion of the appraisal
regarding "Participatory Investment Analysis" due to the lack of inclusion of facts, figures and
calculations substantiating the conclusions reached.
22 NYCRR 202.59(g)(2) reads in pertinent part as follows:
(2) The appraisal reports shall contain a statement of the method
of appraisal relied on and the conclusions as to value reached by
the expert, together with the facts, figures and calculations by which
the conclusions were reached. If sales, leases or other transactions involvingcomparable properties are to be relied on, they shall be set forth with sufficient
particularity as to permit the transaction to be readily identified, and the report shall
contain a clear and concise statement of every fact that a party will seek to prove inrelation to those comparable properties....
The ultimate purpose of valuation in these types of proceedings is to reach and arrive at a fair and realistic value of the subject property. MATTER OF GREAT ATLANTIC & PACIFIC TEA CO., INC. v. KIERNAN, 42 NY2d 236 (1977). In addition, another reason for this rule providing for the disclosure of facts and source materials in an appraisal in conjunction with the valuation process is to provide the opposition an opportunity to conduct an appropriate inquiry into the appraisal and prepare an effective cross examination of the appraiser. GULLO v. SEMON, 265 AD2d 656 (3rd Dept., 1999); lv to appeal denied, 94 NY2d 757.
Despite Respondent's assertion that Claimants' appraisal report lacked specificity, there was absolutely no apparent impediment to counsel's ability to cross-examine MR. MAKO as to his conclusions of value. Contrary to counsel's contention that MR. MAKO'S testimony on cross-examination was "evasive, argumentative, and non responsive," the Court did not see it that way. Rather, it appeared to the Court that counsel was overly aggressive and argumentative during the course of the cross-examination of MR. MAKO. The appraiser answered counsel's inquiries clearly and succinctly; albeit, possibly not giving him the answers he wanted to hear. MR. MAKO'S testimony was responsive to the manner in which he was cross-examined.
Perhaps it is just a matter of style and perception that the Court does not view the information contained in his appraisal and the testimony provided by MR. MAKO in the same light as Respondent's counsel. The data set forth in the appraisal and testimony, both on direct and cross, did not inhibit or hamper the Court's ability to consider the merits of the appraisal and testimony, and to accord each the weight deemed appropriate by the Court in arriving at a determination of the value of the Property under this particular method of calculation. [*4]
When reviewed in their appropriate form, both the portion of the Claimants' appraisal report sought to be stricken and the appraisal as a whole (despite any inconsequential deficiencies) are found to substantially meet the requirements of 22NYCRR 202.59(g)(2) and 202.61(a)(1). IN THE MATTER OF WELCH FOODS, INC. v. TOWN OF WESTFIELD, et al., 222 AD2d 1053 (4th Dept., 1995).
Quite frankly, the Court views Respondent's motion to exclude as somewhat of a smoke and mirrors tactic or strategy due to its timing and the possible attempt to, in fact, conceal or divert attention away from the deficiencies in its own appraisal report. It is unquestionable that Respondent's appraisal employed a fair amount of speculation which the Court will address further in this Decision.
Therefore, by reason of the foregoing, Respondent's trial motion to strike a portion of Claimants' appraisal report is DENIED.
FINDINGS AND CONCLUSIONS
During the course of this trial, the Court has had the unique opportunity to
review all of
the exhibits admitted into evidence and to hear and evaluate the testimony,
demeanor, and credibility of each of the witnesses that testified. Based on this unique
opportunity, the Court is in a position to set forth the essential facts upon which its ultimate
conclusions as to highest and best use and valuation are based.
After the trial and in accordance with the Court's direction, the parties presented proposed Findings of Fact and Conclusions of Law. The Court has received Claimants' as Court Exhibit 1 and Respondent's as Court Exhibit 2, and has marked its disposition on them. By this disposition the Court hereby concludes that Claimants have, by the quantum of proof necessary in these types of proceedings, shown that the highest and best use of the Property is a surface parking lot and that the fair market value of the property on March 10, 2004 was $4,750,000.00.
