Gazza v. New York State Dept. of Environmental Conservation

• Decision Date: 04 December 1995
• Citation: 217 A.D.2d 202,634 N.Y.S.2d 740
• Parties: In the Matter of Joseph F. GAZZA, Appellant, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 740

634 N.Y.S.2d 740

217 A.D.2d 202

In the Matter of Joseph F. GAZZA, Appellant, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Respondent.

Supreme Court, Appellate Division,

Second Department.

Dec. 4, 1995.

Esseks, Hefter & Angel, Riverhead (Stephen R. Angel and John M. Wagner, of counsel), for appellant.

Dennis C. Vacco, Attorney-General, New York City (Maria Semidei-Otero and Leslie Allen, of counsel), for respondent.

Before BRACKEN, J.P., and SULLIVAN, FRIEDMANN and KRAUSMAN, JJ.

FRIEDMANN, Justice.

On this appeal, we must determine whether a landowner who purchased property with the full knowledge that it had been designated protected tidal wetlands can claim that a regulatory taking occurred when he was denied a building permit for a residence. We conclude that where, as here, a landowner does not have a reasonable investment-backed expectation that he would be able to build a residence on his parcel, he cannot claim a regulatory taking when his application for a permit to allow the construction of a building is denied.

I

This is a proceeding pursuant to ECL 25-0404 to review the denial of a permit to allow the construction of a building to the petitioner, Joseph F. Gazza, by the respondent, the New York State Department of Environmental Conservation. The petitioner purchased the subject parcel for $100,000 on November 29, 1989. Of the purchase price, $90,000 was used to discharge a tax lien that had been placed on the property by the Internal Revenue Service. The parcel is located on the north side of Dune Road in the Village of Quogue, Suffolk County. The northerly side of the parcel fronts on the Quogue Canal.

At the time of the petitioner's purchase, approximately 65 percent of the in-excess-of-47,000-square-foot parcel had been inventoried as tidal wetlands by the respondent (see, ECL 25-0101 et seq.). These wetlands had first been inventoried in or about 1977. Some amendments to the designated wetlands on the parcel were made in 1981. The respondent's power to expand the inventoried wetlands on the subject parcel by the filing of an amended map was sustained by this court (see, Matter of Thompson v. Department of Envtl. Conservation of the State of N.Y., 132 A.D.2d 665, 518 N.Y.S.2d 36, affg.130 Misc.2d 123, 495 N.Y.S.2d 107).

Several months prior to the petitioner's purchase of the property, he submitted to the respondent an application to construct a single-family home on the parcel. As part of this application, the petitioner requested variances from the two setback requirements contained in the respondent's regulations. The first variance request was from the minimum 75-foot setback required between the tidal wetland boundary and the dwelling (see, 6 NYCRR 661.6[a][1] ). The second variance request was from the 100-foot setback required between the tidal wetland boundary and the septic system (see, 6 NYCRR 661.6[a][2] ).

The matter was heard by an Administrative Law Judge (hereinafter ALJ) who recommended that the application be denied. In her report, the ALJ concluded that:

"A preponderance of the evidence indicates that the proposed Project would cause undue adverse impacts on the wetlands' value for marine food production, wildlife habitat, flood, hurricane, and storm control, absorption of silts and other organic material, and cleansing of the ecosystem * * * The proposed Project would eliminate one of the few remaining pristine and undeveloped wetlands in an otherwise developed area".

The ALJ therefore denied the application for a permit. However, the ALJ also recommended that at the petitioner's option, "since no party is in opposition, a permit for a dock, catwalk, and small parking lot may be issued".

The recommendation was adopted by the Commissioner of the Department of Environmental Conservation (hereinafter the DEC) on January 16, 1992. In a subsequent letter, the DEC, by one of its attorneys, informed the petitioner that it would permit the construction of a parking area, single catwalk, and single dock of 20 feet on the property. The DEC would also permit either the placement of a mobile home "with self contained septic" on the site or the placement of a 100-square-foot shed for storage and mechanical systems that could be used for the mooring of a single family houseboat.

II

A

On or about February 10, 1992, the petitioner commenced the instant proceeding under ECL 25-0404, asserting that the respondent's denial of a building permit constituted a taking of his real property without compensation (see, ECL 25-0404).

