An application was made for a site plan to the Planning Board of the City of Poughkeepsie for a 24 two-bedroom unit condominium complex in four buildings on a 3.4 acre parcel adjacent to an historic district.   The site had existing mature trees on the perimeter of the property, some of which were proposed to be cut down and replaced with new trees.   On April 19, 2011, the City of Poughkeepsie Planning Board issued a negative declaration pursuant to the New York State Environmental Quality Review Act (“SEQRA”). The Historic Southside Neighborhood Association appealed the determination in an Article 78 Proceeding to the Dutchess County Supreme Court seeking an order annulling the negative declaration and directing the Planning Board to issue a positive declaration and proceed with an Environmental Impact Statement (“EIS”). See Jeanette Peterson as President of the Historic Southside Neighborhood Assn. v. Planning Board of the City of Poughkeepsie et al., Index No. 3511/2011, September 2, 2015.

The Supreme Court stated the standard in reviewing the negative declaration issued by the Planning Board was limited to “whether the agency identified the relevant areas of environmental concerns took a hard look at them, and made a reasonable elaboration of the grounds for its determination.” The Supreme Court found that the Planning Board took the requisite “hard look” at the potential impacts of the proposed project on the bordering historic district during a 20 month review period. The Court found that the Planning Board’s reliance on the New York State Office of Parks, Recreation and Historic Preservation (“OPRHP”) which issued three letters concluding that it did not perceive any substantial impact to the neighboring historic district was reasonable. The Supreme Court upheld the negative declaration and dismissed the proceeding. The Historic Southside Neighborhood Association appealed the matter to the Appellate Division.

In its decision dated July 5, 2018, the Appellate Division, Second Department, in the Matter of Jeannette Peterson, etc., v. Planning Board of the City of Poughkeepsie, et al., 2018 N.Y. Slip. Op. 05049, reversed the Supreme Courts determination. Regarding the impact to the historic district the Appellate Division found the Planning Board’s reliance on the OPRHP insufficient stating that the Planning Board “merely relied upon a letter from the New York State Office of Parks, Recreations and Historic Preservation, which stated only that the proposed action would not have an adverse impact on the historic district. Such a conclusory statement fails to fulfill the reasoned elaboration requirement of SEQRA.”

Additionally, the Court reviewed the Planning Board’s determination regarding the potential impacts to vegetation or fauna cited in the negative declaration which stated that the proposed action would not result in the “removal or destruction of large quantities of vegetation or fauna.” However, the Environmental Assessment Form relied upon by the Planning Board noted the reduction of the 3.4 acre parcel’s forestation from 2.75 acres to 0.3 acres. The Court stated, “[i]n the context of this project, the level of deforestation is significant.”

Therefore, the Appellate Division found that the proposed action may have significant adverse environmental impacts upon one or more areas of environmental concern and determined that the Planning Board’s negative declaration was arbitrary and capricious. The matter was remitted to the Planning Board for the preparation of an Environmental Impact Statement.

Split zoned parcels can be a headache for property owners and practitioners.  In general, a split zoned parcel is a piece of land located in two or more zoning districts and divided by a zoning district boundary line.  Often these split zoned parcels are found at interfaces between commercial and residential uses or other areas of transition in the municipality.

Throughout New York, most zoning codes provide various ways to handle such conditions, often allowing applicants to extend one district or its permitted uses over a portion of the other district without needing to apply for a change  of zone.  Problems for applicants and practitioners arise when the proposed use on the property is prohibited on the other side of the  zoning boundary line.  Under those circumstances, applicants may face hostile boards or opponents claiming that because such use is prohibited in one of the districts, it requires a use variance.  As a use variance can often be an insurmountable hurdle, practitioners must carefully craft a record to support the proposed use for a split zoned parcel.

Recently, in  the City of Saratoga Springs, a neighboring restaurant owner sued to block a proposed pet kennel, claiming it required a use variance because kennels were prohibited in one of the two zones that split the property.  In other words, the restaurant owner was claiming that the prohibited tail was wagging the permitted dog.  Unfortunately, the restaurant owner was barking up the wrong tree, and in June of 2018, the Appellate Division affirmed the City of Saratoga Springs Zoning Board of Appeals (ZBA) determination that a use variance was not required for the proposed kennel project and granted the necessary area variances See, Wen Mei Lu v. City of Saratoga Springs—N.Y.S.33D —(3d Dept 2018).

In Wen Mei Lu, Pet Lodges Inc. submitted an application to the City’s Building Inspector in 2016, seeking approval of the proposed construction of a pet boarding facility.  The 6,000-square-foot kennel facility was planned for a 1.6 acre parcel of land that was split zoned Rural Residence and Tourist Related Business (TRB).  The smaller rear portion of the property, zoned Rural Residential, allows for animal kennels, but the TRB zone that comprises the larger portion of the property fronting on State Route 9, prohibits the use.

The application was denied by the City’s Building Department on the ground that the project required area variances for certain setback issues.  Pet Lodges Inc. then applied to the ZBA for area variance relief.  At the hearing, the restaurant owner’s attorney submitted letters and testimony claiming, among other things, that the kennel required a use variance, because it was a prohibited use in the TRB zone, and was fundamentally inconsistent with the permitted uses such as service establishments, eating and drinking establishments and bed and breakfasts.

The Appellate Division, in finding that the ZBA rationally determined a use variance was not required, noted that although kennels are prohibited in the TRB zone, under the City’s zoning ordinance, where a zoning district boundary line divides a lot or land, the district requirements on either side of the boundary may be construed, at the property owner’s option, as extending 100 feet into the remaining portions of the property.  Here, the applicant chose to extend the Rural Residential district where kennels are permitted into the TRB commercial zone where kennels are prohibited.

Finding that such an extension of a zoning boundary did not require a use variance, the Court went on to hold that the ZBA’s determination to grant the necessary area variances had a rational basis in the record.  The Court also determined that while a small portion of the facility’s parking area and driveway will lie within the TRB district, the ZBA rationally found that such accessory uses were not prohibited under the zoning ordinance.   The Court noted that ZBAs are “invested with the power to vary zoning regulations in specific cases in order to avoid unnecessary hardship or practical difficulties arising from a literal application of the zoning law.”

Given the potential complexities associated with split zoned properties, this decision provides some clarity as to what the courts and zoning boards are considering when faced with split zoned lots.

 

 

 

General Municipal Law §239-m requires that before taking action on a land use application, a municipal agency like a Zoning Board of Appeals or Planning Board must refer the application to a county or regional planning commission for its recommendation. This referral and receipt of comments and recommendations from the planning commission is no longer just a nicety. It is jurisdictional.

