STATE OF NEW YORK

SUPREME COURT: COUNTY OF ERIE
______________________________________________________________________________

In the Matter of the Application of

ORCHARD GLEN RESIDENCES AND CARRIAGE
HOMES, LLC., AURORA PARK HEALTH CARE
CENTER, INC., d/b/a THE WATERS OF AURORA
PARK, and VICTORIA Y. KOVAKA,

Petitioners

For a Judgment under CPLR Article 78 and §3001

VS. Index No.: 05883/01

ERIE COUNTY INDUSTRIAL DEVELOPMENT
AGENCY, and PRESBYTERIAN HOMES OF
WESTERN NEW YORK, INC.

Respondents

______________________________________________________________________________

ARTHUR J. GIACALONE, ESQ.
Attorney for Plaintiff

HURWITZ & FINE, P.C.
Attorneys for Defendant ECIDA
Dan D. Kohane, Esq. of Counsel

COHEN, SWADOS, WRIGHT, HANIFIN
BRADFORD & BRETT, LLP
Attorneys for Defendant PHWNY
Larry Kerman, Esq. of Counsel

MINTZ, J.

Petitioners seek Article 78 and declaratory relief with respect to a determination by Respondent Erie County Industrial Development Agency [hereinafter "ECIDA"] to provide financial assistance to Respondent Presbyterian Homes of Western New York, Inc. (hereinafter "PHWN'Y"'] for the construction of the Braecroft Retirement Community [hereinafter the project]. Petitioners claim that the determination of ECIDA was improper in six respects: 1) That the project is not in furtherance of PHWNY's purposes, and as such violates Gen. Mun. Law §854 (13); 2) That the project's costs exceed twenty million dollars, in violation of Gen. Mun. Law §854 (13); 3) That the project is not a proper economic project for ECIDA financial assistance and that the determination by ECIDA is arbitrary and capricious or contrary to its purposes; 4) That the petitioners were deprived of a reasonable opportunity to be heard in violation of Gen. Mun. Law §859-a; 5) That ECIDA improperly deviated from its "uniform tax exemption policy," in violation of Gen. Mun. Law §874(4)(a) and (c); and 6) That ECIDA's determination pre-dates PHWNY's correction of the project's total costs.

With respect to their first claim for relief, petitioners claim that Gen. Mun. Law §854(13) requires that in order to provide financial assistance as specified in §854(13) to a not-for-profit corporation, the project must be in furtherance of the not-for-profit's purposes. Petitioners claim that the project at issue is not in furtherance of PHWNY's purposes as the project does not have a "charitable purpose." Gen. Mun. Law §854(13) provides in pertinent part:

" Civic facility"-shall mean any facility which shall be owned or occupied by a not-for-profit corporation organized and existing under the laws of this state or authorized to conduct activities in this state .... [A] civic facility project may include: (a) dormitories for educational institutions; (b) facilities as defined in article twenty-eight of the public health law; and (c) housing facilities primarily designed to be occupied by individuals sixty years of age or older provided that the total cost of such projects as provided for in paragraphs (a),(b), and (c) herein does not exceed twenty million dollars."

§854(13) itself imposes no requirement of a "charitable purpose," only that the project be owned or occupied by a not-for-profit corporation. Petitioners claim that since PHWNY was incorporated for "charitable purposes," ECIDA must scrutinize whether the project itself is for "charitable purposes," to ensure that the project is in furtherance of the not-for-profit corporation's purposes. Nowhere in §854(13) is there any requirement upon an IDA to make a determination whether the project specified is in fact in furtherance of the purposes of the not-for-profit corporation which owns or occupies it. Such a determination might require a legal determination that the IDA is not to be expected to make. There has been no policy reason advanced by petitioners that would justify adding this extra requirement to an IDA’s determination of whether a project meets the requirements of §854(13). On the contrary, §854(13) imposes only objective determinations to be made by the IDA: to wit, whether the project is one of the three enumerated and whether the project is owned or occupied by a not-for-profit corporation. Imposing such an subjective determination is against both the language and the spirit of the section. Thus, whether or not the project was in furtherance of PHWN'Y's charitable purposes is simply not relevant to the ECIDA determination, and this basis for petitioners' claim cannot be sustained.