Both parties presented evidence in the form of testimony from real estate appraisers (MAKO for Claimants and PEATFIELD for Respondent) whom the Court deemed qualified as experts in the field of real estate appraisals. In addition, these experts prepared real estate appraisal reports which were received into evidence (Exhibits Nos. 5 and CC), and about which they testified in detail on direct and cross examination. The Court has afforded these appraisal reports the weight and probative value it has deemed appropriate in reaching its ultimate conclusion.
Prior to the testimony of MR. MAKO, Claimant called JOHN D. MURPHY, SR. and DAVID GROSS, the President and General Manager, respectively, of MURBRO PARKING, INC.. The testimony of MR. MURPHY detailed the transactional history of the property which has culminated in this proceeding and which has been described herein above. In addition, the testimony of the these three witnesses set forth the geographical data concerning the Property as well as a detailed description of the manner of its usage by Claimants as a surface parking lot.
The Property consists of 2.4 ± acres of land which is a surface parking lot situated along Harrison Street between South State Street and South Townsend Street at the southern boundary of the Central Business District of the City of Syracuse. It is conveniently and easily accessed to and from both Interstate Routes 81 and 690. [*5]
The Property has a paved asphalt surface with striped parking slots for 330 vehicles and can accommodate an additional 30 vehicles in unmarked areas when necessary. Overhead lights, guardrails and an attendant's booth are located on the Property. While the Property is subject to a 30-foot easement along the south line, which easement is known as "Molly Alley," and provides ingress and egress to both the OnCenter garage and the Property, neither this easement nor the encroachment along the northern boundary of the Property (abutting Harrison Street) significantly impacts the Property upon which the Claimants have parked vehicles without interruption or interference for a period in excess of 25 years. While the OnCenter may control the easement, any obstruction thereof would only interfere with the entrance to its garage. Therefore, the easement has no negative effect or impact on the Property.
Despite the fact that Lot 17 can accommodate 360 cars on any given occasion - a number admitted to by Respondent's expert, Claimants' expert properly stabilized the number of parking spaces at 335 - a number that the Court has accepted for purposes of its valuation.
The Court must totally discount the testimony of GLEN MIHAL, a land surveyor called by Respondent. MR. MIHAL, on the basis of drawings he prepared (Exhibits Nos. AA and BB), testified that the Property could accommodate only 296 vehicles. Exhibits AA and BB are of no probative value. They are nothing more than diagrams of Lot 17. They do not contain any measurements, metes and bounds, references to any survey monuments, or any indications of entrances/exits to the Property. In addition, these diagrams show only numbered parking spaces totally omitting at least 34 addition spaces along Harrison Street and south of the spaces numbered 101-267, as elicited from MR. MIHAL on cross examination.
In condemnation proceedings such as this, the fair market value of the Property at its highest and best use as of the date of taking is the appropriate measure of damages. MATTER OF THE CITY OF NEW YORK (FRANKLIN RECORD CENTER, INC.), 59 NY2d 57 (1983). Based on the entire record, including the testimony of all witness and exhibits received, there is no question that the highest and best use of the Property as of March 10, 2004 was a surface parking lot.
The testimony of Claimants' witnesses thoroughly set forth the uniqueness of this particular parcel. Location is the primary factor which earmarks Lot 17 as an oasis in a parking desert sought after by parking generators. Situated with easy access to and from Routes 81 and 690, as well as to and from Harrison, South State and South Townsend Streets, the Property presents a multidimensional site operated on a 24 hour/7 day schedule. Lot 17 accommodates monthly, daily, and nightly parking customers from a wide and diverse pool. Government and private sector employees as well as attendees of cultural, social and/or sporting events at the Everson, OnCenter, Civic Center, and/or War Memorial constitute its customer base. As established by the evidence contained in the record, and as indicated by the Court in the disposition of the parties' presented Facts and Conclusions, the location of Lot 17, as this unique facility, cannot be duplicated.
