NY Appellate Court Prohibits Local Development Agency from Condemning Property for Hospital Parking Lot

This post was authored by Amy Lavine, Esq.

A New York appellate court held in December that the Oneida County Industrial Development Agency (IDA) had no authority to condemn property for a hospital parking lot.The court explained in a rather cursory opinion that under the IDA’s enabling legislation, its “statutory purposes”—and thus its use of eminent domain—were restricted to the development of “commercial facilities.” The court noted that “healthcare-related facilities” weren’t included in any of the IDA’s statutory purposes and then concluded that the proposed condemnation would not be for a “commercial purpose” because the property wasn’t being condemned solely for a surface parking lot but rather “because it was a necessary component of a larger hospital and healthcare facility project.”

Judge Curran disagreed with the majority’s decision and offered a persuasive dissent. As he argued, the court failed to give any deference to the IDA’s determination that its use of eminent domain was for a lawful purpose within the bounds of its statutory authority, nor did the court make any finding that the IDA’s determination was arbitrary, irrational, or that it lacked any reasonable basis. In Judge Curran’s opinion, the result was a de novo ruling that “entirely supplanted” the IDA’s exercise of its administrative authority.

Judge Curran also emphasized that administrative deference was required under the court’s precedents with respect to “an agency’s interpretation of a broad ambiguous statutory term,” and a decision issued by the court in 2017 was particularly on point, as the court in that case had deferred to another IDA’s determination that granting tax subsidies to a resort and casino was for a lawful “commercial” purpose as authorized under another provision in the IDA enabling act. Matter of Nearpass v Seneca County Indus. Dev. Agency, 152 AD3d 1192 (NY App Div 4th Dept 2017). As Judge Curran explained: “Here, the majority fails to address Nearpass and ignores its obvious application to the resolution of this appeal. Although this case and Nearpass arise out of slightly different contexts—i.e., interpreting different provisions of the General Municipal Law—they both ultimately involve the same question of statutory interpretation in the context of administrative decision-making. As noted, they also both involve the same broad and ambiguous statutory term—i.e., the word ‘commercial.’ It would be one thing if the majority acknowledged Nearpass and explained why, despite that case’s central holding, OCIDA’s determination that the project here was ‘commercial’—i.e., its interpretation of General Municipal Law § 858—was irrational or unreasonable.”

Judge Curran also disagreed with the majority’s reliance on the absence of any specificreference to healthcare facilities in the IDA’s enabling legislation as a basis for its decision, since the IDA’s statutory grant of eminent domain was broad and whether or not a particular type of land use was expressly listed was irrelevant to determining whether or not any particular use of eminent domain would be for “commercial” purposes. Judge Curran also noted that “as OCIDA correctly contends, the [medical office building] that would be serviced by the subject property for the development of a surface parking lot is neither a ‘hospital’ nor a ‘health-related facility’ as those terms are generally understood…. It appears that, in its essence, the majority’s conclusion stands for the proposition that, if a proposed parking lot is part of a hospital’s or heathcare-related facility’s campus, however tangentially, an industrial development agency may not utilize its eminent domain power to acquire property for that purpose because a ‘hospital’ or ‘health-related facility’ is either not among the broadly defined purposes in section 858 or is somehow excluded from them. I know of no principle of statutory construction, or any precedent, that supports such a conclusion and I respectfully decline to follow it.”

Matter of Bowers Dev., LLC v Oneida County Indus. Dev. Agency, 2022 NY Slip Op 07327 (NY App Div 4th Dept 12/23/22)