Any variance or site plan or other land use approval is null and void if the approving agency has not followed this referral procedure. e.g., Ernalex Constr. Realty Corp v. City of Glen Cove, 681 N.Y.S. 2d 296 [2d Dept.1998]; 24 Franklin Ave. R.E. Corp. v. Heaship, 30 N.Y.S.3d 695 [2d Dept. 2016].

Moreover, the statute of limitations does not even begin to run to challenge an agency action (the grant of a variance, for example) if the variance is jurisdictionally defective because the referral procedure was not followed. e.g., Hampshire Mgt. Co., No. 20, LLC v. Feiner, 860 N.Y.S.3d 714 [2d Dept. 2008].

Old news.

So, what happens if an agency grants a variance without following the referral procedure and then, perhaps realizing its mistake, grants an amended variance where it does make the proper referral to the planning commission?

In Fichera v. NYS Dept. of Environmental Conservation, 74 N.Y.S.3d 422 [4th Dept. 2018], the Fourth Department held that the original and the amended variances were both null and void. The applicant had received variances from the Town’s ZBA, and permits from the DEC needed to conduct mining. The ZBA and the applicant argued that the time to challenge the original variance had run and that the amended variance was perfectly fine because the referral process had been diligently followed.

The Appellate Division disagreed. First, the Court applied the “old news” rules above to find that the original variance was jurisdictionally defective because of the failure to follow the referral process. Then, they also held that the same jurisdictional defect tolled the statute of limitations so that the challenge to the original variance was timely. Therefore, the original variance was vacated as jurisdictionally defective.
What about the amended variance? Shouldn’t that be upheld because there was a proper referral and, therefore, no jurisdictional defect?

Not so fast, said the Court. The applicant’s problem was that the ZBA relied on the initial variance in granting the amended one: “Inasmuch as the determination granting an amended area variance was based on the initial, void determination, we further conclude that the ZBA’s approval of the amended variance is likewise null and void. . . .

One factor that appears to be important is that the planning commission had strongly recommended that the variance be denied. A zoning board can override the commission’s recommendation by a super-majority vote. Here, the ZBA had voted unanimously to override the commission’s recommendation to deny the amended variance. No good, said the Court: “[T]he subsequent vote cannot retroactively cure the jurisdictional defect in granting the original area variance upon which the ZBA relied in granting the amended area variance.”

The applicant’s and the ZBA’s problem, it appears, is that they took a short cut to rely on the original variance, at least in part, in deciding to approve the amended variance. In retrospect, they should have made a new determination. The Court agreed and remitted the matter back to the ZBA “for a new determination on petitioner’s application.”

Hindsight is always accurate, and the impetus to avoid re-hashing materials already reviewed is understandable. But the short cut here, especially in light of the opposition from the planning commission and organized concerned citizens, lead to a long road. A good lesson.

Recently Farrell Fritz, P.C. represented a family held limited liability company in connection with an application to a East End zoning board of appeals to maintain an eight (8) foot fence and six (6) foot driveway gates around its property in Sagaponack.   See, 79 Parsonage LLC v. Zoning Board of Appeals of the Incorporated Village of Sagaponack.  Both the fence and a portion of the applicant’s gates violated the Village of Sagaponack’s six (6) foot height limitation.

On behalf of the applicant, Farrell Fritz argued that a fence was necessary to exclude a family of deer that had taken up residence on the property.  Exclusion of the deer was necessary as one member of the household had suffered through two bouts of Lyme’s Disease. In addition, the fence was constructed among mature vegetation and was not visible from the street.

Despite those and additional arguments offered at the hearing, the Sagaponack Zoning Board denied the application.

On behalf of the property owner, Farrell Fritz commenced an Article 78 proceeding in the New York State Supreme Court, Suffolk County, appealing the Zoning Board’s Decision.

On December 15, 2017, Justice Gerard W. Asher, J.S.C. overturned the Zoning Board’s denial and directed the Board to issue the requested variances finding that the applicant overcame the presumption afforded to Zoning Boards in deciding zoning cases. Through the Article 78, Farrell Fritz demonstrated that no evidence existed to support the Zoning Board’s decision; and its findings were conclusory, and therefore irrational and arbitrary and capricious. Judge Asher agreed with the application that the fence was hidden, and a grant would benefit the applicant because one of the two members already suffered from Lyme’s Disease. After making the findings, Judge Asher vacated and annulled the ZBA determination.

What Judge Asher makes clear in his Decision, and should be considered by all practitioners, is that zoning boards must balance all of the relevant considerations in a rational way.

In April of 2016 we published the blog entitled “Mining in the Hamptons: Appellate Division Affirms Town of Southampton Zoning Board of Appeals Limitations on Pre-existing Nonconforming Uses Associated with Hamptons Mining Operation.” Despite the Appellate Division’s decision regarding certain pre-existing nonconforming uses occurring on the site, Sand Land Corporation’s (“Sandland”) pre-existing mining use of the property was never at issue, until now.

In January 2018, the New York State Department of Environmental Conservation (“DEC”) issued a determination entitled “Ruling of the Chief Administrative Law Judge on Threshold Procedural Issue, January 26, 2018” essentially halting the DEC’s review of Sandland’s mining permit application until further information was submitted by the Town of Southampton. Sandland, was authorized pursuant to a Mined Land Reclamation Law (MLRL) permit issued by the DEC to mine sand and gravel from 31.5 acres of the 50 acre site to a depth of 160 feet above mean sea level, which is 60 feet below the surface elevation at 220 feet. In January of 2014, Sandland submitted an application to the DEC to expand its current permit to mine 4.9 additional acres and excavate the floor of the mine to 120 feet above mean sea level- lowering the mine floor by 40 feet. The DEC notified the applicant that a permit modification to expand the mine “beyond its previously approved life of mine boundaries” was considered a “new application”, classified as a “major project” and required a statement that mining was not prohibited at the site.

NYS Environmental Conservation Law (“ECL”) §23-2703, Declaration of Public Policy, Subsection 3 states, “No agency of this state shall consider an application for a permit to mine as complete or process such application for a permit to mine pursuant to this title, within counties with a population of one million or more which draws its primary source of drinking water for a majority of county residents from a designated sole source aquifer, if local zoning laws or ordinances prohibit mining uses within the area proposed to be mined.” Suffolk County satisfies this criteria having a population of one million or more and drawing its primary source of drinking water from a sole source aquifer. Opponents of Sandlands’ application argued that because mining is prohibited in the zoning district where the property is located, ECL §23-2703 (3) applies and the DEC is prohibited from processing the application.