In formulating his opinion concerning the highest and best use of the Property, Claimants' expert thoroughly testified to the four-step process he utilized. Considerations as to geography, legally permitted uses, financial feasibility of uses, and maximum productive uses were outlined in great detail on both direct and cross-examination. These considerations all yielded the same conclusion - that current and feasible future conditions of supply and demand do not support [*6]commercial development of the Property for office or retail use at this southern end of the Central Business District. However, these conditions do solidly support the continued use of Lot 17 as a surface parking lot. MR. MAKO's testimony as to the foundation of his opinion irrefutably established that there was no history of any private development for this area for at the very least the fifteen (15) year period prior to March 10, 2004, and there was no foreseeable change in this lack of development. However, as detailed, there is a huge demand for parking.
Respondent's expert was completely erroneous in his conclusion that the highest and best use of the Property was for potential commercial development even though he used the same four step process utilized by MR. MAKO. MR. PEATFIELD, on behalf of Respondent, opined that the interim use of the Property is a parking lot. This conclusion somewhat equivocates from a conclusion he set forth in a previous appraisal of Lot 17. In 2001, MR. PEATFIELD opined that the highest and best use of the Property was its current use as a surface parking facility. See: Exhibit No. 10, p.8. Acknowledging that there was no commercial development in this area of the Central Business District for at least the previous fifteen (15) years (Exhibit No. CC, p. 23), MR. PEATFIELD was unable to provide an opinion as to the projected length of this interim use.
There was ample testimony that an interim use of over five (5) years may tend to render an appraisal speculative as concerns a parcel's highest and best use. In his appraisal report, MR. PEATFIELD states that "the downtown core of Syracuse has been void of new private construction except for the 250 South Clinton Office Building in 1989. This is a result of a stable or declining demand for office and related uses, . . . and a changing culture regarding retailing in cities such as Syracuse." Exhibit No. CC, p.20. Indeed, the PEATFIELD appraisal as well as his testimony in this regard must be deemed speculative and accorded little value as it determines the interim use of Lot 17 is a parking lot with an extended duration in excess of five (5) years.
A party asserting a highest and best use different from the existing one must establish that it is reasonably probable that the asserted highest and best use could or would have been made of the subject property in the near future. THOMPSON v. ERIE COUNTY INDUSTRIAL DEVELOPMENT AGENCY, 251 AD2d 1026 (4th Dept., 1998). Clearly, Respondent has failed to meet this burden.
Just as Respondent's appraiser was erroneous in his designation of the highest and best use of the Property as potential commercial development, his valuation analysis and thereby his calculations are also in error. MR. PEATFIELD, in his analysis, based adjustment and stabilization calculations on Lot 17 containing only 295 parking spaces, the location of his comparables (superior or inferior as he so judged them), size of these comparables and improvements thereon. Moreover, his postulation that the highest and best use is potential commercial development with an indeterminable interim use as a parking lot would necessarily lower his figures. It appears that Respondent's expert relied too much on his own judgment and experience and not on concrete and substantiated data in performing his analysis.
A market-driven sale is characterized as an arms length transaction. As MR. PEATFIELD testified on cross-examination, an appraiser must be sensitive to factors such as eminent domain because the power of condemnation can impact on negotiations, thereby affecting the analysis of a comparable sale from an appraisal point of view. Based on his [*7]testimony, it is readily apparent that a number of Respondent's comparable sales were not market-driven and, therefore, not fitting sales with which to analyze the value of Lot 17.
For example, the cloud of eminent domain was present with regard to L-1 and L-3. Also, L-4 involving the SUNY Health Center was deemed a "friendly condemnation." In addition, where a sale is made to a "preferred developer," as in the case of L-2, or is a distressed sale, as reflected by L-5, such a sale does not provide a valid comparable for valuation purposes no matter what adjustment or stabilization quotients an appraiser may apply. The fact that the sales used by Respondent (L-1 through L-10) were the only major land sales from 1989 to 2003 does not necessarily render these sales suitable as comparables. MATTER OF FMC CORP. v. UNMACK, 92 NY2d 179 (1998).
