Development

Fact Question About Power of Village to Lease Public Property to Private Entity

Matter of 10 East Realty LLC v. Incorporated Village of Valley Stream

NYLJ 4/25/05, p. 30, col. 3

AppDiv, Second Dept

(memorandum opinion)

In landowner's article 78 proceeding to vacate a determination by the village to lease a municipal parking lot to a private entity, landowner appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division modified to reinstate the petition, holding that landowner's complaint raised questions about the power of the village to lease public property to a private entity.

The village entered into an agreement to lease the parking lot to a private company. In bringing this proceeding, landowner argued that the lease was a violation of the public trust doctrine. Landowner contended that the village owns the property for public use, and that when a village holds property for public use it may not sell that property without specific authorization from the state legislature. Landowner argued that the same principle applied for leases as for sales. Supreme Court rejected landowner's argument.

In modifying to reinstate the complaint, the Appellate Division indicated that a municipality may not devote property held for public use to private purposes even temporarily, without the approval of the state legislature. In this case, landlord did not seek legislative approval. As a result, the court concluded that Supreme Court should not have granted the village's pre-answer motion to dismiss the complaint.

COMMENT

By its terms, section 1-102 of the Village Law appears to authorize villages to lease, sell, and convey real property without qualification. By contrast, section 20 of the General City Law permits cities to sell some properties, such as streets and lighting systems, after they have been discontinued from public use, but prohibits alienation of other properties, such as parks, public places, and waterfront property. While the statute gives a city the power to sell or lease other properties, it only permits a city to grant franchises or rights to use these inalienable properties.

Despite these statutory distinctions, New York courts have held that when a municipality (including a village) has acquired property for the benefit of the public, or used that property for the benefit of the public, state legislative approval is needed before the property may be sold or leased to a private entity. The Court of Appeals has held that municipal property impressed with a public trust cannot be alienated or subjected to anything more than a revocable permit, without legislative approval. In Miller v. City of New York, 15 NY2d 34, the court struck down a 20-year license to operate a driving range and shops in a park area, holding that the purported license was more similar to a lease obtained without legislative approval than a revocable permit. Without legislative approval, a municipality cannot allow property acquired or held by it to be even partly diverted to private use or possession. Thus, in Matter of Lake George Steamboat v. Blais, 30 NY2d 48, the court invalidated a lease executed by the Village of Lake George to a private sightseeing company because the subject of the lease, 110 feet of a 1000-foot dock, had been built for public purposes, and the village had not obtained legislative sanction for the lease.

By contrast, when a municipality owns property that was not acquired for nor dedicated to public use, courts have generally found that no legislative approval is needed to sell or lease the land. In determining whether a board of trustees appointed by the Town of Islip had the authority to lease private waterfront land, the Court of Appeals, in Town of Islip v. Estates of Havermeyer Point, 224 NY 449, observed that the town held the subject beach in private, making it unnecessary to obtain legislative authorization to lease the land. Likewise, a municipality can lease lands under water that are owned in a private capacity without legislative sanction, so long as there is no interference with public use of the waterway. In Bebelander v. Town of Islip, 17 Misc2d 819, the court upheld the town's lease of underwater land to a shell-fishing company without legislative approval because the town held the land in a proprietary capacity, and the lease would not appropriate public uses associated with the water itself, such as fishing and navigation.

Fact Question About Power of Village to Lease Public Property to Private Entity

Matter of 10 East Realty LLC v. Incorporated Village of Valley Stream

NYLJ 4/25/05, p. 30, col. 3

AppDiv, Second Dept

(memorandum opinion)

In landowner's article 78 proceeding to vacate a determination by the village to lease a municipal parking lot to a private entity, landowner appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division modified to reinstate the petition, holding that landowner's complaint raised questions about the power of the village to lease public property to a private entity.

The village entered into an agreement to lease the parking lot to a private company. In bringing this proceeding, landowner argued that the lease was a violation of the public trust doctrine. Landowner contended that the village owns the property for public use, and that when a village holds property for public use it may not sell that property without specific authorization from the state legislature. Landowner argued that the same principle applied for leases as for sales. Supreme Court rejected landowner's argument.

In modifying to reinstate the complaint, the Appellate Division indicated that a municipality may not devote property held for public use to private purposes even temporarily, without the approval of the state legislature. In this case, landlord did not seek legislative approval. As a result, the court concluded that Supreme Court should not have granted the village's pre-answer motion to dismiss the complaint.

COMMENT

By its terms, section 1-102 of the Village Law appears to authorize villages to lease, sell, and convey real property without qualification. By contrast, section 20 of the General City Law permits cities to sell some properties, such as streets and lighting systems, after they have been discontinued from public use, but prohibits alienation of other properties, such as parks, public places, and waterfront property. While the statute gives a city the power to sell or lease other properties, it only permits a city to grant franchises or rights to use these inalienable properties.

Despite these statutory distinctions, New York courts have held that when a municipality (including a village) has acquired property for the benefit of the public, or used that property for the benefit of the public, state legislative approval is needed before the property may be sold or leased to a private entity. The Court of Appeals has held that municipal property impressed with a public trust cannot be alienated or subjected to anything more than a revocable permit, without legislative approval. In Miller v. City of New York, 15 NY2d 34, the court struck down a 20-year license to operate a driving range and shops in a park area, holding that the purported license was more similar to a lease obtained without legislative approval than a revocable permit. Without legislative approval, a municipality cannot allow property acquired or held by it to be even partly diverted to private use or possession. Thus, in Matter of Lake George Steamboat v. Blais, 30 NY2d 48, the court invalidated a lease executed by the Village of Lake George to a private sightseeing company because the subject of the lease, 110 feet of a 1000-foot dock, had been built for public purposes, and the village had not obtained legislative sanction for the lease.

By contrast, when a municipality owns property that was not acquired for nor dedicated to public use, courts have generally found that no legislative approval is needed to sell or lease the land. In determining whether a board of trustees appointed by the Town of Islip had the authority to lease private waterfront land, the Court of Appeals, in Town of Islip v. Estates of Havermeyer Point, 224 NY 449, observed that the town held the subject beach in private, making it unnecessary to obtain legislative authorization to lease the land. Likewise, a municipality can lease lands under water that are owned in a private capacity without legislative sanction, so long as there is no interference with public use of the waterway. In Bebelander v. Town of Islip, 17 Misc2d 819, the court upheld the town's lease of underwater land to a shell-fishing company without legislative approval because the town held the land in a proprietary capacity, and the lease would not appropriate public uses associated with the water itself, such as fishing and navigation.