City of N.Y. v. Bluebelt

• Decision Date: 01 December 2014
• Docket Number: No. 4013/06.,4013/06.
• Citation: 17 N.Y.S.3d 381 (Table)
• Court: New York Supreme Court
• Parties: In the Matter of the CITY OF NEW YORK Relative to Acquiring Title in Fee Simple absolute in certain real Property, where not heretofore acquired, for v. New Creek Bluebelt, Phase 3 Decision In the area generally bounded by Zoe Street, Dongan Hills Avenue, Hylan Boulevard and Stobe Avenue, in the Borough of Staten Island, City and State of New York. BayCrest Manor Inc., (Fee Claimants for Damage Parcels 9 and 10) [Block 3544 Lots 25, and 43] Claimants, The City of New York, Condemnor. BayCrest Manor Inc., (Fee Claimants for Damage Parcels 9 and 10) [Block 3544 Lots 25, and 43], Claimants, v. The City of New York, Condemnor.

17 N.Y.S.3d 381 (Table)

In the Matter of the CITY OF NEW YORK Relative to Acquiring Title in Fee Simple absolute in certain real Property, where not heretofore acquired, for

v.New Creek Bluebelt, Phase 3 Decision In the area generally bounded by Zoe Street, Dongan Hills Avenue, Hylan Boulevard and Stobe Avenue, in the Borough of Staten Island, City and State of New York. BayCrest Manor Inc., (Fee Claimants for Damage Parcels 9 and 10) [Block 3544 Lots 25, and 43] Claimants, The City of New York, Condemnor.

BayCrest Manor Inc., (Fee Claimants for Damage Parcels 9 and 10) [Block 3544 Lots 25, and 43], Claimants

v.The City of New York, Condemnor.

No. 4013/06.

Supreme Court, Richmond County, New York.

Dec. 1, 2014.

Zachary W. Carter, Corporation Counsel of the City of New York, New York, for City.

Goldstein Rikon & Rikon and Houghton, LLP, New York, for Claimants.

Opinion

WAYNE P. SAITTA, J.

At issue in this condemnation proceeding is the just compensation to be awarded to claimant BAYCREST MANOR INC., for the taking of the subject property, located on Staten Island (Block 3544 Lots 25, and 43). The Condemnor, THE CITY OF NEW YORK, took title to the property on November 3, 2006 (the vesting date). The court viewed the property on October 3, 2013, and a non-jury trial was held on October 7–9, 2013.

The City acquired the subject property for use as part of the CITY's New Creek Bluebelt Phase 3 project. The property consists of two irregularly shaped lots located in the Dongan Hills Section of Staten Island totaling 7,087 square feet. Lot 25 (Damage Parcel 9) fronts on Zoe Street and is 3,313 square feet in size. Lot 43 (Damage Parcel 10) is a contiguous lot, located to the rear of lot 24 and is 3,774 square feet in size. Lot 43 fronts on Cletus Street, a mapped but unbuilt street. Both lots were owned by Claimant at the time of vesting and are treated as a single lot for purposes of valuing the property.

Most of the area of both lots are designated wetlands and the remainder of the lots are wetlands adjacent uplands. The subject property was regulated as wetlands on the vesting date.

Both parties agree that because of the wetlands regulations, the owners of the property would not be able to obtain a permit to develop the lots. They also both agree that the highest and best use of the lot, as regulated, is vacant.

The first issue which the Court must determine is whether the restrictions on the lots imposed by the State's Wetlands regulations constituted a regulatory taking.

A property restricted by wetlands regulations is valued as restricted unless the Claimant can demonstrate that there is a reasonable probability that the wetlands regulations would be held to be a regulatory taking. If so, Claimant is entitled to an increment above the regulated value, representing an additional amount a reasonable buyer would pay for the probability of a successful judicial determination that the regulations were confiscatory. Chase Manhattan Bank v. State of New York, 103 A.D.2d 211, 479 N.Y.S.2d 983 (2nd Dept.1984) ; Berwick v. State of New York, 107 A.D.2d 79, 486 N.Y.S.2d 260, (2nd Dept.1985) ; Matter of City of New York, Staten Island Bluebelt Phase 2 (Fink) Index 4012/04 (Su. Ct. Kings 2007).

It is the Claimant's burden to establish that there is a reasonable probability that the regulations would be found to constitute a taking. de St. Aubin v. Flacke, 68 N.Y.2d 66 (1986) ; Adrian v. Town of Yorktown, 83 AD3d 746, 920 N.Y.S.2d 411, (2nd Dept.2011).

To show a reasonable probability that a constitutional challenge to the wetland regulations would succeed, a claimant must demonstrate that the regulations render their property unsuitable for any economic or private use, and destroy all but a bare residue of its value. Spears v. Bearle 48 N.Y.2d 254 (1979), de St. Aubin v. Flacke, 68 N.Y.2d 66 (1986) ; Chase Manhattan Bank v. State of New York, 103 A.D.2d 211, 479 NYS 983 (2nd Dept.1984).

