Matter of 49 Wb, LLC v. Village of Haverstraw

• Decision Date: 19 June 2007
• Docket Number: 2006-00605.
• Citation: 2007 NY Slip Op 05506,44 A.D.3d 226,839 N.Y.S.2d 127
• Parties: In the Matter of 49 WB, LLC, Petitioner, v. VILLAGE OF HAVERSTRAW et al., Respondents.
• Court: New York Supreme Court — Appellate Division

44 A.D.3d 226

839 N.Y.S.2d 127

2007 NY Slip Op 05506

In the Matter of 49 WB, LLC, Petitioner, v. VILLAGE OF HAVERSTRAW et al., Respondents.

2006-00605.

Appellate Division of the Supreme Court of the State of New York, Second Department.

June 19, 2007.

Feerick Lynch MacCartney PLLC, South Nyack (J. David MacCartney of counsel), for petitioner.

Watkins & Watkins, LLP, White Plains (John E. Watkins, Jr., and Liane V. Watkins of counsel), for respondents.

OPINION OF THE COURT

DILLON, J.

The decision of the United States Supreme Court in Kelo v New London (545 US 469 [2005]) has reshaped, in certain respects, the concept of eminent domain. For the first time, the Supreme Court held that a municipality's taking of nonblighted private property by eminent domain, in furtherance of a plan for economic development that would be open for use by the general public, constitutes a permissible "public use" within the meaning of the Fifth Amendment of the Federal Constitution (id. at 487-490). The five-judge majority in Kelo emphasized that nothing in its decision prevented states from placing restrictions upon the exercise of eminent domain specifically through state statutes or constitutional interpretations as to what qualifies as a "public use." Kelo was controversial at the time of its issuance,¹ as it granted municipalities greater license to interpret the "public use" of its takings, subject to superior state law. Eminent domain may now represent a growth industry for litigation over the purported public uses which have formed the basis for takings of private property.

The instant petition may represent one of the earliest post-Kelo litigations in the State of New York. The issues are threefold and all appear to be, for us, questions of first impression: (1) regarding the timeliness of a petition seeking judicial review of a municipal determination and findings, whether the date from which the statute of limitations is measured runs from the minimum second date of publication of the determination and findings, as required by EDPL 204 (A), or from the completion of additional publications beyond the minimum under EDPL 207 (A); (2) assuming a timely petition, whether the municipal condemnor here exercised its eminent domain authority over private property in furtherance of a "public use" (EDPL 207 [C] [4]), or as a mere pretext conferring a private benefit; and (3) whether the petitioner is entitled to an award of attorneys' fees, costs, and disbursements under EDPL 702 (B) if the condemnor's determination and findings are rejected by the reviewing court.

For reasons set forth below, we find that the petition in this instance was timely filed within the applicable statute of limitations. We also find that a condemnation of property should be judicially rejected where, as here, its ostensible purpose of providing affordable housing was a pretext to benefit private entities resulting in the creation of less affordable housing than if there had been no taking of property at all, and the taking does not rationally relate to any other public purpose. Finally, we find that under EDPL 702 (B), the petitioner is not entitled to an award of legal fees, costs, and disbursements absent the condemnor's commencement or abandonment of proceedings under EDPL articles 4 through 6 to acquire vested title.

I. Relevant Facts

The Graziosi Building is a two-story building located in Rockland County at 49 West Broad Street in the Village of Haverstraw. At the time the petition was brought, the building consisted of a dental office on the first floor and vacant offices on the second floor. In July 1999, Ginsburg Development Company, Harbors Haverstraw, LLC, and related entities (hereinafter collectively referred to as Ginsburg), informally proposed to develop the downtown Haverstraw Hudson River waterfront through a "public/private redevelopment project." Thereafter, on April 9, 2002, the respondent Village of Haverstraw, through its Board of Trustees (hereinafter collectively the Village), adopted a resolution requiring Ginsburg to develop 40 affordable housing units within the waterfront development district, and to identify, rehabilitate, or construct approximately 85 additional scattered-site units that would provide affordable housing incidental to the revitalization of the downtown waterfront.

Graziosi Realty, LLC, which owned the Graziosi Building, had listed the property for sale in 1999. Efforts to sell the property to Louis Wu in 2004 and to Housing Opportunity for Growth, Advancement and Revitalization, Inc. (hereinafter HOGAR), in 2005 were unsuccessful. The Graziosi Building was sold to the petitioner, 49 WB, LLC (hereinafter 49 WB), pursuant to a written contract dated April 28, 2005, with title passing to 49 WB on June 27, 2005.

