Matter of Middleland Inc. v City Council of City of New York
Annotate this CaseDecided on December 22, 2006
Supreme Court, Kings County
In the Matter of the Application of Middleland, Inc. and SDR, LLC, Petitioner, For a Judgment Pursuant to C.P.L.R. Article 78 and for Declaratory Relief pursuant to C.P.L.R. § 3001
against
The City Council of the City of New York, Brooklyn Borough President and Community Board 3 of the Borough of Brooklyn, Respondents.
6281/2006
Wayne P. Saitta, J.
Petitioner, MIDDLELAND INC. and SDR, LLC., (hereinafter "Petitioners"), move by Amended Verified Petition dated May 25th, 2006, Amended Memorandum of Law in Support of Amended Verified Petition and the exhibits attached thereto for a final Judgement:
(1) Annulling, setting aside and declaring illegal
(a) the Restrictive Declaration, as defined in the instant Verified Petition; and,
(b) the determination of the New York City Council (the "City Council") dated October 27, 2005 (City Council Resolution Nos. 1230 and 1231 filed October 27, 2005) pursuant to Department of City Planning Applications Nos. C 030276 ZMK and M 030440 ZMK, denying a re-zoning and cancellation of a restrictive declaration for the properties at 557 Dekalb Avenue and 223/225 Spencer Street (Lots 1,2 and 62 of Block 1763), in the County of Kings, City of New York (the "Properties"); and,
for an Order:
(1) Declaring the Restrictive Declaration invalid as contrary to the laws of the State of New York;
(2) Declaring the Restrictive Declaration null and void as an impermissible regulatory taking contrary to the United States and New York State Constitutions;
(3) Nullifying and setting aside the determination of the City Council as illegal, arbitrary, capricious [*2][*3]and an abuse of its discretion;
(4) Nullifying and setting aside the determination of the Brooklyn Borough President as illegal, arbitrary, capricious and an abuse of its discretion;
(5) Nullifying and setting aside the determination of the Community Board 3 of Borough of Brooklyn as illegal, arbitrary and capricious and an abuse of its discretion;
(6) Directing the City Council to approve the re-zoning and cancellation of the Restrictive Declaration for the Properties; and,
(7) For such other and further relief as the court may deem just and proper.
Upon reviewing Petitioners' Amended Notice of Petition, Amended Verified Petition together with exhibits and Amended Memorandum of Law in Support of Amended Verified Petition dated May 25th, 2006; Respondents' Verified Answer to Amended Verified Petition together with exhibits, Respondents' Memorandum of Law in Opposition to the Amended Verified Petition dated July 13th, 2006; Petitioners' Verified Reply together with exhibits and Petitioners' Reply Memorandum of Law In Support of Petition Pursuant to C.P.L.R. Article 78 dated September 5th, 2006; the court file, all the proceedings had herein and after due deliberation, the petition is denied in part and granted in part.
Summary of Underlying Proceeding
In 2003, Petitioner MIDDLELAND filed Application No. 030276 ZMK with the City Planning Commission (the "CPC") seeking to re-zone three lots on Block 1763 which is bounded by Dekalb Avenue, Spencer Street, Willoughby Avenue and Walworth Street in the Bedford-Stuyvesant section of Brooklyn, from an existing M1-5 zoning district to an R6 zoning district (the "2003 Re-zoning Application"). The properties that are the subject of the 2003 Re-zoning Application are Block 1763 Lots 1 and 2, which are owned by Middleland and Block 1763 Lot 62 which is owned by SDR, LLC. With the exception of these Properties, the remainder of Block 1763 is zoned R6.
Also in 2003, MIDDLELAND filed Application No. M 030440 ZMK to cancel Restrictive Declaration D-15 which encumbers the Properties (hereinafter "Cancellation Application"). Petitioner's seek the re-zoning and cancellation of the Restrictive Declaration in order to construct a new residential development of the Properties.
