Matter of 10 E. Realty LLC v Incorporated Vil. of Val. Stream

[*1] Matter of 10 E. Realty LLC v Incorporated Vil. of Val. Stream 2006 NY Slip Op 50561(U) [11 Misc 3d 1074(A)] Decided on April 6, 2006 Supreme Court, Nassau County Phelan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 6, 2006
Supreme Court, Nassau County

In the Matter of Application of 10 EAST REALTY, LLC, EAST VALLEY CIVIC ASSOCIATION, WILLIAM FREDA, MARY C. SALG, RICHARD R. KONRAD and THOMAS O'NEIL, Petitioners, For Judgment Pursuant to Article 78 of the Civil Practice Law and Rules

against

THE INCORPORATED VILLAGE OF VALLEY STREAM, MAYOR EDWARD CAHILL, GUIDO CIRENZA, RICHARD COFFMAN, JOANNE ANTUN, JOSEPH ZABATA, constituting the Incorporated Village of Valley Stream Board of Trustees, VINCENT ANG, the Clerk of the Incorporated Village of Valley Stream and 1 E. LINCOLN REALTY CORP., Respondents.



020555/02



Jordan M. Hyman, Esq.

Attorney for Petitioners

10 East Merrick Road, Suite 308

Valley Stream, NY 11580

Minerva & D'Agostino, P.C.

Attorneys for Respondent 1 E. Lincoln Realty Corp.

and Additional Respondent 1 E. Lincoln Realty LLC

107 South Central Avenue

Valley Stream, NY 11580

McKenna & Schnier

Attn: Patrick Michael McKenna, Esq.

Attorneys for Respondent Village of Valley Stream

and Village Respondents

115 South Corona Avenue

Valley Stream, NY 11580

Thomas P. Phelan, J.

This is an Article 78 proceeding brought by petitioner 10 East Realty, LLC., and several residents of the Village of Valley Stream to vacate resolution 203/02 of the Board of Trustees of the Village of Valley Stream, which adopted Local Law 5-002, also known as Local Law E-2002, which local law authorized the Village to take back a purchase money mortgage in the sum of $275,000 in connection with the sale by the Village to 1 E. Lincoln Realty Corp. (Lincoln Corp.), of a Village [*2]owned parking lot known as Lot 11. The petition also seeks a stay of the sale and counsel fees.

For the reasons which follow, the petition is denied and the proceeding dismissed.

On March 25, 2002 the Board of Trustees of the Village of Valley Stream considered an offer by Lincoln Corp. to purchase a parking lot known as Parking Lot 11 for $275,000 to be paid in equal installments over 15 years at 5% interest. The contract was contingent upon the purchase by additional respondent 1 E. Lincoln Realty, LLC [Lincoln LLC] of the neighboring building, known as Carroll Hall, owned at the time by the local Knights of Columbus Council, and upon Lincoln LLC's obtaining the necessary variances to improve that building with a second story addition. On April 1, 2002, at a regularly scheduled and noticed open meeting of the Board, the trustees passed Resolution 072/02 approving the sale of Parking Lot 11. The contract was executed May 20, 2002.

On September 3, 2002 a public hearing was held on the variance applications. Evidence was offered to the effect that other Village owned parking lots in the immediate area were underutilized and that Parking Lot 11 was no longer needed by the Village to afford adequate public parking in that part of the Village. The record remained open until September 17, 2002 at which time the Board of Zoning Appeals issued its decision. The Zoning Board found that the proposed development of the adjacent property owned by the local Knights of Columbus Council was "very desirable." It further found that the variances were not substantial and that the project would have a "revitalizing" effect on the area. The applications were approved.

On November 4, 2002 the Board of Trustees introduced Local Law E-2002 which authorized the Village to take and hold a purchase money mortgage upon the closing of the sale. On November 18, 2002 a public hearing was held and petitioners were heard. The findings of the Zoning Board of Appeals were also made part of the record. On December 9, 2002 the Board of Trustees passed resolution 203/02 which adopted Local Law E-2002 approving the purchase money mortgage.

This proceeding was commenced on December 31, 2002 seeking to vacate Resolution 203/02 and prohibiting respondents from closing on the sale of the parking lot. An earlier application by petitioners for a preliminary injunction has been denied and the sale has since closed. Petitioners argue that the Village could not sell the parking lot without prior state legislative approval as the property is held as a "public trust," and that the village is constitutionally barred from taking back a purchase money mortgage.

Initially respondents raise the statute of limitations as a defense to the extent that petitioners are seeking to interfere with the sale of the property which was authorized on April 1, 2002 and which was contracted for on May 20, 2002. The Court agrees.

