Third Department Reaffirms That Private Ownership with Public Purpose Okay Under the Public Trust Doctrine

Farrell Fritz, P.C.

The Public Trust Doctrine holds that when a municipality acquires land for an expressly public purpose, it cannot later sell or otherwise alienate the use of that land for private use without the State Legislature’s approval (see e.g. 10 E. Realty, LLC v Inc. Vill. of Valley Stream, 17 AD3d 474, 476 [2d Dept 2005]). The Doctrine is often raised in disputes over the sale or alienation of public parkland (see e.g. Glick v. Harvey, 25 NY3d 1175 [2015] [in which the petitioners claimed that certain lands in Greenwich Village, New York, were impliedly dedicated as public parkland); Friends of Van Cortlandt Park v City of New York, 95 NY2d 623 [2001] [involving the proposed construction of a wastewater treatment facility in a public park]). But is the Legislature’s approval required in every instance where land held in the public trust is conveyed to a private party? Not always.

In Peachin v City of Oneonta, the Third Department reaffirmed that a municipality may convey land held in the public trust to a private developer without the State Legislature’s approval where the land will continue to be dedicated to public use or public benefit. The Court’s decision is a valuable reminder for any municipality considering the development or revitalization of underutilized lands dedicated to the public trust.

In 1922, the City of Oneonta acquired 2.12 acres of land from an individual who gifted the property to the City through their last will and testament. The gift was made on the condition that the land be “limited … to City-Town-and-County Public Buildings and for Park and Municipal purposes only” (Peachin at p. 6). The City maintained the property as a public parking lot since 1933 (id. at 6-7).

Years later, the City implemented a downtown revitalization plan. Through that initiative, the City sold the property to a private party who proposed to redevelop it as a mixed-use building containing 64 affordable-housing apartments and an educational facility co-sponsored by a local college for research and development by local grain industry professionals (id. at p. 2).  A collection local business owners sued to stop the development claiming, in part, that the City violated the Public Trust Doctrine because it did not obtain the State Legislature’s approval to sell the project site to the developer (id. at pp. 3, 6).

Affirming the Supreme Court’s holding, the Appellate Division agreed that while the parking lot was held in the public trust, the City’s decision to sell the site without legislative approval did not violate the Public Trust Doctrine under the specific facts presented. The Court opined:

…[T]he parcel was conveyed for the purpose of constructing affordable workforce housing for artists and middle-income residents in connection with the City’s downtown revitalization initiative. The purchase and sale agreement included a warranty that Parkview [the developer] would construct the project in compliance with these City-approved plans and explicitly referenced low-income housing credits as part of the project financing. The residential portion of the building would “contain exhibition spaces for artists to showcase their work” and the Hartwick College Grain Innovation Center had the stated purpose of providing testing, product development and support resources for small-scale, local grain industry professionals. In other contexts, this Court has found the construction of certain affordable housing to be a “public use” (Matter of Keegan v City of Hudson, 23 AD3d 742, 743 [2005], lv denied 6 NY3d 705 [2006]; see Matter of Russin v Town of Union of Broome County, 133 AD2d 1014, 1015 [1987]), and, when considering the educational and revitalization components of the plan, we are persuaded that the project may be fairly characterized as such (Peachin at p. 7).

Thus, the Third Department held that the State Legislature’s approval was not a prerequisite to the sale of the City’s property (id.).

Again, the Court’s decision in Peachin is potentially valuable precedent for the development or redevelopment of lands held in the public trust. A question not addressed in Peachin, however, is what happens in the future when the property sold stops being used for its stated public purpose(s) and is redeveloped yet again, but for a strictly private purpose? Will the State Legislature’s approval be required then? A question for another time.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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