Eminent Domain

Eminent Domain Exercise Invalid for Want of Public Use

Matter of 49 WB LLC v. Village of Haverstraw

NYLJ 6/27/07, p. 18, col. 1

AppDiv, Second Dept

(Opinion by Dillon, J.)

In a petition brought pursuant to the Eminent Domain Procedure Law, landowner challenged the village's exercise of its condemnation power over a two-story building. The Appellate Division granted the petition, holding that the exercise of eminent domain power was not in furtherance of a public use.

HOGAR, the Village's designated affordable housing organization, is a tenant of the subject building, and sought unsuccessfully to purchase the building because it could not meet the owner's financing requirements. On April 28, 2005, the then-owner sold the subject building to 49 WB, and title passed to 49 WB on June 27, 2005. Eleven days later, the village published a notice of a public hearing on its proposed acquisition of the subject property through eminent domain. During the public hearings, HOGAR proposed to add a third floor to the building, and to construct 16 residential condominiums, to be sold to village residents and volunteers at subsidized prices. 49 WB offered an alternative proposal, which would have provided six-to-eight units on two additional floors. The village accepted HOGAR's proposal, and authorized acquisition of the building from 49 WB. 49 WB then sought judicial review, alleging that the acquisition did not achieve a public use, benefit, or purpose, and was beyond the power conferred on the village by state statutes or by the state and federal constitutions.

In granting the petition, the court first rejected the village's contention that the petition was barred by the statute of limitations, concluding that the 30-day statute ran from the date of the last publication of the notice in an official newspaper. The court then turned to the substance of 49 WB's claim. The court noted that the village had identified three public purposes that would be advanced by the condemnation. The court dismissed the first ' that the building was well-suited for a community health center, because 49 WB had already made tangible efforts to introduce such a center to the site ' efforts more developed than any prepared by HOGAR, the proposed transferee of the site. The second purpose ' maintaining office space for HOGAR ' would also not be achieved because 49 WB had already offered to extend HOGAR's lease for space in the premises. Finally, the court turned to the construction of housing for local residents and volunteers. Here, the court cited a 2002 agreement between the village and a developer that obligated the developer to identify and/or construct 85 affordable housing units within the village. The court noted that the developer had agreed to contribute toward HOGAR's purchase of the subject building upon the village's exercise of eminent domain. In light of this agreement, the court noted that the condemnation would not increase the number of affordable units within the village, because the units in the subject building would be used to satisfy the contractual obligation that the developer had already undertaken; without the condemnation, the developer would have been obligated to construct the same number of units elsewhere. Hence, the condemnation did not advance any of the village's stated purposes. As a result, the court granted the petition. The court, however, denied attorney's fees to 49 WB.

COMMENT

In eminent domain proceedings, New York courts have been deferential to local legislative decisions that a proposed condemnation furthers a public purpose. In Jackson v. New York State Urban Dev. Corp., 67 N.Y.2d 400, the Court of Appeals held that the city could condemn property in Times Square to eradicate blight and stimulate development, and that once the city has put forward an adequate basis for condemnation, the landowner must show that the city's determination is 'without foundation' in order to avoid condemnation. Landowners affected by the condemnation argued that the legislature had failed to take into account crucial factors regarding traffic patterns, air pollution, archaeology and water supply when deciding to condemn the property. However, the court noted that the city had analyzed the issues, and accepted the city's determinations regarding them. The courts have also upheld the exercise of eminent domain for purposes such as expanding public parks, constructing public roadways, and providing public parking (see, e.g., Village Auto Body Works v. Westbury, 90 A.D.2d 502, allowing condemnation of land for use as public parking).

The potential for private benefit does not require invalidation of a condemnation, provided that the private benefit is incidental to the public use. In Waldo's, Inc. v. Johnson City, 74 N.Y.2d 718, the Court of Appeals upheld the condemnation of land to build a four-way intersection that would provide better access to a mall. Although the mall received a benefit as a result of the condemnation, and the owner of the mall had invested $1.5 million into the development of the intersection, the court held that a public purpose predominated based on the existence of three public studies that had found that traffic congestion in the vicinity of the mall had become a cause for public concern.

In addition, courts have declined to inquire into the legislature's motives for condemning particular property. For example, in Broadway Schenectady Entertainment v. County of Schenectady, 299 A.D.2d 672, the court upheld the county's determination to condemn an adult bookstore for use as a community policing center, even though the determination was made very shortly after the bookstore opened. The court would not inquire into the town's motives when the only evidence of bad faith on the part of the town was suspicious timing.

Against this strong presumption that a legislature's exercise of eminent domain is proper, before 49 WB, the courts had only struck down exercises of eminent domain where the legislature has overstepped its authority, or where procedural requirements were not met. For example, in Russin v. Union, 133 A.D.2d 1014, the court annulled the town board's determination to take land on which it intended to build homes to be sold to low income elderly individuals. The court held that because Article XVIII ' 10 of the New York Constitution provides that, in relation to housing, a legislature cannot partake in any private business besides the operation of low-rent housing, the town board's action exceeded its authority. In Matter of Hargett v. Town of Ticonderoga, 35 A.D.3d 1122, the court annulled a condemnation where the town superintendent of highways condemned land for highways that would facilitate the growth of the tourist industry in the town, since the superintendent's statutory authority was limited to the creation and maintenance of roads, and did not include the promotion of tourism. And in Spittler v. Town of Hamburg, 4 A.D.3d 735, the court rejected the town's determination to condemn land where the town failed to indicate the basis for its determination in compliance with Article 2 of the Eminent Domain Procedure Law.

