New York Law Review

Tag: takings clause

  • Walton v. New York State Dep’t of Correctional Services, 13 N.Y.3d 475 (2009): Whether a Commission on Inmate Calls is an Illegal Tax

    13 N.Y.3d 475 (2009)

    A state agency’s commission on inmate phone calls, where recipients voluntarily accept the calls, is not an illegal tax, taking without compensation, or a violation of equal protection or free speech rights under the New York Constitution.

    Summary

    Family members and legal service providers of inmates sued the NYS Department of Correctional Services (DOCS), challenging the commissions DOCS collected from inmate phone calls as unconstitutional. They argued the commissions were an illegal tax, a taking without just compensation, and violated equal protection and free speech rights. The Court of Appeals held that because call recipients voluntarily accepted the calls, the commission was not a tax or taking. Further, because all recipients of inmate calls were treated the same, and because alternative means of communication existed, no equal protection or free speech violations occurred. The court affirmed the dismissal of the suit, emphasizing that while the policy was questionable, it did not violate the NY Constitution.

    Facts

    DOCS contracted with MCI to provide telephone services in state prisons. The agreement stipulated that MCI would pay DOCS a commission on each collect call made by inmates. DOCS used these commissions to fund programs within its Family Benefit Fund, including healthcare for inmates and bus services for family visitation. The Public Service Commission (PSC) approved MCI’s rate filings, including the commission, but later stated it lacked jurisdiction over the DOCS commission itself. Call recipients were informed that the call was from an inmate and had the option to refuse the call. Petitioners, who accepted collect calls and paid the rate, challenged the DOCS commission.

    Procedural History

    Petitioners sued DOCS and MCI, alleging various state constitutional violations. The Supreme Court initially dismissed the constitutional claims as time-barred, but the Appellate Division reversed. The Court of Appeals in Walton I reinstated the constitutional claims. On remand, the Supreme Court dismissed the claims on the merits. The Appellate Division affirmed. The Court of Appeals then reviewed the substantive constitutional arguments.

    Issue(s)

    1. Whether DOCS’s collection of commissions on inmate phone calls constituted an illegal tax or fee in violation of the Separation of Powers Doctrine and Article III, § 1 and Article XVI, § 1 of the New York Constitution?

    2. Whether the DOCS commission amounted to a governmental taking of property without just compensation in violation of Article I, § 7(a) of the New York Constitution?

    3. Whether the inclusion of the DOCS commission in the rates charged for telephone services violated the petitioners’ right to equal protection of the law under Article I, § 11 of the New York Constitution?

    4. Whether the commission impeded the petitioners’ freedom to associate with and speak to their loved ones and clients, violating Article I, § 8 of the New York Constitution?

    Holding

    1. No, because MCI, not the call recipients, was obligated to pay the commission, and the commission was a contractual obligation, not a tax imposed on the recipients.

    2. No, because the acceptance of collect calls was a voluntary action, and in exchange for their payments, petitioners received telephone services.

    3. No, because the petitioners were not similarly situated to other New York residents who did not accept collect calls from inmates, and all recipients of inmate calls were treated the same.

    4. No, because alternative means of communication remained available, such as mail and visitation, and the additional expense did not imperil the right of inmates to communicate with others.

    Court’s Reasoning

    The court reasoned that a tax is a charge exacted by the government for general costs, while a fee is related to a specific benefit received. Here, the commission was neither. MCI’s obligation to pay DOCS arose from a voluntary contract, similar to how property owners receive compensation for allowing payphones on their premises. The court distinguished this situation from a tax because the call recipients voluntarily accepted the calls and were not compelled to pay DOCS directly.

    The court dismissed the takings claim because the petitioners voluntarily accepted the calls and received telephone services in exchange for their payment. There was no confiscation of property without consent. The court stated that the State Constitution does not mandate the lowest possible phone rates for inmates’ families.

    Regarding free speech and association, the court applied the Turner v. Safley standard, which asks whether a policy impinging on prisoners’ constitutional rights is reasonably related to legitimate penological interests. The court found that because alternative means of communication existed, the commission did not substantially impair inmates’ right to communicate.

    The court dismissed the equal protection claim, holding that the petitioners were not similarly situated to other New York residents. The court stated that all recipients of inmate calls were treated the same, and the security concerns attending incarceration justified the limited options available to inmates.

    The court explicitly stated that its holding should not be seen as an endorsement of the DOCS policy, recognizing that the executive and legislative branches had already determined the commission was not a proper cost to pass on to families and legal representatives of inmates.

  • Consumers Union of U.S., Inc. v. State, 5 N.Y.3d 327 (2005): State Power to Redirect Assets of Converting Non-Profit Insurer

    5 N.Y.3d 327 (2005)

    When a non-profit health insurer converts to a for-profit entity, the state has broad authority to direct the use of the conversion proceeds, provided the designated uses are reasonably consistent with the insurer’s historic mission of promoting affordable and accessible health care.

