We’re taking a look at eminent domain issues that are close to home this week. On Long Island, New York, the Massapequa Water District is proposing to carve off a $21.6 million section which could result in a pubic takeover of parts of New York American Water’s Nassau County property. The State Senate is passing a bill proposing a new water authority.
The district has said that it is prepared to negotiate “immediately” over a purchase of the East Massapequa portion of the system which will “begin operation by January 1, 2021.” It will include a savings for customers derived from a lack of profit incentive and no tax payments. If the negotiations fail, guess what will happen next - you got it -- the district said that it would use its eminent domain authority to take over the system if the negotiations fail.
The Massapequa Water District valued the portion of the New York American Water’s East Massapequa district with approximately 5,359 customers and infrastructure of $21.6 million. This also includes three wells and one storage tank.
Like the old Ronco ads used to say...but wait! There’s more! New York American Water has already secured an agreement to be sold to Liberty Utilities of Canada for $607 million. The deal has been scheduled to close between July and December. The Public Service commission is trying to stop the deal by requesting bids from public authorities or water districts to acquire all or part of the 120,000-customer system in Nassau county by August 3. The PSC has extended the period for proposals through mid-October.
The State Senate passed legislation that would provide a framework to establish the North Shore Water Authority, part of a plan that would allow approximately 4,500 Sea Cliff customers of New York American Water to municipalize if a feasibility study finds it’s economical. A citizens group in that district call the North Shore Concerned Citizens, has proposed joining the territory with the Jericho Water district. A watchdog group said that these moves are a positive step away from private ownership of the water system.
State Senator Jim Gaughran (D-Northport) said that New York American Water, “for years has overcharged ratepayers and profited off the backs of Long Islanders.”
Companion legislation would have to pass in the Assembly and then be signed by Gov. Andrew Cuomo. The district covers ratepayers in Sea Cliff, Old Brookville, Roslyn Harbor, Glenwood Landing, Glen Head, and Glen Cove.
The Town of Hempstead, whose previous studies found the prospect of a water takeover to not be feasible, recently announced a new procurement for “valuation services and a feasibility study” related to “potential acquisition” of New York American Water assets within the town.
In 2018, the Massapequa Water District inquired about a takeover. Consultants had assured the district that acquiring the customer base and adding customers to its own billing and mapping system “would not be an overly difficult undertaking.”
It’s never difficult... until it is. Let’s see how this one unfolds!
The Hudson County Improvement Authority’s bid to buy out stakeholders at Christ Hospital is in the works and there’s talk that Jersey City could foot some of the bill for the eminent domain proceedings.
Next week, the city council will vote on a resolution to contribute $10,000 to reimburse Hudson County for evaluating the Christ Hospital properties. That payment raises questions about whether the city will chip in for more of the expenses related to the eminent domain proceedings in in the future.
The money would be an “initial deposit” used to reimburse the authority under the terms of the resolution. It would be for “all professional charges incurred in connection with the evaluation of the acquisition of the medical center and negotiations with the interested parties and/or preparation of any agreements and undertaking research relating thereto.”
City spokeswoman Kimberly Wallace-Scalcione said in an email that the resolution seemed to leave open the possibility of using city funds for the eminent domain proceedings.
“The COVID-19 pandemic has only brought more awareness to the importance of Christ Hospital serving Jersey City,” Wallace-Scalcione said. “The Mayor is committed to protecting Christ Hospital, and we are partnering with the county to use all the tools we have at our disposal.”
Last month, Hoboken’s city council passed a nearly identical resolution to contribute $10,000 toward an eminent domain evaluation. But city spokesman Vijay Chaudhuri said there were no plans to contribute towards a larger payout. “The city does not intend to utilize funding for an eminent domain proceeding regarding the hospital,” Chaudhuri said.
Joyce Watterman, Jersey City Council President, said the city was just trying to help with the proceedings. This is due to the fact that the county is struggling financially. “Jersey City’s trying to do what it can do,” she said. But she continued her comments by saying that the city was only considering helping with the initial evaluation. The city council is still undecided about contributing to a possible eminent domain payout in the future.
