Wein v. Beame

Decision Date15 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.
CourtNew York Court of Appeals Court of Appeals
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 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 State for an amount equal to the taxes it would have assessed against the building had UDC not purchased it; UDC will then lease the building back to Wembley under a 99-year lease; the rental will be payable to the city rather than to UDC; for the first 40 years of the lease, the rent will be less than the taxes which could otherwise be assessed, whereas for the remainder of the lease the rental will be equal to the taxes; and, at the termination of the lease, title to the property will vest in the City of New York.

Following the acceptance of this plan by the city council, plaintiff commenced this action, seeking a judgment declaring the scheme to be in violation of section 1 of article XVI of our Constitution, which provides in pertinent part that "(t)he power of taxation shall never be surrendered, suspended or contracted away * * * Exemptions from taxation may be granted only by general laws." Plaintiff contends that the effect, and indeed the sole purpose of the plan is to grant the hotel a special tax exemption in violation of this explicit constitutional provision.

In proffering this argument, plaintiff is, of course, presented with an insurmountable obstacle in the fact that the property will obtain tax exempt status not by any claimed or alleged invalid legislation enacted by the city council, but rather by virtue of the purchase of the hotel by the UDC. Plaintiff seeks to overcome this...

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19 cases
  • Hotel Dorset Co. v. Trust for Cultural Resources of City of New York
    • United States
    • New York Court of Appeals Court of Appeals
    • December 27, 1978
    ...reconstruction of the Commodore Hotel, this court, in a unanimous decision, could find no unconstitutionality (Wein v. Beame, 43 N.Y.2d 326, 401 N.Y.S.2d 458, 372 N.E.2d 300). There, all the property would be run for profit. Wembley would purchase the hotel from Penn Central for 10 million ......
  • Watkins v. New York State Ethics Com'n
    • United States
    • New York Supreme Court
    • March 21, 1990
    ...heavy burden of demonstrating unconstitutionality beyond a reasonable doubt rests upon the one who claims it. Wein v. Beame, 43 N.Y.2d 326, 331, 401 N.Y.S.2d 458, 372 N.E.2d 300; Hotel Dorset Co. v. Trust for Cultural Resources of New York, 46 N.Y.2d 358, 413 N.Y.S.2d 357, 385 N.E.2d 1284. ......
  • Oelbermann Associates Ltd. Partnership v. Borov
    • United States
    • New York City Court
    • November 15, 1988
    ...for Cultural Resources of City of New York, supra, 46 N.Y.2d at 373, 413 N.Y.S.2d 357, 385 N.E.2d 1284; cf. Wein v. Beame, 43 N.Y.2d 326, 331, 401 N.Y.S.2d 458, 372 N.E.2d 300). The majority noted that the cases such as Matter of Mayor of City of NY [Elm St.], supra, finding laws to be "spe......
  • Burns v. Egan
    • United States
    • New York Supreme Court
    • July 1, 1985
    ...recognized in the area of public financing and can only be overcome by a clear showing of unconstitutionality (Wein v. Beame, 43 N.Y.2d 326, 331, 401 N.Y.S.2d 458, 372 N.E.2d 300). Plaintiffs must clearly demonstrate that the Prison Construction Act creates a State long-term debt without vo......
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