ECL §23-2711(3) requires that the DEC notify the Town’s “Chief Administrative Officer” for properties not previously permitted pursuant to that title and seek input regarding whether mining is permitted on site.[1] The Town responded with a letter noting the Certificate of Occupancy authorizing mining on site but noted that if the DEC was characterizing this as a new mine, that new mines are prohibited in all zoning districts.[2] The Town further noted the location of the property in the Aquifer Protection Overlay District and requested that the reclamation of the property be expedited to allow the property to be used for conforming residential purposes. However, the Town did acknowledge that “certain nonconforming uses, if they are established to pre-exist zoning, are allowed to continue and even expand under certain circumstances pursuant to Town Code §330-167B”.

Additionally, the Town Code provides for the continuance of nonconforming uses pursuant to §330-115 which states, “Any lawful use occupying any building, structure, lot or land at the time of the effective date of this chapter or any amendment thereto which does not comply after the effective date of this chapter or any amendment thereto with the use regulations of the district in which it is situated may be continued in the building or structure or upon the lot or land so occupied, except as provided in § 330-119.”[3]

The DEC held a hearing where the applicant argued that the application only sought renewal of an existing permit for a lawful preexisting nonconforming use. Ultimately, however the DEC Administrative Law Judge held that ECL § 23-2703(3) prohibits the DEC from processing mining permits for mines located in towns such as the Town of Southampton, Suffolk County, where the county, with a population of over one million people, draws its primary drinking water for a majority of its residents from a designated sole source aquifer, and the town has a local law prohibiting mining in the town. Additionally, the Administrative Law Judge found that Sandland had not established that the proposed mine expansion was authorized under the Town’s local zoning laws. The reviewing Judge adjourned the matter pending submission of proof adequate to establish that applicant’s proposed mine expansion is authorized under the Town’s local law.

As determined by the New York State Court of Appeals, a prior nonconforming use for mining is unique in that it is not limited solely to the land that was actually excavated before the enactment of a restrictive zoning law (in this case, March 27, 1983) but extends well beyond.[4] The well-known Court of Appeals case, Syracuse Aggregate, established that pre-existing mining rights extend to the boundaries of the property regardless of whether that specific area was mined prior to the change in the zoning law. In examining the nature of mining as a nonconforming use the Court stated:

“By its very nature, quarrying involves a unique use of land. As opposed to other nonconforming uses in which the land is merely incidental to the activities conducted upon it, quarrying contemplates the excavation and sale of the corpus of the land itself as a resource. Depending on customer needs, the land will be gradually excavated in order to supply the various grades of sand and gravel demanded. Thus as a matter of practicality as well as economic necessity, a quarry operator will not excavate his entire parcel of land at once, but will leave areas in reserve, virtually untouched until they are actually needed.” [5]

In furtherance of this premise, the Court of Appeals in Buffalo Crushed Stone extended that holding to properties purchased in contemplation of mining that are separate and apart from the original mined parcel.[6] The Court stated,

“Consequently, a prior nonconforming use for quarrying cannot be limited solely to the land that was actually excavated before the zoning law, because-in this unique type of industry- landowners commonly leave portions of their land as mineral reserves to be excavated at a future time.[7]   Mine owners commonly leave portions of their land as mineral reserves to be excavated at a future time.”[8]

The question remains, then, how this administrative court essentially halted the continuation of this “unique” mining operation that pre-exists zoning via the DEC permitting process without applying or even considering this well-established line of Court of Appeals cases.  Indeed, the reviewing Administrative Law Judge did cite the Syracuse Aggregate case but only for the following premise: “A town’s authority includes not only the power to prohibit the development of new mines ( see id. at 684), but to impose reasonable restrictions limiting the expansion of and eventually extinguishing prior nonconforming mining uses within the town (See Matter of Sand Land Corp. , 137 AD3d at 1291-1292; Matter of Syracuse Aggregate Corp. v Weise , 51 NY2d 278, 287 [1980] Matter of 550 Halstead Corp. v Zoning Bd. of Appeals of Town/Vil. of Harrison , 1 NY3d 561, 562 [2003] [Because nonconforming uses are viewed as detrimental to zoning schemes, public policy favors their reasonable restriction and eventual elimination.]).”

However, the Judge failed to take notice of the Court of Appeals holding in Gernatt Asphalt Products, Inc. v. Town of Sardinia, 87 N.Y.2d 668, 642 N.Y.S.2d 164, 664 N.E.2d 1226 (1996), upholding a zoning law banning mining except for preexisting operations. “Towns may not directly regulate mining, but they retain the power to zone — even to zone out mining totally, as long as non-conforming uses are protected, as the Constitution mandates, to prevent a de facto taking.” See McKinney’s Practice Commentaries to NYS Environmental Conservation Law 23-2703 , Philip Weinberg (emphasis added).

Procedurally, Sandland’s mine permit expires in November of 2018. The matter was appealed administratively in a motion to reargue, a second hearing took place and we look forward to the Administrative Law Judge’s ruling.

 

[1] ECL §23-2711(3) further states,(a) The chief administrative officer may make a determination, and notify the department and applicant, in regard to: (i) appropriate setbacks from property boundaries or public thoroughfare rights-of-way, (ii) manmade or natural barriers designed to restrict access if needed, and, if affirmative, the type, length, height and location thereof, (iii) the control of dust, (iv) hours of operation, and (v) whether mining is prohibited at that location. Any determination made by a local government hereunder shall be accompanied by supporting documentation justifying the particular determinations on an individual basis.

[2] Mining effectively became prohibited in the Town of Southampton on March 27, 1981. See Huntington Ready Mix-Concrete Inc. v. Town of Southampton et al., 104 A.D.2d 499 (1984).

[3] Town Code § 330-119, Compulsory termination of nonconforming uses, bars, taverns and nightclubs, addresses the amortization of pre-existing nonconforming nightclubs.

[4] Syracuse Aggregate Corp. v. Weise, 51 N.Y.2d 278, 434 N.Y.S.2d 150 (1980); Buffalo Crushed Stone, Inc. v. Town of Cheektowaga, 13 N.Y.3d 88, 885 N.Y.S.2d 913 (2009)(stating “quarrying contemplates a gradual unearthing of the minerals in the land, as so excavation of portions of the land may be sufficient to manifest an intention to conduct quarrying on the property as a whole.”)

[5] Id. at 285, 434 N.Y.S.2d 150 (citations omitted).

[6] Buffalo Crushed Stone, Inc., 13 N.Y.3d 88, 885 N.Y.S.2d 913 (2009)(confirming the mining company had the vested pre-existing right to mine a separate parcel, “subparcel 5” which was not mined by its predecessors and separated by a road from the larger mined area.)

[7] Id. at 401.

