In re the City of New York , 17 A.D.2d 534 ( 1963 )

Per Curiam.

At issue here are appeals and cross appeals from awards in condemnation as to five parcels used in whole or in part as parking lots, (Damage Parcels [hereinafter “ D. P.”] 17-18, 39, 53-54, 56 and 57) and two building awards (D. P. 40 and 60).

The decree involved is the third partial and final decree of the Supreme Court, New York County, dated November 1, 1960, incident to a “ Title 1 ” proceeding for the acquisition of a substandard area that has since been redeveloped into a middle-income housing co-operative. Title vested on May 29, 1958, and values were determined in the decree as of that date. The appeals and cross appeals are disposed of as follows: The five final awards relating to parcels used in whole or in part for parking lot purposes are modified to the extent of reversing the land awards as to these five parcels and remanding them to Special Term for retrial; the final award for D. P. 40 is modified to the extent of increasing the land award, and the final award for D. P. 60 is modified to the extent of reversing the award for the building and remanding it to Special Term for retrial as to the building award, and the awards are otherwise affirmed as hereinafter indicated.

D. P. 17-18, 39, 53-54, 46 and 57

Three of these parcels are used exclusively for parking lot purposes. D. P. 17 and 54 are each improved with a five-story tenement, the rear of which is used for parking in conjunction with parcels Nos. 18 and 53, respectively. The city appeals from the land awards made for those parcels. Claimants cross-appeal with respect to the awards for D. P. 39 and 57 for the reason that they are inconsistent and irreconcilable, and because Special Term did not make known its basis for making these awards. They request a retrial in accordance with a formula fixed by this court for evaluation of land used as parking lots, or, in the alternative, a sharp increase in the base land awards as to these parcels.

In the tentative decree, Special Term fixed a base land compensation for each parcel and then made an additional award for parking lot parcels in the form of an increment for parking lot use at the rate of $1 per square foot. The city’s objection to this increment was thereafter sustained. However, in the final decree Special Term fixed a new over-all land compensation which approximated or exceeded the total in the tentative decree and, in each instance, exceeded the base land compensation fixed in the tentative decree, and gave no supporting reason for the increase. Absent any given or apparent reason for this increase, we must conclude that the sums over and above the base land awards were allowed for parking lot use. There is no objection to the base land awards where they conform with land values in the neighborhood. There is an issue, however, as to whether an additional award should be made because of the special use of these parcels for parking lot purposes.

This issue was found disturbing by Special Term: what is the proper method of appraisal for determining the value of real estate used as a parking lot? The method referred to is not to be formulated by means of a judicial proceeding (Matter of City of New York [Maxwell], 15 A D 2d 153). By reverting to first principles, one finds a reliable answer. Urban real estate — particularly in metropolitan centers—■ derives its value from its potentiality as sites for buildings. While the land aside from the building produces no income and, hence, as a business investment would have no value, yet it is a necessary condition to the existence of the building. It is from the combination of land and building that income is produced and commercial real estate derives its value. Because it has the potentiality of providing a building site, and there is a market for land as such, vacant land is not valueless. Also, land may be improved without structures, or at least with minimal structures, and still have a commercial use as, for instance, storage yards, playing fields, parking lots, or the like. Compared with the incidence of land used as building sites, the latter are few and their use as such is transient. Therefore, their sales potentiality is dominated by the sales price of the neighboring sites.

However, there is a distinction between land in its natural state and a plot improved even only to the extent of a parking lot. The latter must be graded and surfaced and certain structures, such as fences, booths and the like, are either essential or usual. In a sale of the property, a buyer would naturally expect to pay for what he found there. Furthermore, the owner whose land is being condemned would be fully compensated if he were paid what an equivalent unimproved lot would cost, plus the replacement value, less depreciation, of whatever improvements contributed to the conversion of the site to a parking lot. In any event, that is the maximum value that can be placed on any improvement (People ex rel. Hotel Paramount Corp. v. Chambers, 298 N. Y. 372).