CPLR 217(1) provides in relevant part: "Unless a shorter time is provided in the law authorizing the proceeding, a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding...."[*3]

A determination is final and binding on the date it becomes effective. (Calvert v. Westchester County Personnel Office, 128 AD2d 523) It is not necessary however that the Board have completed every step necessary to effectuate the sale. In Young v. Board of Trustees of the Village of Blasdell, 89 NY2d 846, with respect to when a decision to lease a property became final and binding, our Court of Appeals stated: "With respect to the December 1993 action of the Board, the Statute of Limitations was triggered when the Board committed itself to "a definite course of future decisions" (citations omitted). That occurred when the Board of Trustees resolved to approve the lease and certainly no later than when the lease was executed in December of 1993."

In the instant matter, the Board of Trustees resolved to sell Parking Lot 11 on April 1, 2002 and became contractually obligated to do so on May 20, 2002 when the contract for sale was executed. Accordingly, the statute of limitations herein began to run no later than May 20, 2002 and the instant proceeding is untimely with respect to a challenge to the Board of Trustees' decision to sell the property.

Even if the instant proceeding were timely with respect to the Board's decision to sell the property, the Court would nevertheless deny the petition and dismiss the proceeding on its merits.

Petitioners contend that Parking Lot 11 is held in trust for the benefit of the public and therefore its conveyance requires authorization by the State Legislature (see, generally, Friends of Van Cortlandt Park v. City of New York, 95 NY2d 623). Rooted in Roman and English law, "the public trust doctrine is based on the notion that the public holds inviolable rights in certain lands and resources, and that regardless of title ownership, the state retains certain rights in such lands and resources in trust for the public." (Grad, Treatise on Environmental Law, § 10.05 (2005)). Historically, the doctrine applied to natural resources such as tidelands, bottoms of seas and oceans, and to navigable waters of lakes and streams (Ibid.; see e.g. Coxe v. State of New York, 144 NY 396, 405-406, 39 N.E. 400). New York courts have extended the public trust doctrine beyond the waters to include parkland (see Friends of Van Cortlandt Park v. City of New York, 95 NY2d 623, 630, 727 N.Y.S.2d 2, 750 N.E.2d 1050; Brooklyn Park Commissioners v. Armstrong, 45 [*4]NY 234). (Landmark West! v. City of New York, 9 Misc 3d 563; 572)

Expansion beyond such natural resources as waters and parkland, however, is not recognized. Thus, the building at issue in Landmark West!, though restricted in use to specific public purposes by the terms of its gift to New York City, did not subject the property to the public trust doctrine.

Likewise, in Angiolillo v. Town of Greenburgh, 290 AD2d 1, the Second Department refused to apply the public trust doctrine to excess parkway land despite the many "parklike features" such land possessed. To the contrary, the court recognized the distinct purposes to which parkland and parkway land relate; the first being recreation and the second transportation. As there was a lack of evidence to support a finding that the excess parkway land at issue therein constituted parkland, the public trust doctrine, requiring legislative approval before it could be sold, did not apply. Moreover, while the property may have been specifically dedicated for public use, albeit not as a park, the court noted that state statute authorized the Commissioner of Transportation to sell such land upon the Commissioner's determination that it was unnecessary for parkway operation.

In the instant matter, there has been no showing that Parking Lot 11 was obtained or utilized for any purpose other than the distinctly un-parklike purpose of serving as a lot upon which to "park" motor vehicles. The land involved in these proceedings was a village parking lot taken by eminent domain for that very purpose in the 1940s. It is not and never has been used by the Village or its residents as a park. Further, Village Law §1-102(1) specifically empowers an incorporated village such as respondent Village "to take, purchase, hold, lease, sell and convey such real and personal property as the purposes of the corporation may require." (see, also, NY Op. Atty. Gen., Informal Opinion No. 88-14 [1988]).

As set forth above, absent status as parkland the public trust doctrine has no application here. Accordingly, any attempt to set aside the sale of the parking lot in question on the grounds that the public trust doctrine requires legislative approval of the transaction must fail.