Background and Pertinent History
A.Re-zoning
In 1975, the CPC approved the Housing and Development Administration's Application No. CP-23030 for a zoning map change (hereinafter "1975 Re-zoning) covering the properties in question as well as Lots 1, 20, 24 and 29 of the adjacent Block 1764 (hereinafter "the adjacent properties"). The 1975 Re-zoning changed the zoning of both the Properties and the Adjacent Properties from existing R6 and C2-3 Districts to M1-5.
This was done to facilitate the development of a new industrial site to be occupied by International Business Machines Corporation ("IBM") who purchased all of the properties covered in the 1975 Re-zoning. IBM built a two story facility on Lot 1 of Block 1764. [*4][*5]
The properties and adjacent properties remained an IBM facility until 1993 when IBM sold Lot 1 on Block 1764 and Lots, 1, 2, and 62 on Block 1763 to Advanced Technological Solutions Inc. ("ATS"), a computer repair company,.
In 2002, ATS conveyed Lots 1 and 2 on Block 1763 to Middleland and Lot 62 on Block 1763 to Dekalb Properties LLC ("Dekalb"). In 2005, Dekalb conveyed Lot 62 on Block 1763 to SDR. The Properties have been vacant since 2002.
B.Restrictive Declaration
As part of the 1975 Re-zoning, the then owners of the Properties on Block 1763 sold the Properties to IBM subject to a Restrictive Declaration which provided that the Properties could only be used as an "accessory parking lot" for the "IBM Plant."
The IBM Plant is defined in the Restrictive Declaration as a "manufacturing facility that was to be developed by IBM on an adjacent parcel of land bounded by Walworth Street, Dekalb Avenue and Nostrand Avenue."
Article IV of the Restrictive Declaration provides that the Restrictive Declaration may be cancelled "only with the approval of the City Planning Commission and the Board of Estimate or the agencies succeeding to their jurisdiction, and no other approval or consent shall be required from any public body, private person or legal entity of any kind."
Cancellation of the Restrictive Declaration is now within the jurisdiction of the CPC and City Council because the City Council has succeeded to the jurisdiction of the Board of Estimate.
C.2003 Re-zoning Application
Pursuant to Section 197-c of the City Charter, the 2003 Re-zoning Application is subject Uniform Land Use Review Procedure ("ULURP") as a result, the 2003 Rezoning Application was referred by CPC to CB3 and the Borough President and is subject to mandatory review by the City Council.
The Cancellation Application is not subject to ULURP and only needs the approval of the CPC and the City Council. However, the Cancellation Application was also presented at each stage of the ULURP process because it was related to the Re-zoning Application.
On April 25, 2005 the CPC certified the 2003 Re-zoning Application as complete and the public review process began.
D.CB3 Hearings
On June 8th, 2005 the Land Use Committee of the CB3 conducted a public hearing on the matter. A full Community Board hearing was conducted on June 27th, 2005. Middleland representatives were present at both hearings.
On June 27th, 2005, by a vote of twenty-five in favor, none against, the CB3 voted to deny the 2003 Re-zoning Application and issued the following recommendation:
In accordance with the [public hearing, the Community Board 3 voted to disapprove the application for the following reasons:
The Need for Economic Development (Jobs) - The community wants to encourage manufacturing businesses and jobs in the industrial Northwest quadrant.
Housing Available to all of the Diverse Segments of the Community - The Northwest has experienced residential conversions. However, builders have not been sensitive to the critical need for housing that affects the entire community.
[*6][*7]
CB3 did not issue a recommendation on the Cancellation Application because it was not in their jurisdiction.
In his Affirmation, Richard Lobel, counsel for Petitioners, states that after giving a presentation to CB3 an CB3 board member showed the discriminatory intent of the board by asking if the proposed residential development would be "segregated housing." The Affirmation of Sheldon Lobel, also counsel for the Petitioners states that at the hearing Ruben Pratts, Vice-Chair of CB3 made racially insensitive, discriminatory and inflammatory remarks which included phrases such as or similar to "these people" and "milking this country" when speaking in context of supporting the denial of the Petitioners Application.