Even if whether the project was in furtherance of charitable purposes were relevant, petitioners have not established that the project was not in furtherance of charitable purposes simply by demonstrating that the likely clientele of the project were middle class and upper middle class retirees. For example, under §854(13), a college or university, which would be incorporated as a not-for-profit corporation for charitable and educational purposes, could seek IDA assistance for the construction of a dormitory to house its students without regard to whether any financial aid would be provided to needy students. And §854(13) simply provides that one appropriate purpose of a civic facility is housing for individuals over the age of 60, without regard to whether any financial assistance will be provided to the individuals. Thus, ECIDA's determination without regard to whether the project was in furtherance of "charitable purposes," was entirely proper.

It should be noted that petitioners make no claim against PHW-NY directly, challenging their undertaking of the project as against their purposes. The petition only seeks to annul the determination of the ECIDA; thus any assertion that PHWNY's undertaking of the project is ultra vires is not properly before the court.

With respect to petitioners' second and sixth claims, petitioners urge this court to adopt an extremely narrow reading of §854(13)'s requirement that the project's cost not exceed twenty million dollars. As indicated by ECIDA's affidavits in opposition to the relief requested, PHWNY amended its application and indicated that the total costs were $19,668,000. To the amended application and to the original application petitioners claim that the total cost presented is not within the twenty million dollar limitation because the project may turn out to cost more than the amount specified in the application, that ECIDA should have considered certain "soft costs," which may be or have been incurred, and although disputed by ECIDA, the project would have a second phase which was not included in the project application.

To grant petitioners relief would require a reading of §854(13) contrary to both the intent and the practicality of administering this section. First, petitioners offer no admissible evidence that the project would, in fact, cost more than twenty million dollars, but only speculate that the cost is greater than that stated . In contrast both respondents have, by affidavit, introduced evidence that the actual cost would be $19,668,000. Second, the only time the language "the total cost of such projects" has been interpreted by a court in a similar statute, the court held that the language meant "the amount of the bonds to be issued." Mersereau v. County of Westchester, 178 Misc. 652 (Sup.Ct. West.Co. 1942). Third, the legislative history of both the original §854(13) and the amendment speak in terms of the amount of bonding authority. Fourth, the definition of "project" for purposes of §854 (see º854(4)), includes only the land, buildings and other improvements, fixtures and personal property contained, and does not include general development expenditures. Finally, there can be no consideration by an IDA of what additional costs might be incurred before the project is over. To do so would add a level of uncertainty to the validity of the bonds after their issue; this could not possibly have been intended by the statute. Indeed, the only interpretation of the statute which is consistent with its 'legislative history and its practical administration is one where the twenty million dollar cost specified in the statute is a limitation on the amount of bonds which may be issued in connection with the project. ECIDA's determination was in accord with §854(13)'s monetary limitations.

With respect to the third claim, ECIDA has amply supported its determination to provide financial assistance to the project with objective findings. Petitioners do not demonstrate that ECIDA failed to consider whether there was sufficient need for the project, and petitioners do not offer any proof that contradicts that the project would not go forward without either ECIDA assistance or other tax relief. The determination was not arbitrary or capricious.

Finally with respect to the fourth and fifth claims, ECIDA has demonstrated that it took all procedural steps required under the statute, and with respect to the fifth claim, garnered the necessary approvals of the affected taxing authorities. Where the legislature has specified procedural steps to be followed, it would be improper for this court to impose other procedural standards.

For the foregoing reasons, the petition is in all respects denied. Submit order.

Dated: August 20, 2001
Buffalo, New York

_____________________________________
JOSEPH D. MINTZ, J.S.C.