    Summary

    This case addresses the legal challenge to New York legislation authorizing Empire Blue Cross and Blue Shield’s conversion from a not-for-profit to a for-profit corporation. The legislation directed a substantial portion of Empire’s assets to public health and charitable purposes. The plaintiffs, Empire subscribers and related organizations, argued that the legislation violated due process, contract clauses, and constituted an unlawful taking of private property by diverting assets from Empire’s original charitable mission. The New York Court of Appeals upheld the legislation, finding that the state’s actions were within its authority to regulate non-profit conversions and that the designated asset uses aligned with Empire’s historic mission.

    Facts

    Empire began as a non-profit providing affordable hospital care to workers. Over time, it faced financial challenges due to community rating, open enrollment policies, and competition from commercial insurers. The New York legislature provided subsidies and favorable treatment to Empire over the years. Ultimately, Empire proposed converting to a for-profit entity to raise capital. The proposed conversion involved transferring assets to for-profit subsidiaries and using the proceeds for a charitable foundation. The Attorney General raised concerns, leading to legislative action culminating in Chapter 1 of the Laws of 2002, which authorized the conversion but directed 95% of the assets to a public asset fund managed by state appointees, and 5% to a charitable organization.

    Procedural History

    Subscribers and related organizations sued, alleging Chapter 1 was unconstitutional. The Supreme Court initially dismissed the complaint but later found a potential violation related to exclusive privileges. The Appellate Division affirmed. The Court of Appeals granted leave to appeal, certifying the question of whether the Appellate Division’s decision was properly made.

    Issue(s)

    1. Whether Chapter 1 of the Laws of 2002, authorizing Empire’s conversion and directing the use of its assets, constitutes an unconstitutional taking of private property under the state and federal constitutions?

    2. Whether Chapter 1 violates the Due Process Clause of the state and federal constitutions by depriving Empire of property rights without adequate procedural safeguards?

    3. Whether Chapter 1 violates the Contract Clause of the federal constitution and the due process clause of the state constitution by impairing contractual obligations?

    4. Whether Chapter 1 violates Article III, Section 17 of the New York Constitution by granting an exclusive privilege to Empire?

    Holding

    1. No, because Chapter 1 does not constitute an unconstitutional taking, as the legislation serves legitimate public purposes aligned with Empire’s historic mission and does not unduly interfere with Empire’s investment-backed expectations.

    2. No, because Chapter 1 provides sufficient process through public hearings, the Superintendent’s review, and the opportunity for judicial review.

    3. No, because Empire’s certificate of incorporation does not create a contract protected by the Contract Clause, and Chapter 1 does not impair any essential contractual attribute.

    4. No, because Chapter 1 does not grant Empire an exclusive privilege, as it does not prevent other entities from seeking similar conversions.

    Court’s Reasoning

    The Court reasoned that the plaintiffs lacked a cognizable property interest in the assets of Empire beyond their status as subscribers. However, due to the Attorney General’s conflict of interest and the Board’s statutory immunity, the subscribers had standing to protect Empire’s not-for-profit assets. The Court found that Chapter 1 did not effect an illegal taking because it did not compel Empire to convert, and the dedication of assets to health care worker recruitment and retention and public health programs aligned with Empire’s historic mission. The Court determined that the legislation did not violate due process, as it provided adequate procedural safeguards, including public hearings and judicial review. It also found that the legislation did not violate the Contract Clause because Empire’s certificate of incorporation was not a contract protected by the clause. Finally, the Court held that Chapter 1 did not violate the Exclusive Privileges Clause, as it did not grant Empire a monopoly. Key to the Court’s reasoning was the determination that the uses of the conversion proceeds were consistent with Empire’s mission of promoting affordable and accessible health care, even though the proceeds were directed to public programs rather than a private charitable foundation. The dissenting opinions argued that the legislation constituted an unlawful taking and violated the directors’ fiduciary duties.

  • Twin Lakes Development Corp. v. Town of Monroe, 1 N.Y.3d 100 (2003): Constitutionality of Fixed Development Fees

    Twin Lakes Development Corp. v. Town of Monroe, 1 N.Y.3d 100 (2003)

    A municipality can impose fixed per-lot fees on developers for recreational purposes in lieu of parkland dedication, provided there’s an essential nexus between the fee and the development’s impact, and the fee is roughly proportional to the recreational needs generated by the development.

    Summary

    Twin Lakes Development Corp. challenged the Town of Monroe’s requirement that developers pay fixed per-lot fees for recreational purposes and consulting costs. Twin Lakes argued that these fees constituted an unconstitutional taking and violated due process. The New York Court of Appeals held that the fixed recreation fee was constitutional because it met the “essential nexus” and “rough proportionality” tests established in *Dolan v. City of Tigard*. The court also found no due process violation in the consulting fee requirement because the Town Code provided sufficient mechanisms for ensuring the fees were reasonable, and Twin Lakes had not availed itself of these mechanisms. The court affirmed the dismissal of Twin Lakes’ complaint.

