Image credit: NYC Water.

The City took Staten Island property that was subject to wetlands regulations. In the early 1970s Baycrest Manor, Inc., purchased two irregularly shaped, adjacent unimproved lots between Zoe Street and Cletus Street in the Dongan Hills section of Staten Island.  After Baycrest purchased the lots the State designated the majority of the lots as wetlands. On November 3, 2006 the City acquired the lots from Baycrest as part of a multi-phase project to manage storm water along the New Creek Bluebelt. Subsequently Baycrest sued the City seeking just compensation. The Supreme Court, Richmond County, awarded Baycrest $382,190.25 based on the determination that Baycrest was entitled to an increment above the regulated wetland value of the lots.

The City appealed. The City argued that no knowledgeable buyer would be willing to purchase the lots at a price above its regulated wetland value in the hope of successfully challenging the wetlands regulations. The City maintained that Baycrest should not have been awarded any increment above the $57,000 market value of the lots as restricted by the wetlands regulations.

The Appellate Division, Second Department, rejected the City’s argument and determined that Baycrest had established that there was a reasonable probability that the imposition of the wetlands regulations on the lots would constitute a regulatory taking that reduced the value of the lots. The Appellate Division determined that the trial court properly applied a reasonable probability increase rule in valuing regulated wetlands properties taken in condemnation, but ruled that the Supreme Court erred when it applied an incorrect increment formula that was not based on market data.  The Appellate Division, accordingly, reduced the award from $382,190.25 to the principal sum of $156,987.84.

In Re New Creek Bluebelt, Phase 3, 65 N.Y.S.3d 552 (2 Dep’t. 2017).

By: Thomas Columbia (Thomas is a CityLaw Intern and a New York Law School Student, Class of 2019.)