E.Borough President Hearing
On July 6th, 2005, the Borough President also had a public hearing on the 2003 Re-zoning Application where Middleland representatives were present. The Borough President recommended disapproval of the 2003 Re-zoning Application stating in pertinent part that "the Borough President supports development that is appropriate for the context of the neighborhood and supports the needs of the community, [however,] the plan does not comply with the community's needs as is evidenced by its recently submitted 197-a plan. The Borough President also stated that "the proposal by Middleland, Inc. to develop housing on the parking lot of the former IBM facility is inadequate because it does not address the community's vision of creating permanent jobs at this location."
F.CPC Hearing
On August 10th, 2005, the CPC held a public hearing on the 2003 Rezoning Application pursuant to ULURP. CPC also heard the Cancellation Application pursuant to Section 197-c of the City Charter and Article IV of the Restrictive Declaration.
On September 14th, 2005, CPC issued two reports after examining the land use, planning and environmental impacts of both applications the proposed re-zoning and cancellation of the Restrictive Declaration and determined that both applications were appropriate with respect to land use and environmental conditions. The report stated in pertinent part that (1) the parcel has been vacant for 13 years; (2) the subject sites are underutilized, and; (3) the re-zoning site is too small to support significant industrial or commercial uses. The CPC also stated that the restrictive declaration is no longer needed and prevents appropriate use of the site. CPC filed a copy of this report with the City Council.
G.City Council Hearings
On October 24th, 2005, the Zoning and Franchises Subcommittee of the City Council held a public hearing on the 2003 Re-zoning Application pursuant to the ULURP. The City Council also heard the Cancellation Application pursuant to Section 197-c of the City Charter and article IV of the Restrictive Declaration. Middleland representatives were present. At the conclusion of the hearing, the Zoning and Franchises Subcommittee voted to deny both applications. Immediately thereafter, the Land Use Committee of the City Council also held a hearing, where no public testimony was taken. The Land Use Committee also voted to deny both applications.
The City Council formally adopted the denials pursuant to Resolution Nos. 1230 and 1237 dated October 27th, 2005.
Presently, the Properties are vacant and have remained vacant for three (3) additional years. Pursuant to the terms of the Restrictive Declaration, the Properties may not be used or developed other than as an accessory parking lot for the IBM Plant which ceased to exist in 1993 and IBM has sold off all interests in the property within the area of the 1975 Re-zoning.
[*8][*9]ARGUMENTS
A.Argument for 2003 Re-zoning Application
Middleland argues that CB3's determination to deny the re-zoning application has no rational basis because the Properties share common property lines with residentially developed parcels on all sides and that residential use is far more consistent with land use in the area than other potential uses. Middleland relies on CPC's finding that the re-zoning site is too small to support significant industrial or commercial use. Middleland also states that their plan includes development for housing 20% of which was slotted to be affordable housing; as such that their denial also lacks a rational basis because the area is in critical need for housing.
Middleland submits that CB3's findings were illegal, arbitrary, and capricious an abuse of CB3's discretion and should be annulled. Middleland further states that City Council's and Borough President's decision were based on CB3's decision and as such their decision was tainted by an arbitrary and capricious finding.
Finally, Middleland argues that because the City Council has no rational basis for its decision, their decision amounts to a regulatory taking because it denies the Petitioner the right to make any feasible or economically viable use of the Properties.
Respondent
B.Argument for Cancellation of the Restrictive Declaration
Middleland states that the IBM facility ceased to exist in 1993 and as such any use of the Properties in accordance to the Restrictive Declaration is impossible. Further the term "accessory use" as defined by Section 12-10 of the Zoning Resolution requires that the use is either by the same ownership as such principal use, or is operated and maintained on the same zoning lot substantially for the benefit or convenience of the owners, occupants, employees, customers or visitors of the principal use." Middleland argues that the Restrictive Declaration is invalid as a matter of law because it allows no legal use of the Properties since IBM ceased to exist in 1993.
