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Oyster Bay not responsible for $33M payment, state court rules

Oyster Bay Town Hall, in Oyster Bay on

Oyster Bay Town Hall, in Oyster Bay on March 27, 2016. Credit: Anthony Lanzilote

A state appellate court panel on Wednesday unanimously reversed a 2016 ruling that would have required the Town of Oyster Bay to pay about $33 million to a company with land in Farmingdale that was seized by the town to build a park.

Oyster Bay, using eminent domain, condemned 14.03 acres of formerly contaminated industrial land at 55 Motor Ave. to expand Ellsworth W. Allen Park. The town paid the former owner, 55 Motor Avenue Company LLC, $3.27 million for the property, but the company sued, saying “just compensation” for the land was $20.7 million.

“We’re thrilled by the decision,” Town Supervisor Joseph Saladino said. “We felt all along the amount that was paid for the property was correct . . . This is great news for our taxpayers.”

The decision saves the town about $33 million when including the interest that accrued on $20.7 million since 2003, town spokeswoman Marta Kane said.

James Greilsheimer, the Manhattan-based attorney for 55 Motor Avenue, said his clients are “disappointed” in the ruling by the four-judge panel of the Appellate Division Second Department in Brooklyn.

“We will be considering our options,” Greilsheimer said.

55 Motor Avenue officials argued the land and an adjoining parcel could have been used for nearly 245,000 square feet of retail space, and that the market value of the 14 acres for retail was $20.7 million, if combined with contiguous land.

The town asserted that the best use of the land if it had not been seized for a park would have been for a warehouse or a research and development building, and that the value of the land for such a light industrial use was $3.27 million.

Wednesday’s ruling stated the company had “failed to establish that there was a reasonable probability that they would have been granted a special use permit” to develop the parcels into retail uses. A special-use permit from the town would have been necessary for any retail project.

The property is part of more than 30 acres that for decades had been used for metal finishing and manufacturing aircraft parts and became contaminated. After years of cleanup, the U.S. Environmental Protection Agency in 2014 declared the site ready for development.

The town is preparing to begin construction on the 14 acres and 7.5 adjoining acres to build the park extension. The town paid 55 Motor Avenue $4.45 million for the second parcel. The company also filed a claim for just compensation for that parcel, and appraisers for the town and the company are preparing reports on the value of the land.

55 Motor Avenue owns a third 8.7-acre parcel on the site that it leases to Stop & Shop.

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