 

[8] Id. at 396 stating, (“we hold that the long and exclusive quarrying operation of BCS and its predecessors and their preparations to use areas left as aggregate mineral reserves, consistent with the nature of quarrying, established a right of prior nonconforming usage on the disputed subparcels”).

Last month, the Appellate Division, Second Department, issued four decisions[1] in a series of hybrid proceedings challenging local laws in the Town of Riverhead (“Riverhead”). Plaintiff/Petitioner Calverton Manor, LLC (“Calverton Manor”), in connection with a site plan application, sought to annul several resolutions adopted by Defendant/Respondent Riverhead Town Board (“Town Board”). These resolutions: (1) established a new comprehensive plan; (2) implemented a new agricultural protection zoning district (“Agricultural District”); (3) implemented a new rural corridor district (“Rural District”); and (4) enacted a new transfer of development rights law (“TDR Law”). Each of the challenges was based upon the Town Board’s failure to comply with N.Y. General Municipal Law Section 239-m (“Section 239-m”), among other things. In addition, Calverton Manor argued that the “special facts exception” required Riverhead to apply the preceding zoning district laws to its application, rather than the new Agricultural District and Rural District laws.

In these cases, the Court held that some circumstances allow revisions to be made to proposed laws or actions referred to the county planning agency pursuant to Section 239-m even after the referral is made. As the Court analyzed Calverton Manor’s Section 239-m challenges to the various Town Board resolutions, its holdings illustrate the distinction between valid post-referral modifications and invalid modifications which violate Section 239-m and render the entire act void. Additionally, the Court analyzed the special facts exception in light of Riverhead’s treatment of Calverton Manor’s application.

Calverton Manor’s Site Plan Application versus a New Comprehensive Plan

Calverton Manor owns an undeveloped parcel of land (“Property”) in Riverhead and submitted a site plan application in 2001 to construct numerous commercial and residential buildings thereon (“Application”). For approximately two years, Calverton Manor worked with Riverhead on its Application to satisfy the applicable zoning laws in effect at the time. Riverhead, however, had been developing a new comprehensive plan since 1997. The new comprehensive plan sought to protect open space and farmland, while concentrating development into certain specified areas. Riverhead’s new comprehensive plan also proposed eliminating certain permitted uses on the Property that were crucial to the Application.

Calverton Manor submitted the last revised Application in September 2003. The Town Board adopted the new comprehensive plan on November 3, 2003. The new comprehensive plan derailed the Application and development of the Property. Calverton Manor brought its challenges in Suffolk County Supreme Court. Calverton Manor was largely unsuccessful and appealed; the Town Board cross-appealed concerning the special facts exemption.

Amendments Subsequent to a Section 239-m Referral: Embraced in the Original

With respect to Calverton Manor’s Section 239-m challenge to the Town Board’s resolutions enacting the comprehensive plan, the Agricultural District and the Rural District, the trial court denied the petition, dismissed the proceeding and declared theses local laws legal and valid.[2] Section 239-m, in many instances, requires a municipality to submit to the county planning agency a “full statement” of the proposed action. In pertinent part, the trial court found that the Town Board made the appropriate Section 239-m referrals. Calverton Manor appealed and the Second Department affirmed. The Court held that despite changes made to the comprehensive plan, Agricultural District and Rural District after the Town Board referred these local laws to the Suffolk County Planning Commission (“Commission”), the revisions were “embraced within the original referral” such that the Town Board did not fail to refer a full statement of its proposed action.

Calverton Manor also presented a Section 239-m challenge to Riverhead’s new TDR Law. Transfer development rights allow landowners whose development rights have been adversely affected or limited in one place to transfer these rights to another place and build in excess of certain limitations in that other, buildable place. The parcel from which rights are transferred is the “sending parcel” and the parcel to which rights are transferred is the “receiving parcel.” Riverhead’s new TDR Law designated the Property as a “sending parcel” so that development rights could only be transferred away from it, as opposed to towards it.

With respect to this challenge, the trial court also denied Calverton Manor’s Section 239-m challenge to the TDR Law based upon the same rationale. The Second Department, however, reversed the trial court, granted the motion for summary judgment and declared the TDR Law void for failure to comply with Section 239-m. The Town Board’s submission of the TDR Law to the Commission was effectively rejected because it was missing the complete text of the law. The Commission, upon receipt of the proposed law, advised the Town Board by letter that it would not review the TDR Law until it received a complete revised text of the amendment. And, nothing in the record contradicted the Commission’s position that it did not receive a complete text of the law. Therefore, the Court found that the Town Board failed to refer a “full statement” of the proposed TDR Law to the Commission prior to enacting the same in violation of Section 239-m.

The Town Board sought the same “embraced within the original” protection the Court applied to the other local laws. Specifically, the Town Board argued its referral of prior drafts of the TDR Law sufficed Section 239-m and obviated the need for the subsequent referral. The appeals court disagreed. A new referral is not required only if “the particulars of the [changes] were embraced within the original referral.” Unlike the changes made to the comprehensive plan, Agricultural District and Rural District, subsequent to their referrals, the amendments to the TDR Law were not embraced within the referred version.

The TDR Law ultimately passed by the Town Board, among other things, mapped the sending and receiving districts and specified the degree to which density limitations could be exceeded. The prior versions of the TDR Law reserved these details for future consideration. Highlighting the significance of the changes made to the TDR Law post-referral, the Town Board’s own resolution declared that the final TDR Law contained “significant modifications” from the prior versions. In addition, the Town Board even prepared a supplemental generic environmental impact statement over the course of several months to evaluate the changes in the final TDR Law. Accordingly, the Court held that the Town Board failed to comply with Section 239-m, the adoption of the resolution enacting the TDR Law was of no effect and the TDR Law is void and unenforceable.

Special Facts Exception Permits “Grandfathering” Site Plan Applications

In addition to its Section 239-m, Calverton Manor argued “special facts” required that the zoning district laws preceding the Agricultural District and Rural District apply to its Application. Ordinarily, courts apply the current zoning laws in effect when they render decisions. Under the special facts exception, however, courts may apply the law in effect at the time the application was made. This exception applies where the landowner “establishes entitlement as a matter of right to the underlying land use application [and] extensive delay indicative of bad faith….unjustifiable actions by municipal officials…or abuse of administrative procedures.”

The Town Board sought to dismiss this claim, but the trial court held triable issues of fact existed sufficient to permit the claim to proceed. The Town Board cross-appealed and the Second Department denied its appeal.[3] The Court found that triable issues of fact exist as to whether special facts warranted the application of the prior zoning laws to Calverton Manor’s Application.