“Let’s just do the first step,” she said. “You don’t want to bite off more than you can chew.”
Earlier this month the Hudson County Improvement Authority began the process of assessing the hospitals’ property value through eminent domain.
CarePoint Health has been trying to sell the three hospitals since last year. In October, RWJ Barnabas signed a letter of intent to buy Christ Hospital and Hoboken University Medical Center. And BMC Hospital, LLC, a group of healthcare investors, announced last month that it had finalized a deal to buy Bayonne Medical Center.
Of course, there is more to the story – there always is! The sales have been complicated by Alaris Health owner Avery Eisenreich. A month after CarePoint Health announced the sale of Christ and HUMC to RWJBarnabas, Eisenreich bought the property under Bayonne Medical Center and 70% of the land under Hoboken University Medical Center. He also owns 25% stakes in both the Christ Hospital land and operations.
Officials have accused Eisenreich of holding up the sales of the three hospitals through his land holdings. Last month, the county board of freeholders voted to begin eminent domain proceedings to buy out Eisenreich’s stakes.
Large eminent domain payouts would be a heavy burden on Hudson County, and if similar situations happen nationwide to local governments as they all deal with the financial fallout from the coronavirus.
CarePoint owns 11 Jersey City properties, in addition to Christ Hospital, that are associated with the acute care hospital. The properties were valued at $135 million in 2012.
Councilman-at-large James Solomon said the city’s $10,000 proposal was a sign of the importance of Christ Hospital. “Keeping the hospital in Jersey City is an important thing, so it made sense to me that the city would make a small contribution to the appraisal,” he said.
As for a larger contribution down the line, Solomon said he was open to discussions about it.
“From (a) overall health of the city perspective, it’s important that we have the hospital capacity,” said Solomon. “As we saw during COVID, we need it.”
A proposed pipeline is getting the okay to exercise eminent domain power on certain areas of the state. The green light was given by New York’s highest court this week which said that federal approval was good enough.
On June 25, 2020 the Court of Appeals filed its order in favor of National Fuel Gas Supply Corp., the pipeline-builder. The company expects to construct a 99-mile natural gas pipeline in Pennsylvania and western New York.
As often happens with eminent domain, the people who own the land fight back. National Fuel wanted to build a 50-foot wide permanent easement and the couple that owned the property resisted. When the negotiations failed, National Fuel decided to exercise the eminent domain authority given to it by a Federal Energy Regulatory Commission certificate of public convenience and necessity.
Part of the argument from the couple stated that National Fuel’s certificate was invalidated by failure to obtain water quality certification from the New York Department of Environmental Conservation.
“(W)hile DEC retained authority to grant or deny National Fuel’s application for a water quality certification (unless deemed waived), such authority did not extend either to invalidating a previously issued FERC certificate… where FERC placed no such conditions on the certificate’s effectiveness or to blocking eminent domain that might otherwise properly proceed under the certificate and (New York’s Eminent Domain Procedure Law),” Judge Leslie Stein wrote. “It remains within FERC’s purview to determine the effect of the DEC’s denial of National Fuel’s certificate of public convenience and necessity, and to stay or revoke the certificate if it deems it appropriate to do so.”
Judge Jenny Rivera disagreed in a dissenting opinion and said that the FERC certificate conditioned the project on completion of state mandatory assessments.
“(N)o good can come from this,” Rivera said. “Indeed, the majority misinterprets the federal regulatory process and the EDPL condemnation framework, and in doing so sanctions the condemnation of private property for development projects that may never gain financial approval.
“I do not see how the public benefits from the premature taking of private land…”
As shown by these dissenting opinions, the controversy surrounding eminent domain remains strong. This ruling is reminiscent of Kelo v. City of New London, where the Court held that the problems of large-scale urban blight need to be addressed with large-scale redevelopment plans, and that land can be appropriated then transferred to a private entity for a clearly defined public use.
New York is a very condemnor friendly state. It is always important to contact an experienced eminent domain attorney if you are faced with the seizure of your property.