The definition of market value according to Judge Wachtler's opinion in MATTER OF TOWN OF ISLIP (MASCIOLI), 49 NY2d 354, 360 (1980), is "the price a willing buyer would have paid a willing seller for the Property." In his appraisal report (Exhibit No. CC at p.6) and on his direct testimony, MR. PEATFIELD indicated that the Property is not within the boundaries of an Empire Zone or Economic Development Zone. Accordingly, this factor would be considered by any prospective investor or developer with regard to purchasing the Property. This exclusion would reduce the value of a parcel and most certainly has entered into MR. PEATFIELD'S calculations.
This is extremely problematic as Lot 17 does, in fact, have Empire Zone status as established by Claimants. See: Exhibit no. 12, p. 13. This is a glaring error by Respondent and creates a substantial negative impact on the property valuation it has propounded for the Property.
On the other hand, the appraisal report and testimony of MR. MAKO, on behalf of Claimants, does not present any deficiencies or inconsistencies that detract from the analysis performed and the conclusions reached. This is detailed in the Court's disposition of the submitted Findings and Conclusions.
The Court finds that MR. MAKO properly valued the Property utilizing the Sales Comparison Approach and the Income Capitalization Analysis. Using the Sales Comparison Approach, the appraiser performed an analysis using accepted appraisal techniques to compare Lot 17 with comparable sales of similar properties on both a square footage and parking space basis. As to the Income Capitalization Analysis, the appraiser employed both a participatory investment and non participatory passive investment approach yielding the same approximate amount.
Respondent's objection to Claimants' utilization of the Income Capitalization Analysis as a valuation method is unfounded. Utilization of this methodology is appropriate where, as in this particular case, income/revenue is inextricably joined to a specific and unique parcel of realty. SCHACHENMAYR V. BOARD OF ASSESSORS OF TOWN OF NORTH ELBA, 263 AD2d 731 (3rd Dept., 1999); MATTER OF NYCO MINERALS, INC. V. TOWN OF LEWIS, 296 AD2d 748 (3rd Dept., 2002); lv to appeal dismissed in part and denied in part, 99 NY2d 576 (2003). Here, the parking lot usage is so interwoven with income/revenue that the Court may and should consider income/revenue evidence to assess and compute the fair market value. Therefore, the income capitalization analysis conducted by MR. MAKO was appropriate insofar as the parking operation conducted by Claimants is inextricably tied to Lot 17. Location [*8]is the key because another parcel lacking the unique and particular circumstances surrounding Lot 17 will not provide an automatic resurrection of this surface parking lot.
Although both the MAKO appraisal report and the PEATFIELD appraisal report are detailed appraisals based on standard appraisal techniques and practices (see: MATTER OF NIAGARA MOHAWK POWER CORPORATION V. TOWN OF GEDDES, 92 NY2d 192 (1998)), the MAKO appraisal report and the conclusions set forth therein is the more competent and convincing report. As such, the testimony and information provided to the Court concerning it are more credible and convincing. Based on sound proof, credible testimony and objective rather than speculative data, the evidence offered by Claimants has met the standard of proof required to establish the highest and best use of the Property as a surface parking lot and the fair market value of the Property on the date of taking at $4,750.000.00.
Therefore, by reason of the foregoing, and based on the entire record, including the Court's disposition set forth on the Findings of Fact and Conclusions of Law (Court Exhibits Nos. 1 and 2), the Court finds that the highest and best use of the Property is the continued usage as a surface parking lot and that the fair market value of Lot 17 as of the date of taking, March 10, 2004, is $4,750,000.00. Claimants are hereby awarded just compensation in the amount of $4,750,000.00 plus interest from said date.
Claimants are to submit an Order and Judgment accordingly.
ENTER
____________________________
Anthony J. Paris
J.S.C.
Dated: December 18, 2007
Syracuse, New York
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
