Kingstonian Lawsuit Decision, Dec. 2, 2021
Kingstonian Lawsuit Decision, Dec. 2, 2021
Kingstonian Lawsuit Decision, Dec. 2, 2021
Petitioners-Plaintiffs, DECISION/ORDER
-against-
Respondents-Defendants.
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Motion Return Date: October 13, 2021
APPEARANCES:
Petitioners/Plaintiffs: Jeffrey S. Greer, Esq.
Lewis & Greer, PC
510 Haight Avenue, Suite 202
Poughkeepsie, NY 12603
-and-
Victoria L. Polidoro, Esq.
Rodenhausen Chale & Polidoro, LLP
55 Chestnut Street
Rhinebeck, NY 12572
1 This matter has been dismissed as to Ulster. Decision and Order dated November 24, 2021.
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Mott, J.
IDA's grant of a Payment in Lieu of Taxes (PILOT) to the Kingstonian Project (Project) in 5
causes of action. The IDA, City and Developers oppose.z Blue Stone/Wright claims it lacks
an interest herein, that the petition should be dismissed as to it, and seeks sanctions for
In addition, the IDA moves for summary judgment dismissing the 3rd and 5th causes
of action insofar as they seek plenary relief. The City joins in that motion. Petitioners
oppose.
Background
The circumstances underlying this dispute are more fully addressed in Decisions
and Orders in Petitioners' related proceedings challenging other Project approvals3 and
Decision and Order dated November 9, 2021 herein, holding in abeyance Developer's
motion for a protective order. Briefly, on January 20, 2021 the IDA granted Developers a
(Resolution). Prior thereto, the IDA gave notice of and held a public hearing, engaged in
z Notwithstanding, KCSD's answer admitting Petitioners' allegations that the PILOT approval is arbitrary and
capricious and that Petitioners have suffered a special harm, as KCSD's PILOT disapproval is not diapositive
and it has made no evidentiary proffer and submitted no legal argument, said admissions add nothing to
Petitioners' allegations.
3 Petitioners have challenged the Project in 4 dismissed matters, to wit: Creda, LLC et al a City of Kingston
Planning Board, et al, Index No. EF2020-253 (challenging negative State Environmental Quality Review
declaration) (Creda); 61 Crown Street, et al, v. City of Kingston Common Council, et al, Index No. EF2020-2075
(declaratory judgment action seeking, inter alia, to annul a re-zoning determination involving a Project
parcel); and, 61 Crown Street, LLC, et al v. NYS Department of Parks, Recreation and Historic Preservation, et al,
Index No. EF2020-2079, (challenges Respondent's no-adverse impact letter); 61 Crown Street LLC et al v. City
of Kingston Common Council et al, EF2021-1496 (alleges failure to comply with SEQR in re-zoning benefitting
the Project); and in 2 other pending proceedings, to wit: 61 Crown Street, LLC et al, v. City of Kingston Heritage
Area Commission, Index No. EF2021-2986; and, 61 Crown Street, LLC, et al, v. City of Kingston Common Council,
et al, Index No. EF2021-3014.
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financial analyses and consulted affected taxing jurisdictions and reviewed the Developers'
application, dated January 14, 2021, stating, inter alia, that the IDA's financial assistance is
required because the Project's "precarious funding structure would collapse under the
The IDA amended its housing policy twice: in August 2020, to permit the IDA to
all of its taxing jurisdictions; and, on January 20, 2021, modifying the amendment to permit
IDA assistance if, after attempting such approvals, same are not forthcoming. The latter
reasoned that the housing policy amendment was merited to conform to the IDA's Uniform
Tax Exemption Policy (UTEP), which only requires taxing jurisdiction input. Here, 3 taxing
notice that the City had resolved to lease a 1.4-acre property to the Project to construct a
parking garage, including "at least 200 .spaces devoted to public use" which will revert to
the City if it "is not developed and. used for," such purpose.
