In re Town of Hempstead

— In condemnation proceedings, claimant Malibu Associates, Inc., appeals, as limited by its brief [592] and on the ground of inadequacy, from so much of a partial final decree of the Supreme Court, Nassau County, dated May 2, 1979, as awarded compensation for the improvements on the condemned realty. Decree reversed insofar as appealed from, on the law, with costs payable jointly by respondents appearing separately and filing separate briefs, and the matter is remitted to Special Term for further proceedings in accordance herewith. In 1954, appellant leased some SSVz acres of beachfront property on the south shore of Long Island from Ovide de St. Aubin and and Manlio Liccione. (Liccione divested himself of his interest in the property prior to this proceeding.) The parties stipulated that their respective interests in the improvements in the property, in the event of condemnation, would be 71.7% to appellant and 28.3% to St. Aubin. These figures were reversed with respect to their respective interests in the land itself. Appellant constructed on the property a large clubhouse for catering, cabanas, lockers, swimming pools, tennis, handball and basketball courts, and other facilities, at a cost of $2.5 million. The business operation of these facilities was a failure, however, and in 1968, at which time the beach club facilities had a stipulated depreciated value of $1.38 million, the facilities were condemned by the respondent town. From the time of condemnation until the present, the town operated the premises, as had appellant, as catering and recreational facilities. Indeed, the town has not made any substantial structural changes in the improvements on the property. In 1977 it realized an income of approximately $400,000 from the operation of the facilities. Special Term found that the highest and best use of the condemned property would be single-family residential use, and thus denied compensation for the reproduction value of the beach club facilities, in that they interfered with the highest and best use of the property. We conclude that this ruling was error. There is substantial support for the proposition that the value of improvements which interfere with the judicially determined best use of condemned property, and which consequently must be destroyed, is not compensable (see Van Kleeck v State of New York, 18 NY2d 897; Matter of County of Nassau [Colony Beach Club of Lido], 43 AD2d 45, affd 39 NY2d 958; Irv-Ceil Realty Corp. v State of New York, 43 AD2d 775; Spano v State of New York, 22 AD2d 757). However, this case is manifestly different. Not only did the improvements not have to be destroyed, but they were actually utilized by the town in connection with the use to which it put the property. Under circumstances such as these, where improvements inconsistent with the best use of the land are nonetheless utilized by the condemnor for the purpose for which they had been erected, the value of the improvements must be compensated (see Matter of Port Auth. Trans-Hudson Corp. [Hudson Rapid Tubes Corp.], 20 NY2d 457, remittitur amd 20 NY2d 968, cert den 390 US 1002; Matter of City of New York [New Gen. Hosp. — Cinelli], 280 App Div 196, affd 305 NY 835; City of New York v State of New York, 49 AD2d 659). It would be both irrational and unfair for the town to use the beach club structures for the same purposes as did appellant, and yet not compensate it for the structures because they are inconsistent with the best use of the land. Consequently, the town should compensate appellant for the reasonable reproduction value, less depreciation, of the structures, such sum to be determined after a hearing. Hopkins, J. P., Gibbons and Weinstein, JJ., concur.