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Appellate Court Rules Use of Eminent Domain Improper

In what the Appellate Division, Second Department called a case of first impression, the court has ruled an attempt by the Village of Haverstraw to acquire a property by condemnation for affordable housing violated the Eminent Domain Procedure Law. In the case 49 WB, LLC v. Village of Haverstraw the court found the Village failed to demonstrate a public purpose.

The Village proposed to condemn the property at issue for acquisition by a local not-for- profit, HOGAR. In finding that the acquisition of the property had a public purpose the Village had determined that (1) HOGAR would provide a community outreach health center, (2) provide an office for HOGAR and (3) the site would be suitable to construct 16 units of affordable housing. The Court found: (1) the Village failed to demonstrate that HOGAR was more likely to provide a community outreach health center than the current owner who had a plan for such use and therefore “failed to articulate how or in what manner the condemnation …fosters any benefit to the public which would not be obtained absent condemnation”; (2)HOGAR already leased space in the building and the owner had offered a long term lease, further “there is no foundational support in the record to conclude that any “public” benefit would flow from having a private, not-for-profit corporation such as HOGAR be an owner of its office space rather than a tenant”; and (3) the condemnation, through a complex analysis outlined below, actually results in fewer affordable housing units for the Village.

The Court found that the entire affordable housing argument was tied to a private development of the Village’s waterfront. The Court noted that in exchange for permission to construct a large development on the Village’s waterfront, the waterfront developer was required to “participate” in the development of 85 units of affordable housing. The developer intended to contribute to HOGAR’s acquisition of the property and therefore, the Court found, would get credit for participating in the 16 units of affordable housing HOGAR proposed for the site. This would reduce the developer’s obligation to build affordable housing by the 16 units. But the Court found that the present owner already proposed 6 units of affordable housing on the site which, unlike HOGAR’s proposal, did not include “participation” by the developer and would not be credited to the developer’s requirement of 85 units. Therefore, by pursuing the condemnation and giving the developer credit for HOGAR’s 16 units, the Village was actually losing the 6 additional units that would have been constructed by the owner of the property. The Court concluded allowing the present owner to construct 6 units would net the Village 91 units of affordable housing rather than 85. Thus the purported public purpose of providing more affordable housing was illusory.

The Court found, based upon this analysis, “the condemnation solely benefits the private entities.” Significantly the Court then limited its holding by stating: “we do not suggest that private owners of property can avoid the proper exercise of a municipality’s condemnation authority by merely offering to utilize the property in the same manner as intended by the municipality. Instead, our opinion rests upon the evidentiary record that the Village invoked its power of condemnation for the sole purpose of benefiting private and not public interests.”

Another issue was whether the challenge had been brought within the 30 day statute of limitations. The court noted that EDPL 204(A) provides for publication of notice of the determination and findings in “at least” two successive newspapers. In this case the Village published notice in five successive newspapers. The court found that since the publication was not “complete” until the last date of publication, even though the three additional days of publication were optional by the Village, the time to appeal did not run under EDPL 207 (A) until thirty days from the date publication was completed.

Finally, the Court found that the petitioner was not entitled to attorney’s fees and costs under EDPL 702 (B) as no acquisition procedure had been commenced. EDPL has a two step process (1) determining public purpose and (2) acquisition. As no actual acquisition procedure had been commenced the Court determined there was no right to recover fees and costs.

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