A Very Rare Win – Matter of Bowers Dev. LLC v Oneida County Indus. Dev. Agency. But, It Ain’t Over Until It’s Over.

The Fourth Department handed down a Christmas present on December 23, 2022 granting a petition filed pursuant to Section 207 of the Eminent Domain Procedure Law (EDPL) to annul the determination of the Oneida County Industrial Development Agency (OCIDA) to condemn certain real property.

Before we dive into the case, let’s discuss EDPL Sec. 207, the exclusive procedure in New York to challenge a condemnation.

Authorizing and Challenging the Condemnation

Article 2 of New York’s Eminent Domain Procedure Law sets forth the prescribed way that property is to be acquired by eminent domain.  EDPL Section 201 provides that there must be public hearings for both state and non-state takings at a location reasonably proximate to the property.  It is essential that notice be given by publication and by personal service or certified mail, return receipt requested, to each assessment record billing owner or his or her attorney of record, as required by Section 202.

The hearing is not only about the project, but it also is to serve to give information concerning the impact of the taking on the claimant’s remaining land, and alert the condemnors to factors that might make the acquisition of the subject property far more expensive than originally contemplated.  A condemnor may not know that the subject property is actually used in conjunction with another non-adjacent piece or that zoning has changed.  All condemnors must take findings on specific issues.  Section 204 provides that:

(B) The condemnor, in its determination and findings, shall specify, but shall not be limited to the following:

  • the public use, benefit or purpose to be served by the proposed public project;
  • the approximate location for the proposed public project and the reasons for the selection of that location;
  • the general effect of the proposed project on the environment and residents of the locality;
  • such other factors as it considers relevant.

Procedure to Challenge EDPL Section 207 Petition

          Ninety days after the conclusion of a public hearing, which is jurisdictional, a condemnor is to make a Determination and Findings concerning the proposed public project.  N.Y. Em. Dom. Proc. Law § 204(A).  Many condemnors hold the hearing open for an additional period of time for submissions of further comments or materials.  There is a requirement to publish a synopsis of the determination in at least two successive issues of a newspaper.  Id. § 204(A).  The challenge of a Determination and Findings must be made by filing a petition pursuant to Section 207 of the EDPL within thirty days of the condemnor’s publication of its synopsis of the Determination and Findings.  Id. § 204(A).  This is an extremely limited time period.  As adopted, Section 207 of the EDPL mandates that the petition is to be an original proceeding filed in the Appellate Division embracing the county where the property was located.  Further, only a “condemnee” as defined by Section 103(c) of the EDPL could file a petition.  See East Thirteenth St. Cmty. Ass’n. v N.Y. State Urban Dev. Corp., 84 NY2d 287, 296 (2d Dept 1994); see also McCarthy v Town of Smithtown, 19 AD3d 695, 696, 555(App. Div. 2005) (a non-condemnee is entitled only to a properly conducted hearing held on proper notice).  The EDPL provides that the scope of review is limited to four issues:

  1. Was the proceeding in conformity with Federal and State constitutions;
  2. Whether the proposed acquisition is within the condemnor’s statutory jurisdiction or authority;
  3. Whether the condemnor’s determination and findings were made in accordance with procedures set forth in this article [Article 2] and with Article 8 of the Environmental Conservation Law (SEQRA); and
  4. Whether a public use, benefit, or purpose will be served by the proposed acquisition. Y. Em. Dom Proc. Law § 207(C).

Although Section 207(C) of the EDPL only provides four areas of review, it is clear that there are at least two additional grounds for granting a petition to set aside a Determination and Findings – an “excess taking” can be challenged as well as a “pretext taking.”  Id.

A petitioner will find it extremely difficult to prevail and have a petition granted to reject the condemnor’s Determination and Findings.  If an adequate basis for determination is shown and the objector cannot show that the determination was without foundation, the agency’s determination will be confirmed.

The most successful challenge is based on the failure to conduct a proper environmental study.  Section 207(C)(3) of the EDPL requires compliance with the State Environmental Quality Review Act (SEQRA).  The leading case in New York dealing with SEQRA is Jackson v New York State Urban Development Corp., 69 NY2d 400 (1986).  Judge Kaye, who wrote the decision involving a challenge to the 42nd Street Development project, stated: “The heart of SEQRA is the Environmental Impact Statement (EIS) process….  Under the act, an EIS must be prepared regarding any action that ‘may have a significant effect on the environment.’”  Id. at 415.  It was held that SEQRA “does not require an agency to impose every conceivable mitigation measure, or any particular one,” but rather, “requires the imposition of mitigation measures only ‘to the maximum extent practicable.’”  Id. at 422.  Essentially, what was required was to identify those impacts of the proposed development and to take “a hard analytical look at them.”  Id. at 426.