    Facts

    Twin Lakes Development Corp. sought approval to subdivide a 28-acre parcel into 22 residential lots in the Town of Monroe. As required by Town Code, Twin Lakes deposited funds into an escrow account for consulting costs. The Planning Board granted conditional final approval, mandating per-lot payments in lieu of parkland dedication and reimbursement for consulting fees. The “in lieu of” payments were set at $1,500 per lot, as per Town Code.

    Procedural History

    Twin Lakes paid $33,000 in “in lieu of parkland” fees and $22,000 in consulting costs, allegedly “under protest.” Instead of challenging the Planning Board’s determination directly, Twin Lakes filed a declaratory judgment action to invalidate the fee provisions on constitutional grounds. The Supreme Court granted the Town’s motion for summary judgment, dismissing the complaint. The Appellate Division affirmed. Twin Lakes appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the Town’s $1,500 per-lot recreation fee constitutes an unconstitutional taking because the fee is not based on an “individuated assessment” of the recreational needs generated by its subdivision plan.
    2. Whether the Town Code violates procedural due process because applicants cannot challenge the amount of the recreation fee as excessive in relation to a particular subdivision plan.
    3. Whether the requirement to pay consulting fees without an express audit component violates due process.

    Holding

    1. No, because the Town made explicit findings connecting the need for recreational facilities to the subdivision’s impact and the fee is roughly proportional to that impact.
    2. No, because the recreation fee requirement is generally applicable, was adopted after a public hearing, and the Town revisits the fee schedule annually, allowing property owners to voice objections.
    3. No, because the Town Code limits fees to those that are “reasonable,” the Town interprets fees as subject to audit provisions, and the Town has processes in place to ensure fees are not excessive.

    Court’s Reasoning

    The court applied the “essential nexus” and “rough proportionality” tests from *Dolan v. City of Tigard* to the recreation fee. The court found an essential nexus because the Town made explicit findings that the demand for recreational facilities exceeded existing resources and that subdivision development exacerbated the problem. The statute also mandated that fees be used strictly for recreational purposes. The court stated, “Taken together, these factors clearly establish the essential nexus between the stated purpose of the condition and the fee.”

    Regarding rough proportionality, the court held that Twin Lakes failed to prove that the $1,500 per-lot fee was disproportionate to the development’s impact. The court distinguished *Garden Homes Woodlands Co. v. Town of Dover*, noting that the per-lot fee was neither a special assessment nor a tax but a generally applicable land-use regulation. The court highlighted *Jenad, Inc. v. Village of Scarsdale*, stating that the fee “was merely a kind of zoning, like set-back and side-yard regulations, minimum size of lots, etc., and akin also to other reasonable requirements for necessary sewers, water mains, lights, sidewalks, etc.”

    As for the consulting fees, the court noted that the Town Code limited fees to those that were “reasonable” and that the Town interpreted the fees as subject to audit provisions. Because Twin Lakes did not allege the fees were unreasonable or request an audit, the court found no due process violation. The court emphasized, “Under these circumstances, plaintiff has failed to establish a due process violation.”

  • Ward v. Bennett, 79 N.Y.2d 394 (1992): Ripeness of Takings Claim When Further Administrative Relief is Excessively Burdensome

    Ward v. Bennett, 79 N.Y.2d 394 (1992)

    A property owner’s claim that a denial of a building permit constitutes an unconstitutional taking is ripe for judicial review when the governmental entity charged with implementing the regulations has reached a final decision, and further administrative remedies, such as demapping, are excessively burdensome.

    Summary

    The Wards were denied a permit to build a house on their property because it was located in the bed of a mapped, but unopened, street. After unsuccessfully appealing to the Board of Standards and Appeals (Board), they filed an Article 78 proceeding claiming the denial was arbitrary and capricious and constituted an unconstitutional taking. The lower courts dismissed the taking claim as premature, arguing the Wards needed to pursue “demapping” under the New York City Charter. The Court of Appeals agreed that the Board’s decision wasn’t arbitrary but held the taking claim was ripe, as the demapping remedy was too burdensome and the Board’s decision was final. The case was remitted for further proceedings on the taking claim.

    Facts

    The Wards owned a vacant lot in Staten Island, acquiring title in 1966 with knowledge that a mapped street, North Burgher Avenue, extended through the property. The mapped street covered over 85% of the Wards’ lot. In 1986, the Wards applied for a permit to build a two-story house. The Department of Buildings (DOB) denied the permit under General City Law § 35, which prohibits building in the bed of a mapped street.

