The City of New York (the City) moves for an order: (1) precluding so much of the rebuttal appraisal report prepared by Brent Lally for claimant Waringin, Ltd. (Waringin), dated October 20, 2008, as purports to add an increment to the value of the property taken, and (2) pursuant to 22 NYCRR 202.62(e), limiting claimant's testimony at trial to the value of the property, as regulated by freshwater and adjacent freshwater wetlands regulations. Waringin cross moves for an order (1) precluding consideration of so much of the City's rebuttal appraisal, prepared by Jerome Haims Realty, Inc., dated May 5, 2008, as purports to offer as its final value the regulated value of the subject property, and (2) pursuant to 22 NYCRR 202.62(e), precluding the City's testimony at trial to the value of the property as regulated. [*2]

The parties exchanged appraisal reports on January 11, 2007. Six months later, on July 13, 2007, this court rendered a decision setting forth a comprehensive statement of the case law to be followed in valuing wetland regulated property (Staten Island Bluebelt - Phase 2, Richmond Co Sup Ct, Index No 4012/04) (the July 2007 Decision). In view of that decision, both the City and claimant agreed that neither had properly valued the subject property.

On November 3, 2008, rebuttal reports were exchanged. In its rebuttal report, claimant values the property at $1,806,000; in its rebuttal report, the City values it at $201,225. Following a conference on May 1, 2009, when it became clear that the parties were unable to agree on how to appraise the property in accordance with the July 2007 Decision, the instant motion and cross motion followed.

In support of its motion, the City alleges that the value of the property as set forth in claimant's rebuttal report is not calculated in accordance with the method of valuing wetlands regulated property established by case law and therefore must be precluded from consideration. More specifically, the City argues that in order to properly value the subject property, it must first be valued without consideration of the regulations and then it must be valued as regulated. The City contends that if, and only if, the imposition of the regulations leaves the owner with only "a bare residue of value" should an increment be added to the regulated value to account for the reasonable probability of a successful challenge to the regulation as a confiscatory regulatory taking.

The City explains that in claimant's rebuttal report, Lally values the property, in reliance upon seven comparable sales, without wetland regulations, at $32.50 per square foot, for a value of $2,548,000 ($32.50 times 78,406 square feet). Claimant then values the property, as regulated, in reliance upon five comparable sales, at $9 per square foot, for a value of $706,000 ($9 times 78,406 square feet). Each of the comparable sales is accompanied by a letter from the DEC Regional Permit Administrator stating that the property is within the jurisdiction of the DEC under the Freshwater Wetlands Act, so that a [*4]permit would be required to develop the property; no distinction is made between properties that are completely regulated and properties that are only partially regulated.

The City then argues that accepting Lally's valuation, the imposition of the freshwater wetlands regulations took 72% of the value of the property's original value, leaving claimant with 28% ($706,000 divided by $2,548,000 equals 27.7%). The City concludes that a regulation that reduces the value of property by 72% will not support a finding of a regulatory taking. Accordingly, it alleges that the value of the property cannot exceed $706,000, or the value of the property as legally restricted in use by all zoning and environmental regulations, as found by claimant. From this it argues that the portion of the rebuttal report that adds an increment in value to the property is unacceptable as a matter of law, so that claimant must be precluded from introducing the evidence at trial and must be limited to proving the value of the property as regulated.

Claimant

In support of its cross motion and in opposition to the City's motion, claimant argues that both rebuttal reports value the subject property as fully regulated under the existing wetlands regulations and as wholly unregulated by those restrictions. With regard to its report, claimant asserts that Lally incorporated the development plan proposed by Glen V. Cutrona Associates, which states that 24 semi-detached dwellings having 78,406 square feet could be built, for a value of $2,458,000. In valuing the property as regulated, claimant relies upon the opinion of Todd W. Ettlinger, an engineer, who concludes that DEC would not issue a permit for construction on the site and determined that the property had no development potential; Lally therefore values the property at $706,000 by analyzing sales of wetlands regulated vacant land.

In contrast, the City values the property in reliance upon a plan prepared by CEA Engineers, P.C. (CEA), which states that 24 semi-detached houses aggregating 51,408 square feet of developable area could be constructed; in reliance upon four comparable sales, Haims values the property at $40 per square foot, or $2,056,320. After deducting estimated site costs of $341,700, the City values the property at $1,741,620. In valuing the property as regulated, Haims relies upon the opinion of CEA that a permit would be issued by the DEC for the construction of a single dwelling of 2,784 square feet. He then aggregates the value of $35 per square foot for developable land and $1.50 per square foot for the land that is unbuildable, for a value of $201,225 as regulated.

Claimant then avers that the determination of value must be preceded by three interrelated findings of fact by the court: the market value of the property as regulated; the market value of the property without wetlands regulations; and the likelihood that based upon these findings, a regulatory taking would be found.

Claimant further argues that as this court previously found in another condemnation matter in which the City sought to preclude consideration of claimant's proof of value, the City's motion is more properly characterized as a motion for summary judgment, not one seeking to preclude the introduction of an appraisal report (see Matter of City of New York, [*5]2008 NY Slip Op 52261U, 6 [2008]). In this regard, claimant asserts that the range of values set forth in the rebuttal reports present material issues of fact that cannot be resolved on papers. More specifically, proof as to each asserted value must be adduced at trial, tested by adversarial challenge and weighed by the court before any conclusions can be reached. Claimant contends that this conclusion is particularly appropriate since the legal standard to be applied to the facts presented in this case is without precise, mathematical certainty, because the terms used by the court to define a regulatory taking, such as "reasonable economic return" or "bare residue of economic value" do not admit of a bright line formulation. Moreover, the City itself acknowledges that "[r]esearch has not found any decision that sets out the exact percent of value constituting a bare residue.'" Claimant also notes that the City does not concede that claimant's valuation of the property as either regulated or unregulated should be adopted by the court, so that issues of fact exist with regard to value.

