| Matter of Morris Bldrs., LP v Empire Zone Designation Bd. |
| 2012 NY Slip Op 03486 [95 AD3d 1381] |
| May 3, 2012 |
| Appellate Division, Third Department |
| 2—In the Matter of Morris Builders, LP, et al., Appellants, vEmpire Zone Designation Board et al., Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), forrespondents.
Egan Jr., J. Appeal from a judgment of the Supreme Court (Devine, J.), entered February 14,2011 in Albany County, which, among other things, dismissed petitioner's application, in acombined proceeding pursuant to CPLR article 78 and action for declaratory judgment, to reviewa determination of respondent Empire Zone Designation Board revoking the certification ofpetitioner Morris Builders, LP as an empire zone business enterprise.
Petitioners are two limited partnerships with a leasehold interest in 80 acres of a 100-acre siteowned by the Westchester County Industrial Development Agency and located in the City ofYonkers, Westchester County. The remaining 20 acres consist of a former landfill that is thesubject of a Department of Environmental Conservation consent order. According to petitioners,they are directly financing the environmental cleanup of the site pursuant to the terms of twopayment in lieu of taxes agreements entered into between petitioner Morris Builders, LP and theCity of Yonkers Industrial Development Agency.
In June 2009, Morris Builders, which obtained certification as an empire zone business(see General Municipal Law § 955 et seq.) in July 2004,[FN1]was advised that respondent Commissioner of Economic Development was revoking itscertification due to its failure "to provide economic returns to the state in the form of totalremuneration to its employees (i.e. wages and benefits) and investments in its facility greater invalue to the tax benefits [it] used and had refunded to it" (General Municipal Law § 959[a] [v] [6])—a test commonly referred to as the "1:1 benefit-cost test."[FN2]Morris Builders thereafter filed a timely notice of appeal with respondent Empire ZoneDesignation Board (hereinafter the Board) but neglected to tender its submissions to the Boardwithin the 60 days set forth in General Municipal Law § 959 (w). In March 2010, theBoard unanimously passed Resolution No. 3 of 2010 upholding, in relevant part, theCommissioner's decision to revoke Morris Builders' empire zone certification effective January1, 2008.[FN3]
Petitioners thereafter commenced this combined CPLR article 78 proceeding and action fordeclaratory judgment seeking to annul the Board's determination and declare the relevantportions of General Municipal Law § 959 and the accompanying regulation—5NYCRR 11.9—unconstitutional. Respondents answered and the Board, the Commissionerand respondent Department of Taxation and Finance moved to dismiss petitioners' declaratoryjudgment action, as well as petitioners' order to show cause seeking discovery. Supreme Courtdenied those applications but ultimately dismissed the petition/complaint in its entirety finding,among other things, that the Board's determination was rational. This appeal by petitionersensued.[FN4]
To the extent that petitioners contend that the Board's decision to uphold the revocation ofMorris Builders' empire zone certification was irrational, we disagree. Although we indeedconclude in Matter of Office Bldg. Assoc., LLC v Empire Zone Designation Bd. (95AD3d 1402; [2012] [decided herewith]) that the Board's "one size fits all"determination—as embodied in resolution No. 3 of 2010—was improper, ourdecision in that regard is of no aid to petitioners here. In the absence of a timely perfected appeal,there was no additional documentation, explanation or evidence for the Board to consider beyondthe business annual reports previously reviewed by the Commissioner, which reflected thatMorris Builders received in excess of $3.8 million in tax credits while returning only $124,109 inthe form of wages and investments. Under these circumstances, the Board had no choice but touphold the Commissioner's revocation of Morris Builders' certification as an empire zonebusiness (see General Municipal Law § 959 [w]) and, [*2]therefore, the rationale for the Board's determination is readilyapparent (compare Matter of Office Bldg. Assoc., LLC v Empire Zone Designation Bd.,supra). Similarly, to the extent that petitioners contend that their considerable investment inthe landfill cleanup effort should have been considered as an additional "economic, social [or]environmental factor[ ] when evaluating the costs and benefits of [the] project to the state andwhether [Morris Builders'] continued certification [was] warranted based on such factor[ ]"(General Municipal Law § 959 [w]), we need note only that petitioners' remedy in thisregard was to timely perfect its administrative appeal. Simply put, although the Board indeedmust "consider the explanation provided by the business enterprise" as to "why its certificationshould be continued" (General Municipal Law § 959 [w]), the Board certainly cannot befaulted for failing to consider information that petitioners neglected to properly put before it inthe first instance.
Nor are we persuaded that the Board's determination was made in violation of lawfulprocedure due to certain typographical errors initially contained in General Municipal Law§ 959 (w).[FN5]To be sure, "[s]tatutes are to be construed according to the ordinary meaning of their words.Application of this cardinal rule, however, is not to be mechanically applied when an absurd orfutile result would ensue, especially one at variance with the policy and purpose of thelegislation" (Matter of Jose R., 83 NY2d 388, 393 [1994] [citations omitted]; see Matter of Markus v Assessors of Townof Taghkanic, 24 AD3d 1066, 1067 [2005], lv denied 6 NY3d 709 [2006];Matter of New York State Elec. & Gas Corp. v Public Serv. Commn. of State of N.Y.,308 AD2d 108, 114 [2003]). As these isolated drafting errors, which have since been corrected(see L 2010, ch 57, part R, § 2), clearly were at variance with the statutory schemeand, more to the point, the underlying legislative intent, we decline petitioners' invitation toinvalidate the Board's determination upon this basis—particularly given that the Boardreferenced the correct evidentiary standard in its determination.