Respondent's argue that the Restrictive Declaration is valid and binding upon Petitioner's because its plain language shows that the drafters intended the restrictive Declaration to run with the land and that the reference to IBM was merely descriptive. City Council's denial to cancel the Restrictive Declaration does not constitute a taking. Finally,
Respondent's argue that the court cannot disturb the City Council's decision not re-zone the properties constitutes a legislative enactment. Respondent's also argue that the Restrictive Declaration is valid and binding because the plain language shows that the drafters intended same to run with the land and the term IBM is used descriptively. Additionally, Respondents argue that Petitioners can legally use the Properties as a parking lot and that the right to other uses was never taken from Petitioners because they never had it. Finally, Respondents submit that the failure to cancel the Restrictive Declaration cannot constitute a regulatory taking because the Petitioners can feasibly use the Properties as an accessory parking lot to the manufacturing plant in the adjacent properties.
ANALYSIS
Petitioners bring an Article 78 proceeding seeking an Order nullifying and setting aside the City Council's determinations not to re-zone the subject properties and not cancel the Restrictive Declaration.
A.The City Council acts in a Legislative Capacity
The City Council's determination not to re-zone the properties herein are legislative acts [*10][*11]based on political considerations. "A legislative body.... is on the scene, knows the needs and wishes of the people and is charged by the electorate with the responsibility for legislating and conducting governmental affairs of the community in accordance with the best interests thereof; and the courts may not lightly overrule its legislative acts." Albright v. Manlius, 34 AD2d 419, 422-423 (4th Dept. 1070).
In Save the Pine Bush, Inc. v. Albany, 70 NY2d 193, 202 (1987) the Court of Appeals stated that unless the challenge is directed solely at the procedures that were followed in its enactment, "the general rule is that an Article 78 proceeding is unavailable to challenge the validity of a legislative act such as a zoning ordinance."
Additionally, there is a very low threshold to meet in order to validate those decisions. Legislative determinations in the area of zoning are "entitled to the strongest presumption of validity." Church v. Islip, 8 NY2d at 258.Where "the validity of the legislative classification for zoning purposes [is] fairly debatable, the legislative judgment must be allowed to control." Village of Eculid v. Ambler Realty Co., 272 U.S. 365, 388. The fact that the Council disagreed with the City Planning Commission is not itself a basis to overrule their decision.
The City Council's reason for their decision not to re-zone the properties, the need to create jobs in Central Brooklyn is a valid use of the zoning powers. Lazore v. Board of trustees of Village of Massena, 191 AD2d 764, 767 (stating providing needed jobs is a valid reason for zoning consideration). While whether the community would be better served by more housing as opposed to more jobs is open to debate, it is essentially a political question. The court will not second guess the City Council's judgment on whether the properties should be re-zone to allow for the Petitioner to build housing.
Finally, though the M1 zoning classification prohibits the owners from building a residential building, maintaining the M1 zoning classification does not deprive them of many other uses, including retail and commercial use. As such, the M1 zoning classification does not deprive the Petitioner's of reasonable use of the Properties.
B.The City Council's Determination was not Arbitrary or Capricious
Even though the Council's decision was a legislative act, if it can be shown that the Council acted in an arbitrary and capricious manner, judicial review under Article 78 is appropriate. In Rodgers v. Village of Tarrytown, 302 NY 115, 121 (1951) Petitioner brought the case seeking declaration that two amendments to a zoning ordinance invalid. The Court of Appeals stated:
"Decisions as to how a community shall be zoned or re-zoned, as to how various properties shall be classified or reclassified rests with the local administrative body; its judgment and determination will be conclusive, beyond interference from the courts unless shown to be arbitrary and the burden of establishing such arbitrariness is imposed upon him who asserts it." emphasize added.
In reviewing the proceeding, courts are limited to considering whether the "determination was made in violation of lawful procedure, was affected by error of law or was arbitrary or capricious or an abuse of discretion. Chinese Staff & Workers Ass'n v. City of New York, 68 NY2d 359, 363 (1986); Matter of Pell v. Board of Educ. Of Union Free Sch. Dist. No. 1 of the Towns of Scarsdale and Mamaroneck, 34 NY2d 222, 231, 356 N.Y.S.2d 833, 839 (1974); C.P.L.R. § 7803 (3).
