ST. JAMES, NY-A state court has ruled that New York State undervalued 245.5 acres that it seized from Gyrodyne Co. in 2005. The ruling by Judge James J. Lack of the New York State Court of Claims says the locally based REIT is entitled to the full $125-million value at which Gyrodyne appraised the property; the state paid Gyrodyne $26.3 million when it seized the land for the SUNY Stony Brook Research and Development Park.
A spokeswoman for SUNY Stony Brook tells GlobeSt.com that the university is reviewing Lack's decision. Calls to the state attorney general’s office were not returned by deadline.
Lack agreed with Gyrodyne’s contention that in valuing the land based on its then-current zoning for light industrial use, the state misapplied the Eminent Domain Procedure Law’s requirement that just compensation be based upon the property’s highest and best use and the probability that this use could have been achieved. Gyrodyne had planned to seek rezoning of the land for residential development as part of its Flowerfield project, and Lack ruled that there was a reasonable probability that it would have been successful in getting the rezoning passed.
Gyrodyne based its appraisal of the land’s fair-market value on such a rezoning. The eminent domain seizure reduced the Flowerfield project’s size from 314 acres to 68.
In his decision, Lack noted that the REIT’s slate of witnesses made a better case than the experts called by the state. “Defendant’s experts were inconsistent with their own reports and vague as to their testimony on cross-examination,” he wrote. In contrast, he added, “claimant’s experts were detailed in their analyses” and “pointed to solid facts in determining that the highest and best use would be a change of zone to residential use.”
Gyrodyne’s president and CEO, Stephen Maroney, says in a statement that the company’s goal in pursuing the eminent domain case “was to seek just compensation for our shareholders. Since 2005, we have devoted significant attention and resources to achieving this goal. We have always been confident that our claims were supported by the facts.” He adds that while it’s not known whether the state will appeal the ruling, “we anticipate that final resolution of the litigation will facilitate the fulfillment of the company’s strategic goals, both with respect to Flowerfield and generally.”
The company says it plans to submit an application to the court seeking reimbursement of attorneys’ fees and costs. In addition, Gyrodyne says it’s also entitled under the EDPL to statutory simple interest on the additional $98.7-million payment due from the state.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
