State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: December 9, 2021 532952

________________________________

In the Matter of PSC, LLC,

Petitioner,
v
MEMORANDUM AND JUDGMENT
CITY OF ALBANY INDUSTRIAL
DEVELOPMENT AGENCY et al.,
Respondents.
________________________________

Calendar Date: October 13, 2021

Before: Egan Jr., J.P., Lynch, Pritzker and Colangelo, JJ.

__________

Tabner, Ryan & Keniry, LLP, Albany (Brian M. Quinn of

counsel), for petitioner.

Hodgson Russ LLP, Albany (Charles W. Malcomb of counsel),

for City of Albany Industrial Development Agency, respondent.

Young/Sommer LLC, Albany (Joseph F. Castiglione of

counsel), for Capitalize Albany Corporation and another,
respondents.

__________

Pritzker, J.

Proceeding initiated in this Court pursuant to EDPL 207 to

review a determination of respondent City of Albany Industrial
Development Agency condemning 11 parcels of petitioner's real
property for a mixed-use redevelopment project.

In August 1988, petitioner's predecessors in interest

entered into a lease agreement whereby they agreed to lease 10
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of their properties "for parking and or other lawful purpose[]"

at a base rate of $8,500 per month with such rate to increase by
$1,000 per month every five years for 50 years. Eventually, the
lease was assumed by the Albany Convention Center Authority, and
it was then transferred to respondent Liberty Square
Development, LLC. Liberty Square is a wholly-owned subsidiary
of respondent Capitalize Albany Corporation, a municipal
corporation that "serv[es] as the City of Albany's economic
development arm." In 2019, Capitalize Albany received a grant
of over $10 million in order to acquire real estate across eight
acres of land in an area of the City of Albany known as Liberty
Square – an area that Capitalize Albany describes as blighted
and economically underutilized – in order to carry out an
economic redevelopment plan involving a mixed-use development
concept called for by the Capital Region Economic Development
Council's Capital 20.20 regional development strategy.
Capitalize Albany was able to acquire all but 0.88 acre of land
in that area through private transactions. The remaining 0.88
acre consisted of 11 parcels of petitioner's property
(hereinafter the properties) that are used for parking – 10 of
which were the subjects of the aforementioned lease. Despite
attempts to purchase the properties, Capitalize Albany was
unable to do so.

Capitalize Albany submitted an application to respondent

City of Albany Industrial Development Agency (hereinafter the
Agency) requesting that the Agency use its power of eminent
domain to acquire the properties (see General Municipal Law
§ 903-a). The Agency held a public hearing via Zoom, at which
it presented the project and accepted comments and documents
from the public, including petitioner's counsel. In January
2021, the Agency approved the use of eminent domain to acquire
the properties for Capitalize Albany and Liberty Square, issuing
a determination and findings resolution and a negative
declaration pursuant to the State Environmental Quality Review
Act (see ECL art 8 [hereinafter SEQRA]) in support of its
decision. Petitioner commenced this proceeding in this Court
pursuant to EDPL 207 seeking to annul the Agency's
determination, and respondents answered.
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We begin by examining petitioner's claims that the

Agency's determination should be annulled due to several
procedural errors: (1) that the Agency relied on additional
evidence, a short environmental assessment form, after closing
the public hearing; (2) that the Agency closed the public
hearing before issuing a SEQRA determination; and (3) that the
hearing was conducted in violation of the Public Officers Law
and Executive Order 202.1 because it took place on Zoom and did
not provide an adequate way for the public to view or listen to
the meeting. It is well established that the condemnor is
required to make its determination in accordance with the
statutory procedures set forth in EDPL article 2 and ECL article
8, and this Court's review of a condemnor's determination
includes whether such procedures were followed (see EDPL 207 [C]
[3]; Matter of Johnson v Town of Caroga, 162 AD3d 1353, 1354
[2018]). Nevertheless, it is the party challenging the
condemnation who "bear[s] the burden of establishing that the
determination . . . was violative of any of the applicable
statutory criteria" (Matter of Johnson v Town of Caroga, 162
AD3d at 1354 [internal quotation marks and citations omitted];
see Matter of Rafferty v Town of Colonie, 300 AD2d 719, 721
[2002]).

