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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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The New York Court of Appeals in In the Matter of Edward J. Vomero v City of New York, et al has unanimously held that the City of New York Board of Standards and Appeals abused its discretion in granting a use variance to use residentially-zoned property for commercial use. The Court reversed the decision of the Appellate Division, Second Department in which two justices had dissented, and reinstated the original judgment of the Supreme Court, Richmond County.

Under the New York City zoning code, a use variance may be granted only if: 1) use of the property for permitted uses would impose practical difficulties or unnecessary hardship because of the unique physical conditions of the property, 2) the owner cannot realize a reasonable financial return from use of the property for permitted uses because of such unique physical conditions, 3) use of the property for non-permitted uses would not alter the essential character of the neighborhood, and 4) the owner did not create the practical difficulties or unnecessary hardship.

The property at issue is a corner lot located in a residentially-zoned district on Staten Island abutting a six-lane wide street. The owner purchased the property for $275,500 and then demolished the existing house located on the land, all for the purpose of constructing a photography studio accessory to its catering hall located directly across the street in a commercially-zoned district. An appraisal was obtained seven months following purchase which showed that the vacant land could be sold for $375,000 for residential use. The land is similar in size to other residential properties located in the neighborhood.

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The New York Court of Appeals has held that a person who can demonstrate greater enjoyment of a natural resource than the general public has standing under the State Environmental Quality Review Act (SEQRA) to challenge an action by a governmental entity which may threaten such a natural resource. In Matter of Save the Pine Bush v Common Council of the City of Albany, the Court held that both the individual petitioners and the organization had standing to challenge an action that allegedly threatened certain endangered species within the Pine Bush area. However, the Court also found that Petitioners had failed to prove their case on the merits as the City had examined the major potential impacts and the City “was not required to scrutinize every possible environmental issue, and the failure of the City’s environmental impact statement (EIS) to discuss the possible impact of rezoning on certain rare species was therefore not a fatal flaw.”

The project at issue involved a rezoning for a proposed hotel that would not be in a protected area but is near a protected area which is habitat for the Karner Blue butterfly. The draft scope of the proposed EIS included examination of the potential impacts on the Karner Blue butterfly but no other plant or animal species. In response to the draft scope a number of comments were submitted. Among the comments was one from the New York DEC which discussed the Karner Blue and pointed out that the Karner Blue is in a habitat which is known to support four other “rare or unusual species…Frosted Elfin butterfly, the Hognosed Snake, the Worm Snake and the Eastern Spadefoot Toad.” The DEC asked that the investigation encompass those species as well.

The DEIS was prepared and included a discussion of the Karner Blue butterfly, including a report by a biologist who stated that repeated visits to the site failed to disclose any Karner Blue butterflies at the site. There was no mention of the other species raised in the DEC comments. The DEIS was commented upon by a number of agencies including the DEC. Other than what the court characterized as brief comments on the Frosted Elfin butterfly and a reference to the Adder’s Mouth Orchid (which had not been mentioned previously) there was no mention of the other species previously raised by the DEC.

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In an action to compel issuance of a certificate of occupancy, the Appellate Division upheld the action of a building inspector on the grounds that the property owner had failed to appeal to the zoning board of appeals before starting an action, thereby failing to exhaust its administrative remedies. In Matter of Vinrus v. the Village of Pelham Manor Building Inspector, the building inspector had issued a notice that the property owner was required to obtain a certificate of occupancy for a new tenant. The property owner brought an article 78 proceeding challenging the direction of the building inspector on various grounds.

The Village, which was defended by Silverberg Zalantis LLC, argued that the building inspector had acted properly but that, irrespective of that fact, a precondition to a suit challenging the actions of a building inspector’s interpretation of the zoning ordinance is that an appeal must be submitted to the zoning board of appeals to review the determination of the building inspector. Further, such an appeal must be made to the zoning board of appeals within 60 days of the challenged decision pursuant to Village Law section 7-712-a (5)(b). The lower court dismissed the action and the appellate division affirmed simply stating “the petitioner failed to exhaust its administrative remedies before commencing this proceeding (see Village Law § 7-712-a[5][b]; Matter of White v Incorporated Vil. of Plandome Manor, 190 AD2d 854; see also Matter of Capitol Distribs. Corp. v Jones, 2 Misc 2d 816, 817; cf. Matter of Goldberg v Incorporated Vil. of Roslyn Estates, 61 AD3d 756).”

The brief on appeal was written by Katherine Zalantis and the appeal was argued by Steven Silverberg.

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The Appellate Division held that under certain circumstances a zoning board may consider deceitful conduct by an applicant in reaching a determination to deny an area variance. In Matter of Caspian Realty, Inc. v Zoning Board of Appeals of the Town of Greenburgh, the court reiterated that a zoning board of appeals may only apply the five criteria set forth in Town Law section 267-b (3) for granting or denying an area variance but “an applicant’s deceitful conduct may form the basis for the denial of requested variances, but only if that conduct and other balanced considerations fit within the factors enumerated by Town Law § 267-b(3).”