Petitioners' claim that Morris Builders was not accorded due process is equally unavailing.Initially, we reject petitioners' assertion that Morris Builders was not afforded an adequatepre-deprivation remedy. The record reflects that Morris Builders was advised in June 2009 thatits certification was being revoked due to its failure to satisfy the 1:1 benefit-cost test and, inconjunction therewith, was apprised of both its right to appeal such decertification to the Boardand the time frame within which the administrative appeal must be filed and any writtensubmissions must be tendered (see General Municipal Law § 959 [w]).Accordingly, we are satisfied that Morris Builders "was given adequate notice of theCommissioner's decision, as well as the reasons for its decertification" (Matter of WL, LLC vDepartment of Economic Dev., 97 AD3d 24, — [2012] [decided herewith]).
We reach a similar conclusion regarding petitioners' claim that Morris Builders was not [*3]afforded a meaningful opportunity to secure a post-deprivationremedy. As noted previously, Morris Builders had a viable post-deprivation avenue ofrelief—namely, to timely perfect its administrative appeal to the Board and tenderadditional documents in support of its claim that it was entitled to continued certification as anempire zone business. As Morris Builders failed to perfect its administrative appeal in a timelymanner, it cannot now be heard to complain. In any event, we are satisfied that the statutoryscheme afforded Morris Builders due process in this regard (see id. at—).[FN6]
As to the balance of petitioners' arguments, although we agree—for the reasonspreviously stated—that the Board's decision to uphold the revocation of Morris Builders'empire zone certification was entirely rational, we also agree—for the reasons set forth inMatter of WL, LLC v Department of Economic Dev. (supra)—that suchrevocation cannot be made retroactive to January 1, 2008. Like the petitioner in that case, MorrisBuilders—a certified participant in the program since 2004—could not haveanticipated that the program rules governing certification would be changed and "had everyreason to assume that it would continue to enjoy the benefits of certification so long as itcontinued to comply with the provisions in the [then] existing statutory enactments" (Matterof WL, LLC v Department of Economic Dev., 97 AD3d at —). Accordingly, having given due consideration to all of the relevant factors, includingMorris Builders' forewarning of a change in the old law, the reasonableness of its reliancethereon, the length of the retroactive period at issue and the public purpose to be served by theretroactive application of the statutory amendments (see Matter of Replan Dev. v Departmentof Hous. Preserv. & Dev. of City of N.Y., 70 NY2d 451, 456 [1987], appealdismissed 485 US 950 [1988]), we agree that "the retroactive application of the. . . amendments constituted an unlawful taking of [Morris Builders'] property and,as such, violated its right to due process" (Matter of WL, LLC v Department of EconomicDev., 97 AD3d at —). Accordingly, the revocationof Morris Builders' certification as an empire zone business "cannot be made retroactive toJanuary 1, 2008, and the amendments may only be prospectively applied" (id.).
As a final matter, we cannot say that Supreme Court abused its "considerable discretion" indenying petitioners' CPLR 408 request for disclosure (Matter of Grossman v McMahon,261 AD2d 54, 57 [1999]; see Matter ofCity of Glen Cove Indus. Dev. Agency v Doxey, 79 AD3d 1038, 1038 [2010]; Matter of Dallio v Goord, 15 AD3d803, 804 [2005], lv denied 5 NY3d 709 [2005]). Petitioners' remaining contentions,to the extent not specifically addressed, have been examined and found to be lacking in merit.
Peters, P.J., Malone Jr., Kavanagh and Stein, JJ., concur. Ordered that the judgment ismodified, on the law, without costs, by reversing so [*4]muchthereof as dismissed that part of the petition/complaint seeking a declaration that the April 2009amendments to General Municipal Law § 959 may not be applied retroactively to January1, 2008; petition/complaint granted to that extent and it is declared that said amendments shall beapplied prospectively; and, as so modified, affirmed.
Footnote 1: Petitioner Morris IndustrialBuilders, LP never obtained certification as an empire zone business.
Footnote 2: The underlying statutory schemeis more fully discussed in our decisions in Matter of WL, LLC v Department of EconomicDev. (97 AD3d 24 [2012] [decided herewith]) andMatter of Office Bldg. Assoc., LLC v Empire Zone Designation Bd. (95 AD3d 1402;[2012] [decided herewith]).
Footnote 3: The Board's resolution, whichalso upheld the revocation of certification of 90 other similarly situated business entities, isaddressed in greater detail in Matter of Office Bldg. Assoc., LLC v Empire Zone DesignationBd. (supra).
Footnote 4: Petitioners do not challenge thedismissal of their sixth and seventh causes of action.
Footnote 5: As set forth in the April 2009amendments to the statute (see L 2009, ch 57, part S-1, § 3), General MunicipalLaw § 959 (w) contained a singular incorrect reference to General Municipal Law §959 (a) (iv)—instead of subdivision (a) (v)—and mistakenly stated that theCommissioner's revocation could be reversed only if the Board unanimously found that thebusiness entity presented "insufficient evidence"—as opposed to "sufficientevidence"—to show that the Commissioner's finding was erroneous.
Footnote 6: We note in passing that theFourth Department recently held that a similarly situated petitioner was not entitled to a hearingregarding the revocation of its empire zone certification (Matter of J-P Group, LLC v New York State Dept. of Economic Dev.,91 AD3d 1363, 1366 [2012]).