Articles Posted in Eminent Domain

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In a rebuke to the Appellate Division First Department, the New York Court of Appeals today held that the condemnation of land on the upper west side of Manhattan to benefit Columbia University may go forward. In Matter of Kaur v New York State Urban Dev. Corp., the Court of Appeals reversed the Appellate Division rejection of the proposed condemnation and, in reliance on its recent holding in Matter of Goldstein v. New York State Urban Development Corporation, held that the findings of (1) blight, (2) that the petitioner’s property qualified as a “land use improvement project” and (3) the finding of a “civic purpose” to the project, were “rationally based and entitled to deference.”

The proposal is for development of a new 17 acre campus for Columbia University. Over the last decade Columbia has acquire a majority of the parcels in the area, however, a number of property owners have held out and this challenge is to the proposal by the Empire State Development Corporation (ESDC) to utilize its authority under the Eminent Domain Procedure Law (EDPL) to acquire the balance of the parcels within the area covered by ESDC’s General Project Plan (GPP) to implement the Columbia proposal. After reviewing the history of the case, the Court reviewed and struck down each of the holdings of the Appellate Division.

The Court noted that the main argument in opposition was that the condemnation is not for the purpose of putting the properties to a “public use” within the meaning of the New York Constitution and that the findings of blight were arrived at in bad faith. The Court noted that in “Matter of Goldstein, we reaffirmed the longstanding doctrine that the role of the Judiciary is limited in reviewing findings of blight in eminent domain proceedings…Thus, given our precedent, the de novo review of the record undertaken by the plurality of the Appellate Division was improper. On the “record upon which the ESDC determination was based and by which we are bound” (id. at 517, citing Matter of Levine v New York State Liq. Auth., 23 NY2d 863, 864 [1969]), it cannot be said that ESDC’s finding of blight was irrational or baseless. Indeed, ESDC considered a wide range of factors including the physical, economic, engineering and environmental conditions at the Project site. Its decision was not based on any one of these factors, but on the Project site conditions as a whole. Accordingly, since there is record support – “extensively documented photographically and otherwise on a lot-by-lot basis” (id. at 526) – for ESDC’s determination that the Project site was blighted, the Appellate Division plurality erred when it substituted its view for that of the legislatively designated agency.”

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An appellate court upheld an award for condemnation of land underwater as well as denial of consequential damages for a partial taking, in a case where part of a residential subdivision was taken for parkland. In Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, the Appellate Division Second Department upheld the decision of the lower court noting that if the lower court’s “explanation of its award is supported by the evidence, it is entitled to deference and will not be disturbed on appeal….”

The property at issue was just over 6 acres, including almost an acre of underwater land. The taking was 2.3 acres, including the underwater land. The property owner sought consequential damages claiming that by creating a park the value of the remaining land it owned was reduced, as the park reduced privacy. The park district’s appraiser claimed that the park enhanced the value of the remaining property because it provided an unobstructed view of Long Island Sound as a result of restrictions on the use.

The Court noted in determining damages:

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In a case that appears to break new ground, the Appellate Division, First Department, found that the proposed condemnation of a number of parcels to make way for a new Columbia University Campus should be rejected. In Matter of Kaur v. New York State Urban Development Corporation the split court issued a strongly worded decision finding the “process employed by ESDC predetermined the unconstitutional outcome, was bereft of facts which established that the neighborhood in question was blighted, and ultimately precluded the petitioners from presenting a full record before either the ESDC or, ultimately, this Court. In short, it is a skein worth unraveling.”

By way of background, the Manhattanville area of West Harlem has been in the sights of Columbia University for a number of years as the location for a new campus. Several years ago it began acquiring property in the area, but a number of property owners refused to sell to Columbia and Columbia began working with the Empire State Development Corporation (ESDC) to acquire the holdouts through eminent domain. The court found that while in 2000 Columbia owned only 2 properties in the area, by 2003 Columbia owned 51% of the properties in the roughly 17 acres at issue. In 2004, the New York City Economic Development Corporation (EDC), the ESDC and Columbia began meeting concerning the project. In 2006, the ESDC hired Columbia’s planning consultant to do a study of the area. The study, issued in 2007 noted that by 2007 Columbia controlled 72% of the properties. The study concluded that the majority of the lots in the area were substandard.

During the course of related litigation over release of documents under the Freedom of Information Law (discussed in this Blog in July, 2008) issues were raised concerning the neutrality of the consultant who worked for both Columbia and ESDC. ESDC thereafter retained another consultant to do a further study. By the time of the new study Columbia either owned or was in contract to purchase 48 of the 67 lots in the study area. The new study concluded many of the properties were neglected and the area was “blighted.”

