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THE CONDEMNATION OF PROPERTY WAS NOT SUPPORTED BY A DEMONSTRATION OF URBAN BLIGHT OR ANY OTHER PUBLIC PURPOSE; THE SEQRA NEGATIVE DECLARATION WAS NOT SUPPORTED (SECOND DEPT).

The Second Department, annulling the determination of the City of White Plains Urban Renewal Agency, held that the agency did not demonstrate the condemnation of the petitioners’ proper served a public purpose. The condemnation was founded on a 25-year-old study which found the area was affected by “urban blight.” The court noted that the State Environmental Quality Review Act (SEQRA) negative declaration by the agency did not identify the areas of environmental concern and the agency did not take a hard look at them:

… [T]he remediation of substandard or insanitary conditions (i.e., urban blight) is a proper basis for the exercise of the power of eminent domain … . Here, however, the agency relies only on conclusory assertions of blight based upon a 25-year-old urban renewal plan which itself lacks detail or documentation. …

Where a condemning authority does not demonstrate that property is substandard for the purpose of urban renewal, the authority must identify some public purpose other than the purported remediation of blight … . While a condemning authority may select virtually any project which “contributes to the health, safety, general welfare, convenience, or prosperity of the community” … , this broad discretion does not relieve the authority from selecting a particular project and, where demanded by the property owner, submitting that project to judicial scrutiny. Matter of Gabe Realty Corp. v City of White Plains Urban Renewal Agency, 2021 NY Slip Op 04134, Second Dept 6-30-21

 

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THE CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY ISSUED BY THE FEDERAL ENERGY REGULATORY COMMISSION (FERC) EXEMPTED THE GAS PIPELINE COMPANY FROM ANY REVIEW REQUIREMENTS OF THE EMINENT DOMAIN PROCEDURE LAW (EDPL); THE COMPANY WAS FREE TO EXERCISE EMINENT DOMAIN OF THE LAND IN DISPUTE (CT APP).

The Court of Appeals, reversing the Appellate Division, in a full-fledged opinion by Judge Stein, over a two-judge dissent, determined that the certificate of public convenience and necessity issued to petitioner, National Fuel Gas Supply, for construction of a gas pipeline, exempted National Fuel from any requirements of the Eminent Domain Procedure Law (EDPL). Therefore National Fuel did not need to comply with the notice and hearing requirements of the EDPL before exercising eminent domain of the land in dispute:

In 2017, the Federal Energy Regulatory Commission issued a certificate of public convenience and necessity to petitioner National Fuel Gas Supply for its proposed construction of a 99-mile natural gas pipeline spanning from Pennsylvania to Western New York. … [t]his certificate …—which did not condition National Fuel’s eminent domain power on receipt of a water quality certification and which remained valid and operative at all relevant times despite the New York State Department of Environmental Conservation’s intervening denial of National Fuel’s application for such a certification—exempted National Fuel from the public notice and hearing provisions of article 2 of the Eminent Domain Procedure Law (EDPL) in accordance with EDPL 206 (A). …

The question before us distills to whether the certificate of public convenience and necessity issued by the Federal Energy Regulatory Commission (FERC) to National Fuel satisfies EDPL 206 (A) so as to entitle National Fuel to exercise eminent domain over the land in dispute without undertaking additional review of the pipeline’s public benefit. If satisfied, EDPL 206 (A) excuses compliance with various provisions of EDPL article 2 where a proposed condemnor has successfully completed a review of the project’s public benefit and use before a state, federal, or local agency. * * *

… [W]here, as here, a gas company holds a valid certificate of public convenience or necessity from FERC for the proposed construction of a pipeline and that certificate places no relevant conditions on the eminent domain power and has not been stayed or revoked by FERC or a federal court properly reviewing its issuance, compliance with article 2 is excused under EDPL 206 (A). Matter of National Fuel Gas Supply Corp. v Schueckler, 2020 NY Slip Op 03563, CtApp 6-25-20

