Value with variance OK’d

In eminent domain case court ruled that appraisal could be based on assumption that variance would be granted. The City acquired title to a vacant M1-2 property, owned by Congregation Adas Yereim, through eminent domain. The property’s zoning allowed light manufacturing uses as-of-right, but prohibited residential uses. Prior to condemnation, Congregation had already begun the process of applying for a special permit and variance that would have allowed it to build a five-story school and four residential buildings with 90 units. A formal application had been submitted for the special permit and hearings had been held on the matter; a variance application for the residential buildings would follow once the special permit was obtained. Though the City took title to the property before the special permit was obtained, Congregation submitted an appraisal report that valued the property as if it would be developed with the residential buildings and school.

The City attempted to preclude the appraisal report from evidence, arguing that it erroneously assumed that a variance would have been granted. The City further argued that, even if the property would have received a variance, the appraisal report should be inadmissible at trial since the method of valuation was inappropriate. The appraiser, according to the City, should have valued the property as it was zoned and then added an increment for the probability of obtaining a variance instead of valuing the property as if it received the variance.

Justice Abraham Gerges rejected the City’s position, ruling that the appraisal report was admissible at trial. Gerges determined that the City failed to show that it was not reasonably probable that Congregation would obtain the special permit and variance, and thus, the appraisal report could assume as much. Turning to the valuation method, Gerges noted that when “truly” comparable sales were taken into account, as was asserted by Congregation, there was no need for an increment. Gerges ruled that the City failed to prove that the sales were not truly comparable, and concluded that the suitability of the comparable sales was a matter of fact for the trial court to consider.

Sanitation Garage Brooklyn, District 3 and 3A, Index No. 37905/03 (Kings Cty.Sup.Ct. Nov. 10, 2008).

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