Initially, petitioner's contention that the Agency

received the short environmental assessment form and considered
it after the public hearing is belied by the record, which shows
that the form was submitted as part of Capitalize Albany's
application to the Agency, well in advance of the public
hearing. Second, there is no statutory requirement that a SEQRA
determination be made in advance of the public hearing, and, in
fact, such declarations appear to be frequently made alongside
the determination and findings of public benefit – after the
public hearing (see e.g. Matter of Johnson v Town of Caroga, 162
AD3d at 1353-1354; Matter of Davis Holding Co., LLC v Village of
Margaretville, 55 AD3d 1101, 1102 [2008]). Lastly, although
agencies are required to make "reasonable efforts to ensure that
meetings are held in an appropriate facility [that] can
adequately accommodate members of the public who wish to attend
such meetings" (Public Officers Law § 103 [d]), the Agency was
permitted to hold a hearing via Zoom, as laws relating to the
 -4- 532952

attendance of in-person meetings were suspended in light of the

COVID-19 pandemic so long as "the public ha[d] the ability to
view or listen to such proceeding and that such meetings [we]re
recorded and later transcribed" (Executive Order [A. Cuomo] No.
202.1 [9 NYCRR 8.202.1]), which was done here.

Petitioner also asserts that the taking was invalid for

several alternative reasons. As relevant here, "[i]n the
context of [an] EDPL 207 proceeding, this Court's scope of
review is limited to whether the proceeding was constitutional,
whether the acquisition was within the condemnor's statutory
authority . . . and whether a public use, benefit or purpose
will be served by the proposed acquisition" (Matter of Johnson v
Town of Caroga, 162 AD3d at 1354 [internal quotation marks and
citations omitted]; see Matter of 225 Front St., Ltd. v City of
Binghamton, 61 AD3d 1155, 1156 [2009]). The party challenging
the condemnation "bear[s] the burden of establishing that the
determination was without foundation and baseless, or that it
was violative of the applicable statutory criteria" (Matter of
Johnson v Town of Caroga, 162 AD3d at 1354 [internal quotation
marks and citations omitted]; see Matter of Rafferty v Town of
Colonie, 300 AD2d at 721).

Petitioner first argues that the taking was excessive and

unnecessary because there was no evidence that the properties
are in a state of blight or disrepair or that the taking of
petitioner's 0.88 acre was necessary to develop the remaining
seven acres already owned by Liberty Square. Petitioner also
argues that the public notice was too speculative to be proper
because Capitalize Albany did not yet have any specific plans
for redeveloping the area and that, without knowing the specific
manner in which the properties will be used, it is impossible to
determine whether they will be used for a public purpose. "Upon
judicial review, if an adequate basis for a determination that a
public purpose [will be] served is shown and the objector cannot
show that the determination was without foundation, the agency's
determination should be confirmed" (Matter of Board of Coop.
Educ. Servs. of Albany-Schoharie-Schenectady-Saratoga Counties v
Town of Colonie, 268 AD2d 838, 841 [2000] [internal quotation
marks, brackets and citations omitted]). What constitutes a
 -5- 532952

public purpose is defined broadly and "encompasses any use which

contributes to the health, safety, general welfare, convenience
or prosperity of the community" (Matter of 225 Front St., Ltd. v
City of Binghamton, 61 AD3d at 1157 [internal quotation marks
and citations omitted]; accord Matter of Johnson v Town of
Caroga, 162 AD3d at 1355). Further, "[a]reas of economic
underdevelopment and stagnation may be considered blighted so as
to support the taking of vacant and underutilized properties
located therein" (Matter of Court St. Dev. Project, LLC v Utica
Urban Renewal Agency, 188 AD3d 1601, 1602 [2020]).

In support of the application, Capitalize Albany submitted

a comprehensive "Concept Plan Report," which was prepared to
provide "an analysis of the fiscal, economic, and other impacts
anticipated to be catalyzed by a conceptual plan for
redevelopment" in the Liberty Square area (hereinafter the
report). The report said that, since the properties were not
contiguous but were centrally located within the planned project
site, "they are necessary to achieve the full economic,
community and other benefits under" the conceptual plan. The
report noted that the current site was "dominated by surface
parking lots in significant disrepair" and contained "long-
vacant buildings which have been flagged as 'unsafe' for
emergency responders to enter" and that the area has been known
as "The Dead Zone" or "the parking lot district." Further, the
report examined in detail each of the seven blocks that make up
the planned project area and it was noted that the parking lots
and buildings on all blocks were "in poor condition" and
buildings were in significant disrepair, including one building
that had to be demolished "following a catastrophic structural
failure of the roof." The report noted that "[t]he area
currently suffers from economic underdevelopment and stagnation,
as the current conditions/use have existed for decades, and the
site utilization is far below that which can be accomplished on
the [b]lock as part of the conceptual redevelopment." A 14-year
review of the area was conducted using Google Earth, which found
that "on any given day, only . . . between 6% and 31% of the
land area" was actively utilized.
 -6- 532952

