Judge OKs SIDA use of eminent domain: Syracuse (NY) Post-Standard, 3/17/06

City agency can seize rights of Carousel Center stores for mall expansion, court says

By Rick Moriarty

State Supreme Court Justice John Centra on Thursday approved the Syracuse Industrial Development Agency's use of eminent domain to seize the rights of 14 Carousel Center stores to block an expansion of the mall.

Centra dismissed claims by the stores that the agency took too long to file its petitions in court, that the expansion was impossible given the recent legal dispute between the agency and the developer, and that plans for the mall's expansion into Destiny USA were too vague to justify the use of eminent domain.

The judge said his ruling March 9 in another lawsuit that Destiny's developer had met the terms of a 30-year tax deal with the city settled the question of whether the expansion could go forward. In that case, mall owner Robert Congel sued the agency and the city Dec. 30, alleging they had wrongly refused to activate the tax deal.

The development agency will be required to compensate the 14 stores for the rights being taken from them. The amount of compensation will be determined in a separate proceeding if the agency and the stores cannot agree on the value of the rights.

Acting at Congel's request, the development agency asked the court to allow it to seize certain lease rights held by the stores. Those lease rights gave the stores veto power over any expansion of the mall and even a change in the mall's name to Destiny USA.

Congel wants to expand the mall into a retail, hotel and entertainment attraction that he says will attract tourists from around the world. Under a preferred developer agreement with the agency, he will have to pay the cost of any compensation given to the stores.

In 2002, three department stores J.C. Penney, Kaufmann's and Lord & Taylor fought the agency's intention to use its eminent domain power against them, arguing the agency was interfering in a contract between them and the mall's owner.

But the Appellate Division of state Supreme Court ruled the store's lease rights were the same as property rights and could be taken by eminent domain to advance an economic development project, just as government takes land to widen a road.

The stores say they do not want to stop the expansion; they only want the developer to negotiate with them over his plans and how those plans will affect their business.

The agency did not file the petitions to condemn portions of the stores' leases until Dec. 29, but Centra said that was within the three-year period allowed by law after the state's highest court, the Court of Appeals, refused to hear appeals by the stores.

David Michel, city economic development director, said the agency's action is an example of how the city is cooperating with Congel to "move the project ahead." Congel has accused Mayor Matt Driscoll of trying to scuttle the project to force him into renegotiating the tax deal.

Destiny USA said Centra's decision was "yet another example of the far-reaching and broad support for Destiny USA, and the important public benefits associated with it."

The company urged the development agency to immediately issue bonds to help finance the expansion - something Centra ordered the agency to do in his ruling last week on the tax deal.

"We remain prepared to move forward with the start of construction upon issuance" of the bonds, the company said.

The development agency's directors are scheduled to meet Tuesday, and Destiny said it hopes they will use that meeting to "confirm their intent to be a partner in moving this important project forward."

Michel said Destiny is not on the agenda for the meeting. He said the city and the developer are in discussions aimed at settling their dispute.

Edward Premo, a lawyer who is representing J.C. Penney, said the department store was reviewing Centra's decision and had not decided whether to appeal. Lawyers for the other stores could not be reached for comment Thursday afternoon.

J.C. Penney has given a strong hint it will appeal. Penney legal representatives asked Centra in February to stay any ruling against them to give them time to appeal. He refused Thursday to grant such a stay, but that will not prevent the store from asking the Appellate Division for one.

The development agency does not intend to kick any of the 14 stores out of the mall. It is taking only their ability to block the mall's expansion.

Destiny USA said the stores will remain in their current locations or, in some cases, can be relocated within the mall.

The other 11 stores are Borders, Arden B, Bath & Body Works, Bath & Body Works at Home, Bon Ton, Circuit City, Comp USA, DSW, H&M, Old Navy and Weathervane.

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