The cases cited by petitioners are clearly distinguishable. In Lake George Steamboat Co. v. Blais, 30 NY2d 48 and People ex rel. Swan v. Doxsee, 136 AD 400 , the Courts dealt with leases to private for-profit companies of property acquired and owned by the municipal respondents for the [*5]specific purpose of providing public docking for the residents of the municipality. In Kenny v. Board of Trustees of Inc. Village of Garden City, 289 AD2d 534 the Court dealt with property acquired and used as a park for recreational purposes and to which the public trust doctrine clearly applies. Finally, the trial court decisions in Ambassador Management Corporation v. Incorporated Village of Hempstead, 186 Misc. 74, and Denihan Enterprises v. O'Dwyer, 197 Misc. 950, containing dicta to the effect that a parking lot is held in trust or constitutes public use, not only predate the effective date of Village Law §1-102(1) but must be deemed to have been superceded by the Second Department's holding in Angiolillo v. Town of Greenburgh, supra.

Petitioners next challenge the terms of the sale, specifically the Village's taking of a purchase money mortgage, as violative of the New York State Constitution Article VIII Section 1 which prohibits gifts or loans of public money to private persons. That provision reads in relevant part: No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking...

The Court disagrees. In the one reported case on this subject, Cook v. Burtis 157 Misc. 140, that Court held that the constitutional ban on loans of public funds did not apply to the taking of a purchase money mortgage.

The New York State Comptroller's Office has reached the same conclusion. In Opinion of the State Comptroller No. 87-51 the Comptroller wrote in relevant part: Although this provision, on its face, would appear to preclude a municipality from loaning an individual part of the purchase price of real property and taking back a note and mortgage to secure this debt, we note that numerous special acts have authorized municipalities in this State to take back purchase-money mortgages (see, e.g., L 1944, ch 323; L 1948, ch 852; L 1974, ch 953; L 1976, ch 421; L 1977, ch 502). In addition to these special acts, Education Law, § 402(3) authorizes school districts to take back purchase-money mortgages in connection with the sale of former schoolhouses. Therefore, since all acts of the Legislature carry with them a strong presumption of constitutionality (see, e.g., Birkeland v State, 98 AD2d 395, 470 NYS2d 661, aff'd 69 NY2d 661, 485 NYS2d 485; also see gen., McKinney's Statutes, § 150 [b] ), it has been our opinion that the acceptance of a purchase-money mortgage by a municipality is not constitutionally prohibited (see, e.g., 1981 Opns St Comp No. 81-61, p 62; 1978 Opns St Comp No. 78-932, unreported; 33 Opns St Comp, 1977, p 53; 1977 Opns St Comp No. 77-329, unreported). Further, we [*6]note that at least one lower court has concluded that a purchase-money mortgage taken back by a town in partial payment for the sale of real property would not contravene a predecessor provision to current Article VIII, § 1 (Cook v Burtis, 157 Misc 140, 283 NYS 146 [1935] ).

The Court agrees with the reasoning of the Comptroller that in as much as numerous special acts have authorized municipalities to take back purchase money mortgages upon the sale of municipal land, a strong presumption of constitutionality exists regarding this power.

The Court agrees with respondents that a purchase money mortgage is properly viewed as a security interest in the real property sufficient to issue the eventual payment of the purchase price to which the municipality is entitled. No money has passed to the purchaser from the village or from the purchaser to some third party as with a traditional "loan.". (See Opinion of the State Comptroller No. 96-4.)

The scope of the Court's authority to review the Village Board's determination in this matter is therefore limited to an inquiry as to whether respondents' decision was arbitrary or capricious. (Rockland Medilabs Inc. v. New York State Dept. of Social Services, 186 AD2d 953) The Court may not substitute its judgment for that of respondents. (Hoffman v. Town Bd. of Town of Queensbury, 255 AD2d 752; Matter of Karanja v. Perales, 163 AD2d 264, lv. denied 76 NY2d 715) Where the determination made has a rational basis in the record before it, a decision is not arbitrary and capricious and may not be set aside by the Court. (Halperin v. City of New Rochelle, 24 AD3d 768; Richcar Tavern, Inc. v. New York State Liquor Authority, 160 AD2d 881)

In this regard, the court finds that the Village has articulated a rational basis for its decisions to sell the parking lot and to take back a security interest in the property by way of a purchase money mortgage. It has determined that other public parking in the immediate area is underutilized and that Parking Lot 11 is no longer needed for public parking, that additional tax revenues will be received from the sale of Parking Lot 11 and from the expansion and improvement of the adjacent building, and that if the purchase price were to be received in a lump sum the Village would be compelled to either spend the money before the end of the fiscal year or treat it as a revenue surplus for budgetary purposes.

Accordingly, the petition filed under Index No. 020555-02 seeking to vacate Resolution 203/02 and the purchase money mortgage, and stay the sale of Parking Lot 11, is denied.

Settle judgment.

APRIL 6, 2006 THOMAS P. PHELAN

Date J.S.C.