Petitioners allege that the findings of the administrative proceedings of the Community [*12][*13]Board 3, the Brooklyn Borough President and the City Council lacked a rational basis, were based in part discriminatory intent, and were arbitrary and capricious. Specifically, the Affirmations of Richard Lobel and Sheldon Lobel, counsels to Petitioners, state that discriminatory remarks made by members of CB3, including phrases such as "these people" "milking this country" and "segregated housing" which tainted the decision of the board as well as the decision of the City Council.
It is undisputed that the hearings held by the Community Board 3 and the Borough President were public hearings. Thus, the very nature was to allow any member of the public to speak to assert their opinion openly. Discriminatory comments made by a few individuals during a public hearing, without more, does not automatically infer capriciousness and arbitrariness.
Here, the Petitioners do not show that the discrimination was so pervasive as to deny them a fair hearing, nor do the Petitioners show that the comments were taken in to consideration in the CB3's decision making process. There is no evidence in the record that these few comments were a basis of CB3's decision or had an impact on it.
Moreover, the Brooklyn Community Board and the Borough President merely offer non-binding recommendations on applications to the CPC. See, City Charter §2800 (d)(17); City Charter §8200 (9); Community Board No. 7 v. Schaffer, 84 NY2d 148, 159 (1994). The City Council makes its own independent determination.
CPC and the City Council may reject the recommendations of a community board or may adopt resolutions which differ greatly from those recommended by the Community Board and/or the Borough President. See, Starburst Realty Corp. v. City of New York, 125 AD2d 148, 156 (1st Dept. 1987). In fact, the CPC did approve both Petitioners' Applications for the Re-zoning and to cancel the negative declaration.
Further there is no evidence that discriminatory comments were made at the City Planning Commission or the City Council or that the Council either knew of or took into consideration the allegedly discriminatory comments made at the Community Board and Borough President's hearings.
As such, the court finds that the City Council's determination was not tainted by discriminatory motives and the court will not disturb the determinations of the City Council.
Restrictive Declaration.
II.The Court Strikes the Restrictive Declaration
A.The Restrictive Declaration Leaves the Property with No Legal Use
The Restrictive Declaration herein states that the Properties "shall be developed and used only as an accessory parking lot for a manufacturing facility to be developed by IBM on the adjacent parcel of land bounded by Walworth Street, Dekalb Avenue, Nostrand Avenue.
Petitioner's argue that the Restrictive Declaration is invalid because it assumes that the properties would be owned and operated jointly by IBM; thus, the declaration relies upon the owner of the Properties not the use.
It is well settled that a municipality may regulate and restrict the uses of property, but may not place restrains upon the users or owners of that property. Allen v. North Hempstead, 103 AD2d 144, 146 92nd Dept. 1984). Here, the restrictive declaration is clearly tied to IBM and thus, places restrains on the users owners of the property and seized to make sense when the properties came to separate ownership.
The Petitioners argue that the Restrictive Declaration is further flawed by the use of the term [*14][*15]"accessory parking lot" because it requires that the property remain connected to the adjacent properties either by (1) the same ownership; (2) or the same zoning lot.
Respondent's argue that the term IBM is only descriptive and not IBM specific. However, the final sentence of Article I of the Restrictive Declaration states: "IBM agrees that the subject property shall be developed as provided above in use as an accessory parking lot for the IBM Plant as substantially the same time that the Plant first goes into operation." This further evinces the City's intent to bind the owners of the property as well as the property itself.
The plain language of the declaration is that the lot is restricted to use as an accessory parking lot for a manufacturing facility to be developed by IBM. The designation of an IBM manufacturing facility is not merely descriptive, it is substantive. This is particularly so as the facility had not yet been developed at the time of the declaration was enacted. A declaration which restricts property based on the identity of the owners is not valid and it is not the role of the courts to rewrite or revise such a declaration to purge its infirmities.
B.Non-Cancellation of the Restrictive Declaration Constitutes an Unconstitutional Regulatory Taking of Petitioner's Property
The Fifth Amendment to the United States Constitution prohibits the taking of "private property...for public use, without just compensation." U.S. Const. Amend. V. The taking of private property by the government for public use may occur when the government enacts or enforces laws, regulations or rules that restrict some beneficial use or full exploitation of private property and it does not substantially advance a legitimate state interest. Brown v. Legal Foundation of Washington, et.al, 538 U.S. 216 (2003); Keystone Bituminous Coal Ass'n v. deBenedictis, 480 U.S. 470, 485 (1987).
