| Matter of Hague Corp. v Empire Zone Designation Bd. |
| 2012 NY Slip Op 04452 [96 AD3d 1144] |
| June 7, 2012 |
| Appellate Division, Third Department |
| In the Matter of Hague Corporation, Appellant, v Empire ZoneDesignation Board et al., Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), forrespondents.
Malone Jr., J. Appeal from a judgment of the Supreme Court (McNamara, J.), entered April25, 2011 in Albany County, which dismissed petitioner's application, in a combined proceedingpursuant to CPLR article 78 and action for declaratory judgment, to review a determination ofrespondent Empire Zone Designation Board revoking petitioner's certification as an empire zonebusiness enterprise.
The relevant statutory scheme is more fully detailed in our decisions in Matter of WL,LLC v Department of Economic Dev. (97 AD3d 24 [2012]) and Matter of Office Bldg.Assoc., LLC v Empire Zone Designation Bd. (95 AD3d 1402 [2012]). As is relevanthere, in April 2009, the New York State Empire Zones Act (see General Municipal Law§ 955 et seq.) was amended to include additional standards that had to be met inorder for a commercial entity to retain its certification to participate in the program, including therequirement that the entity establish that it "provide[d] economic returns to the state in the formof total remuneration to its employees (i.e. wages and benefits) and investments in its facilitygreater in value to the tax benefits the business enterprise used and had refunded to it" (GeneralMunicipal Law § 959 [a] [v] [6]; see also 5 NYCRR 11.9 [c] [2]), otherwiseknown as the "1:1 benefit-cost test." These amendments also authorized respondent Departmentof Economic Development (hereinafter DED) to adopt emergency regulations to facilitate itsreview of entities in the program and, pursuant to that authority, DED published [*2]regulations in May 2009. The regulations provided that, amongother things, DED's review would be limited to the 2001-2007 time period (see 5NYCRR 11.9 [c] [2]).
In August 2009, petitioner received notice from DED that its records had been reviewed and,as a result of the findings, its certification was being revoked pursuant to General Municipal Law§ 959 (a) (v) (6) for its failure to satisfy the 1:1 benefit-cost test, retroactively effective asof January 1, 2008. After respondent Empire Zone Designation Board (hereinafter the Board)upheld this determination, petitioner commenced this combined CPLR article 78 proceeding andaction for declaratory judgment challenging the revocation of its certification. Supreme Courtdismissed the petition/complaint, and petitioner appeals.
Initially, we are unpersuaded by petitioner's contention that DED violated the StateAdministrative Procedure Act (hereinafter SAPA) in adopting the regulations on an emergencybasis without first identifying the circumstances necessitating such and providing the public withan opportunity to comment. Although, generally, agencies must comply with the provisions ofSAPA prior to the adoption of rules or regulations, here, the Legislature specifically providedDED with the authority to promulgate the regulations necessary to effectuate its review of theempire zone participants on an emergency basis, "notwithstanding any provision to the contraryin [SAPA]" (General Municipal Law § 959 [a] [v]). Accordingly, DED was not required tocomply with the SAPA provisions before promulgating the regulations. Although petitionerfurther contends that DED subsequently improperly readopted the emergency regulations beyondthe applicable 90-day limitation period (see State Administrative Procedure Act §202 [6] [b]), any impropriety would be of no consequence to petitioner inasmuch as its notice ofdecertification was issued within the initial 90-day period (see e.g. Matter of J-P Group, LLC v New York State Dept. of EconomicDev., 91 AD3d 1363, 1367 [2012]).