    Procedural History

    The Wards appealed the DOB denial to the Board of Standards and Appeals. The Board denied the appeal, citing concerns from the Department of Environmental Protection (DEP) and the Department of Transportation (DOT). The Wards then initiated an Article 78 proceeding in Supreme Court, Richmond County, challenging the Board’s decision and alleging an unconstitutional taking. The Supreme Court denied the petition, stating the Board had a rational basis and the taking claim was not ripe because the Wards hadn’t pursued demapping under the ULURP. The Appellate Division affirmed. The Court of Appeals modified the order, finding the taking claim was ripe and remitting the case to the Supreme Court for further proceedings.

    Issue(s)

    1. Whether the Board’s denial of the building permit was arbitrary and capricious.

    2. Whether the Wards’ constitutional confiscation claim was ripe for judicial review, given the availability of a demapping procedure.

    Holding

    1. No, because the Board had a rational basis for denying the permit based on concerns from the DEP and DOT regarding the development of the mapped street.

    2. Yes, because the Board’s decision was final and the demapping procedure was an excessively burdensome remedy, thus not barring judicial review of the taking claim.

    Court’s Reasoning

    The Court of Appeals held that the Board’s decision was not arbitrary because it was supported by substantial evidence, including concerns from the DEP and DOT about the impact of the proposed building on future street development, sewer installation, and drainage. The court applied the rational basis test, stating that the Board’s determination will be upheld if it has a rational basis and is supported by substantial evidence in the record. Regarding the takings claim, the court emphasized the distinction between ripeness and exhaustion of administrative remedies, quoting Church of St. Paul & St. Andrew v. Barwick, 67 N.Y.2d 510, 521: “Ripeness pertains to the administrative action which produces the alleged harm to plaintiff; the focus of the inquiry is on the finality and effect of the challenged action…The focus of the ‘exhaustion’ requirement, on the other hand, is not on the challenged action itself, but on whether administrative procedures are available to review that action and whether those procedures have been exhausted.” The Court noted that no further administrative avenues were available to review the Board’s permit denial. The court found that the demapping procedure, requiring approval from the New York City Council, was too burdensome to require before the takings claim could be considered ripe. The court reasoned that requiring pursuit of such a burdensome remedy would create a “bureaucratic nightmare” and undue hardship, effectively blocking meaningful judicial review of the confiscation claim. As stated in the opinion, “An aggrieved property owner could be effectively blocked from seeking meaningful judicial review of a confiscation claim until, for example, a change in governing law — a possibly excessively burdensome course of action, such as is presented in this case.”

  • Spring Realty Co. v. New York, 68 N.Y.2d 657 (1986): Constitutionality of Loft Law

    Spring Realty Co. v. New York, 68 N.Y.2d 657 (1986)

    Article 7-C of the Multiple Dwelling Law (the “Loft Law”), which legalizes interim multiple dwellings, is a valid exercise of the state’s police power and does not violate the Due Process, Equal Protection, or Takings Clauses of the United States or New York State Constitutions.

    Summary

    Spring Realty Co. challenged the constitutionality of New York’s Loft Law, arguing it violated due process, equal protection, and constituted a taking without just compensation. The Court of Appeals upheld the law, finding it a reasonable exercise of police power to address unsafe living conditions in converted loft buildings and the housing shortage. The court emphasized the legislative findings demonstrating the state’s legitimate concern for building code compliance, safety, and adequate housing. While the court affirmed the law’s validity, it struck down a portion of the lower court’s order that mandated hardship hearings by the Loft Board, clarifying that the Board has discretion on whether to hold such hearings.

    Facts

    Several loft buildings in New York City were converted to residential use without complying with applicable building codes. These buildings often lacked minimum safety standards, posing risks to occupants. The New York State Legislature enacted Article 7-C of the Multiple Dwelling Law (the “Loft Law”) to legalize these “interim multiple dwellings.” Spring Realty Co. and other plaintiffs, who owned loft buildings, challenged the law’s constitutionality.

    Procedural History

    The Special Term (trial court) upheld the constitutionality of the Loft Law but ordered hardship hearings. The Appellate Division affirmed the Special Term’s decision. The case was then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether Article 7-C of the Multiple Dwelling Law violates the Due Process Clauses of the Fourteenth Amendment of the United States Constitution and Article I, § 6 of the New York State Constitution.
    2. Whether Article 7-C of the Multiple Dwelling Law violates the Equal Protection Clauses of the Fourteenth Amendment of the United States Constitution and Article I, § 11 of the New York State Constitution.
    3. Whether Article 7-C of the Multiple Dwelling Law constitutes a taking without just compensation in violation of the Fifth Amendment of the United States Constitution and Article I, § 7 of the New York State Constitution.
    4. Whether the lower court erred in ordering the Loft Board to conduct hardship hearings.

    Holding

    1. No, because the Loft Law is a reasonable means to address legitimate legislative concerns regarding unsafe living conditions and the housing shortage, and thus a valid exercise of the police power.
    2. No, because the plaintiffs failed to demonstrate that the statute violates the Equal Protection Clauses.
    3. No, because there was no showing that the statute, as applied to the plaintiffs’ properties, contravenes the state or federal constitutions as a taking without just compensation.
    4. Yes, because mandamus only compels a purely ministerial act, and the Loft Board has discretion on whether to schedule hardship hearings.