The record contained inconsistencies as to whether Calverton Manor’s last revised Application was “complete” in September 2003. On the one hand, evidence in the record showed that Calverton Manor needed to make further revisions before the Application could be deemed completed under Riverhead’s rules. In this scenario, Calverton Manor is not entitled to the exception. On the other hand, evidence also showed that the Town Board determined the Application was “completed” upon submission in September 2003. This latter circumstance indicates the Town Board may have delayed processing the Application in bad faith until the new laws went into effect. Because triable issues of fact exist, summary judgment on this claim was inappropriate.

—ENDNOTES—

[1] Calverton Manor, LLC v. Town of Riverhead, 160 AD3d 829 (2d Dept 2018); Calverton Manor, LLC v. Town of Riverhead, 160 AD3d 833 (2d Dept 2018); Calverton Manor, LLC v. Town of Riverhead, 160 AD3d 838 (2d Dept 2018); Calverton Manor, LLC v. Town of Riverhead, 160 AD3d 842 (2d Dept 2018).

[2] Although these are hybrid proceedings, for the purposes of simplicity, the petition/complaint will be referred to as the petition and the proceeding/action will be referred to as the proceeding.

[3] The Town Board cross-appealed “from so much of the order as did not search the record and award them summary judgment and, in effect, make a declaration in their favor” on Calverton Manor’s special facts exception claim. The Second Department “dismissed” the cross appeal based upon the premise that the Town Board was not entitled to make such an appeal because it was technically not aggrieved. The Court noted that a party is not aggrieved by an order which does not grant relief that the party did not request. Here, apparently, the Town Board did not ask the trial court to award summary judgment on the special exceptions claim. Therefore, it cannot be aggrieved by this aspect of the order and is not entitled to appeal it. Despite having “dismissed” the cross-appeal, the Second Department heard, analyzed and denied the Town Board’s arguments seeking summary judgment on the special facts exception.

It is not uncommon for municipal planning departments to require applicants who are seeking land use approvals involving multiple contiguous parcels to consolidate or merge the properties to form one single larger parcel. Consolidation or merger typically results in a new tax map number, a new single tax bill for the consolidated or merged lots, assurances to the municipality that the otherwise single unconsolidated or non-merged lots will not be individually sold off post land use approvals and that the proposed project which is subject to the land use approvals will be assessed for real property tax purposes as one single improved unit (versus partially improved and partially vacant land).

Consolidation or merger of single parcels into one larger parcel provides for certainty when it comes to ownership of the lands subject to the approvals and provides the municipal assessing unit with certainty as to the use of the lands while imposing a single tax class and assessed value to the overall project.  Consolidation or merger is most often required prior to issuance of a building permit or Certificate of Occupancy.  Consolidation can be set forth as a covenant or condition in a written and signed Declaration of Covenants and Restrictions, which is recorded against the property in the applicable County Clerk’s or County Registers Office.  Similar to any other covenant or restriction, failure to comply with the covenant or restriction to consolidate can result in revocation of the relevant land use approvals.

In a recent Second Department case involving a real property tax assessment dispute, failure by the property owner to consolidate or merge six individual parcels that form the boundaries of a shopping center gave rise to unequal tax assessments among the six parcels, resulting in the exact problem that municipalities try to avoid by requiring consolidation or merger.

In re Blauvelt Mini-Mall, Inc v. Town of Orangetown, as a condition of site plan approval granted in 1992, the Town required that six individually owned parcels be merged into one single parcel forming the boundaries of a proposed shopping center.  Despite the condition, no formal steps were ever taken to effectuate the merger.   The facts of the case do not indicate whether the merger requirement was reduced to a recorded Declaration of Covenants and Restriction with revocation language.

Over the years, although a formal merger was never accomplished, the Town assessed the shopping center as one real property taxable unit by undervaluing five of the parcels while overvaluing the sixth parcel.  This valuation strategy lead to the unequal tax assessments that consolidation or merger seeks to avoid.   What is interesting about this case from a land use perspective is the fact that despite the 1992 Town directive to consolidate or merge the lots, the Appellate Division reversed the trial court holding that directed the merger by stating that  “[n]one of the parties sought merger of the parcels or similar relief, merger of all the parcels at issue into one tax lot is not supported by the record, and merger of all the parcels could be potentially prejudicial to the petitioner.”

Hence, despite all outward appearances by the property owner to use the unconsolidated parcels as one consolidated improved shopping center parcel, failure to take the necessary steps to consolidate, such as transferring all six parcels into one deed, providing one overall property description or metes and bounds instead of six individual metes and bounds, and modifying the official tax maps to reflect one single parcel, the petitioner in this case could potentially benefit from the unequal tax assessments to the detriment of the municipality.  Likewise, even though the Town conditioned site plan approval on consolidation or merger of the lots, failure by the municipality to insure that consolidation actually occurred seems to have resulted in a waiver or estoppel against the municipality, which is not typically applicable to municipalities.

Author note: Although the facts of this case do not indicate the basis for under valuation of five parcels and over valuation of the sixth parcel, it would likely be reasonable that the five undervalued parcels are perhaps being assessed as vacant land containing only parking areas, or open space, while the sixth parcel houses the actual shopping center structure.  If this is the case, petitioner could easily argue that parcels one to five should receive a lower vacant land assessment, while only parcel six should receive a full commercial improved real property assessment.  Allowing this fact pattern to exist provides for uncertainty in tax assessments.

On March 28, 2018, the Babylon Town Board adopted a moratorium on any new land use applications that seek to increase a parcel’s wastewater limits established by the Suffolk County Department of Health Services (“SCDHS”) by utilizing Pine Barrens Credits (“PBC”), which effectively transfer development rights from other parts of Suffolk County to properties within the Town of Babylon.  During the period of the moratorium, the Town plans to study the potential impacts to groundwater from allowing developers to increase development density by acquiring PBCs.

The concept of transferring development rights using PBCs derives from the Long Island Pine Barrens Maritime Reserve Act, which was adopted in 1993 for the purpose of protecting approximately 100,000 acres of the Long Island Pine Barrens located within the towns of Brookhaven, Riverhead and Southampton.  As one method of land preservation, the Act authorizes the creation of a transfer of development rights (“TDR”) program, the specifics of which are set forth in the Central Pine Barrens Comprehensive Land Use Plan (“Plan”).  Under the TDR program, a PBC can be used to transfer the development potential from a parcel of property within the protected Pine Barrens Core Preservation Area (“Core”), or other environmentally-sensitive area identified in the Plan (a “sending parcel”), to a parcel in a designated area outside the Core (a “receiving parcel”).  Upon acceptance of the PBC, the sending parcel’s development rights are transferred to the receiving parcel, which may now be developed more intensely.  For a more detailed discussion of the Pine Barrens TDR program, see John Armentano’s blog post, Pine Barren Credits – There’s Money In Those Trees.