At the hearing before the Supreme Court, the petitioner's appraiser, James R. McLauchlen, testified that assuming that a residence could be constructed thereon, the parcel was worth $396,000. McLauchlen used the direct sales comparison approach to derive this value. All of the 12 comparables that McLauchlen used were partially comprised of tidal wetlands. However, only two were comprised of from 65% to 70% of tidal wetlands (i.e., as is the subject parcel).

No adjustment was made to any of the comparables to reflect the fact that a wetlands permit was required before there could be construction on the subject parcel. In other words, McLauchlen assumed that the subject parcel could be sold in the marketplace unencumbered by any wetland restriction. In McLauchlen's words, his "assignment was based upon the assumption that there would be a minimum house or the ability to have a minimum house constructed on the property".

In contrast, the respondent's appraiser, Patrick A. Given, testified that at the time the petitioner purchased the parcel, it was worth approximately $80,000. One of the crucial assumptions made by the respondent's appraiser was that "a knowledgeable buyer would recognize that this property was not going to be readily buildable, that it would be speculative at best at that time". He therefore assumed that the highest and best use of the property would be for recreational use. It would be an attractive site for a houseboat or mobile home of some kind.

Mr. Given utilized the direct sales comparison approach, relying on four comparable sales which he believed were "similar to the subject [parcel] in that, number one * * * they were [not] readily buildable for a single family residence and [number two], they had a highest and best use similar to the subject [parcel], that is: For a recreational use * * * water access".

B

At the hearing before the Supreme Court, the petitioner attempted to establish that it would be impossible for him to construct a dock on the property because he would not be able to obtain the requisite permits from the local governmental entities. In this regard, Roy L. Haje, an "environmental consultant", testified.

Haje's firm obtains permits for people who wish to install docks or bulkheads, or do dredging or similar work. He testified that it would be unlikely that the Southampton Trustees would grant a building permit for the construction of a dock within the Quogue Canal abutting the petitioner's property. In a similar vein, Stanton J. Pohl, an attorney, concluded that it would be "highly unlikely" that the Zoning Board of Appeals of the Village of Quogue would grant a variance for the construction of a dock. In essence, to grant a variance for a dock on a parcel where there is no residence would be to permit a commercial activity in a residential zone. Pohl explained that the Zoning Board would be reluctant to do this.

Testifying for the respondent on this issue was Richard E. DePetris, an attorney who had represented the Zoning Board of Appeals of the Village of Quogue in connection with a variance application that the petitioner had made with respect to the construction of the proposed residence, which was subsequently withdrawn.

DePetris indicated that there was a strong possibility that the variances required for the off-street parking and the catwalk would be granted. He also indicated that the variance necessary for the dock would also be granted. DePetris explained that the denial of the wetlands permit was a "significant factor to be considered" in this regard, because

"One of the criteria to be considered under established case law and statutory law on a use variance is whether a reasonable return can be made from any permitted use. So if a property is eligible for erection of a one-family dwelling * * * it would be very difficult for an applicant to be able to prove that he can't make a reasonable return from a permitted use * * * therefore, it is only an unusual fact situation * * * that the Board would ever seriously consider such an application.

"Q. And in your opinion, the denial of the DEC Permit for the construction of a dwelling and sanitary system could constitute such an unusual circumstance, is that your opinion?

"A. That is correct * * * if the applicant cannot erect a one-family dwelling on his lot, that is a relevant factor in showing whether or not the applicant can make a reasonable return from the permitted use, one family dwelling".

C

The petitioner also testified at the hearing, stating that he paid $100,000 cash for the property. Of this, $90,000 was earmarked to discharge an I.R.S. tax lien of the prior owner.

The petitioner is an attorney who owns 50 rental properties, as well as commercial, industrial, and office buildings. He has extensive experience constructing houses in the Quogue/Southampton area.

The petitioner acknowledged that since 1990, each year he has successfully petitioned the Village of Quogue and the Town of Southampton for a reduction in the real estate taxes on the subject parcel. The basis for his applications is that his property "had wetlands on it and that should be taken into consideration in the taxing of this property".

He also acknowledged that, at the time of his purchase, he was aware that the bulk of the subject parcel had been inventoried as tidal wetlands. He was also aware that there had been prior litigation...