    Court’s Reasoning

    The Court of Appeals held that the Loft Law was a valid exercise of the state’s police power. The court noted the legislative findings indicated a legitimate concern about loft buildings being converted to residential use without complying with building codes and that many of these buildings did not conform to minimum safety standards. The court stated that the statute established a reasonable means to meet these concerns, citing Goldblatt v. Town of Hempstead, 369 U.S. 590, 594-595, and Suffolk Outdoor Adv. Co. v. Hulse, 43 N.Y.2d 483, 489. The court found no merit to the equal protection claim, citing McGowan v. Maryland, 366 U.S. 420, 425, and 8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124, 137. The court also rejected the takings claim, citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 127-128 and Modjeska Sign Studios v. Berle, 43 N.Y.2d 468, 473-475, 477. The court emphasized that there was no showing that the statute, as applied to the plaintiff’s properties, constituted a taking without just compensation.

    Regarding the hardship hearings, the court stated, “mandamus is an extraordinary remedy which lies only ‘to compel the performance of a purely ministerial act where there is a clear right to the relief sought’ (Matter of Legal Aid Socy. v Scheinman, 53 NY2d 12, 16).” Since the statute did not mandate the Loft Board to schedule hearings when resolving hardship applications, the lower court erred in ordering such hearings.

  • Suffolk Outdoor Advertising Co. v. Hulse, 56 N.Y.2d 78 (1982): Billboard Removal and Amortization

    Suffolk Outdoor Adv. Co. v. Hulse, 56 N.Y.2d 78 (1982)

    A municipality can require the removal of nonconforming outdoor advertising signs without paying compensation, provided a reasonable amortization period is allowed, and neither federal nor state law preempts this power.

    Summary

    Suffolk Outdoor Advertising Co. challenged a Southampton ordinance requiring the removal of nonconforming billboards without compensation after an amortization period. The company argued that federal and state laws preempted the town’s power to enforce the ordinance. The New York Court of Appeals held that neither federal nor state law preempted the town’s authority to require billboard removal, provided a reasonable amortization period was allowed. The court found the amortization period reasonable as applied to the company, as it had already recouped its investments.

    Facts

    The Town of Southampton enacted Ordinance No. 26 in May 1972, requiring the removal of nonconforming outdoor advertising billboards by June 1, 1975, with a provision for extensions. Suffolk Outdoor Advertising Co. challenged the ordinance. After an earlier ruling on other aspects of the case, the company applied for an extension of the amortization period, which the town board denied. The board determined that the company had already amortized the costs of its billboards and made a substantial profit. The company conceded that its investment had been fully recovered and the billboards substantially depreciated for tax purposes.

    Procedural History

    Suffolk Outdoor Advertising Co. initially sought a declaratory judgment that Ordinance No. 26 was unconstitutional. The New York Court of Appeals initially upheld the ordinance but declined to rule on the reasonableness of the amortization provision. After the town board denied the company’s application for an extension of the amortization period, the company brought a proceeding to review the determination. The Supreme Court confirmed the town board’s determination and dismissed the petition. The Appellate Division affirmed, finding substantial evidence supported the town board’s decision and that federal law did not preempt the ordinance. The case then went to the New York Court of Appeals.

    Issue(s)

    1. Whether the 1978 amendments to the Federal Highway Beautification Act require compensation for billboard removal, thus invalidating the town’s amortization provision.

    2. Whether the amortization provision of the ordinance, as applied to the company, constitutes an unconstitutional taking.

    Holding

    1. No, because neither federal nor state law preempts the town’s power to require billboard removal without compensation, provided a reasonable amortization period is allowed.

    2. No, because the amortization period was reasonable as applied to the company, as they had fully recouped their investments, and the public benefit from removing the billboards outweighed any detriment to the company.

    Court’s Reasoning

    The court reasoned that New York’s Highway Law explicitly states that local ordinances can be more restrictive than state law regarding billboards. The court noted that unlike the federal statute, the state highway law had not been amended to require compensation. The court interpreted the Federal Highway Beautification Act as a taxing and spending measure, not a prohibition on billboard removal through amortization. The court cited National Adv. Co. v City of Ashland, Ore., emphasizing that the state remains free to refuse compensation and accept the penalty of reduced federal highway aid. The court also stated that the Federal Highway Administration agreed with this interpretation of the federal law.

    Regarding the unconstitutional taking argument, the court applied the criteria from Modjeska Sign Studios v Berle. It emphasized that the company had fully recouped its investments, substantially depreciated its billboards for income tax purposes, and had relatively insubstantial lease obligations. The court concluded that the town board’s decision that the public benefit from billboard removal outweighed the detriment to the company was not arbitrary or capricious, citing Metromedia, Inc. v San Diego.