SUMMARY OF THE FOURTH DEPARTMENT DECISION REVERSED BY THE COURT OF APPEALS ON JUNE 25, 2020

ALTHOUGH THE FEDERAL ENERGY REGULATORY COMMISSION (FERC) APPROVED THE GAS PIPELINE, THE STATE DID NOT ISSUE A WATER QUALITY CERTIFICATION (WQC) FOR THE PROJECT, THEREFORE THE PIPELINE COMPANY CAN NOT SEEK EASEMENTS OVER PRIVATE LAND PURSUANT TO THE EMINENT DOMAIN PROCEDURE LAW (EDPL) TO INSTALL THE PIPELINE (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice NeMoyer, over a two-justice dissent, considering a matter of first impression, reversing Supreme Court, determined that a gas supply company could not acquire easements over private property by eminent domain for the installation of a pipeline for which the state denied a permit:

In February 2017, the FERC [Federal Energy Regulatory Commission] granted petitioner’s application for a certificate of public convenience and necessity to construct and operate a 97-mile natural gas pipeline from Pennsylvania into western New York. The pipeline’s proposed route travels directly across respondents’ land … . Within the voluminous certificate, the FERC found that petitioner’s “proposed [pipeline] project is consistent with the Certificate Policy Statement,” i.e., the public interest. “Based on this finding and the environmental review for the proposed project,” the FERC further found “that the public convenience and necessity require approval and certification of the project.” …

… [T]he New York State Department of Environmental Conservation (DEC) denied petitioner’s application for a WQC [water quality certification]. The WQC application, held the DEC, “fails to demonstrate compliance with New York State water quality standards.” Petitioner has taken various steps to challenge the WQC denial, including the filing of a petition for judicial review in the Second Circuit pursuant to 15 USC § 717r (d). It appears that those challenges have not yet been finally resolved. It is undisputed, however, that if the WQC denial is ultimately upheld, the pipeline cannot be built … . * * *

… [P]etitioner is trying to expropriate respondents’ land in furtherance of a pipeline project that, as things currently stand, cannot legally be built. Such an effort turns the entire concept of eminent domain on its head. If the State’s WQC denial is finally annulled or withdrawn, then petitioner can file a new vesting petition. But until that time, petitioner cannot commence a vesting proceeding to force a sale without going through the entire EDPL [Eminent Domain Procedure Law] article 2 process. Matter of National Fuel Gas Supply Corp. v Schueckler, 2018 NY Slip Op 07550, Fourth Dept 11-9-18

 

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LOCAL LAW PROHIBITING SHORT-TERM RENTAL OF PROPERTIES WHERE THE OWNER DOES NOT RESIDE IS NOT UNCONSTITUTIONAL AS A REGULATORY TAKING (FOURTH DEPT).

The Fourth Department determined plaintiff’s constitutional attack on a Local Law which prohibited short-term rental of properties where the owner did not reside did not constitute a regulatory taking of the property:

In 2012, petitioner-plaintiff (plaintiff) purchased a single-family residence (subject premises) located in respondent-defendant Town of Grand Island (Town) for the purpose of renting it out on a short-term basis, i.e., for periods of less than 30 days. Plaintiff never resided at the subject premises. In 2015, the Town enacted Local Law 9 of 2015 (Local Law 9), which amended the Town Zoning Code to prohibit short-term rentals in certain zoning districts, except where the owner also resided on the premises. The Town enacted the law in response to significant adverse impacts to the community that it found were caused by permitting short-term rental of residential properties to occur. Local Law 9 contained a one-year amortization period—which could be extended up to three times upon application—during which preexisting short-term rental properties could cease operation. * * *

… [P]laintiff did not submit evidence establishing that, due to the prohibition under Local Law 9 on short-term rentals, the subject premises was not capable of producing a reasonable return on his investment or that it was not adaptable to other suitable private use. Instead, plaintiff’s submissions showed a “mere diminution in the value of the property, . . . [which] is insufficient to demonstrate a [regulatory] taking” … . Matter of Wallace v Town of Grand Is., 2020 NY Slip Op 03301, Fourth Dept 6-12-20

 

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CLAIMANT WAS ENTITLED TO MORE COMPENSATION FOR THE 3.86 ACRES TAKEN FOR AN AIRPORT RUNWAY AND THE 80.72 ACRES TAKEN FOR AN AVIGATION (RUNWAY APPROACH) EASEMENT; PURSUANT TO THE ISSUES OF CONTIGUITY, UNITY OF USE AND UNITY OF TITLE. THE ENTIRE PARCEL, NOT A SINGLE SMALLER PARCEL, WAS AFFECTED BY THE TAKING (THIRD DEPT).

