The Town of Southampton recently held several public hearings to consider a local law requiring an updated certificate of occupancy prior to all property transfers. Specifically, the local law proposed amending Town Code §123-16, Certificate of Occupancy, to state that “upon any change in ownership of a property, an updated certificate of occupancy shall be obtained.” After consideration at several meetings, starting in December of 2016 and ending in March of 2017, the Town Board determined not to proceed with the amendment.

Many East End villages already require an updated certificate of occupancy prior to transfers of property, [1] however East Hampton, Southampton and Southold towns do not. During its public hearing process, the Town Board of the Town of Southampton waded through the many issues raised with regard to the impacts of requiring an updated certificate of occupancy upon both property owners and the Town Building Department. The Town considered allowing exceptions for those transfers conducted for estate purposes only and those transfers between individuals and corporations, limited liability companies, trusts or other entities where the majority shareholder would be the same as the prior fee title owners. Additionally, the Town was asked to consider those properties that cannot obtain an updated certificate of occupancy upon transfer due to over-clearing where compliance requires significant re-vegetation of the property and in certain circumstances Planning or Conservation Board approvals. Obviously re-vegetation cannot occur during the winter months and there is no temporary certificate of occupancy provision in the Town of Southampton’s code potentially putting property owners in a hurry to sell in a difficult situation.

The Appellate Division, Second Department, addressed an updated certificate of occupancy code provision in Lazy S Group I, v. Gomez, et al., 60 A.D. 3d 999, 876 N.Y.S.2d 473 (2d Dept. 2009). This case involved an action for specific performance of a contract for the sale of real property in the City of Peekskill where the contract required the seller to deliver a valid certificate of occupancy authorizing the use of the premises as a four-family dwelling. At closing, the parties learned that the certificate of occupancy for the premises permitted its use as a “three-plus” family dwelling but not as a four family dwelling and title did not close. Litigation followed and during that time period the City of Peekskill enacted a new provision of the Code of the City of Peekskill requiring that an updated certificate of occupancy be obtained before any improved real property that is transferred may be used or occupied. The code imposed the burden of obtaining the certificate of occupancy upon the seller “unless the parties agree otherwise in their contract of sale.” (Peekskill City Code §300-48A(3)). The Supreme Court granted the seller’s motion for summary judgment dismissing the complaint and directing the delivery of the down payment to the seller as liquidated damages. The Appellate Division reversed noting that while the City Code imposed the burden of obtaining an updated certificate of occupancy on the Seller unless the contract stated otherwise, the contract in this case was silent with respect to which party must obtain the updated certificate of occupancy. Thus, the Court found that triable issues of fact existed as to whether the communications between the parties and conduct of the parties at closing constituted any agreement with regard to the updated certificate of occupancy and whether there was a breach and if so, which party was in breach of contract. This case illustrates issues that arise when updated certificates of occupancy are required by municipalities and further illustrates the benefit of addressing such matters with specificity in the contract of sale. Indeed, most real estate attorneys require updated certificates of occupancy in their riders to the contract and are successful in obtaining same unless the property is being sold “as is” or there are existing illegal structures that would take a significant amount of time and village/town approvals to cure (as in the case of those over-cleared properties that require costly re-vegetation and further town approvals).

Requiring updated certificates of occupancy for real property transfers burdens homeowners with legalizing all structures on their property and necessarily can delay real estate transactions to the chagrin of real estate brokers. However, the law would obviate any need for protracted and often difficult negotiations regarding properties that do not comply with the law or have existing, illegal structures and would therefore be welcomed by most attorneys. Regardless, for real property transfers in the East End towns, attorneys must continue to resolve such matters through contract negotiations.

[1] See Village of Quogue; Village of Sag Harbor Code §300-17.3(B); Village of Southampton Code §A119-8(A); Village of North Haven Code §55-7(A); Village of Westhampton Beach Code §197-64(C); & Village of East Hampton Code §104-11(A), among others.