Historically, PBCs have been accepted by several towns and by the SCDHS to permit a new development project, or an expansion or change of use of an existing building, that will result in a wastewater discharge (effluent loading) that exceeds the SCDHS’s allowable sanitary flow rate for parcels that are served by an individual on-site sewerage system (i.e., not connected to a municipal sewer system).  The allowable flow rate for a particular parcel is set forth in Article 6 of the Suffolk County Sanitary Code and is calculated based on the proposed use, and size of the building and the parcel on which it sits, as well as the hydrogeological (groundwater recharge) zone in which the parcel is located.  A PBC may be used to permit additional effluent loading up to a maximum of twice the allowable density.

Following the recent approval of two development projects in North Babylon and Deer Park, the Town has decided to take a closer look at the environmental consequences of allowing for increased density.  According to Richard Groh, the Town’s chief environmental analyst, the Town’s planning and environmental control departments have formed a working group to study the impacts to groundwater that will result from continuing the practice of accepting PBCs to increase development density.  Upon completion of the study, the group will submit its recommendations to the Town Board for consideration.

Early this year, the Supreme Court of New York, Richmond County issued a comprehensive opinion in Galarza v. City of New York, 58 Misc.3d 1210(A), reaffirming and clarifying the nuances of condemnation, takings and just compensation principles as they relate to wetlands restrictions.  The court held that the owner of a 21,000 square-foot vacant lot (“Property”) condemned by the City of New York (“City”) as wetlands was entitled to just compensation in the amount of $669,000, where the fair market value of the undevelopable land was approximately $200,000.

In awarding upwards of 335% of the Property’s apparent value, the court found that the owner was entitled to an incremental increase in just compensation.  This finding was based upon the nature of the wetlands restrictions vis-à-vis takings precedent.  And, it is significant that the court awarded the higher value despite the owner having purchased the Property after it was already designated as wetlands and known to be undevelopable.  This decision follows a late-2017 decision of the Appellate Division in In re New Creek Bluebelt Phase 3 (Baycrest Manor), 156 A.D.3d 163 (2d Dep’t 2017), where the Second Department affirmed, as modified, an increased award as just compensation for wetlands condemnation.

Claimant Ivan Galarza (“Owner”) purchased the Property at a tax lien foreclosure auction in 2003.  At the time the Owner purchased the Property at auction, the Property was already designated as wetlands.  The City later acquired the Property by condemnation as part of its New Creek Bluebelt Phase 4 project.  The Owner and the City both agreed that the wetlands designation precluded the Owner from obtaining a permit to improve the Property and that the highest and best use of the Property, as regulated, would be to remain vacant.  The parties disagreed, however, as to whether the wetlands restrictions constituted a regulatory taking.  The regulatory taking issue is relevant and forms the crux of this entire case because it is precisely the finding of a “reasonable probability of success” in bringing a hypothetical regulatory taking claim to challenge regulations, e.g. wetlands restrictions, that entitles a property owner to the incremental increase in just compensation.

The Threshold Question: Whether the Regulation Is a Background Principle of New York State Law on Property and Nuisance

First, the court addressed the threshold issue of whether the Owner was barred from bringing a takings claim in the first place, because the Owner purchased the Property subject to the wetlands designation.  Relying on Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), Galarza stated that the “logically antecedent inquiry” into a takings claim is whether “the proscribed use was part of the title to begin with.”  Thus, before any owner can claim deprivation of economically beneficial uses of property, courts must first determine whether the right to use the property in the manner prohibited was actually part of the “bundle of rights” acquired with title.

In Lucas, the U.S. Supreme Court held that in order for a regulation not to constitute a taking where it prohibits all economically beneficial use of land, the regulation cannot be newly legislated or decreed, but must inhere in the title itself; the restriction must be a background principle of a state’s law of property and nuisance – already placed upon the ownership of property.  After Lucas, the New York Court of Appeals issued four opinions simultaneously in 1997 known as the “takings quartet.”[1]  These four cases established the “notice rule” in New York, whereby any owner who took title after the enactment of a restriction was barred from challenging the restriction as a taking because the use prohibited was not part of the bundle of rights acquired with title by a buyer.

Almost a decade after Lucas, the U.S. Supreme Court’s decision in Palazzolo v. Rhode Island, 533 U.S. 600 (2001), up-ended New York’s “notice rule.”  The high Court held that a per se notice rule was untenable and altered the nature of property because an owner would be deprived of the right to transfer an interest acquired with title (prior to the regulation).  Moreover, the Court held that simply because an owner acquired property after the enactment of regulations does not transform those regulations into background principles of state law on property and nuisance.

In determining whether New York State’s wetlands restrictions affecting the Property are part of the background principles of New York’s law on property and nuisance, the Galarza court answered in the negative.  Interestingly, the City argued, among other things, that protection of wetlands was grounded in common law and cited to medieval England’s use of wetlands restrictions.  The court noted, however, that these restrictions pre-dated the creation of fee estates and that as individual ownership rights began to take shape, wetlands regulations were abandoned in favor of development.

In addition, the Galarza court distinguished the Palazzolo decision issued by Rhode Island Superior Court after remand from the U.S. Supreme Court.  The Superior Court found that wetlands designations were part of the background principles of Rhode Island’s state law.  Conversely, the Galarza decision found that “[w]hile development of wetlands constitutes a nuisance under Rhode Island law, development of wetlands was not a nuisance under New York law.”  The court chronicled the filling and draining of wetlands and the history and treatment of land development in the City from its inception until the 1970s, at which time conserving wetlands became a concern.  “Given this history, it is clear the New York wetlands regulations did not simply make explicit a prohibition on activity that was always unlawful, and therefore the wetlands regulations are not part of New York property and nuisance law.”

The Galarza court also distinguished a 2016 Second Department ruling in Monroe Eqs. LLC v. State of New York, 145 A.D.3d 680, which held watershed regulations constituted background principles of New York law.  Unlike wetlands regulations, watershed regulations prohibit a nuisance by preventing poisoning and pollution of water supplies and drinking water.  Based upon this analysis, the court found the Owner in Galarza was not barred from bringing a takings claim.

The Regulatory Takings Analysis: Per Se, Partial or Not at All

After having found the Owner’s regulatory taking claims were not barred, the court proceeded to the crux of the case: whether there was a reasonable probability that the wetlands regulations constituted a regulatory taking.  If not, the Owner’s just compensation is limited to the value of the Property as regulated.  If so, then the Owner is entitled to an incremental increase in value as just compensation, i.e. the value of the land as restricted plus an increment.  The increment reflects the premium a hypothetical buyer would pay for the Property in light of the probable success on a takings challenge.  (In other words, the Property would be worth more and, thus, entitled to greater value as just compensation for condemnation.)  To show a reasonable probability of success on a takings claim, the claimant must demonstrate that the regulation renders the property “unsuitable for any economic or private use, and destroy[s] all but a bare residue of its value.”