We are not persuaded that the Board's decision to uphold the revocation of petitioner'scertification was irrational.[FN*] Although petitioner contends that its business annual reports (hereinafter BARs) for the years1995 to 2000 should have been reviewed by DED in determining whether to decertify petitioner,DED was required only to consider at least three BARs (see General Municipal Law§ 959 [a] [v] [6]; [w]) and, as this Court has previously decided, DED's decision toconsider an entity's BARs only for the time period between 2001 and 2007 was neither arbitraryand capricious nor an unlawful exercise of its regulatory authority (see Matter of WL, LLC vDepartment of Economic Dev., 97 AD3d at 29-30).Moreover, DED was required to consider only the information contained in petitioner's BARs in[*3]determining whether the sum of the actual value of the wagesand benefits paid by petitioner to its employees and the value of the capital investments made bypetitioner exceeded the total amount of tax benefits received by petitioner in that time period(see 5 NYCRR 11.9 [c] [2]). Accordingly, contrary to petitioner's assertion, DED was notrequired to consider in its calculation expenditures on rent paid by petitioner's tenant.
Petitioner's assertion that it was not accorded due process is unavailing. The record reflectsthat, in August 2009, petitioner was notified by DED that its certification was being revoked dueto its failure to satisfy the 1:1 benefit-cost test and was apprised of its right to appeal thatdetermination to the Board within a specified time frame. Accordingly, we are satisfied thatpetitioner was provided with sufficient notice of DED's decision and the reasons therefor (seeMatter of WL, LLC v Department of Economic Dev., 97 AD3d at 30-31; Matter of Morris Bldrs., LP v Empire Zone Designation Bd., 95AD3d at 1383-1384). Moreover, although petitioner complains that it was not granted a hearingbefore the Board on appeal, "[t]he statute does not require the Board to hold such a hearing"(Matter of WL, LLC v Department of Economic Dev., 97 AD3d at 31) and, in any event, the record reflects that petitioner was offered anopportunity to submit documents to the Board in support of its appeal. Overall, we are satisfiedthat the manner in which the Board considered petitioner's appeal afforded petitioner due process(see Matter of WL, LLC v Department of Economic Dev., 97 AD3d at 31; Matter of Morris Bldrs., LP v Empire Zone DesignationBd., 95 AD3d at 1383-1384).
However, for the reasons set forth in Matter of WL, LLC v Department of EconomicDev. (supra) and Matter of Morris Bldrs., LP v Empire Zone Designation Bd.(supra), after consideration of all the relevant factors (see Matter of Replan Dev. vDepartment of Hous. Preserv. & Dev. of City of N.Y., 70 NY2d 451, 456 [1987], appealdismissed 485 US 950 [1988]), we agree with petitioner that the revocation of petitioner'scertification cannot be made retroactive to January 1, 2008. Like the petitioners in those cases,petitioner here could not have foreseen the changes to the program rules regarding certificationand "had every reason to assume that it would continue to enjoy the benefits of certification solong as it continued to comply with the provisions in the [then] existing statutory enactments"(Matter of WL, LLC v Department of Economic Dev., 97 AD3d at 32 [2012]; see Matter of Morris Bldrs., LP v Empire Zone DesignationBd., 95 AD3d at 1384-1385). Accordingly, the revocation of petitioner's certification cannotbe made retroactive to January 1, 2008 and the amendments to General Municipal Law §959 may only be prospectively applied.
Peters, P.J., Rose, Lahtinen and Garry, JJ., concur. Ordered that the judgment is modified, onthe law, without costs, by reversing so much thereof as dismissed that part of thepetition/complaint seeking a declaration that the April 2009 amendments to General MunicipalLaw § 959 may not be applied retroactively to January 1, 2008; petition/complaint grantedto that extent and it is declared that said amendments shall be applied prospectively only; and, asso modified, affirmed.
Footnote *: To the extent that petitionerargues that the Board failed to properly consider the merits of its appeal by issuing a summaryletter decision after a brief meeting attended by approximately 90 other decertified programparticipants, we note that, although the Board's process has been appropriately criticized (seeMatter of Office Bldg. Assoc., LLC v Empire Zone Designation Bd., 95 AD3d at 1405),here, as in Matter of WL, LLC v Department of Economic Dev. (2012 NY Slip 03497), itis readily apparent that the Board based its denial of petitioner's appeal on an application of 5NYCRR 11.9 (c) (2) (see Matter ofMorris Bldrs., LP v Empire Zone Designation Bd., 95 AD3d 1381 [2012]).