Background/Summary Judgment
Petitioners' 3rd cause of action incorporates allegations from their 1St and 2nd causes
of action to allege IDA violation of General Municipal Law (GML) § 51 prohibiting illegal
acts by public officials.4 The 1St asserts the IDA arbitrarily amended its housing policy to
enable a PILOT constituting an illegal gift of public funds/property; and, the 2nd that IDA-
member Daniel Savona's (Savona) PILOT vote was conflicted, rendering the Resolution
illegal. It avers the conflict arises by his ownership interest in ,Plaza Pizza located in the
4 Petitioners also reference State Finance Law (SFL) § 123-b as a basis for standing.
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Kingston Plaza Mall.. (Mall) and leased from Defendant Herzog Supply Co., Inc. (Herzog),
which also owns part of the Project land and whose principal is a member of Defendant
They assert, in the 5th cause of action, that GML. § 859-a(5) (b) requires an IDA
written cost-benefit analysis, thereby compelling PILOT reconsideration due to the KLDC
notice, because it reduced Project requirements for public parking to 200 from 277.
The IDA claims Petitioners lack taxpayer standing under GML § 51 as said statute
applies only to patently illegal actions of public officials, not discretionary acts; and, that
GML § 51 and State Finance Law (SFL) § 123-b do not apply to autonomous public benefit
The IDA urges that Petitioners' GML § 859-a claim fails as the KLDC notice issued
after the Resolution and is incapable of altering the PILOT's terms. Further, it avers
Petitioners allege only speculative harm unripe for review, as the petition only alleges the
KLDC's notice could allow less public parking. The IDA maintains that public parking is just
one of the Project's multiple public benefits it considered and cites Kingstonian's affiant,
Bradley Jordan, (Jordan) confirming there have been no changes to the parking proposal
The City adopts the IDA arguments and avers Petitioners' collateral debate about
state tax caps limiting KCSD revenue is inapposite, as explained in the affidavit of City
Assessor, Dan Baker (Baker): Further, it claims the KLDC reference to a minimum of 200
5 Developers' petition opposition reiterates IDA and City arguments as to the inapplicability of GML § 51 and..
avers the 5th cause of action is barred by administrative finality but they make. no submission on the IDA
motion.
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parking spaces merely reiterates the text of City's initial request for qualification (RFQ) for
administrative record. They aver common-law standing upon economic and environmental
injuries by their proximity to the Project, affecting health due to increased noise, pollution,
and historic and cultural resources and hampered commercial prospects, including
reduced public parking during Project construction and thereafter. Further, they claim
taxpayer standing pursuant to SFL § 123-b and GML § 51, asserting that the import of the
Project and lack of other review opportunities merits same. Finally, they urge that the
KLDC notice alters the PILOT's cost-benefits analysis, requiring its re-evaluation.
Discussion/Summary Judgment
To prevail on summary judgment, the moving party must establish prima facie
show that there are no issues of material fact." Alvarez v Prospect Hosp., 68 NY2d 320, 324
[1.986]. "Only when the movant bears this burden and the nonmoving party fails to
demonstrate the existence of any material issue of fact will the motion be properly
granted." Staunton v Brooks, 129 AD3d 1371 [3d Dept. 2015]. On summary judgment, the
movant has the initial burden of establishing. lack of standing. Cenlar FSB v Lanzbom,168
Here, Petitioners lack standing. and fail to state a claim pursuant to GML § 51 which
authorizes "taxpayers to maintain actions against public officials to prevent illegal official
acts and...waste, [as it] is not applicable to ... public benefit corporation." Matter of
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Defreestville Area Neighborhood Assn, lnc. v Planning Bd. of Town of N. Greenbush, 16 AD3d
715, 718 [3d Dept 2005] (no standing to challenge IDA tax incentives despite standing to
challenge project zoning determinations); Godfrey v Spano, 13 NY3d 358 [2009] (GML § 51
applies only when acts are fraudulent or a waste of public property/funds by their use for
entirely illegal purposes); Mesivta of Forest Hills Inst., Inc. v City of New York, 58 NY2d 1014,
1016 [1983] (failure to observe statutory provisions does not constitute fraud or illegality
Petitioners also lack standing under SFL §123-b, as the IDA's challenged acts are
discretionary. SFL § 123-b provides taxpayer standing without regard to injury in fact,
"against an officer or employee of the state who in the course of his or her duties has
...is now ... or is about to cause a wrongful expenditure, misappropriation,
misapplication, or any other illegal or unconstitutional disbursement of state funds
or state property." SFL § 123-b.