Canoe Place Inn, Hampton Bays
Canoe Place Inn, Hampton Bays, photo credit: www.27east.com

The Town of Southampton re-zoned three properties located in Hampton Bays adjacent or close to the Shinnecock Canal by amending the Town’s Zoning Code to add section 330-248(V), creating the Canoe Place Inn, Canal and Eastern District Maritime Planned Development District. This local law, adopted on January 13, 2015, provides for the rehabilitation of the Canoe Place Inn for use as an inn, catering facility, and restaurant. The law also provides for the development of a 37-unit luxury, waterfront town-house community and associated wastewater treatment facility on the Shinnecock Canal.   Four individual property owners/taxpayers formed an unincorporated community group called Shinnecock Neighbors to oppose the zoning changes and to challenge the local law via a hybrid Article 78 proceeding and declaratory action. In the case, entitled Shinnecock Neighbors, et al. v. Town of Southampton, R Squared Development LLC et al., 3 NYS3d 679 [Sup. Ct. Suffolk Co. 2016], the Shinnecock Neighbors allege, in part, that the local law should be deemed null and void because the Town Board failed to comply with the New York State Environmental Quality Review Act (“SEQRA”) and take the requisite hard look at the potential environmental impacts of the proposed development. Several of the respondents moved to dismiss the petition and complaint on the grounds that the petitioners lacked standing. In an order dated August 30, 2016, the Hon. William B. Rebolini, Justice of the Supreme Court, Suffolk County, dismissed the motion and held that the four petitioners and their unincorporated community group, Shinnecock Neighbors, had the requisite standing to bring the proceeding/action.

As noted in the decision, in order to establish standing in a land use matter, a party “must suffer direct harm (i.e., injury-in-fact) that is in some way different from that of the public at large and, further, that the claimed harm is within the zone of interests protected by the statute or statutes alleged to have been violated.” Shinnecock Neighbors v. Town of Southampton, 3 NYS3d at 683. An organization or association such as Shinnecock Neighbors has standing when one or more of its members has standing to sue, the association demonstrates that the interests it asserts are germane to its purpose, and it is evident that neither the asserted claim nor relief requires the participation of its individual members. (See Society of the Plastics Industry, Inc. v. County of Suffolk, 77 NY2d 761, 570 NYS2d 778 [1991]; Matter of Dental Society of State of NY v. Carey, 61 NY2d 330, 474 NYS2d 262 [1984]).

Three of the four individual petitioners owned residential properties within 500 feet of the proposed wastewater treatment facility. As a result, the Court found that these three individuals had standing and stated, “[a]s it is alleged that each of them resides in close proximity to the proposed development, there arises a presumption that each will be adversely affected in a manner different from the public at large.” Shinnecock Neighbors v. Town of Southampton, 3 NYS3d at 684. Additionally, the Court found that their allegations of harm, including increased traffic, increased noise and air pollution, and degradation of the community from the proximity of the wastewater treatment facility were within the zone of interests protected by SEQRA and the Town’s zoning code. Id. at 684.

Interestingly, the fourth individually-named petitioner asserted a different rationale for standing. Although this petitioner lived about one mile from the canal and was not within the zone of interests protected by the statute, she claimed to be an environmental activist, professional artist and “art activist” who required access to the canal as it was a significant source of her creative inspiration and that the proposed development would have a profound negative effect on her work. The Court found that this fourth petitioner had standing and stated: “…her use and enjoyment of the area is more intense than that of the general public and, therefore, that she may be directly harmed in a way different in kind and degree from others…like claims of specific environmental injury, injury to a petitioner’s aesthetic and environmental well-being, activities, pastimes or desire to use and observe natural resources may also be found to state cognizable interests for purposes of standing.” Id. at 684. As each of the four petitioners had standing, the Court determined that the Shinnecock Neighbors also had the requisite standing. The underlying proceeding/action is still pending before the Court.