Eminent Domain Exercise Invalid for Want of Public Use

Matter of 49 WB LLC v. Village of Haverstraw

NYLJ 6/27/07, p. 18, col. 1

AppDiv, Second Dept

(Opinion by Dillon, J.)

In a petition brought pursuant to the Eminent Domain Procedure Law, landowner challenged the village's exercise of its condemnation power over a two-story building. The Appellate Division granted the petition, holding that the exercise of eminent domain power was not in furtherance of a public use.

HOGAR, the Village's designated affordable housing organization, is a tenant of the subject building, and sought unsuccessfully to purchase the building because it could not meet the owner's financing requirements. On April 28, 2005, the then-owner sold the subject building to 49 WB, and title passed to 49 WB on June 27, 2005. Eleven days later, the village published a notice of a public hearing on its proposed acquisition of the subject property through eminent domain. During the public hearings, HOGAR proposed to add a third floor to the building, and to construct 16 residential condominiums, to be sold to village residents and volunteers at subsidized prices. 49 WB offered an alternative proposal, which would have provided six-to-eight units on two additional floors. The village accepted HOGAR's proposal, and authorized acquisition of the building from 49 WB. 49 WB then sought judicial review, alleging that the acquisition did not achieve a public use, benefit, or purpose, and was beyond the power conferred on the village by state statutes or by the state and federal constitutions.

In granting the petition, the court first rejected the village's contention that the petition was barred by the statute of limitations, concluding that the 30-day statute ran from the date of the last publication of the notice in an official newspaper. The court then turned to the substance of 49 WB's claim. The court noted that the village had identified three public purposes that would be advanced by the condemnation. The court dismissed the first ' that the building was well-suited for a community health center, because 49 WB had already made tangible efforts to introduce such a center to the site ' efforts more developed than any prepared by HOGAR, the proposed transferee of the site. The second purpose ' maintaining office space for HOGAR ' would also not be achieved because 49 WB had already offered to extend HOGAR's lease for space in the premises. Finally, the court turned to the construction of housing for local residents and volunteers. Here, the court cited a 2002 agreement between the village and a developer that obligated the developer to identify and/or construct 85 affordable housing units within the village. The court noted that the developer had agreed to contribute toward HOGAR's purchase of the subject building upon the village's exercise of eminent domain. In light of this agreement, the court noted that the condemnation would not increase the number of affordable units within the village, because the units in the subject building would be used to satisfy the contractual obligation that the developer had already undertaken; without the condemnation, the developer would have been obligated to construct the same number of units elsewhere. Hence, the condemnation did not advance any of the village's stated purposes. As a result, the court granted the petition. The court, however, denied attorney's fees to 49 WB.

COMMENT

In eminent domain proceedings, New York courts have been deferential to local legislative decisions that a proposed condemnation furthers a public purpose. In Jackson v. New York State Urban Dev. Corp. , 67 N.Y.2d 400, the Court of Appeals held that the city could condemn property in Times Square to eradicate blight and stimulate development, and that once the city has put forward an adequate basis for condemnation, the landowner must show that the city's determination is 'without foundation' in order to avoid condemnation. Landowners affected by the condemnation argued that the legislature had failed to take into account crucial factors regarding traffic patterns, air pollution, archaeology and water supply when deciding to condemn the property. However, the court noted that the city had analyzed the issues, and accepted the city's determinations regarding them. The courts have also upheld the exercise of eminent domain for purposes such as expanding public parks, constructing public roadways, and providing public parking ( see, e.g., Village Auto Body Works v. Westbury , 90 A.D.2d 502, allowing condemnation of land for use as public parking).

The potential for private benefit does not require invalidation of a condemnation, provided that the private benefit is incidental to the public use. In Waldo's, Inc. v. Johnson City , 74 N.Y.2d 718, the Court of Appeals upheld the condemnation of land to build a four-way intersection that would provide better access to a mall. Although the mall received a benefit as a result of the condemnation, and the owner of the mall had invested $1.5 million into the development of the intersection, the court held that a public purpose predominated based on the existence of three public studies that had found that traffic congestion in the vicinity of the mall had become a cause for public concern.

In addition, courts have declined to inquire into the legislature's motives for condemning particular property. For example, in Broadway Schenectady Entertainment v. County of Schenectady , 299 A.D.2d 672, the court upheld the county's determination to condemn an adult bookstore for use as a community policing center, even though the determination was made very shortly after the bookstore opened. The court would not inquire into the town's motives when the only evidence of bad faith on the part of the town was suspicious timing.

Against this strong presumption that a legislature's exercise of eminent domain is proper, before 49 WB, the courts had only struck down exercises of eminent domain where the legislature has overstepped its authority, or where procedural requirements were not met. For example, in Russin v. Union , 133 A.D.2d 1014, the court annulled the town board's determination to take land on which it intended to build homes to be sold to low income elderly individuals. The court held that because Article XVIII ' 10 of the New York Constitution provides that, in relation to housing, a legislature cannot partake in any private business besides the operation of low-rent housing, the town board's action exceeded its authority. In Matter of Hargett v. Town of Ticonderoga , 35 A.D.3d 1122, the court annulled a condemnation where the town superintendent of highways condemned land for highways that would facilitate the growth of the tourist industry in the town, since the superintendent's statutory authority was limited to the creation and maintenance of roads, and did not include the promotion of tourism. And in Spittler v. Town of Hamburg , 4 A.D.3d 735, the court rejected the town's determination to condemn land where the town failed to indicate the basis for its determination in compliance with Article 2 of the Eminent Domain Procedure Law.