Eminent Domain in NY – Power Brokers Stealing From Private Enterprise


 “[w]e feel extremely gratified with the Court of Appeals’ denial of the State’s motion, which, hopefully, signals an end to the State’s challenges in this litigation.  We now look forward to collecting the award to which Gyrodyne and its shareholders are entitled.” ~ Stephen V. Maroney, Gyrodyne’s President and Chief Executive Officer

This is a story about the flagrant misuse of Eminent Domain which has become a way of life for some New York politicians and their backers.

This particular story really begins with Southampton College, which is situated on an 81-acre campus on Long Island’s tony East End.

Congressman Tim Bishop served as Provost of Southampton College for 16 years, where he began working in 1973 as an admissions counselor. During his 29 years at the college, he served in administrative positions affecting almost every aspect of college life, from institutional research and planning, to financial aid and enrollment services, student activities, personnel, community relations and fundraising.

Bishop oversaw the demise of the once-acclaimed college, resigning in 2002 to become the congressman from CD-1. He left barely in time to escape its demise. Mr. Bishop, in charge of the college’s budget, ran deficits almost every year he served despite the millions from generous donors and the property’s outstanding resources. At one point, he made a feeble attempt to cut spending by outsourcing the custodians’ jobs.

The once beautiful campus buildings fell into disrepair and the neglected grounds gave way to nature’s less sightly growth.

The college puttered along for a few years after Bishop’s departure.

Mr. Bishop blamed the closing of the college on deficits, enrollment issues and the lack of generous donors, all of which fell under his authority.

Ironically, according to his website, he is currently helping to find ways to make college more affordable by – unbelievably – making government loans more accessible on the backs of the taxpayers. Ingenious!

To digress for a moment, the college loan program is working so well that it is believed the college bubble could be as serious as the housing bubble, especially now that 53.6% of college graduates cannot find full-time work. Easy college loans are not a good idea until college officials learn to cut spending instead of relying on student borrowing to cover expenses.

Southampton college was bought by Stony Brook University in what amounted to a bailout in 2006 to avoid the Native-Americans’ claim to the property.

Instead of using those 81 acres for their latest extravagant expansion (with taxpayer money), SUNY, in the same year, decided to confiscate  property belonging to Gyrodine Company of America at Flowerfields estate in St. James, NY.

Gyrodyne, a real estate investment trust, sued for just compensation.

Stony Brook found the whole lawsuit situation quite a bother. They wrote that the “eminent domain proceedings have continued ad nauseum.” How unfortunate that they were inconvenienced by a little thing called justice and fair compensation, after all, big government’s tenet is that it is entitled to any private property you own, at least that is the case in NY. Stony Brook Edu

The State paid Gyrodyne $26,315,000 for the property at that time. As Gyrodine pursued their lawsuit for just compensation, they accepted it as a down payment.

The case, which is such a bother for Stony Brook, has been winding its way through the court system.

Yesterday, it was announced that the Court of Appeals found in favor of Gyrodine.

Gyrodine:…The November 2011 Appellate Division decision affirmed the judgment of the Court of Claims in June 2010 requiring the State to pay Gyrodyne an additional $98,685,000 plus statutory interest of nine percent from the date of taking on November 2, 2005 to the date of payment.  The November 2011 Appellate Division decision had also affirmed a related judgment in favor of Gyrodyne entered by the Court of Claims in February 2011 for costs, disbursements and expenses in the amount of $1,474,940.  In addition to this amount for costs, disbursements and expenses, the total amount of the judgment, including statutory interest, is approximately $164,000,000 as of today.

The Court of Appeals’ denial of the State’s motion was issued in connection with Gyrodyne’s claim brought in April 2006 for just compensation for the 245.5 acres of its Flowerfield property in St. James and Stony Brook, New York (the “Property”), taken by the State.  The State had paid Gyrodyne $26,315,000 for the Property at the time of the taking, which Gyrodyne elected, under New York’s eminent domain law, to treat as an advance payment while it pursued its claim for just compensation.  The Court of Claims ruled in Gyrodyne’s favor in June 2010 when it awarded the Company $125,000,000, thereby requiring the State to pay an additional $98,685,000 plus statutory interest of nine percent from the date of taking on November 2, 2005 to the date of payment…Read more…

Of course the state can appeal further.

This entire expense – $164,000,000 – will be borne by the taxpayer and, at the same time, the Southampton College property goes underutilized, offering only a handful of courses.

Is there really justice in New York? Time will tell, but that’s Big Government for you.