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KNAUST v. CITY OF KINGSTON

March 26, 2002

MARK KNAUST, BARBARA KNAUST AND HERMAN KARL KNAUST, II, PLAINTIFFS,
V.
THE CITY OF KINGSTON; THE CITY OF KINGSTON PLANNING BOARD; THE CITY OF KINGSTON LOCAL DEVELOPMENT CORPORATION; AND THE UNITED STATES DEPARTMENT OF COMMERCE, FOR AND THROUGH THE ECONOMIC DEVELOPMENT ADMINISTRATION, WILBUR F. HAWKINS, DEPUTY ASSISTANT SECRETARY FOR ECONOMIC DEVELOPMENT, DEFENDANTS.



The opinion of the court was delivered by: Scullin, Chief Judge.

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs commenced this action pursuant to 42 U.S.C. § 1983, seeking injunctive relief and compensatory damages for an alleged taking of their real property as a result of the operations of the adjacent City of Kingston Business Park in Kingston, New York ("Business Park"), in violation of the Fifth and Fourteenth Amendments to the United States Constitution. Plaintiffs also asserted two state law causes of action, alleging violations of the New York State Environmental Quality Review Act ("SEQRA," Environmental Conservation Law, Article 8) against the City and the Planning Board and alleging the creation of a common law nuisance against all Defendants. See Complaint at ¶¶ 47-54.*fn1

Presently before the Court is Defendants' motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure or, in the alternative, for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The Court heard oral argument in support of, and in opposition to, this motion on March 5, 2002, and reserved decision. The following constitutes the Court's determination of the pending motion.

II. BACKGROUND

A. Factual Background

Plaintiffs own a three-acre parcel of undeveloped real property, which adjoins the Business Park. Plaintiffs' deed to the property references the existence of "caves" on the property. These caves are actually remnants of an underground limestone mine abandoned more than 100 years ago.

Until the mid-1960s, when it was abandoned, Plaintiffs ran a commercial mushroom farming operation on the property. Since that time, the property has been fallow. Plaintiffs' three-acre parcel is now zoned RRR residential. Farming, including mushroom farming, is prohibited in the City's residential zones on parcels of less than five acres. Thus, either a commercial or agricultural use of the property would require discretionary site plan approval from the City of Kingston Planning Board.

In 1991, Plaintiff Mark Knaust petitioned the City to reduce his taxes. At that time, he asserted that the property had a full value of $7,000 and that it had no potential as income producing or commercial property. See Affidavit of Diana Miller, sworn to May 14, 1996 ("Miller Aff."), at Exhibit "A," attached to the Affidavit of Michael J. Moore, sworn to October 1, 2001 ("Moore Aff."), at Exhibit "14." In December 1995, as administrative proceedings related to the Business Park neared conclusion, Plaintiffs announced plans to revive their commercial mushroom farming operation and have since claimed that the property has significant, unique economic value. However, Plaintiffs have not taken any steps to obtain the zoning change, use variance or site plan approval from the City which they need to conduct a commercial or agricultural venture on their property.

During the Spring of 1995, the City of Kingston and the Kingston Planning Board negotiated a series of contracts and agreements with a number of companies for the development and construction of the Business Park on a 107-acre parcel of property adjacent to Plaintiffs' property. Phase I of the project was partially funded with an economic development grant of $1.86 million from EDA, which was used to construct the Business Park's infrastructure. Local and State agency approvals for the Business Park were secured between April 1995 and April 1996 and construction commenced in May 1996.

State and federal environmental regulatory agencies have reviewed this storm water management system and determined that it involves a benign discharge of treated storm water to surface waters. On March 7, 1996, the New York Department of Environmental Conservation ("DEC") indicated that this system "adequately addresses this Department's concerns regarding potential groundwater contamination," and describes the Business Park's storm water as presenting "no greater contamination threat than . . . a shopping center." The letter also states that any contaminants will be "properly treated by the . . . Vortechs . . . systems." See Affidavit of Richard F. Riseley, sworn to May 14, 1996 ("Riseley Aff."), at Exhibit "1," attached to the Moore Aff. at Exhibit "5." Similarly, in May 1996, the United States Environmental Protection Agency ("EPA") determined that the storm water management system was not subject to EPA jurisdiction as an "underground injection well." See Riseley Aff. at Exhibit "3."

B. Prior proceedings in this case

Plaintiffs allege in their complaint that the subterranean lake on their vacant residentially-zoned property adjacent to the Business Park was contaminated and threatened with contamination from the Business Park's storm water management system, allegedly resulting in a taking in violation of the Fifth and Fourteenth Amendments to the United States Constitution. See Complaint at ¶¶ 1, 2, 15, 16, 18. Plaintiffs initially moved for a preliminary injunction to halt the federal funding and construction of the Business Park. This Court denied that motion for failure to demonstrate "probable irreparable harm" holding that "at best, Plaintiffs have demonstrated that there is a `possibility' that storm water runoff from the Kingston Business Park will make its way into the Plaintiffs' lake." Knaust v. City of Kingston, 978 F. Supp. 86, 95 (N.D.N.Y. 1997), vacated as moot, 157 F.3d 86 (2d Cir. 1998). The Court also "question[ed] whether Plaintiffs ha[d] demonstrated the `injury in fact' necessary to assert standing." Id. at 96 n. 13. Finally, the Court noted that "Plaintiffs' Takings Clause claim will likely fail because the Plaintiffs have not demonstrated that there has been a physical invasion of their property[.]" Id.

Plaintiffs appealed the denial of their motion for a preliminary injunction. The Second Circuit dismissed the appeal as moot because the Business Park's infrastructure already had been constructed and all federal funds allocated to the project had been disbursed. See Knaust v. City of Kingston, 157 F.3d 86 (2d Cir. 1998). The Second Circuit also vacated this Court's earlier order, without prejudice to a renewed order consistent with its opinion. See id. This Court then issued a new order granting the EDA's motion for summary judgment, dismissing all claims against the EDA, and dismissing Plaintiffs' preliminary injunction motion as moot. See Knaust v. City of Kingston, No. 96-CV-601, 1999 WL 31106 (N.D.N.Y. Jan. 15, 1999). In its second order, this Court restated its earlier reservations concerning Plaintiffs' alleged injury in fact and their constitutional ...


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