Back on September 6, 2016, this blog commented on the case of Matter of Long Island Pine Barrens Society, Inc. v Central Pine Barrens Joint Planning & Policy Commission, 138 AD3d 996 [2d Dept 2016]. In that case, none of the individual petitioners lived within the zone of interests. Nevertheless, the Appellate Division found that the Society had standing because one of the petitioners, the Society’s Executive Director, used and enjoyed the Pine Barrens to a greater degree than most members of the public. Thus, based on the holdings in the Shinnecock Neighbors v. Town of Southampton and Matter of Long Island Pine Barrens Society, Inc. v Central Pine Barrens Joint Planning & Policy Commission cases, an organization may have standing even though all its members reside outside the zone of protected interests if at least one member can articulate a rationale that shows he or she has an interest that is different from the general public, and that interest may be adversely impacted by the proposed action.

 

 On September 10, 2013, the Town of Southampton adopted a Resolution authorizing the “acquisition” of the ever popular and quite infamous Neptune Beach Club (referred to by partygoers as “Neptunes”) located on Dune Road in Hampton Bays.  The source of funding for the acquisition is the Community Preservation Fund (“CPF”) established in 1998 and adopted by Southampton Town Local Law 22-1998.  The purpose of the CPF is to acquire interests or rights in real property for the purpose of open space preservation and according to the legislation, acquisition is to be accomplished in “cooperation” with willing sellers.  The two questions on my mind are (1) whether community preservation funds can now be included as yet another means to effectuate a “taking” or “eminent domain” proceeding in a friendlier and more efficient manner? and (2) whether uses which present noise, crowds, noxious odors and the like, uses which we commonly refer to as “nuisances”- can now simply be abated by friendly purchase using community preservation funds?

I recently attended a two day continuing education series held at Touro Law Center wherein I was quite surprised at how broadly the Fifth and Fourteenth Amendments “takings” analysis is construed.   Outside of the generally acknowledged line of takings cases such as Penn Central, Kelo and the recently decided Koontz case, the panel discussions, which included Anthony S. Guardino, Esq., a partner in the Land Use Group at Farrell Fritz, enlightened its attendees with many examples of government actions, which to my surprise, were the subject of takings claims, including the imposition of unreasonable exactions and overly broad conditions of development levied against landowners.

On the heels of my newly found knowledge with respect to taking and eminent domain law, I learned that a very local and iconic beach bar named Neptunes was up for purchase by the Town of Southampton.  For many years, Neptunes has been the bane of many a nearby Dune Road resident’s existence.  The Town of Southampton acknowledges that Neptunes poses a “real concern to the local community” and that acquiring the ocean front property will provide the “ancillary benefit of eliminating a nuisance establishment.”  Likewise, as a prerequisite to purchase by way of the CPF, the property was declared by the Town of Southampton  as a “land of shimmering waters, expansive salt hay meadows . . . of paramount importance to birds, especially wintering waterfowl and migratory raptors, songbirds and shorebirds treaveling along the Atlantic Flyway.”  Clearly from the Town’s perspective, preservation of the land upon which Neptunes sits is environmentally valuable.

Given Neptune’s location on Dune Road, one would probably be hard-pressed to disagree with the Town of Southampton that Neptunes is located in an environmentally sensitive area wherein use of the CPF to purchase properties is wholly appropriate.  However,  my question is whether the availablity of community preservation funds provides an additional source of revenue for municipalites to look to when less desirable properties or uses exist in a Town, Village or City.   Should property owners be cautious or concerned that a less desirable use can be “taken” away by purchase?  Likewise, does the purchase of Neptunes signal a change regarding government’s role in private business?  News 12 reports that if the sale occurs, the Town may seek  to develop the property into an upscale restuarant?  Is the operation of an upscale restaurant government business or government doing private business?  It was interesting to learn that some years ago, the Town of Southampton also acquired Neptunes neighboring beach bar, Summers.  Today, the site where Summers bandied away every weekend, is occupied by a Southampton Town-owned recreational facility.

Perhaps the purchase of Neptune Beach Club does not signal the change of government business in any way. However, given that the entirety of Dune Road could arguably be deemed environmentally sensitive, the purchase of Neptunes certanly begs the question of whether the availability of community preservation funds provides municipalities with additional sources of funding to acquire uses that are simply not so desirable, at least to some!