The Third Department, in a comprehensive decision too detailed to fairly summarize here, determined claimant was entitled to more compensation for 3.86 acres for an airport runway and 80.72 acres for an avigation easement appropriated by the County. The court considered the following issues: (1) the entire 97.48 acres, as opposed to a 12.9 acre portion, was affected by the taking because there was contiguity, unity of use, and unity of title or ownership; (2) the pretaking value of the land; and (3) the diminution of value based on the avigation easement which affected the height of buildings which could be constructed on the easement. With respect to contiguity, unity of use and unity of title, the court wrote:

Contiguity will be found between parcels when they are “adjacent and lack[] any physical boundary . . . [and are] capable of being traversed” … . “A public highway actually traveled . . . running through a large tract devoted to one purpose does not necessarily divide it into independent parcels, provided the owner has the legal right to cross the intervening strip of land” … . Given the adjacent nature of the parcels and that claimant has a 200-foot right-of-way to cross the power line fee, we find that the parcels meet the element of contiguity … .* * *

… [C]laimant’s planned development, which included retail on the southern parcel and a technology park on the northern parcel, was not merely a “prospective use existing only in the mind’s eye of [claimant] or based upon claimant’s history as a developer” … , but rather a bona fide development, planned thoroughly, whose progress was cut short by the condemnation. As such, the evidence has established that the elements of contiguity, unity of use and unity of ownership have been met … . Matter of County of Warren, 2020 NY Slip Op 02217, Third Dept 4-9-20

 

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CONDEMNEE WAS ENTITLED TO ADDITIONAL ALLOWANCES (ATTORNEY’S FEES AND COSTS) BASED UPON THE DIFFERENCE IN COMPENSATION BETWEEN THAT OFFERED BY THE VILLAGE AND THE AWARD BY THE COURT IN THIS EMINENT DOMAIN PROCEEDING; THE STATUTORY INTEREST RATE OF 6%, NOT 9%, SHOULD HAVE BEEN APPLIED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that some of the additional allowances for fees and costs (pursuant to Eminent Domain Procedure Law (EDPL) 701) should not have been granted and the statutory interest rate of 6%, not 9%, should have been applied. The additional allowances were sought based upon because the court awarded more compensation to the condemnees (Ferguson and Executive) than that offered by the condemnor (the Village):

Pursuant to EDPL 701, where a court’s award to a claimant in a condemnation proceeding is “substantially in excess of the amount of the condemnor’s proof” and where the court deems it necessary to “achieve just and adequate compensation,” the court may award the claimant an additional sum for costs including attorneys’ and other fees. The goal of this statute is to ” assure[ ] that a condemnee receives a fair recovery by providing an opportunity for condemnees whose property has been substantially undervalued to recover the costs of litigation establishing the inadequacy of the condemnor’s offer'” … . …

… [T]he Supreme Court’s award of $721,671 exceeded the Village’s advance payment of $575,000. While the difference is not insignificant, we find that it does not substantially exceed the Village’s advance payment within the meaning of EDPL 701 … . …

Although the Village, in effect, concedes that the Supreme Court’s award to Executive of $159,596 substantially exceeded its advance payment of $61,044, it correctly points out that Executive was unsuccessful as to the bulk of its claims for compensation and received an award of 16.4% of the $973,000 it sought. Contrary to the Village’s assertion, since Executive’s attorneys were compensated on a contingent basis, their fees were perforce proportionate to their success. Accordingly, the portion of the additional allowance awarded to Executive representing their fees should not be disturbed … . …

Although the Village, in effect, concedes that the Supreme Court’s award to Executive of $159,596 substantially exceeded its advance payment of $61,044, it correctly points out that Executive was unsuccessful as to the bulk of its claims for compensation and received an award of 16.4% of the $973,000 it sought. Contrary to the Village’s assertion, since Executive’s attorneys were compensated on a contingent basis, their fees were perforce proportionate to their success. Accordingly, the portion of the additional allowance awarded to Executive representing their fees should not be disturbed … . Matter of Village of Haverstraw, 2020 NY Slip Op 01068,  Second Dept 2-13-20

 

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CLAIMANT COULD NOT SEEK COMPENSATION FOR PERIODIC FLOODING OF HIS LOT UNDER THE EMINENT DOMAIN PROCEDURE LAW; THERE WAS NO DE JURE TAKING BY THE CITY, AND THE CRITERIA FOR INVERSE CONDEMNATION WERE NOT MET (FIRST DEPT).

