Eminent Domain in Utica, New York

​This blog post shows that eminent domain happens everywhere and to everyone.  Even in Utica, New York which has a population of about 60,000.
 
Recently, The Urban Renewal Agency heard arguments at a hearing against the use of eminent domain to take a tax parcel on which a portion of the former Northland building sits at 317 Court Street in Utica, New York.
 
This is part of the agency’s plan to sell the entire Northland building. Currently, the property sits on two city-owned and two privately owned tax parcels and is being looked at for redevelopment through a competitive bidding process. One of the privately-owned parcels belongs to developer Vincent Bailey and the other is owned by the Pezzolanella family.
 
As with most of our eminent domain posts, there is a hitch. In this case, the city is in negotiations with the Pezzolanella family to buy its parcel and that seems to be moving along as far as we have heard.  Negotiations to buy Bailey’s parcel have failed. What is The Urban Renewal Agency supposed to do in this situation? You guessed it – consider using eminent domain.
 
The lawyer for Bailey, Kathleen Bennett of Bond, Schoeneck & King, questioned the fact that there is no specific proposed project attached to the parcel. “The notice was kind of vague,” she said, summarizing her concerns. “It just said for some unknown public use, which doesn’t give the property owner a lot of opportunity to comment. I think the law is kind of clear that there should be some kind of more defined use.” Also in question are procedural issues, including the fact that there was no map showing the property at the hearing.
 
If we don’t have your attention yet, maybe this will do it.  Bailey, whose parcel includes 20-percent of the building, wants to buy the city-owned portion of the building so he can develop a multi-use property with retail space and apartments. Baileytestified saying that he is willing to work the authority to redevelop the site to meet the authority’s mission.
 
Even if they wanted to, The Urban Renewal Agency cannot sell Bailey the city’s property. That’s because the authority is committed to an open, transparent and competitive bidding process, according to the city’s commissioner of urban and economic development, Brian Thomas. “Negotiating with a single party isn’t an open and transparent process,” he said. “It also markets its properties before arriving at that competitive bidding process, but it can’t market part of a building.” Thomas confirmed that the agency always followed proper procedure. 
 
What is next? The agency now has 90 days to issues its findings.
 
In the meantime, we can share some background on this eminent domain case.  The city acquired its portion of the building through a tax foreclosure on one parcel and through negotiations with Bank of America for another parcel. In 2018, Bailey bought his parcel from the Lilac Group through his Court Street Development LLC. The 0.24-acre parcel contains about 7,268 of the approximately 39,000-square-foot building.
 
Councilman Joe Marino, who is running for mayor, has put his two cents in saying that eminent domain in this case is a “very dangerous precedent.”  The city had cited a 2005 Supreme Court case —Kelo vs. City of New London — to support its right to use eminent domain for economic development purposes. But Marino cautioned authority members to consider the “debacle” in which that case ended. The developer in that Connecticut case abandoned the project, leaving a vacant lot behind. (You may remember this case from one of our blog posts.)
 
There are also questions from Bennett’s team as to how applicable the case is to the current situation. New York law allows industrial development agencies to use eminent domain for economic redevelopment, while Connecticut had no law allowing condemnation for economic redevelopment.
 
Technically, The Urban Renewal Agency is not an industrial development agency.  However, it can condemn to meet urban renewal plans or to improve “substandard or unsanitary” areas. Some think that 317 Court Street may qualify.
 
Bailey said he had offered the city a “fair, just” price for its two tax parcels. The price that was more than any authority project had brought as of the time of his offer. Which puts things in a bit of an odd situation. Bailey said, “to have them take our property and then offer it back to us. It is not a very welcoming feeling.”
 
It’s an interesting series of events, and one that shows how eminent domain can happen to anyone no matter where they live.