Petitioners argue that the City Council's decision not to cancel the Restrictive Declaration amounts to a regulatory taking because the Petitioner's have been left no legal use for their property and unless IBM acquires both the properties and the adjacent properties again, the properties will remain fallow in perpetuity with no legally permissible use.
Respondents cite Gazza v. New York State Dep't of Envt'l Convervation, 89 NY2d 603, 613 (1997) (stating that the purchase of a bundle of rights' necessarily includes the acquisition of a bundle of limitations) in support of their argument that the Petitioners cannot allege a taking because "a property interest must exist before it can be taken"and the Restrictive Declaration existed when they acquired the properties. They argue that the right to other uses was never taken from Petitioners because they never had it.
However, the law in the State of New York, as well as the holdings of the Supreme Court, have consistently permitted subsequent owners of the property to challenge the constitutionality of zoning regulations which pre-date their ownership. See, Palazollo v. Rhode Island, 533 U.S. 606, 121 S. Ct. 2448 (2001). As such, the quote extracted by the Respondents from Gazza may not be taken in a vacuum. In fact Gazza, distinguishes between environmental regulations and zoning regulations and states that "it has been recognized that a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond the governments legitimate police power."Id. at 614 (citing Pennsylvania Coal cCo. V. Mahon, 260 U.S. 393, 413) Furthermore, Gazza further sates that "[p]urchase of property with knowledge of the restriction does not bar the purchaser from testing the validity of the zoning land ordinance since the zoning ordinance in the very nature of things has reference to the land rather than the owner. Id. at 614 (citing Vernon Park Realty v. City of Mount Vernon, (307 NY 493, 500-501). As such, the Petitioners may challenge [*16][*17]the validity of the Restrictive Declaration as subsequent owners of the land.
Respondents then argue that the failure to cancel the Restrictive Declaration cannot constitute a regulatory taking because the Petitioners can feasibly use the Properties as an accessory parking lot to the manufacturing plant in the adjacent properties.
However, as discussed above, the Restrictive Declaration only allows the property to be used as an accessory parking lot for an IBM manufacturing facility. It is undisputed that the adjacent properties are owned and occupied by Home Depot, not IBM. Therefore, the property can not be legally used by Home Depot. Even if one were to accept the Respondents argument that the declaration does not require the lot to be used as accessory lot for an IBM facility only, it would still have to be used for parking for a manufacturing facility on the adjacent lots . The Home Depot store on the adjacent lots is not a manufacturing facility. Therefore, the Properties cannot be used as parking for Home Depot pursuant to the Restrictive Declaration.
Additionally, Home Depot does not have any need for accessory parking spaces since public records show it over two hundred (200) parking spaces available on-site to its customers. Thus, even assuming arguendo the property can be used as a parking lot for Home Depot, Petitioner is correct in its argument that to it ignores economic business realities to say that the properties retain some value because it can be used by an unrelated entity with no need for it.
Finally, the Respondents have not offered any evidence to show that a legitimate state interest is being served by the Restrictive Declaration, since IBM closed its facility.
The court finds that Restrictive Declaration constitutes a regulatory taking because it denies Petitioners any economically viable use of there land.
By reason of the foregoing, the Restrictive Declaration is invalid as an impermissible restriction based on the identity of the owner and a regulatory taking.
Wherefore, the Court grants judgment (1) Declaring the Restrictive Declaration invalid, null and void; (2) setting aside the resolution of the City Council disapproving the decision of the City Planning Commission to cancel the Restrictive Declaration, and; (3) Directing the City Council to cancel the Restrictive Declaration. It is further,
ORDERED that the part of the Petition seeking to set aside the City Council's decision to disapprove the Amendment to the zoning resolution is denied.
This constitutes the decision and order of this Court.
E N T E R ,
__________________________
WAYNE P. SAITTA, J. S.C.
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