The entire holding thus can be summarized, as it was recently by the Appellate Division, Second Department, as the condemnor identifying ‘“the relevant areas of environmental concern,’ [taking] a ‘hard look’ at them, and [making] a ‘reasoned elaboration’ of the basis for its determination.”  Gyrodyne Co. of America, Inc. v State Univ. of N.Y. at Stony Brook, 17 AD3d 675, 676 (2d Dept. 2005) (citations omitted).  Even a major change in the project, specifically the removal of a new football stadium for the New York Jets and the proposed enlargement of the Javits Convention Center was not enough to render reliance on an environmental study to “give rise to the need for the preparation of a supplemental EIS (SEIS).”  C/S 12th Ave., LLC v City of New York, 32 AD3d 1, 7 (1st Dept. 2006).  The new stadium was to be Mayor Bloomberg’s centerpiece for the City’s bid for the 2012 Olympics but was vetoed by the Assembly Speaker.  Charles v Bagli & Michael Cooper, Bloomberg’s Stadium Quest Fails; Olympic Bid Is Hurt, N.Y. Times, June 7, 2005 at A1.  This is not to say that condemnor cannot fail to comply with SEQRA.  In Sun Company, Inc. v City of Syracuse Industrial Development Agency, which involved the Carousel Landing Shopping Mall project in Syracuse, New York, the proposed taking was rejected because of the failure “to consider all the environmental ramifications of the …[p]roject and …to analyze reasonable alternatives….”  209 AD2d 34, 50 (4th Dept. 1995).  Since SEQRA mandates the preparation of an EIS when the proposed action may include the potential for at least one significant environmental effect, “there is a relatively low threshold for the preparation of an EIS.”  Uprose v Power Auth. of N.Y., 285 AD2d 603, 608 (2d Dept. 2001); see Silvercup Studios, Inc. v Power Auth. of N.Y., 285 AD2d 598, 600 (2d Dept. 2001).

The Bowers Development case involved the condemnation of land by OCIDA for a surface parking lot for the Mohawk Valley Hospital.  The majority decision lacks any discussion or analysis.  It is barely two paragraphs long.  The dissent is seven pages long and is correct.

The granting of the petition was based on the belief that OCIDA lacked authority to acquire the property.  It stated, “As an industrial development agency, OCIDA’s statutory purposes are, inter alia, to ‘promote, develop, encourage and assist in the acquiring…[of]…commercial…facilities’ (General Municipal Law § 858).  OCIDA’s powers of eminent domain are restricted by General Municipal Law § 858 (4), which provides, in relevant part, that an industrial development agency shall have the power ‘[t]o acquire by purchase, grant, lease, gift, pursuant to the provisions of the eminent domain procedure law, or otherwise and to use, real property…therein necessary for its corporate purposes.’  The purposes enumerated in the statute do not include projects related to hospital or healthcare-related facilities (see § 858).  While OCIDA’s determination and findings indicate that the subject property was to be acquired for use as a surface parking lot, the record establishes that, contrary to respondents’ assertion, the primary purpose of the acquisition was not a commercial purpose.  Rather, the property was to be acquired because it was a necessary component of a larger hospital and healthcare facility project.”

Justice John M. Curran in his dissent wrote, “Here, the sole basis on which the majority rests its decision to annul OCIDA’s determination—and thereby intervenes into what is effectively the legislative process—is its conclusion that, as a matter of law, General Municipal Law § 858 does not authorize OCIDA to acquire the subject property via eminent domain.  The majority grounds that conclusion on its determination that OCIDA’s ‘corporate purposes’ do not include ‘projects related to hospital or healthcare-related facilities.’  It further concluded, in summary fashion and without any elaboration, that OCIDA’s use of eminent domain here ‘was not [for] a commercial purpose.’  The majority’s conclusion on that latter issue, however, gives no deference to OCIDA’s express determination that it was exercising its lawful eminent domain power in furtherance of its express corporate purpose to ‘promote, develop, encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing,’ inter alia, ‘commercial’ facilities, and ‘thereby advance the job opportunities, health, general prosperity and economic welfare of the people of the [S]tate of New York.”

He also stated, “Furthermore, unlike the majority, I conclude that the absence of any express reference to hospitals or healthcare facilities among the purposes listed in General Municipal Law § 858 is ultimately irrelevant to whether OCIDA has the power to condemn the subject property in furtherance of a commercial purpose.  The part of section 858 describing an industrial development agency’s broad purposes lists certain types of projects, but does so using the word ‘including.’  In other words, the list of project types contained in that paragraph is not exclusive.  Thus, it makes no difference that neither a hospital nor a healthcare-related facility is expressly listed in the purposes paragraph.”

The Observer-Dispatch reported on January 10, 2023, the OCIDA voted unanimously to take an appeal to the Court of Appeals.

In my opinion, the Fourth Department’s decision will be reversed.

The decision resembles Matter of Kauer v New York State Urban Dev. Corp., 15 NY3d 235 (2010) where the Court of Appeals reversed an order from the Appellate Division, First Department which granted an EDPL Sec. 207 petition to annul a determination and findings authorizing the condemnation of several parcels in West Harlem, Manhattan in connection with the Columbia University Educational Mixed Use Development.

The issue for the Court of Appeals was whether ESDC’s exercise of the power of eminent domain for a new Columbia University campus was supported by a sufficient public use, benefit or purpose.  The answer was that ESDC’s finding of blight and determination that the condemnation of the property qualified as a “land use improvement project” was correct.  The Court found that both the blight determination and improvement purpose were rationally based and entitled to deference.

Once again, the Fourth Department’s decision will be reversed.


Posted in Blight, Condemnation, EDPL Sec. 207, Power of Condemnation, Public Purpose
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