    The court highlighted that the company conceded its investment had been fully recovered, it had made a substantial profit, and its billboards had been substantially depreciated for tax purposes. This significantly weakened the company’s claim that the amortization period was unreasonable.

  • Kamhi v. Planning Bd. of Town of Yorktown, 59 N.Y.2d 385 (1983): Limits on Mandatory Land Dedication for Cluster Developments

    Kamhi v. Planning Bd. of Town of Yorktown, 59 N.Y.2d 385 (1983)

    A town planning board lacks the statutory authority to compel a property owner to dedicate land for park purposes as a condition of subdivision approval under cluster zoning regulations without providing just compensation.

    Summary

    Kamhi sought approval from the Yorktown Planning Board to subdivide his property under cluster zoning regulations. The Board approved the plan but conditioned it on Kamhi dedicating a significant portion of his land for a public park without compensation. Kamhi challenged the Board’s authority to impose such a condition. The New York Court of Appeals held that the Town Law does not grant planning boards the power to compel landowners to convey property for park purposes as a condition of subdivision approval without compensation. The power to condition ownership and use only extends to limiting the transfer, development, or subdivision of park property, not to compelling conveyance to the town without cost.

    Facts

    Kamhi owned 11.1 acres of wooded land in Yorktown, NY, bisected by a brook. He sought approval to develop the land as a residential subdivision under cluster zoning provisions due to the presence of the brook and flood-prone areas. The Planning Board approved a plan for eight residences but conditioned the approval on Kamhi conveying 4.5 acres of land along the brook to the town for development as a public park. Kamhi offered to develop the land for a park himself but refused to convey the land to the town without compensation.

    Procedural History

    Kamhi initiated a proceeding to annul the condition imposed by the Planning Board. The Special Term granted Kamhi’s petition, remitting the matter to the Planning Board to impose reasonable conditions short of an uncompensated grant. The Appellate Division reversed the Special Term’s decision and dismissed the petition. Kamhi appealed to the New York Court of Appeals.

    Issue(s)

    Whether subdivision (d) of section 281 of the Town Law grants a planning board the power to compel conveyance of land for park purposes as a condition of cluster subdivision approval without just compensation.

    Holding

    No, because the Town Law does not explicitly grant planning boards the authority to compel landowners to dedicate land for park purposes without compensation as a condition of subdivision approval.

    Court’s Reasoning

    The Court of Appeals reasoned that municipal authorities only possess the zoning and land use powers delegated to them by the legislature. While Article 16 of the Town Law grants various zoning and planning powers, including the power to review and approve subdivision plats, it does not explicitly authorize planning boards to compel the dedication of land for park purposes without compensation under cluster zoning regulations. The court emphasized that sections 277 and 278 of the Town Law, which address subdivision plats, provide for dedication of land for streets and parks or payments in lieu of dedication, but do not authorize uncompensated grants. Section 281, governing cluster development, lacks similar language regarding dedication or payments. The court interpreted subdivision (d) of section 281, which allows conditions on the “ownership, use, and maintenance” of park lands, as limited to restricting the transfer, development, or subdivision of park land, not compelling its conveyance to the town without compensation. The court stated, “Doing so, we interpret the power to condition ownership and use contained in this statute as a delegation of power only to limit the transfer, development or subdivision of park property, not as a grant of power to compel conveyance to the town without cost to it.” The court concluded that implying a power to require uncompensated land transfers for parks is less justified than for streets, as the land amount required for parks is larger and the need is less vital. The court stated, “Indeed, there is less reason to imply the power to require the uncompensated transfer of land for park or recreational purposes than there is for streets because the amount of land required for parks is much greater and the need is less vital (see 4 Anderson, American Law of Zoning [2d ed], § 23.39, p 141).”

  • Loretto v. Teleprompter Manhattan CATV Corp., 58 N.Y.2d 143 (1983): Determining Compensation for a Permanent Physical Occupation

    Loretto v. Teleprompter Manhattan CATV Corp., 58 N.Y.2d 143 (1983)

    When a state statute authorizes a permanent physical occupation of property, the property owner is entitled to just compensation, and the statute must be construed to provide a mechanism for determining that compensation, even if it was initially intended as a police power regulation.

    Summary

    After the Supreme Court reversed and remanded the case, the New York Court of Appeals addressed the issue of compensation for a permanent physical occupation caused by a cable television wire installed on Loretto’s property under Section 828 of the Executive Law. The court held that the statute must be construed to allow for compensation. While the statute was initially intended as a valid exercise of police power, the Supreme Court’s ruling that it constituted a taking necessitated interpreting the law to include a mechanism for just compensation. The Court of Appeals modified the lower court’s judgment to clarify that the validity of the statute was contingent on the commission’s determination of just compensation.