The report set forth a "hybrid . . . redevelopment

concept," which considered, among other things, a development
consisting of approximately 300 residential units, a 100-room
hotel, approximately 16,000 square feet of retail space,
approximately 55,000 square feet of commercial office space, a
450-space parking garage and an open/park space. The report
concluded that approximately 579 new residents would be brought
to the downtown district by the development with annual spending
of approximately $13.5 million, approximately 572 new jobs would
be created that would be within walking distance to nearby
economically distressed areas. In addition, the hotel would
generate $288,259 annually in City revenues, the property would
generate approximately $2.2 million annually in tax revenue, the
required infrastructure investment would benefit residents, and
businesses and a parking garage would address parking demands.
The report noted that a request for proposals on development of
this area had previously been made, but no "legitimate"
proposals were received "due in large part to the challenges of
obtaining full site control." At the public hearing, the Agency
displayed two maps that highlighted the properties and showed
that they were centrally located to the project site. Letters
of support for the project were sent to the Agency ahead of the
hearing from members of the community, including from Daniel
McCoy, the Albany County Executive, and Kathy Sheehan, the Mayor
of Albany.

Petitioner, through counsel, was given an opportunity to

speak at the public hearing and objected to the eminent domain
proceeding because petitioner's owners, who are members of the
Chambers family, were dependent on income derived through these
properties. Petitioner objected to the characterization of the
properties as blighted, because they were actively used for the
public purpose of downtown parking. Petitioner characterized
Capitalize Albany as a "flipper" that meant to acquire the
properties and then sell them to a private developer.

Given the foregoing, we discern no error in the Agency's

determination that the properties are in a state of blight, that
the taking of petitioner's 0.88 acre was necessary to develop
the remaining seven acres already owned by Liberty Square, and
 -7- 532952

that said development would serve a public purpose. As to

blight, the Agency's determination that the Liberty Square area
is blighted is supported by the record, which indicated that the
surface parking lots, including the properties, were in states
of significant disrepair and the nearby buildings presented a
safety risk (see Matter of Court St. Dev. Project, LLC v Utica
Urban Renewal Agency, 188 AD3d at 1602). Further, the Google
Earth study found that, at all times over the prior 14 years,
less than 40% of the land was utilized. In contrast, the
proposed development would create new jobs, provide new
apartments and create new business opportunities, all of which
would create an increased tax base. Therefore, the Agency had
support for its determination that the taking served a valid
public purpose by addressing blight and economic
underdevelopment, and petitioner failed to show otherwise (see
Matter of United Ref. Co. of Pa. v Town of Amherst, 173 AD3d
1810, 1811 [2019], lv denied 34 NY3d 913 [2020]; Matter of
Keegan v City of Hudson, 23 AD3d 742, 743 [2005], lv denied 6
NY3d 705 [2006]). Further, the Agency is not required to know
the specific redevelopment plan in order to use its power of
eminent domain and may condemn the property to gain full title
in order to permit economic redevelopment (see Matter of Court
St. Dev. Project, LLC v Utica Urban Renewal Agency, 188 AD3d at
1602-1603).

Further, the Agency did not exceed its broad discretion in

determining that the taking was necessary. Although a condemnor
cannot use eminent domain to take "property not necessary to
fulfill the public purpose, it is generally accepted that the
condemnor has broad discretion in deciding what land is
necessary to fulfill that purpose" (Matter of Rafferty v Town of
Colonie, 300 AD2d at 723; see Matter of Village of Ballston Spa
v City of Saratoga Springs, 163 AD3d 1220, 1226 [2018]). In
making its determination, the Agency expressly determined that
taking all 11 parcels was necessary in order to fully develop
the project site, particularly given that seven parcels
constituted the entirety of a centrally located block. The
Agency believed that, given the location and condition of this
particular site, development at another site in an area of
lesser priority would not be appropriate at this time. Although
 -8- 532952

the lease permitted new developments on the properties, it also

stated that petitioner would own any buildings built upon the
properties, which would prevent Capitalize Albany and Liberty
Square from gaining the full site control necessary to complete
the project. Given the difficulty of developing the site
without the properties, the Agency acted within its discretion
in deciding that it was necessary to condemn the properties (see
Matter of United Ref. Co. of Pa. v Town of Amherst, 173 AD3d at
1811-1812; Matter of Village of Ballston Spa v City of Saratoga
Springs, 163 AD3d at 1226-1227; compare Matter of Davis Holding
Co., LLC v Village of Margaretville, 55 AD3d at 1104-1105).

