NEW: One shoe drops: Judge dismisses Summit Greenfield’s state suit against the town

October 5, 2012
by Christine Yeres

In a decision filed with the County Clerk on Monday, October 1, 2012, State Supreme Court Judge George Loehr dismissed Summit Greenfield’s lawsuit challenging the New Castle Town Board’s review of the developer’s application to construct 199 units of housing (20 of them affordable) on the former Reader’s Digest property.  The developer of Chappaqua Crossing filed the state suit (and another in federal court) two months before the Town Board completed its review and approved construction of 111 units of housing (20 of them affordable). The federal case is pending.

The state suit alleged that the town’s failure to act on its application had deprived Summit Greenfield of all economically viable use of the commercial portion of its property and sought compensation, even suggesting that the town be required to purchase the property from Summit Greenfield.

The decision reads, in part, “it is clear that [Summit Greenfield] has not been deprived of all economically beneficial uses of the Property.  From the date [Summit Greenfield] acquired the Property to the date it commenced this action, it was free to lease the commercial portion of the Property and to develop the residential portion of the Property if only for single family homes: on its face, something of no insignificant value.  Viewing the full bundle of [Summit Greenfield’s] rights, it was never permanently deprived of all economically beneficial use of the Property.”

In his decision, Judge Loehr pointed out that to state such a claim, Summit Greenfield must “allege facts to the effect that” the Town’s “regulatory conduct, after the final exhaustion of administrative remedies, has deprived [Summit Greenfield] of the ability to obtain a reasonable return—viewed in the light of investment-backed expectations—from the Property as a whole based on any legal use of the Property.”

“When [Summit Greenfield] acquired the Property,” Judge Loehr continued, “it knew how the Property was zoned and therefore the uses to which it could be legally put.  [Summit Greenfield] does not challenge the zoning; [it] challenges [the Town’s] conduct in refusing to approve its proposed development of the Property within the existing zoning and/or in refusing to change the zoning and/or to approve variances.  While [the Town’s] conduct in refusing to approve what [Summit Greenfield] had requested presumably reduced its value, it did not destroy its value as a whole.  A diminution in value, even if significant, which does not leave the Property worthless, and which resulted from hoped for administrative approvals or changes in the law fails to state a claim under Penn Central and the Fifth Amendment or as a violation of a substantive due process under the Fourteenth Amendment.”

Also on October 1, Summit Greenfield issued the following statement through spokesperson Geoff Thompson of Thompson and Bender: “We have reviewed the ruling and respectfully disagree with the judge’s decision. We are reviewing our options.”

Background: A timeline

2004 Summit Greenfield purchased the property with zoning for BRO (Business, Research, Office) and some single family homes

April 2005 Summit Greenfield asks for zoning change to allow up to four additional office tenants (one to occupy at least 200,000 SF, the other three limited to 171,000 SF combined total)—besides tenant Reader’s Digest.

June 2005 Town Board approves change to have four additional tenants.

January 2006 Summit Greenfield proposes construction of 348 condos, reduction of existing office square footage

December 2006 Town Board rejects the application

July 2007 Summit Greenfield proposes 278 units of housing (56 of them affordable)

August 2007 Town begins NYS environmental review

December 2009 Reader’s Digest, in bankruptcy proceeding, announces it will break its 20-year lease.

March 2010 Summit Greenfield files its first FEIS (final environmental impact statement); Summit Greenfield asks for a variance to lift the four-additional tenant limit.

July 2010 Summit Greenfield proposes plan for 199 units of housing (20 of them affordable); SG submits a second FEIS

In response to October 2010 comments from Town Board, SG submits third FEIS

November 2010 Town declares FEIS incomplete because it does not adequately ensure “the potential viability of the commercial use of the property,” “a range of housing types” including AFFH (affirmatively furthering fair housing, as per the HUD settlement with the County), and consistency with “Town zoning, community character, [and] the Town Development Plan”

December 2010 Reader’s Digest leaves the campus.

February 2011 Summit Greenfield files state and federal lawsuits against the town.

April 2011 Town Board votes to remove limit on number of office tenants and to allow 111 units of housing (20 of them affordable).

March 2011 Summit Greenfield amends its Complaint alleging that the Town’s approval process had been “a sham,” that “its delay was done in bad faith,” and that the project the town approved “was not economically viable, thereby depriving [Summit Greenfield] of all economically viable use of the Property.”

Copyright 2012