One of the claimants’ experts testified that there is a market for parking lots at prices in excess of the sum of these figures (base value of the land plus replacement cost of the improvements). Doubtless, this is so. But the excess price does not represent a value of the land. It constitutes the good will of the business of parking cars which is not a compensable item in condemnation.

Considerations of excess rent do not enter these cases, as the record does not show the facts necessary to raise the question.

Accordingly, the awards as to each of these parcels as to base land value are reversed and remanded to Special Term for retrial in accordance with this formula. As to the land value of parcel 39, the city concedes that if there be no additional award for parking lot use then there should be a 10% increment for plottage. Of course, upon a retrial, Special Term in fixing land values will consider this factor in regard to any parcel to which it may be applicable. In all other respects, the awards are affirmed.

D. P. No. 40

Involved is a reconstructed 5-story basement and brick building. Claimant on its appeal argues that the award is insufficient.

Claimants’ and city’s experts appraised.by building residual capitalisation. The claimants’ appraisal for land and building was $114,759 of which $40,656 was the value fixed for the land. The final award was $110,150 of which $40,650 was for the land. The city concedes that parcels 39 and 40 should be increased by a 10% increment on the basic valuation for plottage if there be no award for parking lot use. Since we are disallowing any award for parking lot use, the award for this parcel should be increased by $4,065. The total award will therefore be $114,215. The award is accordingly increased to that figure and, as so increased, is affirmed.

D. P. No. 60

This parcel was improved with the remains of a 5-story brick loft building. Claimant appeals from the award for that building. A portion of the building had been taken in a 1953 condemnation proceeding to widen Park Row. In that proceeding the court awarded reconstruction costs of $13,584 fixing the value of the building, before taking, at $28,534. However, instead of reconstructing, claimant boarded up the building so that at the time of this proceeding the building because of deterioration and vandalism had been reduced to a gutted shell of the conceded value of $3,000. The claimant’s expert fixed a structural damage of $14,416. This he did by adopting the valuation of $28,534 for the building found in the prior proceeding, hypothesizing the reconstruction of the building and deducting therefrom the award for reconstruction costs of the prior condemnation proceeding.

Special Term awarded $3,000 for the structure.

Claimant contends that at the time of the antecedent award in the proceeding to widen Park Row, there was a reasonable expectation of the instant taking and that reconstruction of the remaining portion of the building was not undertaken in order to minimize the damage the city would be obliged to pay in this proceeding. From a hindsight point of view, had the building been restored, the city in this proceeding would have been called upon to pay the reconstructed value, thereby paying de novo the amount allowed on the prior partial condemnation. In sum, if claimant had gone ahead with the restoration of the building, the damage to the city would have been unduly enhanced.

However, there is no proof in the record to establish that this was what motivated the claimant in not restoring the building. True, there was an offer of proof on this subject but that only went to the advice the claimant’s attorney gave on this subject. There is no testimony that claimant accepted the advice and acted upon it.

We conclude that the rule of just compensation requires that the claimant be fully compensated for his property on the basis of value as if restored according to the formula set forth herein, if claimant establishes on a new trial that the failure to restore the property was induced by a desire to save the city the cost of restoration.

Therefore, on equitable considerations, we modify so much of the award for this parcel as fixes a building award for this parcel and remand for a new trial in accordance with this opinion.

Accordingly, the awards for Damage Parcels 17-18, 39, 53-54, 56 and 57 should be modified on the law and the facts to the extent of reversing the land awards as to these parcels and remanding them to Special Term for retrial in accordance with the formula fixed herein and otherwise affirmed; the award for Damage Parcel 40 is modified on the law and the facts to increase the land award to $114,215 and is otherwise affirmed; the award for Damage Parcel 60 is modified on the law and the facts to the extent of reversing the award for the building and remanding for retrial for the reasons indicated herein and otherwise affirmed. In each instance, no costs are allowed.