Third Department Gets The Project Influence Rule Right

The Third Department got it right in Matter of State of New York v KKS Properties, LLC, __ AD3d __, (July 3, 2014). The lower court’s decision in KKS Properties, LLC is one of those decisions that makes you cringe. An award on an appropriation claim in the Court of Claims which is lower than the advance payment resulting in a judgment in favor of the State is an outrageous outcome for a compulsory taking of one’s property. We have often advocated that there must be a minimum of “just compensation.” A condemnor is required to appraise the property before a taking based on its highest and best use and make an offer in the amount which is 100% of its highest approved appraisal. If the offer is not accepted as payment in full, the condemnee can accept same without prejudice as an advance payment. This amount should be deemed the minimum amount of just compensation.

The Court of Claims in KKS Properties, LLC misconstrued the “Project Influence Rule.” A rule of valuation applied to avoid increases or decreases in property values which result from a proposed project. The rule came about as the result of the Supreme Court decision, United States v. Miller, 317 US 369 (1943), one of the most misunderstood condemnation cases ever decided. An article written by M. Robert Goldstein and Michael Rikon, which more fully discusses the Miller case is available on our website by clicking here.

The Court of Claims is KKS Properties  failed to value the appropriated property on the basis of a comprehensive rezoning which predated the taking. The lower court found that claimant’s property would not have been rezoned absent the bypass extension. On appeal, the Third Department held that the State failed to demonstrate that “but for” the bypass extension, claimant’s property would not have been rezoned. Rather, the Appellate Court noted, the change in zoning “notably occurred prior to the taking — was part of a comprehensive rezoning of the entire Town ***.”

Read the full decision by clicking here.

Posted in Eminent Domain, Project Influence Rule, Published Articles, Recent cases
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