Condemnation Law: Significant Ruling on Highest and Best Use

After a 22-day trial, Carter Ledyard, together with Senior Counsel Joseph Bavuso and Assistant Corporation Counsel James Hicks from the Corporation Counsel’s Office, achieved a significant victory in a matter involving a claim for additional compensation with respect to a 7.2-acre parcel of waterfront property located in Long Island City. The property was acquired in early 2002 by the Queens West Development Corporation and subsequently conveyed to the City. The claimants asserted that there was a reasonable probability that the property, located in an industrial area zoned for manufacturing, would be rezoned to permit luxury residential development, and that the property should be valued on that basis. The claimants’ appraisal included a financial analysis purporting to demonstrate the feasibility of residential development at the site. The claimants’ appraisal valuing the property at $85 million reached a value conclusion more than six times that of the City’s, which valued the property as a development site for big-box retail. While acknowledging the possibility that a rezoning might be granted if requested by the owner, the City argued that the area lacked the infrastructure and services necessary to support residential development. Furthermore, the City argued that all of the key assumptions that went into the claimants’ feasibility analysis were unreliable, including construction costs, rental rates and the total square footage that would be permitted if the property were rezoned. The court agreed with the City on both the suitability and feasibility issues and awarded damages based on a big box use. 

Partners John R. Casolaro and Mark R. Zancolli, counsel Lee A. Ohliger and associate Michael H. Bauscher represented the City.

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