The First Department, reversing Supreme Court, determined claimant’s action for damages based upon the periodic flooding claimant’s lot, over which the city had an easement, should have been dismissed. Claimant alleged the city had appropriated the easement by causing flooding:

… Claimant filed a notice of claim pursuant to Eminent Domain Procedure Law (EDPL) § 503, asserting a claim for appropriation of an easement over its lot. In 2015, claimant alleged for the first time that the bridge construction was causing flooding of its property. In 2017, claimant submitted the appraisal at issue in this appeal, prepared by Cushman & Wakefield, which determined that during a 31-month period from November 2014 through May 2017, claimant’s property and the non-exclusive access easement became flooded after rainfall. It attributed the flooding to a drainage pipe in the access easement area that became blocked by cement during construction of the new bridge. The appraisal provides that subsequent to the discovery of the flooding, claimant leased out its property and received rental income. Claimant’s alleged flooding damages, as set forth in the appraisal, consist of reduced rental income and the inability to develop residential towers on the property. * * *

Because claimant’s property was not subject to a de jure taking by the City, it may not pursue a claim to recover just compensation or consequential damages resulting from the flooding in this eminent domain valuation proceeding … . * * *

“In a modern inverse condemnation action, an owner whose property has been taken de facto may sue the entity that took it to obtain just compensation, and if the action is successful the defendant has no choice in the matter — the compensation must be paid” … .

The claim here for inverse condemnation is legally flawed, since the interference with claimant’s property rights, as set forth in its own appraisal report, is not sufficiently permanent to constitute a de facto taking as a matter of law … . Matter of Willis Ave. Bridge Replacement, 2019 NY Slip Op 08162, First Dept 11-12-19

 

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THE TOWN RESOLUTION ALLOWING THE CONSTRUCTION OF A SEWER LINE ALONG A NATURE TRAIL WAS ANNULLED BY THE 4TH DEPARTMENT, THE TOWN BOARD DID NOT TAKE THE REQUIRED ‘HARD LOOK’ AT THE EFFECTS OF THE SEWER-LINE CONSTRUCTION ON CERTAIN RARE ANIMAL AND PLANT SPECIES, AS WELL AS THE EFFECTS UPON SURFACE WATERS (FOURTH DEPT).

The Fourth Department annulled the determination allowing an easement to install a sewer line along a nature trail. The Fourth Department held that the Town Board did not take the required “hard look” (required by the State Environmental Quality Review Act [SEQRA]) at the effect of the sewer line on certain endangered and rare animal and plant species, as well as the effects on surface water:

… [T]he New York State Department of Environmental Conservation (DEC) made respondent aware that its database indicated the presence of certain endangered, threatened, or rare animal and plant species on the project site. Those species included the northern long-eared bat, the imperial moth, and the northern bog violet. In addition, the database indicated the presence of inland salt marsh. The DEC recommended that respondent conduct a survey of the professional literature and determine whether the project site contains habitats favorable to such species and, if so, that respondent conduct a field survey to determine whether the species are present. The DEC instructed that, if respondent determined that such species are present, modifications should be considered to minimize impact. There is no indication that respondent conducted such a survey. [With the exception of the Indiana bat. the species’] presence was merely noted…, along with the bare conclusion that there would be no significant impact on those species. …

[R]espondent merely set forth general practices for avoiding significant adverse impacts on surface water and stream corridors without providing a reasoned elaboration that, by implementing such practices in this particular project, respondent would successfully avoid any significant adverse impacts on surface water. Matter of Frank J. Ludovico Sculpture Trail Corp. v Town of Seneca Falls, 2019 NY Slip Op 04621, Fourth Dept 6-7-19

 

