Yonkers IDA seeks $3.5M in Austin Ave. landfill case

st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; mso-ascii- mso-ascii-theme- mso-fareast- mso-fareast-theme- mso-hansi- mso-hansi-theme- mso-bidi- mso-bidi-theme-} The Yonkers Industrial Development Agency is seeking a court award of at least $3.5 million in damages stemming from a tangled dispute over a developer”™s failure to keep up annual payments for a former landfill site adjoining the Austin Avenue retail development.

Morris Builders L.P., of Rutherford, N.J., and its partners owe approximately $1.67 million for 2007 as a payment in lieu of taxes, or PILOT, on the 20-acre brownfield, the IDA”™s attorney, Dennis Lynch, claimed in a state Supreme Court filing. The case was moved last month to U.S. Southern District Court in White Plains at the request of the defendants”™ attorney, Philip M. Halpern.

Halpern in court papers countered that the developer of the Stew Leonard”™s, Costco and Home Depot property ”“ by an agreement negotiated with the Yonkers IDA in 2004 ”“ was entitled to an offset on its payments for the adjoining brownfield site. The reason for the offset was because property tax credits to the developer through the state”™s Empire Zone program were less than its scheduled payments to the IDA, the papers state. The defendants”™ attorney also claimed the IDA”™s case should be tossed out because when negotiating the supplemental PILOT the agency agreed to indemnify the developer against any claims or actions related to the state”™s brownfield cleanup program.

In a five-party 1985 contract involving the city of Yonkers, Westchester County and the city”™s and county”™s industrial development agencies, Morris Builders agreed to clean up and develop all or part of an approximately 100-acre parcel off Austin Avenue, according to IDA court filings. Over a 15-year period starting in 1989, the New Jersey company developed approximately 60 acres for the shopping center. The defendant, however, claimed about 28 acres were developed.

In 1992, the company began annual PILOT payments of $350,000 to the IDA. In 2004, Morris Builders agreed to additionally pay up to $1.5 million annually to finance the clean-up of the adjacent landfill site as the city had agreed to do in a 25-year-old consent order with the state Department of Environmental Conservation. The Yonkers IDA initially issued a $1.5 million brownfield redevelopment bond for the project.   

Morris Builders made annual $1.5 million payments from 2004 through 2006, although the last two payments were late, the IDA contends. The company did not make the payment due last December and now owes $1,671,894, the IDA claimed in its lawsuit.

The defendants”™ attorney countered that the supplemental PILOT grants the developer an offset against future payments if the company”™s real property tax credit from the state is less than the agreed-to payment. Those credits since 2004 have been “well below” the annual PILOT payments and the company is entitled to “substantial” offsets, Halpern claimed.

The attorney said the company”™s 2007 payment applied offsets from the previous two years. The IDA broke the contract when it rejected that payment and failed to negotiate to adjust the PILOT payments to reflect the developer”™s reduced tax credits, he said.

U.S. Magistrate Cathy Seibel is presiding in the case.