New York adopted the Eminent Domain Procedure Law (EDPL) by Chapter 839 of the Laws of 1977. The purpose of the law is to provide the exclusive procedure by which property is to be acquired by the exercise of the power of eminent domain and to assure that just compensation is paid. The law also was to establish opportunity for public participation in the planning of public projects necessitating the exercise of eminent domain. EDPL §101.

The adoption of the EDPL followed an intensive study, combined with public hearings by the Temporary State Commission on Eminent Domain. The Commission published annual reports in 1972, 1973 and 1974. (This author was a consultant to the commission in 1972 and 1973.)

The EDPL is 41 years old. It is long in the tooth and in need of revision. There are many substantive areas that require an amendment.

The EDPL provides jurisdiction to not only acquire property by eminent domain and determine just compensation, EDPL §501, but also the exclusive procedure to challenge a proposed condemnation, EDPL §208. Jurisdiction is either in the Court of Claims for State takings, EDPL §501(A), or Supreme Court for all other eminent domain takings, EDPL §501(B).

In New York, the condemnor's obligation to make a good faith pre-vesting offer which represents 100 percent of its highest approved appraisal is statutory. If the offer is not accepted as full payment, it is to be paid as an advance payment without prejudice. EDPL §301 addresses the policy of the EDPL requiring the condemnor to make every reasonable and expeditious effort to justly compensate for the taking of real property. The condemnor is further required to make a written offer to acquire the property in an amount equal to 100 percent of the approved appraisal. EDPL §303. It is then directed that the condemnor offer its highest approved appraisal, and that the offer, where practicable, be made prior to acquiring the property.

Eminent Domain Procedure Law §304 addresses the concept of advance payment. As the statute states, the condemnee may elect to accept such offer as an advance payment and such election shall in no way prejudice the right of a condemnee to claim additional compensation. EDPL §304(A) (3), (4).

But what happens on occasion, particularly in the Court of Claims, is that if the offer is rejected as full compensation, the condemnor will file a lower appraisal.

This practice has been termed “sandbagging.” It is a form of punishment. The Federalist Society Review published a paper in its Nov. 10, 2016, issue, Vol. 17, Issue 3. The article set forth the following:

A government that lowers its appraisal of the property in question once a formal proceeding is commenced only increases the stakes for landowners who refuse an initial offer and decide to test their changes in court. In fact, knowledgeable practitioners in the area of condemnation have suggested that the purpose of sandbagging is “to coerce the [land]owner into accepting the pre-litigation offer on pain of running the risk of a verdict below that offer.”

It is extremely frustrating to observe this bad faith conduct by government. The State of New York does this consistently even after paying an advance payment based on the higher other appraisal. We submit that this conduct is in violation of the law. Uniform Relocation Act of 1970, 42 USCA Section 61, provides that the primary purpose of the subchapter is to establish fair and equitable treatment of persons displaced in a federally assisted project. The statute prohibits any action coercive in nature in order to compel agreement on the price to be paid for the property. 42 USCA Section 4651. A substantially lower appraisal exposes the former owner to jeopardy of the entry of a judgment against it in favor of the condemnor with interest. EDPL 304(h). Think about it—most money paid on an advance payment goes to the mortgagee. If a deficiency judgment is entered, a condemnee not only lost his property, but now owes the State money. It almost happened in Matter of State of New York (KKS Props, LLC), 119 AD3d 1033 (3d Dept 2014), but the Third Department corrected the injustice.

Condemnors, especially the Attorney General, do not want judges to know the amount of the advance payment. They will argue that the other higher appraisal was prepared for settlement and is immune from discovery. But this is not true. The higher appraisal was adopted when it was used to make a payment. The higher appraisal was also used to apply for federal funds and a copy of the report is kept in the files of the agency in case of an audit. The high appraisal was prepared because it was required by statute.

A few New York cases support the right to have the higher appraisal offered into evidence. Cronk v. State of New York, 100 Misc2d 680 (Ct. Cls. 1979), is the leading authority that the other report is an admission. Nunes v. State of New York, 91 AD2d 1135 (3d Dept 1983) is another.

We are not talking about higher appraisals by the same appraiser. In that situation, all prior appraisals may be used for impeachment purposes. CMRC v. State of New York, 270 AD2d 27 (1st Dept. 2000).

New York should adopt a section in the EDPL which provides that a pre-vesting offer may never be lowered as to the value of the property taken. It should be the minimum amount of compensation.

Should the EDPL be revised to provide a set period to file a claim for compensation? If the state of New York appropriates property, one has three years to file a claim in the Court of Claims from the date of personal notification of the taking. However, in all other takings, the Supreme Court is authorized to set the time period for a condemnee to file a claim. EDPL §503(B). While the periods vary, many courts select one year. Why? These are not slip and fall cases, but the taking of property, and there seems to be no rationale or constitutional reason to limit a party from filing a claim to one year.

A great deal of the recent litigation challenging proposed takings has focused on the blight designation necessary to authorize a taking. The Court of Appeals has substantially barred the review of findings of blight in eminent domain proceedings. Matter of Kaur v. New York State Urban Dev. Corp., 15 NY3d 235 (2010).

It is necessary for the Legislature to define what exactly is “blight.” It seems to us that “blight” is in the eyes of the beholder. Since a court will not review a blight designation, justice and fairness require a solid definition.

Should there be a shorter limit on how long a condemnor can condemn property once it determines to take it? Present conditions provide for a three-year period and up to 10 years if the acquisition is done in stages. EDPL §401(C). This creates a cloud of condemnation which affects property values. Further, there is nothing that compels a condemnor to take property.

What is the appropriate interest to be paid? If the state or a state agency takes your property, it pays 9 percent, if a local government acquires, it pays 6 percent. It seems inappropriate and illogical for the agency with the lower credit rating to pay less. Should the interest rate fluctuate and should it be compounded?

Should pre-vesting offers by condemnors be true good faith offers based on proper appraisals? EDPL §303. And should these appraisals be by independent appraisers, not by in-house staff? Should the offers include amounts for trade fixtures as well as real estate, and should such pre-vesting offers be a jurisdictional requirement before a petition to condemn is filed?

Should a jury trial be a right in a condemnation? New York is one of three states in America that does not provide for a jury trial in a condemnation. Why should one have the right to a jury in a slip and fall case but not when one's property is taken?

A condemnor must have sure and certain compensation available to pay all advance payments immediately on vesting and the final award promptly. This is often not the case. On occasion, a developer will have a small municipality acquire a site, but then the condemnor has no funds to make payment and must wait for the developer to come up with the money.

Should there be a requirement that once taking property is completed it actually be used for the intended purpose within a period of time or the project be deemed abandoned and returned to former owner? EDPL §406 requires that if the project be abandoned within 10 years, it be offered to the former owner at fair market value. The time period for abandonment should be reduced.

Finally, the legislature should adopt legislative reform to address the Supreme Court decision in Kelo v. City of New London, 545 U.S. 469 (2005). The New York State Bar Association created a task force on eminent domain which issued a report that concluded that the Kelo decision, while not a revolutionary departure from existing law, does provide the basis for the study of the reform of New York's Law. NYSBA Memorandum dated June 5, 2015. Over 45 states have enacted legislative reform. Why is the Empire State reluctant to study the law?

Michael Rikon is a partner of Goldstein, Rikon, Rikon & Houghton.