To determine whether there was a reasonable probability of a successful regulatory takings claim, the court considered Lucas, Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002) and Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978).  Under Lucas, a regulation constitutes a taking per se “only in the extraordinary circumstance where no economically beneficial use of the land is permitted and the regulations have extinguished all of the property’s value.”  In this scenario, no further analysis is necessary.  Galarza highlighted the distinction between “economic use” (returns from actual use or development) and a “property’s value” (market value as regulated or otherwise), but noted that Lucas used these terms interchangeably.  Later, the U.S. Supreme Court clarified Lucas in Tahoe-Sierra : “compensation is required when a regulation deprives the owner of all economically beneficial uses of his land…[and] is limited to the extraordinary circumstance when no productive or economic beneficial use of land is permitted.”  Anything short of 100% loss of value is not a regulatory taking per se and requires additional analysis by the factors enumerated in Penn Central.

Specifically in Galarza, the Property had value as regulated because there is a market for wetlands in Staten Island (discussed below), but the Property had no economic beneficial use.  The court considered two other cases in this respect, namely Lost Tree Vill. Corp. v. United States, 787 F.3d 1111 (Fed. Cir. 2015), and Florida Rock Indus., Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994), to determine whether having value without any beneficial or economic use(s) precludes a taking per se.  The court in Lost Tree, on the one hand, held that residual non-economic value (i.e. market value) does not preclude a per se taking because there are no longer any underlying economic uses and the market value (selling the property) is not an underlying economic use.  Florida Rock, on the other hand, held that the value of property as a speculative investment is a proper consideration and that the associated market value precludes finding per se taking.[2]

The court in Galarza agreed with Florida Rock, holding that there is an established market for wetlands in Staten Island (for reasons that are not entirely clear) and that these parcels are bought and sold with an expectation that the restrictions may eventually be changed, waived or modified, or that the parcels might be sold at a profit.  Regardless of the motives and intentions, this market exists for parcels without permissible uses and this market must be considered in the takings analysis.  The Property was found to have a market value of $200,000.  Accordingly, because the Property has value in this market, the wetlands designation does not deprive the Property of all of its economic value (although it does deprive economic use entirely).  Therefore, it cannot qualify as a regulatory taking per se under Lucas.

Having failed to meet the Lucas test, the court then turned to a partial regulatory takings analysis under Penn Central.  This analysis is an “ad hoc, factual inquiry” and considers three factors: (1) the regulations’ economic impact upon the claimant, (2) the extent of interference with “reasonable” investment-backed expectations and (3) the character of the regulation as governmental action.

Penn Central Test Part 1: Economic Impact

First, in evaluating the economic impact, courts must compare the value that the regulation has taken from the property with the value that remains with the property.  Here, the court analyzed precedent set by four previous Second Department cases in wetlands taking cases (ranging from 1984 through 2017).[3]  Based upon these cases, the Galarza court found there was a reasonable probability of a successful regulatory takings challenge where regulations deprived the claimant of all rewarding uses of the property, e.g. development prohibition, and reduced the property’s value upwards of 80-90%.

In contrast, the court cited two other Second Department cases: Adrian v. Town of Yorktown, 83 A.D.3d 746 (2d Dep’t 2011), and Putnam County Nat’l Bank v. City of New York, 37 A.D.3d 575 (2d Dep’t 2007).  In Adrian, the court did not find a regulatory taking where the property value was reduced by a 64% reduction and the claimant sold the 15-acre parcel for $3,600,000, although contended it was worth $10,000,000.  In Putnam County Nat’l Bank, the court also did not find a regulatory taking.  There, watershed regulations reduced the value by 80%, and although the claimant was denied a building permit for a 36-lot subdivision because a sewer could not be built within the watershed, approval was granted for an alternative 17-lot subdivision.  The property was ultimately sold for $1,400,000.  That court found this realization was a “reasonable return”, and the economic impact of the watershed restrictions was not sufficient to constitute a taking.

Here, after various arguments and evidence presented by the parties, the court found the Property to have the following set of values: $200,000 as regulated and undeveloped and $1,701,000 as fully developed.  The court also found that it would cost $469,507 to develop the Property and, when the costs are deducted from the fully developed value ($1,701,000 less $469,507), the value of the return would be $1,231,493.  The difference, then, between the regulated value ($200,000) and the developed value, after costs ($1,231,493), is $1,031,493.  This figure is 84% of the fully developed value.  Another way to view the calculation is that the regulated value ($200,000) is 16% of the fully developed value.  Accordingly, the regulations reduce the Property’s value by 84%.

Penn Central Test Part 2: Extent of Interference with Expectations

Penn Central’s second factor is the extent of interference with investment-backed expectations.  Initially, courts must determine whose expectation to use.  In the regulatory takings context, the expectation of the owner is used because it is his or her land that suffers from the restraint.  To determine just compensation in the condemnation context, the expectation of the hypothetical buyer is used because this perspective determines the owner’s realization upon a sale.

Considering the hypothetical buyer’s expectations, the court must view the reasonableness of the expectation as an objective test: whether the regulation embodied a background principle of New York property and nuisance law.  This is the same consideration in determining whether a regulatory claiming is barred at the outset.  Essentially, it is unreasonable to expect to use property in such a manner prohibited as a background principle of law.  Finding guidance from the U.S. Supreme Court in Palazzolo, Galarza concluded it is reasonable to expect to utilize property as if the regulations did not exist – unless the regulations are background principles, the analysis cannot begin by limiting expectations to only those uses allowed by the regulation if the regulation is not a background principle.

As noted above, the Staten Island wetlands market exists and contemplates that regulations may be changed, waived or modified in favor of future development.  The court here ultimately determined it is not unreasonable for a hypothetical buyer to expect to develop the Property at some future date because, among other things, the wetlands restrictions are not background principles of law.  Accordingly, because any development was totally prohibited by the wetlands designations, then the regulations substantially interfered with reasonable expectations to develop the Property.

Penn Central Test Part 3: Character of the Regulation

The third factor under Penn Central is the character of the regulation.  Courts consider whether it amounts to a physical invasion or, instead, merely affects property interests.  Additionally, courts consider “reciprocity of advantage,” i.e. whether the regulation is part of a general scheme that provides some benefit to the regulated parcel, like a comprehensive zoning plan.  The singling-out of a parcel with a disproportionate burden is indicative of a taking.  The Galarza court found that while wetlands restrictions provide a benefit to the public in general, their burden falls disproportionately on a small group of owners, especially those whose entire parcels are classified as wetlands (as opposed to portions of parcels or parcels that are wetlands adjacent).  Here, the wetlands regulations approach a physical taking because they prohibit development entirely and force the Owner to leave the Property vacant.

