4/08/2007

This land is my land: Long Island NY Business News, 4/6/07

By Ross Daly

The Supreme Court decision affirming local government’s right to take property for the common good led to a certain amount of “tearing out of hair and rending of clothing,” as one Long Island attorney puts it. Mostly, says another lawyer, it was a “non-event.”

Both views are right on.

The case was Kelo v. City of New London, and the Supreme Court ruled that local governments can seize people’s homes and businesses not just for public projects such as roads and schools, but also for private economic development.

The case had little direct impact in New York because the state has long recognized this principle. But that doesn’t mean Long Island isn’t awash in contentious eminent domain battles, most notably involving Stony Brook University’s expanding campus, redevelopment in Long Beach and a North Hempstead golf course.

The Kelo decision doesn’t directly affect those cases, but it has moved public perception of eminent domain.

“Kelo acted kind of like a lighting rod for the whole question of eminent domain,” said M. Allan Hyman, a senior partner at Certilman Balin who practices condemnation law, adding the case has raised people’s awareness about the concept of surrendering property to private developers.

Flower, power and cash
Hyman was counsel on one of the more significant uses of eminent domain on Long Island in recent years. He represented Stony Brook University during its condemnation of the St. James property known as Flowerfield.

The 246-acre parcel was seized by the state in 2005, allowing the university to build a state-of-the-art technology center, among other facilities. The owner of the property, Gyrodyne, was paid $26.3 million for the land; the company says the land is worth more and has filed suit in the Court of Claims seeking an additional $158 million.

A Gyrodyne spokesman said the company is optimistic the process will end in a fair result for company shareholders. But a Stony Brook official familiar with the case said the price paid was fair, based on real estate appraisals, the land’s light industrial zoning and its foreseeable uses.

Both sides have retained expert witnesses and are awaiting a hearing date.

Eminent domain disputes usually come down to questions of compensation, said Michael G. Zapson, a real estate attorney with Davidoff Malito & Hutcher LLP. Once government declares a property necessary for a public purpose, the courts tend to agree, he said.

Zapson – a self-professed “big fan” of eminent domain – joked that 99.9 percent of eminent domain disputes are over compensation, while the other 0.1 percent are also about compensation.

Part of that enthusiasm for the process stems from his experience as a Long Beach City Council member through the 1990s. For about 20 years, the city had sought to develop a site known as the “Superblock,” which had several distinct parcels with a variety of owners.

After finally acquiring the properties in October through eminent domain, Long Beach transferred the Superblock to a developer who intends to build a condominium/hotel complex with commercial space, restaurants and a catering hall. Construction at the site has yet to begin.

“People used to say that Long Beach was a blighted area, and it was,” Zapson said. “What the city was able to do was acquire the blighted areas and have them redeveloped. That’s a formula that should be followed in more areas.

“Eminent domain is a very good tool for the municipalities to use to ensure positive development and remove blighted areas,” he added.

Old concept in New York
A. Thomas Levin, chairman of the municipal law, land use and environmental compliance practice for Meyer, Suozzi, English & Klein P.C. in Garden City, said that despite much “tearing out of hair” following the Kelo decision, New York law was already clear: Governments can take property for economic development reasons, as illustrated by the Superblock case.

He added that despite the post-Kelo outcry, governments continue to use eminent domain as they always have. The much-heralded rebirth of Times Square, for instance, was accomplished through eminent domain.

One major side effect of the Kelo decision has been increased attention from lawmakers around the country looking to limit the use of eminent domain, according to Patricia Salkin, associate dean and director of the Government Law Center at the Albany Law School. That includes New York lawmakers, who introduced bills to compensate property owners subject to eminent domain at 125 to 150 percent of market value. The bills went nowhere.

Considering litigation and transaction costs, a price above market value may be appropriate, suggested William Cornachio of Uniondale law firm Rivkin Radler.

One piece of eminent domain legislation that did become New York law last year was extremely limited in scope. The village of North Hills had been considering using eminent domain to take the private Deepdale Golf Club and open it to village residents, but the wealthy and powerful club members banded together to defeat the idea.

In the end, state Sen. Michael Balboni authored narrowly crafted legislation that prohibits municipalities in the Town of North Hempstead from seizing private recreational facilities and using them for the same purpose.


Long Island NY Business News: http://www.libn.com