NY Appellate Court Rejects Economic Development Taking because of Prior Public Use

This post was authored by Amy Lavine, Esq.

A recent appellate division case in New York considered whether a municipal economic development agency could use its eminent domain powers to take property owned by another municipality and used for a bus depot. While the court acknowledged that economic revitalization was a sufficient public purpose to support the use of eminent domain, it nevertheless concluded that the taking had to be rejected because the parcel was already devoted to an existing public use. Matter of City of New York v Yonkers Indus. Dev. Agency, 2019 WL 1272475 (NYAD 2 Dept. 3/20/19).

The property at issue in this case was located in the Yonkers but owned by New York City, which leased it to the Metropolitan Transportation Authority (MTA) for the operation of a bus depot. In March 2017, the Yonkers Industrial Development Agency (IDA) determined that the property was underutilized and adopted a resolution to condemn the parcel so that it could be redeveloped for “productive uses” in accordance with its local urban renewal plan. The resolution only authorized the condemnation of New York City’s fee interest in the property, however, and it excluded the MTA’s leasehold rights.

The court began its analysis by explaining that the “public use” test has been broadly interpreted in New York “as encompassing virtually any project that may confer upon the public a benefit, utility or advantage.” Under this test, the New York courts have accepted condemnations intended to boost the local economy and create jobs, as well as for more traditional public uses like infrastructure and utilities. To bring a successful challenge against a proposed municipal condemnation, the court explained, the property owner “has the burden of establishing that the determination does not rationally relate to a conceivable public purpose.”

Applying these standards to the facts of this case, the court concluded that New York City failed to meet its burden of showing that the IDA’s proposed condemnation had no conceivable public purpose. As the court noted, the taking was intended for the purposes of urban renewal and to increase the economic viability of the City of Yonkers, and these were sufficient and legitimate public purposes to support the use eminent domain.

Regardless of the public use issue, however, the court agreed with New York City that the condemnation was prohibited under the doctrine of prior public use. This rule generally holds that land already devoted to a public use cannot be taken by eminent domain, except where there is specific legislative authority for the taking or where the new use would not substantially interfere with the existing public use. The IDA conceded that the MTA’s bus depot was a preexisting public use and that there was no legislative authorization for the condemnation, so the only issue was whether the proposed redevelopment taking would materially interfere with the bus depot. The court found that it would, and that the IDA’s decision to exclude the MTA’s leasehold interest from the condemnation did not change this result. As the court explained, the taking was premised  on the IDA’s determination that the property was “underutilized” and nothing in the resolution or urban renewal plan suggested that continued operation of a bus depot would be part of the property’s redevelopment. Various comments at the public hearing also provided evidence that the IDAconsidered the bus depot to be an “undesirable” use of the property for purposes of redevelopment, all of which confirmed that the condemnation and new public use would materially interfere with the existing bus depot public use.

Matter of City of New York v Yonkers Indus. Dev. Agency, 2019 WL 1272475 (NYAD 2 Dept. 3/20/19)