Saratoga County Chamber of Commerce, lnc. v Pataki, 100 NY2d 801, 813 [2003] (claim that
state funds are being spent unwisely patently insufficient to satisfy minimum standing
threshold); cf. Nearpass v Seneca County Indus. Dev. Agency, 52 Misc 3d 533, 541 [Sup Ct
2016] affd, Matter of Nearpass v. Seneca County Indus. Dev. Agency, 152 AD3d 1192 [4th
Dept 2017] (issue of whether casino meets statutory definition of a project entitled to IDA
assistance affords SFL § 123-b standing). Further, the challenged discretionary actions do
not involve the direct disbursement of funds and, as the Project has been subject to various
avenues of judicial review, they fail to state a claim or establish standing. Cf., Saratoga
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County Chamber of Commerce, lnc. v Patalri, 100 NY2d 801, 814 [2003] (where denial of
standing imposes "an impenetrable barrier to any judicial scrutiny of legislative action, our
duty is to open rather than close the ,door to the courthouse). Consequently, Petitioners' 3ra
The KLDC is not a party to this action, its notice unchallenged herein and there is no
basis to conclude it changed the PILOT terms. or that it evidences such change. Therefore, it
does not provide a basis for mandamus to compel. the PILOT's re-evaluation. New York Civ.
Liberties Union v State, 4 NY3d 175, 176 [2005] (mandamus is an extraordinary remedy
available only to enforce a clear legal right); see also, Matter of Comm. to Save the Beacon
Theater by Meltzer v City of New York, 146 AD2d 397 [1st Dept 1989] (where. approval is
subject to conditions precedent before the requisite permits can issue, it is non-final and
not ripe for review). Indeed, Petitioners' allegations that the parking proposal has changed
or that the cost/benefits analysis has shifted due to said notice are pure conjecture. Thus,
Petition/Parties' Contentions
Petitioners claim, principally, that the PILOT does not have a sufficient public
benefit due to the net loss of public parking and foregone tax revenue; that the need for the
PILOT is unsubstantiated; that the IDA did not conduct an independent Project review or
issue the statutorily required written costs/benefits analysis; and, that the Project and/or
Petitioners cite the IDA-CEO's June 2021 committee meeting statement that the
software used to analyze the Project was "garbage in garbage out" and that the County
Executive's input was not, per se, acost-benefit analysis. They claim the Project's 32-room
hotel, 143 apartments and 9,000' sq. of retail space will occupy 313 of the 420 parking
spaces per zoning regulations unless a variance is granted, noting the Project will build
over the existing 137-140 public spaces. They aver tax caps and limited revenue under the
PILOT will limit the KCSD's ability to obtain additional resources. Moreover, they aver that
there is no guarantee that the IDA will enforce the claw back provisions. Finally, they claim
that Savona's conflict of interest, evidenced by probable direct and indirect pecuniary
benefits from Project-facilitated Mall access in the form of increased business for Plaza
Pizza and Herzog's, resulting in reduced rent increases for the former.6
The IDA contends that Petitioners lack common-law standing as their allegations of
economic harm are no different from effects on the general public and that they lack
capacity to assert standing on behalf of the KCSD. Further, it avers the PILOT determination
is rationally based upon consideration of 3 Project cost-benefits analyses and its own
scoring of uniform criteria reflected in Exhibit A to the Resolution, all part of the public
analyses/policies do not detract from the IDA's comprehensive, documented and reasoned
cost-benefit analysis, which also considered substantial public support for the Project.
Finally, the IDA maintains there is no actionable conflict as Savona's vote was 1 of 6 and the
alleged benefit to him insufficient to establish same. Finally, it maintains that Petitioners'
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objections to the IDA costs-benefits analysis constitute an improper attempt to have the
The City proffers the affidavit of its Assessor, Daniel Baker, as support for the
approvals and opines, inter alia, that Petitioners' allegations of lost tax revenue is
misleading as the PILOT does not change the existing tax base, including the tax-exempt
status of a large portion of Project-involved land which will be added to the tax rolls after
the PILOT. Further, he observes that the PILOT payments, which are disbursed to the taxing
could double the base PILOT revenue. Finally, he opines that Petitioners' tax argument
refers to a hypothetical loss which the KCSD would be unable to assert under NY State tax
Developers claim, inter alia, that Petitioners are collaterally estopped from
Standing
respect to alleged environmental harm, the IDA's adoption of the City Planning Board's
SEQR has been sustained, such that Petitioners' 4th cause of action is dismissed on
collateral estoppel grounds. Beer v New York State Dept, of Envtl. Conservation, 189 AD3d
1916,1918 [3d Dept 2020]; See, Creda Decision and Order dated June 14, 2021; cf., Matter
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Petitioners' claimed environmental harm was addressed and mitigated as reflected in their
citation to the SEQR, which is part of the IDA record. Finally, even if Petitioners were to
substantiate economic harm sufficient to confer standing, the petition lacks merit.
