Wein v. Beame

• Court: New York Court of Appeals
• Writing for the Court: GABRIELLI; BREITEL
• Citation: 372 N.E.2d 300,43 N.Y.2d 326,401 N.Y.S.2d 458
• Decision Date: 15 December 1977
• Parties: , 372 N.E.2d 300 Leon E. WEIN, Appellant, v. Abraham D. BEAME, as Mayor of the City of New York, et al., Respondents.

Page 458

401 N.Y.S.2d 458 43 N.Y.2d 326, 372 N.E.2d 300 Leon E. WEIN, Appellant,
v.
Abraham D. BEAME, as Mayor of the City of New York, et al.,
Respondents. Court of Appeals of New York. Dec. 15, 1977.

Page 459

William J. Quirk, Brooklyn, for appellant and Leon Edward Wein, appellant pro se.

W. Bernard Richland, Corporation Counsel, New York City (Leonard Koerner, L. Kevin Sheridan and Mark A. Levine, New York City, of counsel), for respondents.

OPINION OF THE COURT

GABRIELLI, Judge.

In this case, we are called upon to determine whether the plan by the City of New York and the Urban Development Corporation (UDC) to revitalize a section of midtown New York, to stem the decay of the area and to provide for the renovation of the Commodore Hotel constitutes a violation of the proscriptions against special tax exemptions and the contracting away of the power to tax which are contained in section 1 of article XVI of the New York State Constitution. Plaintiff appeals from an order of the Appellate Division, First Department, which affirmed a judgment of Supreme Court, New York County, granting defendant summary judgment and sustaining the constitutionality of the challenged plan to save the Commodore Hotel. We hold that the plan is not in violation of the Constitution, and therefore affirm the order appealed from.

The Commodore Hotel, owned by a subsidiary of the insolvent Penn Central Transportation Company, has itself fallen on evil times. The building, located near Grand Central Terminal in the very heart of the city, has deteriorated so greatly that it has been closed, and it is well on its way to becoming yet another boarded-up illustration of the grim realities of urban decay. Tax arrears on the building, including interest and penalties, amount to over 10 million dollars, and the possibilities of the city's recovering the arrears from Penn Central in the foreseeable future are problematic at best. Indeed, due to certain protective orders of the bankruptcy court, the city is precluded from foreclosing during the pendency of the bankruptcy proceedings, which may well prove to be of long duration; and even, in fact, were the city to foreclose on the premises, there would apparently be considerable difficulty in obtaining a purchaser willing to pay an amount commensurate with the tax arrearages alone. Penn Central itself is obviously in no position to

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renovate the hotel, and unless some action be taken, the building will simply disintegrate altogether, thus further contributing to the urban blight against which both the city and the State are struggling. ¹ It appears that the cost of repairs are such that rehabilitation is not economically feasible unless accompanied by some form of relief until the building begins to operate economically and the expenses of renovation can be recouped.

Faced with this problem, the city, UDC, Penn Central, and a private developer, Wembley Realty, Inc. (Wembley), formulated a complex plan which is intended to result in the reconstruction of the hotel by Wembley and ultimately restore it as a functionally integrated part of the business community of the city. It is hoped that this will have a beneficial effect on the midtown area as a whole, and will encourage continuing private investments in the area. Stripped to its essentials, the plan is as follows: Wembley will purchase the hotel from Penn Central for 10 million dollars; ² Wembley will then sell the building for one dollar to UDC; the purchase of the building by UDC will exempt the hotel from city taxes, pursuant to section 22 of the Urban Development Corporation Act (L. 1968, ch. 174, § 22); the city will waive its right under section 26 of the act (L. 1970, ch. 1041) for reimbursement from the...