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James Square Associates LP v. Mullen

Court of Appeals of New York

June 4, 2013

JAMES SQUARE ASSOCIATES LP et al., Respondents,
v.
Dennis MULLEN, Commissioner, New York State Department of Economic Development, et al., Appellants. In the Matter of J-P Group, LLC, Respondent,
v.
New York State Department of Economic Development et al., Appellants, et al., Respondent. In the Matter of Morris Builders, LP, et al., Respondents,
v.
Empire Zone Designation Board et al., Appellants. In the Matter of Hague Corporation, Respondent,
v.
Empire Zone Designation Board et al., Appellants. In the Matter of WL, LLC, Respondent-Appellant,
v.
Department of Economic Development, Also Known as Empire State Development, et al., Appellants-Respondents.

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[970 N.Y.S.2d 889] Eric T. Schneiderman, Attorney General, Albany (Andrew D. Bing, Owen Demuth and Barbara D. Underwood of counsel), for appellants in the first and second above-entitled action and proceeding.

[970 N.Y.S.2d 890] Eric T. Schneiderman, Attorney General, Albany (Andrew D. Bing, Owen Demuth and Barbara D. Underwood of counsel), for appellants in the third and fourth above-entitled proceedings and actions and appellants-respondents in the fifth above-entitled proceeding and action.

Bond, Schoeneck & King, PLLC, Syracuse (Jonathan B. Fellows of counsel), for respondents in the first above-entitled action.

Mosey Persico, LLP, Buffalo (Jennifer C. Persico of counsel), for respondent in the second above-entitled proceeding.

Collier, Halpern, Newberg, Nolletti & Bock, LLP, White Plains (Philip M. Halpern of counsel), for respondents in the third above-entitled proceeding and action.

Hodgson Russ LLP, Albany (Michelle L. Merola and Christopher L. Doyle of counsel), for respondent in the fourth above-entitled proceeding and action.

Bousquet Holstein PLLC, Syracuse (Robert K. Weiler, Philip S. Bousquet and Cecelia R.S. Cannon of counsel), for respondent-appellant in the fifth above-entitled proceeding and action.

Page 240

OPINION

LIPPMAN, Chief Judge.

[993 N.E.2d 376] The common question presented by these appeals is whether the retroactive application of the 2009 Amendments to the Empire Zones Program complies with the Due Process Clause of the Fifth Amendment. Evaluating these cases under the balancing test of Matter of Replan Dev. v. Department of Hous. Preserv. & Dev. of City of N.Y., 70 N.Y.2d 451, 456, 522 N.Y.S.2d 485, 517 N.E.2d 200 (1987), we conclude that the retroactive application of the 2009 Amendments violated plaintiffs' due process rights and affirm on slightly different grounds from those invoked by the Appellate Division.

I. Facts and Procedural History

A. The Empire Zones Program

In 1986, the legislature enacted New York State's Economic Development Zones Act (the EDZ Program). The goal of the EDZ Program was to stimulate private investment, private business development, and job creation in certain geographic areas characterized by persistent poverty, high unemployment, shrinking tax bases, and dependence on public assistance ( see General Municipal Law § 956). The EDZ Program offered a variety of state tax incentives designed to attract new businesses to the state and to enable existing businesses to expand and create more jobs ( see id. ). Over time, the EDZ Program gradually shifted its focus on poverty reduction to business development by relaxing eligibility requirements, and the name of the

Page 241

program was changed to the Empire Zones Program Act (the Program) in May of 2000 (L. 2000, ch. 63, part GG).[1]

Businesses located in qualifying Empire Zone areas and that otherwise meet the statute's criteria could apply to the Department of Economic Development (DED) for a certificate of eligibility, which they could then submit to the Department of Taxation and Finance in support of their claim for tax credits ( see General Municipal Law § 959[a] ). Among the tax credits [993 N.E.2d 377] [970 N.Y.S.2d 891] available to qualifying businesses were the Empire Zone Wage Tax Credit, permitting certified Program participants to claim a credit of $1,500 to $3,000 per new job created against their New York State tax liability ( see Tax Law §§ 210[19]; 606[k] ). Since 2000, the Program has provided that a company's continued eligibility for Program benefits requires it to meet the Program's wage, employment, and investment goals, and new tax credits and exemptions were added for qualified Empire Zone enterprises ( see Technical Analysis, Dept. of Taxation and ...


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