Article I (§7, subd. (a)) of the New York State Constitution and the Fifth Amendment to the United States Constitution both provide that: “Private property shall not be taken for public use without just compensation.” This doctrine has been upheld by the courts of this land since its inception.

In 1897, in Bauman v. Ross, the United States Supreme Court held that “the just compensation required by the Constitution to be made to the owner is [at least] to be measured by the loss caused to him by the appropriation.

He is entitled to receive the value of what he has been deprived of, and no more…[but] when part only of a parcel of land is taken…the value of that part is not the sole measure of the compensation or damages to be paid to the owner; but the incidental injury or benefit to the part not taken is also to be considered.” Bauman v. Ross, 167 U.S. 548, 17 S. Ct. 966, 42 L. Ed. 270 (1897).

What the Bauman court was referring to are consequential/severance damages (to the remainder) in eminent domain cases, which apply to partial acquisitions of property and are usually payable in addition to the value of the direct damages. See Bauman, id</em.; see also RA Three RDS, LLC v. State, 169 A.D.3d 731, 732 (2nd Dept. 2019); Williams v. State, 90 A.D.2d 882 (3d Dept. 1982).

In some cases, however, consequential damages may be wholly or partially offset by a “special benefit.”

What is a special benefit exactly and how does it affect compensation in eminent domain valuation cases? To understand the answer to this question, we must first understand how partial acquisitions of property are valued in eminent domain proceedings.

The measure of damages for a partial taking of real property is the difference between the value of the whole property before the taking and the value of the remainder after the taking. See Diocese of Buffalo v. State of New York, 24 N.Y.2d 320 (1969); Chester Indus. Park Assoc., LLP v. State of New York, 65 A.D.3d 513, 884 N.Y.S.2d 243 (2nd Dept. 2009).

“Consequential damages, also known as severance damages, reflect the fact that in addition to the loss of value of the property actually taken, the condemnee's remaining property may suffer a diminution in value as a result of the loss of the condemned parcels” (see Murphy v. State of New York, 14 A.D.3d 127, 132, 787 N.Y.S.2d 120); therefore, “[c]onsequential damages consist of the diminution in the value of the remainder resulting from the taking of a part and from the condemnor's use of the property taken” (see Williams v. State, 90 A.D.2d 882).

To arrive at a final calculation of damages in partial takings, courts have calculated the value of both the direct damages and the indirect (i.e., consequential/severance) damages to the remainder of the parcel caused by the taking.

Courts have held that the term “indirect damages” includes severance damages and consequential damages. See Matter of City of New York, 80 Misc. 3d 1237(A) (Sup Ct 2023) (Saitta, J.).

However, when “changes to the remainder parcel caused by the project…result in an increase in value rather than a decrease” (i.e., the remainder value of the property that was partially acquired increases in value as a result of the public project for which the property was acquired in the first place), then a “special benefit” exists. See Matter of City of New York.

So then, what happens to the property valuation in a partial acquisition when a special benefit does exist? Nothing good as far as the property owner is concerned.

New York law allows “special benefits to be offset against any consequential/indirect damages to the remainder (but not against the direct damages).” See Matter of City of New York (Cons. Gas. Co.), 190 N.Y. 350 (1907). New York courts have applied this rule fairly consistently in eminent domain cases.

Some examples of condemnation cases where a “special benefit” to the remainder has offset any consequential/severance damage award(s) are:

(1) A project that increased the value of land by making it more accessible and developable, by way of the installation of a storm and drain line, sidewalks, and a service road that was deemed a benefit to the condemnee’s remainder parcels, since many lots in the development abutted the road (see Ridgeway Associates, Inc. v. State, 40 A.D.2d 1051, 339 N.Y.S.2d 160 (3d Dept. 1972), order aff’d, 34 N.Y.2d 678);

(2) Where the value of the remaining portion of land is enhanced due to the construction of a highway (see Lerner Pavlick Realty v. State, 98 A.D.3d 567, 949 N.Y.S.2d 480 (2d Dept. 2012));

(3) In the taking of easements for flood-control programs, where consideration was given to the benefits resulting to the remaining land by reason of the improvement resulting from the flood-control wall and the enhancement in value to such land (see American Woolen Co. v. State, 125 Misc. 186, 211 N.Y.S. 149 (Ct. Cl. 1925)); and

(4) Where the value of the remaining parcel is enhanced by the existence of a park on the condemned portion of the property (see Board of Commissioners of Great Neck Park District of Town of North Hempstead v. Kings Point Heights, LLC, 74 A.D.3d 804, 903 N.Y.S.2d 451 (2d Dept. 2010); cert denied 16 N.Y.3d 848 (2011) (holding, in part, that the condemnor's appraiser correctly concluded that the remaining parcels were enhanced by the existence of the park because it provided the remaining parcels with an unimpeded view of Long Island Sound since there were restrictions on its use)).

Although the rule on special benefits varies from state to state, New York has been fairly consistent in offsetting consequential damages against the enhancement value to the remainder parcel in partial eminent domain acquisitions.

Sometimes, depending on the nature and extent of the project’s enhancement in value to the remainder, a “special” benefit may result in very little compensation being due to the claimant, making it not so special—at all.

Reprinted with permission from New York Law Journal, © ALM Media Properties LLC. All rights reserved.