In support of its cross motion, claimant argues that the City's regulated value of $201,255 is approximately 8% of claimant's valuation and approximately 11.5% of its own unregulated value. Accordingly, the City's rebuttal report should be precluded, since the City fails to demonstrate that a prudent and informed investor would not add an increment to the value of the property to reflect the likelihood that the regulations would be found to constitute a regulatory taking and would be lifted.

The City's Reply

In reply, the City asserts that the court may properly determine whether claimant may include an incremental value above the regulated value of the property on the instant motion, since no combination of the regulated and unregulated values contained in the parties' appraisal reports support the likelihood that the wetland regulations would constitute a regulatory taking. More specifically, the City contends that claimant is confused about the correct range of values at issue herein because it did not properly consider that the acquisition was a partial taking, so that the entire parcel must be evaluated, and that the remainder was improved with a house that was in good condition as of the date of the taking, which claimant values at $317,000.

The City thus contends that claimant improperly deducted the value of the house in assessing the City's valuation and in its own appraisal. Accordingly, claimant misstates the numbers because the City values the property, as regulated, at $554,525, and $2,067,920, as unregulated. It then determined that the final value, as regulated, would be $201,225, i.e. $554,525 minus $353,300, the value that it placed on the house. Similarly, if claimant had included the value of the house in its appraisal, the value of the property would be $1,023,000 as regulated and $2,865,000 as unregulated. Adopting any of the proposed values, however, the difference between the regulated and unregulated values would range from approximately 19% to 49%. The City thus concludes that the property should be valued as regulated, since "it is highly unlikely that a court would find that the wetland regulations [*6]left Claimant with less than a bare residue of value,'" so as to entitle claimant to an increment in value due to the regulations.

The City then argues that premised upon the same reasoning, its valuation of the property is proper, so that claimant's cross motion seeking to preclude admission of its rebuttal report should be denied.

"In the recent case of In re City of New York [Jones Woods Park Addition] (20 Misc 3d 1143[A], 2008 NY Slip Op 51839[U], 2008 NY Misc LEXIS 5962, 2008 WL 4193123 [2008]), this court denied a similar motion made by the City, i.e., a motion seeking to preclude the introduction of an appraisal report at trial . . . and a cross motion by a claimant seeking to preclude the introduction into evidence of the City's appraisal report . . .. For the reasons fully discussed therein, the court finds that both the City's and claimants' appraisal reports adequately set forth the data upon which the respective valuations are based and sufficiently articulate the basis for the proposed values, as required by 22 NYCRR 202.61 (id. at 5-6). Thus, any inadequacies in the appraisal report disclosed during the valuation hearing go to the weight to be given to the report, not its admissibility' (National Fuel Gas Supply v Goodremote, 13 AD3d 1134, 1135 [2004], citing Champlain Natl. Bank v Brignola, 249 AD2d 656, 657 [1998]). Accordingly, neither claimants nor the City will be precluded from introducing their appraisal reports at trial. In so holding, the court emphasizes, as was held in In re City of New York [Jones Woods Park Addition], that the City points to no rule or case law precedent that requires claimant to lay bare its evidentiary proof in its appraisal report' (In re City of New York [Jones Woods Park Addition], 2008 NY Slip Op 51839[U] at 6).

"Moreover, as was also discussed in In re City of New York [Jones Woods Park Addition], in arguing that the opposing party should be precluded from introducing their appraisal report at trial on substantiative grounds, the motion and cross motion are more properly characterized as seeking summary judgment, not seeking to preclude admission of an appraisal report on procedural grounds (In re City of New York [Jones Woods Park Addition] (2008 NY Slip Op 51839U at 5)."

(Matter of City of New York, 2008 NY Slip Op 52261U at 5-6 [footnote omitted]).

The court finds that both claimant's and the City's rebuttal appraisal reports " contain a statement of the method of appraisal relied on and the appraiser's conclusions as to the [*7]property's value, along with facts, figures and calculations by which the conclusion was reached'" (Matter of City of New York, 20 Misc 3d 1143A, 2008 NY Slip Op 51839U, 5, quoting Bialystock & Bloom v Gleason, 290 AD2d 607 [2002], citing 22 NYCRR 202.59[g][2]). Accordingly, neither party will be precluded from introducing its rebuttal appraisal at trial.

The parties' remaining arguments address the issue of valuation, i.e, whether the appraisal offered by the City or by the claimant is more persuasive. As argued by claimant, however, this issue is more properly characterized as one seeking summary judgment (see Matter of City of New York, 2008 NY Slip Op 52261U at 6; In re City of New York [Jones Woods Park Addition], 20 Misc 3d 1143[A]). Inasmuch as the City did not move for summary judgment, its arguments are not properly before the Court on this motion and will not be considered.

Accordingly, for the above stated reasons, both the motion and the cross motion are denied.

The foregoing constitutes the order and decision of this court.

E N T E R,

J. S. C.