    Facts

    Loretto purchased an apartment building in 1972. Unbeknownst to her, Teleprompter installed a cable television wire on the building’s roof in 1970, pursuant to a prior agreement with the previous owner. After Loretto bought the building, Teleprompter maintained the installation relying on Section 828 of the Executive Law, which limited the compensation a landlord could demand for permitting cable TV facilities on their property.

    Procedural History

    Loretto sued Teleprompter, arguing trespass. The trial court upheld the constitutionality of Section 828. The Appellate Division affirmed. The New York Court of Appeals initially affirmed, holding that the law was a valid exercise of police power. The Supreme Court reversed, finding a taking had occurred and remanding for determination of just compensation. The New York Court of Appeals then reconsidered the case on remand.

    Issue(s)

    1. Whether Section 828 of the Executive Law provides a mechanism for determining just compensation for a permanent physical occupation, as now required by the Supreme Court’s decision.
    2. Whether Section 828 is unconstitutional because it violates the separation of powers doctrine, fails to provide for compensation in advance of the taking, or violates due process.

    Holding

    1. Yes, because the statute can be construed to empower the commission to fix reasonable compensation, subject to judicial review.
    2. No, because determination of compensation by a commission is permissible, advance payment is not an absolute requirement under the circumstances, and due process concerns are adequately addressed through judicial review and potential amendment of regulations.

    Court’s Reasoning

    The court reasoned that because the Supreme Court had determined that the statute resulted in a taking, it must be construed, if possible, to provide for just compensation. The court found that Section 828, along with Section 816 of the Executive Law, provided the commission with the power to determine reasonable compensation through an adjudicatory process, subject to judicial review. The court dismissed the separation of powers argument, noting that administrative agencies can perform adjudicatory functions subject to judicial review. The court also rejected the argument that advance payment was absolutely required, finding that the circumstances of the case, including the small amount of compensation involved and the potential for judicial review, provided reasonable certainty that just compensation would be received. The Court addressed due process objections, stating that concerns regarding lack of notice could be addressed by modifying existing regulations. The court emphasized the importance of construing the statute to achieve the legislative aim of promoting the rapid development of the cable television industry while respecting constitutional requirements.

  • Loretto v. Teleprompter Manhattan CATV Corp., 458 N.Y.S.2d 129 (1982): Landlord’s Right to Compensation for Cable TV Installation

    Loretto v. Teleprompter Manhattan CATV Corp., 458 N.Y.S.2d 129 (1982)

    A New York statute requiring landlords to permit cable television companies to install facilities on their property for tenants, with compensation determined by the State Commission on Cable Television, is a valid exercise of police power and not an unconstitutional taking.

    Summary

    Loretto, a property owner, sued Teleprompter, alleging trespass and unconstitutional taking due to the installation of cable television facilities on her building. Teleprompter acted under a New York law allowing cable companies access to rental properties. The New York Court of Appeals held that the statute was a valid exercise of the police power, not a taking requiring compensation, because it served a public purpose (promoting cable television access) and did not unduly diminish the property’s value. The court emphasized the minimal physical intrusion and the absence of frustrated investment-backed expectations. The statute aimed to prevent landlords from hindering cable access and ensure tenants’ access to communication services.

    Facts

    Loretto purchased an apartment building in New York City in 1972.
    Prior to Loretto’s purchase, the previous owner had granted TelePrompter permission to install a CATV cable on the building in 1968 for $50.
    In 1970, TelePrompter installed a cable and directional taps on the roof of the building.
    Loretto claimed she did not notice the cables until CATV service was provided to a tenant a couple of years after her purchase.
    Loretto filed a class action lawsuit against TelePrompter in 1976, alleging trespass and unlawful taking under the color of Executive Law § 828.
    Loretto later transferred the property to Hargate Realty Corporation, a company wholly owned by her.

    Procedural History

    Loretto filed suit in Special Term, seeking damages and an injunction.
    TelePrompter moved for summary judgment, arguing the statute’s validity and failure to exhaust administrative remedies.
    Loretto cross-moved for partial summary judgment, challenging the statute’s constitutionality.
    Special Term granted summary judgment to TelePrompter and the City, declaring the statute constitutional.
    The Appellate Division affirmed without opinion.
    Loretto appealed to the New York Court of Appeals.

    Issue(s)

    Whether Executive Law § 828, which requires landlords to permit cable television companies to install facilities on their property for the benefit of tenants (or tenants of other buildings), constitutes an unconstitutional taking of property without just compensation.
    Whether Executive Law § 828 applies to “crossover” situations, where cable facilities on a building serve tenants of other buildings.

    Holding

    No, because the statute is a valid exercise of the state’s police power, designed to promote access to cable television as a vital communications and educational medium, and the physical intrusion on the landlord’s property is minimal and does not significantly diminish the property’s value or interfere with reasonable investment-backed expectations.
    Yes, because the legislative intent of section 828 is to promote the rapid development and maximum penetration of cable television, which includes preventing landlords from interfering with the installation of cable facilities on their property regardless of whether they are used to furnish service to the tenant or tenants of the property on which installed or of another property or properties or both.

