Developers suing town for blocking planned development

Real Estate Weekly, Feb 5, 2003

Putnam Seabury Partners, L.P., a prominent New York development partnership, filed a $40 million lawsuit against the Town of Southeast and the Town of Southeast Planning Board in New York Supreme Court in Putnam County. The lawsuit accuses them of unconstitutionally and illegally seeking to block a longstanding mixed-use development project under review for the past 15 years, until the town changes the zoning, which would render the project economically unfeasible.

The project, known as Campus at Fields Corners, started in 1986 with the encouragement of the Town of Southeast. Plans included construction of mixed-use affordable housing and office development to enhance the Town's housing diversity, as well as generate needed tax revenue. The site encompasses 327 acres near the intersection of Route 312 and Pugsley Road in the Town of Southeast, and envisions 143 clustered single-family residential dwellings, 237,000 SF of office space, extensive open space, created wetlands and various water retention basins.

Following a full and comprehensive environmental review by the developer in 1991, the Town approved and created a new mixed use OP-3 zoning district, specifically to encourage and accommodate Campus at Fields Corners. Since that time, the developer has spent more than $22 million, cooperating with every governmental agency in complying with, and completing numerous environmental and other technical reviews.

Unfortunately, the delay in finalizing Campus at Fields Corners included a four-year hiatus (1995-1999) when the Town refused to continue to process the project until the proposed New York City Watershed Regulations were issued. Putnam Seabury secured all necessary approvals from the NYCDEP in 1999, and in fact, were the moving force behind the innovative demonstration Phosphorus Offset Program adopted by New York City. This program ensures the improvement of the quality of the drinking water for any development in a phosphorus-restricted basin.

After extensive and expensive technical analysis, Putnam Seabury has been selected to be one of the first developers to participate in the Pilot Program.

"This has been one of the most onerous approvals processes this firm has ever experienced, but we trusted the Town and were determined to work with them at every juncture to create the type of high quality mixed use development, which they encouraged us to build on the site," explained Harvey Schulweis, the managing partner of Putnam Seabury. "We were never prepared, however, for what happened next." exclaimed Schulweis.

Following another three years of review and upon receiving most, if not all of its relevant approvals by 2001, the developers were required to go before the Town Board one last lime for supposedly a purely technical or ministerial cluster approval prior to receiving its final approval. After another five months of unexpected lengthy public hearings -- in which the developer cooperated at every turn -- the Board was scheduled to grant its approval and send the project back to the Planning Board for final approval in December 2001.

Town Board members had in fact, on the record, told representatives of the developer that the Comprehensive Plan being discussed at the time would in no way affect them, and that approval for the project was an independent action that could be expected at its next meeting.

Instead, after several unexplained adjournments and without any notice or advance warning, the Town Board at its meeting of Feb. 28, enacted a Moratorium that terminated any further processing or discussions of Putnam Seabury's project. The board also indicated that it intended to modify the zoning to dramatically decrease the permitted number of housing, which would destroy the economic viability of the Project. "I have filed this lawsuit as a last resort based upon our extreme frustration and disappointment in the Town after years of working with them in the utmost good faith," stated Schulweis.

"Indeed, in our years of practicing before governmental administrative agencies we have never seen such a deceptive and unfair pattern of behavior as manifested by the Town Board in the manner in which they adopted the Moratorium and subsequent Comprehensive Plan as it relates to the Project," declared Michael Zarin, a principal with the White Plains law firm Zarin & Steinmetz, attorneys for the developer.

Putnam Seabury's 47-page multi-volume Complaint is seeking damages in the amount of $40 million, and $22 million in damages for an ongoing temporary regulatory taking of its property.