Article 78 Review
hearing, the court is limited to considering whether it "was made in violation of lawful
discretion." CPLR § 7803[3]; 2-4 Kieffer Lane LLC v County of Ulster, 172 AD3d 1597 [3d
Dept 2019].
"The arbitrary or capricious test chiefly relates to whether a particular action should
have been taken or is justified and whether the administrative action is without
foundation in fact." Pell v Bd. of Ed, of Union Free School Dist. No.1 of Towns of
Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222, 231 [1974]
However, .a court may not substitute its judgment for that of the responsible agency. Beer v
New York State Dept. of Envtl Conservation, 189 AD3d at 1918. Applicable to the Court's
"[t]he agency must adopt a resolution describing the project and the financial
assistance [contemplated...]. Such assistance shall be consistent with the [agency's
UTEP] pursuant to [GML § 874(4)]." GML § 859-a [1].
The Act does not limit benefits to projects that require IDA assistance to be implemented,
and there is no statutory requirement for "the IDA to state the amount of the real property
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GML § 874(4)(a), which regulates IDA PILOT grants, and the IDA's UTEP merely
require input from affected taxing jurisdictions, not their approval. Thus, there is no
statutory bar to the IDA's modification of its housing policy, which otherwise meets
statutory requirements, as the IDA may rationally amend its policies to grant benefits to
cost/benefits analysis. Indeed, not only did the IDA consider the Developers' proposal, it
also prepared a draft review, examined and commented upon the National Development
Council's (NDC) economic/narrative analysis, held a public hearing and enumerated the
Project's expected public benefits. Thus, the IDA complied with the GML § 859-a(5)(b)'s
estimated value of tax exemptions; likely private sector investment and timeliness of
Project completion; projected revenue, such as increased sales taxes and the benefit of a
multi-million dollar parking garage financed, maintained and operated by the Developers
during and after the PILOT, despite its limited projected income. This record establishes
that the PILOT approval is substantiated by fact, compliant with statutory requirements
Here, although Savona is subject to the GML conflict of interest provisions as an IDA-
member, Petitioners' reliance upon his ownership interest in a Mall business leased from
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financial interest do not create a per se conflict for a public official. Town of Mamakating v
Vil. of Bloomingburg, 174 AD3d1175,1179 [3d Dept 2019]; Matter of Schupak v Zoning Bd.
ofAppeals of Town of Marbletown, 31 AD3d 1018, 1020-21 [3d Dept 2006]; Matter of
Parker v Town of Gardiner Planning Bd., 184 AD2d 937, 938 [3d Dept 1992].
Protective Order
Here, the Court finds the issue of the protective order regarding the 7 pages
business material is moot by the dismissal of this matter and because same contain
analyses of raw financial and Project information contained in the previously disclosed
administrative record or which could have been extrapolated therefrom. Indeed, the
application for incentives includes a chart of the Project's projected PILOT payments, the
amount to be invested, to be financed via mortgage or grant and the basic Project
components. As the existing tax base is public information and the NDC
projections/assumptions are stated in its analysis, the withheld pages are not material and
necessary to the Petitioners' prosecution/defense of this matter. See, Decision and Order,
~ See, NYSEF DOC 136, Exhibit E; and NYSEF DOC 137 Exhibits 0 and Q. Cf., Matter of Barker Cent. School Dist.
v Niagara County Indus. Dev. Agency, 62 AD3d 1239, 1241 [4th Dept 2009] (project applicants failed to
present evidence supporting the conclusion that PILOT benefits, including lease/leaseback agreements
outweighed the costs of the tax relief, rendering the PILOT grant lacking in substantial evidence).
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Accordingly, the motion for summary judgment is granted and the petition is
This constitutes the Decision and Order of this Court. The Court is E-Filing this
Decision and Order but that does not relieve the Respondent-Defendant IDA from
compliance with the provisions of CPLR §2220 with regard to entry thereof.
Petition Submissions
8 Petitioners fail to establish a violation of IDA bylaws by not referring its 2~d housing policy amendment to its
Governance Committee before approving same. Further, the Court declines to award sanctions as requested
in B1ueStone/Wright's answer on the facts and circumstances here as they have submitted no argument in
support. First Deposit Nat. Bank v Van Allen, 277 AD2d 858, 860 [3d Dept 2000].
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