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PORTIONS OF THE RESPONDENTS’ APPRAISAL REPORT IN THIS CONDEMNATION PROCEEDING SHOULD NOT HAVE BEEN STRUCK BECAUSE THE PROPER VALUATION METHOD WAS USED; THE EVIDENTIARY RULING ON THE MOTION IN LIMINE IS APPEALABLE BECAUSE THE RULING AFFECTS THE SCOPE OF THE TRIAL ISSUES (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that the portions of motion in limine seeking to strike parts of respondents’ appraisal report in this condemnation proceeding should not have been granted. The court noted that the evidentiary ruling was appealable because it limited the scope of the trial issues. The court further noted that the proof of valuation offered at trial must be limited to the valuation method(s) described in the appraisal report:

Where, as here, “the highest and best use is the one the property presently serves and that use is income-producing, then the capitalization of income is a proper method of valuation” … . In our view, the stricken portion of respondents’ appraisal report, although titled “investment valuation,” applied an income capitalization approach using the standard income capitalization formula, i.e., value equals net income divided by a capitalization rate … , and applied factors that, according to respondents’ appraiser, accurately reflect the property’s value and would make the property more appealing to prospective purchasers. To the extent that petitioner contends that certain factors considered by respondents’ appraiser in valuing the property do not accurately reflect market value, “[t]he fact that some aspects of the valuation methodology [of respondents’ appraiser] may be subject to question goes to the weight to be accorded the appraisal[],” not its admissibility … . … Matter of Rochester Genesee Regional Transp. Auth. v Stensrud, 2019 NY Slip Op 04612, Fourth Dept 6-7-19

 

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PRIOR PUBLIC USE DOCTRINE PRECLUDED CONDEMNATION OF LAND ALREADY SUBJECT TO A PUBLIC USE BECAUSE THE PROPOSED USE WOULD INTERFERE WITH THE EXISTING PUBLIC USE (SECOND DEPT).

The Second Department, reversing the condemnation of a parcel of land owned by the city, determined that the proposed new use of the land would interfere with its current public use as a bus depot, a violation of the prior public use doctrine:

… [T]he proposed condemnation is prohibited under the doctrine of prior public use. Under the doctrine of prior public use, land already devoted to a public use may not be condemned absent legislative authority for the particular acquisition at issue … . However, land already devoted to a public use may be condemned without legislative authority ” where the new use would not materially interfere with the initial use'” … . The Agency does not contest that the subject parcel is devoted to a public use, or that there exists no legislative authority for the proposed condemnation … . Thus, the subject parcel may not be condemned unless the new use would not materially interfere with the existing public use … .

The Agency’s proposed condemnation of the subject parcel for the purpose of returning the parcel to productive use in furtherance of urban renewal would materially interfere with its existing public use as a bus depot. … Accordingly, the Agency’s determination to condemn the subject parcel must be rejected. Matter of City of New York v Yonkers Indus. Dev. Agency, 2019 NY Slip Op 02087, Second Dept 3-20-19

 

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CLAIMANT ENTITLED TO COMPENSATION BASED UPON THE VALUE OF THE LAND BEFORE IT WAS DESIGNATED PROTECTED WETLANDS WHICH COULD NOT BE DEVELOPED (SECOND DEPT)

The Second Department modified (reduced) the award for condemnation of regulated land but upheld the Supreme Court’s legal reasoning. Claimant owned vacant land in a commercial zone. After claimant acquired title New York City took title by eminent domain and designated the land as protected wetlands. Claimant sought the difference in value of the land before and after the wetlands regulation. The Second Department held that claimant was entitled to that relief but accepted the city’s pre-regulation value of the land, which was substantially less than the claimant’s valuation (which had been accepted by Supreme Court):

As the City does not dispute, the claimant established that there was a reasonable probability that the imposition of the wetlands regulations on the property would be found to constitute a taking, inasmuch as the parties agreed that the imposition of the regulations diminished the value of the property by approximately 95% and that there was virtually no chance that the New York State Department of Environmental Conservation would issue a permit allowing the property to be developed … .

Accordingly, the claimant established its entitlement to an increment … .

“The increment above the regulated value of the property that must be added to the regulated value of the property is a percentage that represents the premium a reasonable buyer would pay for the probability of a successful judicial determination that the regulations were confiscatory” . “When adding an increment to the value of vacant land to reflect its development potential, the specific increment which is selected and…  applied must be based on sufficient evidence and be satisfactorily explained”  … . Matter of New Cr. Bluebelt Phase 3, Staten Is. Land Corp. (City of New York), 2019 NY Slip Op 00128, Second Dept 1-9-19

 

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