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In a major decision, the New York Court of Appeals put a new gloss on the New York Eminent Domain Procedure Law (EDPL) allowing the condemnation by the Empire State Development Corporation (ESDC) of the so called “Atlantic Yards” area of Brooklyn to proceed. In Matter of Goldstein v. New York State Urban Development Corporation d/b/a Empire State Development Corporation, the court found that the ESDC had properly determined that the area at issue met the criteria for being “blighted.” Therefore, the taking of private property for the development of 16 commercial and residential towers along with, most notably, a new arena for the “NBA Nets franchise” may proceed.

Initially the court addressed the issue of timeliness of the action. As previously noted in this Blog the EDPL sets forth a two part process for condemnation in New York. The first step is a determination under Article 2 of the EDPL that a site would serve a public purpose and is appropriate for condemnation. Once such a determination has been made a challenge must be brought in the Appellate Division within 30 days pursuant to EDPL section 207. However, in this case the petitioners initially brought an action in federal court and raised federal constitutional issues as well as state claims. The federal action was decided against the petitioners and the state claims dismissed without prejudice. The Court of Appeals therefore concluded that since the state claims were raised in federal court and dismissed without prejudice CPLR 205 (a), which allows a tolling of the statute of limitations under certain circumstances, tolled the statute of limitations in this case.

In a concurring opinion, Judge Read invokes what appeared to be the conventional wisdom prior to this decision. Judge Read argues that EDPL section 207 confers exclusive jurisdiction on the Appellate Division in an EDPL Article 2 challenge and therefore starting the action in another forum, even a federal court, does not toll the statute.

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The New York Court of Appeals ruled last week that a property owner who was successful in defeating an attempt to acquire her property by eminent domain may recover certain of her attorney’s fees and costs. In Hargett v. Town of Ticonderoga the Court noted that in a prior action the Appellate Division had ruled that the Town’s superintendent of highways had exceeded his authority in attempting to condemn property for purposes unrelated to his position. In the earlier action the property owner had challenged the initial finding by the Town that there would be a public purpose in taking her property.In the current action the property owner sought reimbursement pursuant to EDPL 702 for costs and attorney’s fees incurred in the successful challenge to the finding of public purpose. The issue in the case was whether the reimbursement provisions of EDPL 702 would apply to this first stage of the condemnation process in which the Town targeted the property for acquisition or only after the Town actually commenced an acquisition/vesting procedure to condemn the property.

The Appellate Division Third Department denied the application relying upon the holding in Matter of 49 WB, LLC v. Village of Haverstraw in which the Appellate Division Second Department concluded that no reimbursement was available under similar circumstances. As previously discussed on this Blog in a June 23, 2007 post the Second Department in the Haverstraw case held 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 Haverstraw had only identified the public purpose but no actual acquisition procedure had been commenced, the Court determined there was no right to recover fees and costs.

In reliance on the Haverstraw case the Town of Ticonderoga argued that EDPL 702 only provides for reimbursement during the vesting stage of a condemnation proceeding. The Court of Appeals, however, disagreed with that prior holding and concluded that under these circumstances the property owner is entitled to recover certain fees and costs. The Court held in the first stage of the eminent domain process, prior to an actual vesting procedure has been commenced, “reimbursement for attorney’s fees and other costs incurred by a condemnee may be sought pursuant to EDPL 702 (B) after it is determined in an EDPL article 2 proceeding that the condemnor lacked authority to pursue the proposed acquisition.” The Court concluded that this first stage was part of the “acquisition” process contemplated by the language in EDPL 702.

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An appellate court has ruled that EDPL section 402 [B] [6], which authorizes a court to permit pre-condemnation access to property, also authorizes a court to require a condemnor to correct an unsafe or dangerous condition it has created. In Matter of Village of Saranac Lake, the Appellate Division upheld the right of the court to order the Village to correct a dangerous condition created during pre-acquisition access that was granted to perform emergency repairs to a sewer line, but remitted the matter to the lower court for further factual findings on the need

for such repairs.

The Village of Saranac Lake had commenced EDPL proceedings to acquire easements over certain properties for installation, repair and replacement of sewer lines. Under EDPL 402 [B] [6} the Village obtained pre-acquisition permission from the court to conduct emergency repairs of certain sewer lines. The work was performed and the EDPL process continued. However, one of the property owners brought an application to force the Village to repair certain claimed unsafe conditions created by the Village when it made its repairs. The lower court granted the relief. The Village appealed claiming the court had no authority to require the repairs and that the property owners were not entitled to compensation until after acquisition was complete.