Petitioner also argues that the properties cannot be taken

pursuant to the prior public use doctrine because they are used
for public parking. However, the prior public use doctrine is
inapplicable because petitioner does not have the power of
eminent domain, nor has it been delegated such power (see
Westchester Cr. Corp. v New York City School Constr. Auth., 286
AD2d 154, 158 [2001], affd 98 NY2d 298 [2002]; Matter of Board
of Educ., Union Free School Dist. No. 2 v Pace Coll., 27 AD2d
87, 90 [1966]). Even if it were applicable, the condemnation
will not "interfere with or destroy the public use" of the
properties for public parking, because the proposed
redevelopment plan includes building a new parking garage
(Matter of Village of Ballston Spa v City of Saratoga Springs,
163 AD3d at 1222 [internal quotation marks and citations
omitted]; see Matter of Board of Coop. Educ. Servs. of Albany-
Schoharie-Schenectady-Saratoga Counties v Town of Colonie, 268
AD2d at 841-842). We find equally unavailing petitioner's
assertion that the taking was commercial or pretextual inasmuch
as "where the public good is expected to be enhanced by a
project, it does not matter that private interests might be
benefitted" (Matter of Goldstein v New York State Urban Dev.
Corp., 64 AD3d 168, 184 [2009] [internal quotation marks,
brackets and citation omitted], affd 13 NY3d 511 [2009]). As
noted previously, the Agency had a public purpose for this
taking, and the fact that the entire project area will at some
point be transferred into private ownership does not negate that
public purpose (see Matter of Goldstein v New York State Urban
 -9- 532952

Dev. Corp., 13 NY3d 511, 523-524 [2009]; compare Matter of 49 WB

LLC v Village of Haverstraw, 44 AD3d 226, 243-244 [2007]).

Finally, petitioner argues that the Agency did not follow

proper procedure when making its SEQRA determination because it
did not include an analysis of its redevelopment plans, did not
consider the potential impacts of overdevelopment and improperly
segmented the review process by failing to discuss the
redevelopment plans in relation to petitioner's property. "Our
review of [the Agency's] SEQRA determination 'is limited to
whether the determination was made in accordance with lawful
procedure and whether, substantively, the determination was
affected by an error of law or was arbitrary and capricious or
an abuse of discretion'" (Matter of Court St. Dev. Project, LLC
v Utica Urban Renewal Agency, 188 AD3d at 1603, quoting Akpan v
Koch, 75 NY2d 561, 570 [1990]). "Segmentation is the division
of the environmental review of an action such that various
activities or stages are addressed for purposes of environmental
quality review as though they were independent, unrelated
activities, needing individual determinations of significance"
(Matter of Adirondack Historical Assn. v Village of Lake
Placid/Lake Placid Vil., Inc., 161 AD3d 1256, 1257 [2018]
[internal quotation marks, brackets and citation omitted]; see
Matter of Court St. Dev. Project, LLC v Utica Urban Renewal
Agency, 188 AD3d at 1603).

To that end, the Agency's SEQRA resolution determined that

this project, consisting solely of the acquisition of the
properties, was an "unlisted" action and that it would "not have
a significant adverse impact on the environment." The Agency
evaluated whether this would constitute impermissible
segmentation and determined that it would not, because the
redevelopment project was too "speculative and hypothetical" at
this point as it depended on "future steps and proposals that
have yet to be developed." The Agency noted that, once a final
project was approved, a complete SEQRA review would be completed
at that time. The Agency further reviewed the criteria for
determining significance set forth in 6 NYCRR 617.7 (c) and
found that the acquisition will not a have significant adverse
impact on the environment. Regarding the historical resources
 -10- 532952

of the area, the Agency noted that those existed in the area and
preservation of these would need to be considered as part of any
future development plans, but that there would be no negative
effects at this time caused by the acquisition. Thus, although
the review was segmented, it was properly segmented in this
circumstance because it was not done to circumvent review under
SEQRA but to allow for a complete review later (see Matter of
Court St. Dev. Project, LLC v Utica Urban Renewal Agency, 188
AD3d at 1603; Matter of Adirondack Historical Assn. v Village of
Lake Placid/Lake Placid Vil., Inc., 161 AD3d at 1257-1258).
When considering the acquisition itself, the Agency "identified
the relevant areas of environmental concern, took a hard look at
them, and made a reasoned elaboration of the basis for its
determination" that the acquisition would not have a negative
environmental impact (Matter of Johnson v Town of Caroga, 162
AD3d at 1356 [internal quotation marks and citations omitted];
see Matter of Davis Holding Co., LLC v Village of Margaretville,
55 AD3d at 1104; compare Matter of Adirondack Historical Assn. v
Village of Lake Placid/Lake Placid Vil., Inc., 161 AD3d at 1259-
1260). We have reviewed petitioner's remaining contentions and
have found them to be without merit.

Egan Jr., J.P., Lynch and Colangelo, JJ., concur.

ADJUDGED that the determination is confirmed, without

costs, and petition dismissed.

ENTER:

Robert D. Mayberger
Clerk of the Court