The Petitioner had originally applied to the Town for site plan approval for a retail furniture store. The plans submitted designated a cellar area as storage. This was significant as otherwise the proposed structure would have exceeded the permitted floor area ratio (FAR) by almost 100% and would have had significantly less parking than would be required if the cellar was not used for storage. During construction the building inspector questioned the location of partitions, molding and carpeting in the cellar and he was again assured it would only be used for storage. To that point “Caspian provided, further revised plans dated September 25, 2003, that expressly designated the cellar for “storage.”

Thereafter, Caspian operated its business using the cellar for retail and an offsite location for storage. Caspian was issued a violation and appealed to the Town Zoning Board of Appeals for area variances. During the hearings Caspian produced reports stating that the variances would not impact the neighborhood. Neighbors testified about noise, overnight parking and trucks backing into the property causing a problem on a busy road. The Zoning Board denied the variances finding inter alia:

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The Appellate Division Second Department decided a complex appeal involving cross motions on whether a property owner had sufficiently stated causes of action sounding in violations of constitutional rights under 42 USC 1983 and related causes of action resulting from the denial of a certificate of use. In the case of Sonne v. Board of Trustees of the Village of Suffern, the court dismissed some but let stand several causes of action resulting from a long standing dispute over whether a property owner could use and occupy the third floor of a 100 year old commercial building.

The case has a complex history. The Village had denied the property owner the right to use the third floor of its commercial building because there is only one useable exit from the third floor and the Village claims this violates the State of New York Uniform Fire Prevention and Building Code . Underlying the dispute are several factors. The second means of egress from the third floor is blocked by a fence constructed on the adjoining property owned by a company which is Act controlled by the sons of the former Village Building Inspector, one of whom had also been a Village official, including Mayor from 2001 to 2003. The Village had indicated it would not intervene as this is a private matter between property owners. However, the fence is apparently in violation of the local code but no action was taken to cause it to be removed. Second, the Village has taken the position that the single exit does not comply with the State Uniform Fire Prevention and Building Code Act. Yet, there is an advisory opinion from the State indicating that where a property pre-exists the code, which is the case here, and there has been no substantial additional construction, none of which was proposed here, the current requirement of two exits is not applicable. Complicating the situation more is the fact that the use at issue is non-conforming and the third floor has been vacant for several years. The Village code provides that where a non-conforming use has ceased for more than 6 months it may not be re-established.

In an effort to resolve the issues an agreement was negotiated with the adjoining property owner to put a “panic bar’ in the fence, which would have permitted egress from the second exit in an emergency. In addition, as the fence was eight feet high and not in compliance with the local code a variance was obtained for the fence. However, the variance was issued for only two years. As a result the owner complained to Village officials that the two year variance was “useless.” Clearly the concern was that the variance for only two years limited the ability to rent the third floor space. Ten days later the property owner was issued several violations by the Village. During the litigation the Village claimed that this was coincidence and the violations issued were part of a “sweep” of the Village to clean up the downtown of the Village, based upon the Mayor telling the Code Enforcement Officer that there were “a lot of places downtown he’d like to see me pay a visit”. However, the court notes that there was only one other property issued a violation on that date and it appears the violation was based upon a review of the Village files not a “sweep.”

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The following is a summary of New York zoning and municipal law cases decided since June that we have not yet covered. The summary has been prepared by Bernis Shapiro of our office.

In the Matter of Lackawanna Community Development Corporation v. Frank E. Karkowski et al, 12 NY3d 578, 883 NYS2d 168 (June 11, 2009).

Issue: Is property leased out by a Local Development Corporation for for-profit manufacturing activities taxable or exempt from taxation?

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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 a town could prohibit a proposed road over property zoned for commercial and single family use when the road was intended solely to serve a multi-family use on an abutting parcel. In Matter of BBJ Associates LLC v. Zoning Board of Appeals of the Town of Kent, the applicant proposed a multi-family development on a parcel in the adjoining Town of Carmel but with the sole access to the property over a highway through another parcel in the Town of Kent which is not zoned for multi-family use.

The petitioner argued “the “entranceway” or “access road” was not a principal use, an accessory use, or a “driveway;” rather, it was an “infrastructure improvement” pursuant to Town of Kent Zoning Code former § 77-6(F).” On the basis of that interpretation, the petitioner claimed that the zoning board should be reversed.

While the matter was pending the Town amended its zoning ordinance to specifically address this issue and argued that the court should apply the rule which requires that in making its decision a court must apply the law as it exists on the date of the court’s decision. The petitioner argued that the so called “special facts exception” should apply and the law in effect at the time of the application should be applied. The court noted that the special facts exception “may be applied if the municipality unduly delayed proceedings and acted in bad faith.” However, the court declined to reach that issue.

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