In the present case, the wetlands regulations preclude any development of the property or any use other than leaving it vacant. The question remains however, whether this has destroyed all but a bare residue of the value of the property.

While the fact that the regulations may prohibit any development or economic use of a property may most frequently mean that the regulations have destroyed all or all but a residue of the property's economic value, such is not always the case.

The value of a property as a speculative investment is properly considered in valuing a property in a condemnation proceeding. Florida Rock Industries Inc., v. U.S., 18 F3d 1560, (Ct of App, Fed Cir, 1994). There is a history on Staten Island of sales of wetlands properties which cannot be developed, either on the expectation that the restrictions may eventually be waived or modified, or on the expectation that the buyer may be able sell the property at a profit. Matter of City of New York (Grantwood Retention Basin), 33 Misc.3d 586, 929 N.Y.S.2d 478 (Su. Richmond Co.2011)

In this case, both sides have presented comparable sales of Staten Island wetland properties that were similarly restricted so as to prohibit any development. The CITY's appraiser valued the subject lots, as restricted, at $8 a square foot or $57,000 in total. Claimant's appraiser valued the subject lots, as restricted, at $12 a square foot or $85,000 in total.

However, the fact that the property has more than nominal value as a speculative investment does not mean that the regulations do not constitute a regulatory taking. The question remains whether the speculative value of the property, as regulated, is more than a bare residue of the property's value as unregulated.

A regulation constitutes a taking per se, only in the extraordinary circumstance where no productive or economically beneficial use of land is permitted. Lucas v. South Car. Coastal Council, 505 U.S. at 1014, 112 S.Ct. 2886 (1992) ; Tahoe–Sierra Pres. Council, Inc. v. Tahoe Reg'l. Planning Agency, 535 U.S. 302, 122 S.Ct. 1465, (2002).

However, even if the regulations do not eliminate all of the economic value of a property, they may constitute a taking under the doctrine set forth by the United States Supreme Court in Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646 (1978).

This analysis is an “essentially ad hoc, factual inquiry,” in which the court considers: (1) “[t]he economic impact of the regulation on the claimant,” (2) “the extent to which the regulation has interfered with distinct investment-backed expectations,” and (3) “the character of the governmental action.” Id at, 124.

The second factor in the Penn Central analysis, is whether the property owner had investment backed expectations that were blocked by the regulations. In this case, Joseph Barocas, Secretary of Claimant testified that Claimant purchased the subject property in the early 1970's before the wetland regulations were enacted. Barocas testified that he was a developer and builder of apartments and homes, and that in 1962 he purchased a larger parcel of land that bordered on the subject lots. Claimant subsequently purchased the lots that are the subject of this proceeding, to join with the parcel it owned on the block, in order to produce a more rectangular shaped property, as part of plans it had to develop a 250 condominium project called Seaver Village.

Barocas testified that Claimant took no action to develop the property until the 1970's when it filed plans to develop the site. He testified that the application was denied because New York State had issued a moratorium on wetland development. Claimant filed a Petition for a Moratorium permit for the Alteration of Tidal Wetland” on or about May 30, 1975. Barocas testified that the petition was denied and Claimant was never able to get a permit to develop the proposed condominiums. Barocas also testified that the Claimant lost the larger parcel (but not the subject properties) in a foreclosure action prior to the vesting date.

Barocas' testimony, together with his petition for a moratorium permit, establish that he had reasonable investment backed expectations to develop the property which were prevented by the wetland regulations.

The third factor discussed in Penn Central is the character of the governmental action. The inquiry into the character of the regulation looks to whether it amounts to a physical invasion, or instead, merely affects property interests. Lingle v. Chevron USA Inc., 544 U.S. 528, 125 S.Ct. 2074 (2005).

Also considered as part of the character of the regulation, is the concept of “reciprocity of advantage” that is, whether the regulation is part of a more general regulatory scheme that provides some benefit to the restricted property owner, such as in the case of a comprehensive zoning plan. While the benefits to the property owner do not have to equal the benefits gained by other property owners, where a regulation singles out a particular property with a disproportionate burden, there is no reciprocity of advantage, which is indicative of a taking. Penn Central at 438 U.S. at 133–135.

The wetland regulations herein are not part of a comprehensive plan that affects all property owners. While the regulations do provide a general public benefit, their burden falls on a limited group of property owners: the owners of wetlands.

Further, the burden falls disproportionately on owners of properties such as Claimants' which are largely wetlands, as opposed to wetland adjacent properties. Significantly, in terms of evaluating the character of the regulations, the regulations as they affect the property in this case prohibit all development. They do not allow the Claimants any alternative uses that would provide an economic return.

The first factor in the Penn Central analysis, the economic impact of the regulations, is the most involved. In evaluating the economic impact of a regulation in a takings case, the court must compare the value that has been taken from the property with the value...