HOGAR is the Village's designated affordable housing and neighborhood preservation not-for-profit organization, and is also a tenant of the Graziosi Building. While HOGAR, during its tenancy at the Graziosi Building, had always intended to purchase and develop the property, HOGAR could not meet the financing requirements of various proposed purchase contracts.

Eleven days after 49 WB's purchase of the Graziosi Building, the Village published notice of a public hearing on its proposed acquisition of the property through eminent domain. Public hearings were conducted on four dates between July 25, 2005, and September 19, 2005. In addition to comments on the proposed acquisition by various members of the public, the hearing focused on two competing proposals for the development of the Graziosi Building. HOGAR proposed to add a third floor to the building and construct 16 residential condominiums on the second and third floors, to be sold to village residents and volunteers for between $175,000 and $220,000. The Village entertained HOGAR's proposal on condition that HOGAR would completely finance the acquisition of the Graziosi Building for the Village, and according to HOGAR, its financing was in place by the time of the public hearings.

The second competing proposal was from 49 WB as the owner of the Graziosi Building. 49 WB offered to provide six to eight affordable housing units on two additional floors to be constructed. The units would be rented to municipal employees and volunteers at 50% of the market rent so that the remaining 50% could be applied toward the tenants' future home purchases in the village. 49 WB also promised HOGAR a long-term lease for its offices at the Graziosi Building. 49 WB argued that HOGAR's proposal of selling condominiums was a "one shot deal" as compared with 49 WB's rolling rentals that would enable more persons over time to "launch into the next phase of home ownership."

There were no adverse environmental impacts from the proposed development and the Village issued a negative declaration pursuant to the State Environmental Quality Review Act (ECL art 8 [SEQRA]). The Village passed a resolution on November 29, 2005, adopting its determination and findings, authorizing and directing its counsel to take whatever steps were necessary to acquire the Graziosi Building by gift, purchase, or condemnation. The Village found condemnation appropriate to effect the public purpose of providing a centrally-located health care center and affordable housing, as well as suitable office space for HOGAR.

II. Statute of Limitations

Legal notice of the determination and findings was prepared and dated December 12, 2005, and published in the Journal News on five consecutive dates, December 15, 2005, through December 19, 2005. The legal notice advised that pursuant to EDPL 207, "there [were] thirty days from the completion of the condemner's newspaper publication requirement to seek judicial review of the condemner's determination and findings."

49 WB sought judicial review of the Village's determination and findings pursuant to EDPL 207 by the filing of a petition on January 18, 2006. The petition alleges that the condemnation proceeding did not conform to federal or state constitutional mandates; that the acquisition was not within the condemnor's statutory jurisdiction; that the acquisition violated SEQRA; and that the acquisition did not achieve a public use, benefit, or purpose. The Village's answer denied the material allegations of the petition and asserted, inter alia, a defense that the petition was filed beyond the applicable statute of limitations.

The EDPL provides a right of judicial review, directly to the Appellate Division of the department in which the property is located, for persons aggrieved by a determination and findings that authorize a condemnation. The merits of the petition in this instance are not reached unless the petition is timely (accord Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540, 548 [2006]; see Matter of Turner v State of N.Y. Dept. of Transp., 97 AD2d 628 [1983]). A 30-day statute of limitations is imposed by EDPL 207 (A) (see Matter of City of New York [Grand Lafayette Props. LLC], supra at 546; Steel Los III, LP v Power Auth. of State of N.Y., 33 AD3d 990 [2006]), measured from "the condemnor's completion of its publication of its determination and findings pursuant to [EDPL 204]." EDPL 204 (A) requires, in turn, that the condemnor publish its determination and findings, including a brief synopsis thereof, "in at least two successive issues of an official newspaper if there is one ... and in at least two successive issues of a newspaper of general circulation."² The publication must occur within 90 days from the conclusion of the condemnor's public hearings (see EDPL 204 [A]; Matter of Legal Aid Socy. of Schenectady County v City of Schenectady, 78 AD2d 933, 934 [1980]).

While EDPL 204 (A) requires publication of the determination and findings in at least two successive issues, the publication in this matter appeared for five successive days, from December 15, 2005, to December 19, 2005.³

The Village and...