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The Appellate Division held that taking of private property by eminent domain fulfilled a public purpose even though the taking primarily benefited commercial traffic. In the Matter of 225 Front Street, Ltd. v. City of Binghamton the court noted the limited scope of judicial review of a proceeding under the EDPL which “must focus on “whether the proceeding was in conformity with constitutional requirements, whether the proposed acquisition is within the statutory jurisdiction or authority of the condemnor, whether the condemnor’s determination and findings were made in accordance with the procedures set forth in EDPL article 2 and ECL article 8, and whether a proposed [public] use, benefit or purpose will be served by the proposed acquisition.”

Here the Court found that the purpose of acquiring the petitioner’s property was to facilitate road improvements in order to resolve traffic congestion in the City. Petitioner argued that the taking served no public purpose but was for the private benefit of commercial traffic. The court held: “[p]utting aside the fact that commercial use of public highways has obvious public benefits, there can be no doubt but that where an intersection of two public roadways is constructed in such a way that some vehicles cannot safely negotiate it, all vehicular traffic that utilizes the area is obviously affected. This project, as designed, seeks to address such a concern and, as such, has a public purpose.”

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Last year we reported on the case of Goldstein v Pataki, 516 F3d 50 [2008] involving the proposed condemnation of property in Brooklyn, New York in order to build the so called Atlantic Yards Project which includes a huge residential and commercial development along with an arena for the New Jersey Nets. This week the Appellate Division, First Department (In re Develop Don’t Destroy (Brooklyn) v. Urban Development Corporation) again addressed claims by property owners alleging that the State Environmental Quality Review Act (SEQRA) had not been adequately followed and that the project does not involve an appropriate public project within the meaning of the various governing statutes including the Eminent Domain Procedures Law.

In dismissing the claims the court made far reaching findings which are best recited in the court’s own words. The first claim was that the financial participation of the Empire State development Corporation (ESDC) in the project had not been properly analyzed as part of the SEQRA review findings and therefore had not been subjected to appropriate environmental scrutiny. The court disagreed that the ESDC’s financial participation was an area for environmental inquiry holding: “[a]ccordingly, where the decision, although discretionary, is governed by criteria unrelated to the environmental concerns addressed in an EIS, environmental findings based on the EIS are unnecessary as it would be pointless to mandate reliance on an EIS in the interest of informed decision-making in circumstances where the EIS is by hypothesis irrelevant to and cannot inform the decision to be made”

The Plaintiffs then argued that the lead agency failed to take a “hard look” under SEQRA at the threat of a terrorist incident, particularly with respect to the arena. The Court disagreed finding that although there may be exceptions in the case of storage of particularly dangerous materials: “SEQRA contains no provision expressly requiring an EIS to address the risk of terrorism and, indeed, it would not appear that terrorism may ordinarily be viewed as an “environmental impact of [a] proposed action” (ECL 8-0109[2][b] [emphasis added]) within the statute’s purview.”

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An article entitled ” ‘Atlantic Yards’ Condemnation Upheld,” written by Steven Silverberg, founding partner of Silverberg Zalantis LLC, is featured in the March, 2008 ALM Law Journal Newsletter, New York Real Estate Law Reporter. The article discusses the recent decision by the Second Circuit Court of Appeals to dismiss the challenge by several property owners to the condemnation of their properties in order to construct a huge private development in downtown Brooklyn, New York. See:

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The Second Circuit Court of Appeals upheld dismissal of the challenge to condemnation of private property for the Atlantic Yards Project in Brooklyn stating in the case Goldstein v. Pataki, decided on February 1, 2008: “…eminent domain has its costs, it has its benefits, and in all but the most extreme cases, Supreme Court precedent requires us to leave questions of how to balance the two to the elected representatives of government, notwithstanding the hardships felt by those whose property is slated for condemnation.” The Court found that neither the fact that the area at issue would be developed privately nor the fact that the individual property owners’ lots are not themselves blighted changed the public purposes of the project to remove blight and provide affordable housing.

The well publicized proposal is to construct a new sports arena for the New Jersey Nets, sixteen high rise apartment buildings and several office towers in a portion of downtown Brooklyn which the Court described as being “afflicted for decades with substantial blight.” Plaintiffs are 15 property owners whose homes or businesses are in a less blighted portion of the project area which are slated for condemnation.

Plaintiffs claimed violations of the “Public Use Clause” of the Fifth Amendment and the Equal Protection and Due Process Clauses of the Fourteenth Amendment to the United States Constitution, along with a New York State law claim. The basis for the action was the allegation that the “public use” for the project is merely a pretext and any incidental public benefit is secondary to the primary purpose of the project, which Plaintiffs’ claim is to allow a private taking in order to advance the personal fortune of the developer, Bruce Ratner.

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