    Court’s Reasoning

    The court reasoned that the statute advanced a legitimate public interest: promoting the development and accessibility of cable television, deemed a “vital business and community service.” The court emphasized that the police power’s scope adapts to evolving social and economic conditions.
    The court distinguished this case from traditional takings, noting that the government was acting as an arbiter between landlords and tenants rather than appropriating property for its own use.
    The court highlighted the minimal nature of the physical intrusion (a cable occupying “negligible unoccupied space”) and the absence of significant economic impact on the landlord, who could still receive fair rent.
    Referencing PruneYard Shopping Center v. Robins, the court stated that a physical invasion of property alone is not enough to be considered a taking.
    The court found no evidence that Loretto had made any specific investments anticipating income from cable installations, indicating no interference with reasonable investment-backed expectations. The court observed, “the denial of one traditional property right does not always amount to a taking. At least where an owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking, because the aggregate must be viewed in its entirety.”
    The court found that the statute applied to crossover situations as the legislative goal was to ensure maximum cable penetration and to prevent landlords from charging “onerous fees” for cable access, as was testified before the legislative committee. To allow a landlord to obtain onerous fees from the crossover portion of the installation while providing a method of limiting the amount a property owner could demand from a CATV company for allowing tenant service does not align with the legislative plan.
    The court differentiated cable TV companies from telephone companies, noting that unlike cable TV, telephone companies are required to compensate owners for lines placed on their property. This difference is reflective of differing legislative purposes and intents.

  • Penn Central Transportation Co. v. City of New York, 42 N.Y.2d 324 (1977): Landmark Preservation and Reasonable Return on Property

    42 N.Y.2d 324 (1977)

    Landmark preservation laws are constitutional as long as they allow a property owner a reasonable return on the privately created ingredient of the property’s value, even if the owner is not allowed to exploit the property to its fullest potential.

    Summary

    Penn Central, owner of Grand Central Terminal, challenged New York City’s landmark preservation law after being denied permission to build an office tower above the terminal. Penn Central argued that the landmark designation constituted a taking without just compensation. The court upheld the law, finding that it allowed Penn Central a reasonable return on the terminal as it was, and the transferable development rights (TDRs) offered provided additional compensation for the inability to build upward. The court reasoned that society contributed significantly to the terminal’s value, and Penn Central was not entitled to profit solely from this societal investment.

    Facts

    Grand Central Terminal was designated a landmark in 1967 under New York City’s landmark preservation law. Penn Central, the terminal’s owner, sought to build an office tower above the terminal but was denied a permit by the Landmarks Preservation Commission. Penn Central argued that the landmark designation deprived them of the ability to exploit the air rights above the terminal, constituting a taking of their property.

    Procedural History

    Penn Central filed suit in New York State court, seeking a declaration that the landmark preservation law was unconstitutional as applied to the terminal. The trial court ruled in favor of Penn Central. The Appellate Division reversed, upholding the law. Penn Central appealed to the New York Court of Appeals.

    Issue(s)

    Whether New York City’s landmark preservation law, as applied to Grand Central Terminal, constituted a taking of Penn Central’s property without just compensation in violation of the Fifth and Fourteenth Amendments?

    Holding

    No, because the landmark preservation law allows Penn Central a reasonable return on its property and the transferable development rights provide reasonable compensation for any loss of development potential, there is no taking.

    Court’s Reasoning

    The court emphasized that government regulation is invalid if it denies a property owner all reasonable return, but there is no constitutional guarantee that the return include all attributes, incidental influences, or contributing external factors derived from the social complex in which the property rests. The court highlighted the significant public investment in the terminal and the surrounding area. “It is enough, for the limited purposes of a landmarking statute, albeit it is also essential, that the privately created ingredient of property receive a reasonable return. It is that privately created and privately managed ingredient which is the property on which the reasonable return is to be based.”

    The court distinguished this case from zoning cases, noting that landmark regulation is not designed to further a general community plan but to preserve a single piece of property. It also noted that this was not an eminent domain case requiring just compensation. The court found that Penn Central could still derive reasonable income from the terminal as a transportation hub and through its other real estate holdings in the area which benefited from the terminal’s presence.

    The transferable development rights (TDRs) were also a key factor. While acknowledging the imperfections in the TDR program, the court held that the availability of these rights provided reasonable compensation for the lost development potential above the terminal. “If the substitute rights received provide reasonable compensation for a landowner forced to relinquish development rights on a landmark site, there has been no deprivation of due process. The compensation need not be the ‘just’ compensation required in eminent domain, for there has been no attempt to take property.”

    The court distinguished this case from Fred F. French Investing Co. v. City of New York, 39 N.Y.2d 587 (1976), where the development rights were rendered valueless. Here, the court found that Penn Central could transfer its development rights to nearby properties it owned, making the regulation reasonable.