Concluding Penn Central

In concluding its Penn Central analysis, Galarza found: (1) the wetlands regulations diminished the value of the Property by 84%, (2) interfered with the reasonable expectations of the Owner or a hypothetical buyer to develop the Property and (3) the character of the regulations is disproportionately burdensome and prohibits all economic use of the Property.  Moreover, the court found that the diminution of value was so great and the prohibitive character so invasive that, even if a hypothetical buyer did not have an expectation to develop, the regulations themselves “nearly approximate a physical appropriation as to constitute a taking under a Penn Central analysis.”

Therefore, the court held just compensation valuation must include the regulated value plus the incremental value to reflect the hypothetical buyer’s likelihood of successfully challenging the wetlands regulations as a regulatory taking.  This increment is a portion of the difference of the valuation over-and-above the regulated value.  Here, the regulated value was $200,000 and the developed value, after costs was $1,231,493; the difference between these figures is $1,031,493, and the increment is a portion of this difference.  (The Owner already receives the regulated, fair-market value as just compensation, so this value is not included in increment calculation).

In determining the actual incremental value, courts consider the time, effort and expense in “de-regulating” the affected land, including without limitation exhausting administrative remedies, prosecuting the takings challenge and the financial cost of “carrying” the affected property.  Here, the court found that the deregulation costs would be $391,882 and deducted these costs from $1,031,493, resulting in a “present day value” figure of $639,611.  The present day value figure must be discounted for inflation and opportunity costs, among other things.  The court determined that the present day value after the applied discount was $469,380 – and this is the incremental value to be applied.  Finally, the court completed its calculation for its award of just compensation: it added the regulated value ($200,000) together with the increment ($469,380), resulting in an award of $669,380 (rounded to $669,000).

—ENDNOTES—

[1] The four cases are as follows: Gazza v. New York State Dep’t of Envt’l Conserv., 89 N.Y.2d 603 (1997), Basile v. Town of Southampton, 89 N.Y.2d 974 (1997), Anello v. Zoning Bd. of Appeals, 89 N.Y.2d 535 (1997), and Kim v. City of New York, 90 N.Y.2d 1 (1997).  Gazza and Basile addressed wetlands restrictions.In determining the actual incremental value, courts consider the time, effort and expense in “de-regulating” the affected land, including without limitation exhausting administrative remedies, prosecuting the takings challenge and the financial cost of “carrying” the affected property.  Here, the court found that the deregulation costs would be $391,882 and deducted these costs from $1,031,493, resulting in a “present day value” figure of $639,611.  The present day value figure must be discounted for inflation and opportunity costs, among other things.  The court determined that the present day value after the applied discount was $469,380 – and this is the incremental value to be applied.  Finally, the court completed its calculation for its award of just compensation: it added the regulated value ($200,000) together with the increment ($469,380), resulting in an award of $669,380 (rounded to $669,000).

[2] The court addressed the nuances of speculation:

The cases that hold that one cannot consider speculative uses in valuing property in condemnation cases refer to non-current uses where it is not probable that the property would be put to such a use in the reasonable near future.  This is different from investors who speculate in property by purchasing it on the possibility of expectation that it will increase in value at some point in the future.  In this [latter] sense, speculative purchases represent investment backed expectation.

In addition, the court noted that dollars are fungible and that the land-speculation market provides owners with monetary compensation the same way as any other market.  Moreover, the key inquiry for purposes of just compensation for condemnation is whether there was a reasonable probability of successfully bringing a takings challenge as of the date of vesting – not whether any expectations of future value might be met.

[3] The cases are as follows: Chase Manhattan Bank v. State of New York, 103 A.D.2d 211 (2d Dep’t 1984), Baycrest Manor, Matter of New Creek Bluebelt, Phase 4 (Paolella), 122 A.D.3d 859 (2d Dep’t 2014), and Friedenburg v. State of New York, 3 A.D.3d 86 (2d Dep’t 2003).

On January 24, 2018 the Appellate Division, Second Department affirmed in part, and reversed in part, a trial court order granting Defendant, Bay Ridge Methodist’s counterclaim that certain cladding and a drip edge (a system used to deflect water) installed by the Plaintiff, David S. Kimball, along a party wall shared by the parties constituted a trespass.  See, Kimball v. Bay Ridge United Methodist Church, 2017-03575, Jan. 24, 2018.

In upholding the trespass, the Court stated that Kimball “failed to raise a triable issue of fact regarding whether the cladding and drip edge encroached onto the [Church’s} property.”  As such, the trial court’s trespass finding against Kimball, in favor of the Church, was upheld. However, the trial court’s finding that the trespass must be removed was reversed.

In reversing, the Court stated that “RPAPL 871(1) provides that an ‘action may be maintained by the owner of any legal estate in land for an injunction directing the removal of a structure encroaching on such land.  Nothing herein contained shall be construed as limiting the power of the court in such an action to award damages in an appropriate case in lieu of an injunction or to render such other judgments as the facts may justify.'” (emphasis added)

Finding that the Church failed to demonstrate the absence of any triable issues of fact concerning whether the balance of equities weighed in its favor, the Appellate Division vacated the injunction directing Kimball to remove the cladding and drip edge from the shared wall holding that “[i]n order to obtain injunctive relief pursuant to RPAPL 871(1), a party is ‘required to demonstrate not only the existence of [an] encroachment, but that the benefit to be gained by compelling its removal would outweigh the harm that world result.”

Consequently, since the Church did not prove that the benefit gained by the Church in compelling Kimball to remove the cladding and drip edge would outweigh the harm that would result to Kimball if removed, the Court remitted the matter back to the Supreme Court, Kings County for further proceedings.

Under RPAPL 871(1), and upon the trespass finding, the party trespassed upon became the party with the burden to prove that the benefit of removal of the trespass outweighed the harm to the trespassing party.  It is not enough for injunctive relief that a trespass exists.  The trespassed upon party is tasked with the burden to prove that its damages outweigh those damages that the trespassing party may incur upon removal.

It is interesting to note that, RPAPL 871(2) specifically states that “[t]his section shall not be deemed to repeal or modify any existing statute or local law relating to encroaching structures.”  It would be interesting to know whether a common law trespass claim was asserted in this action, or whether another statute or local law was available that could have resulted in a different and more favorable outcome for the Church.