Lawyers focus on letter, timeline in Alden hearing
Petitioners seek to add bank to suit
The Daily Mail
Mar. 7, 2009
CATSKILL — Oral arguments in a lawsuit filed by various Cairo citizens and citizen organizations against numerous parties on the local and State level as well as against developers seeking to bring a housing and retail development to Cairo were heard Friday morning in the temporary Greene County Courthouse.
Greene County Judge George J. Pulver Jr. did not issue a ruling on the case, although he said a decision would be made in a timely manner.
Lawyers for the plaintiffs including Cairo First Inc., Cairo Plaza, LLC, J. Triple S., Inc, E. Slater, Inc., and Cairo Township Taxpayers Association, and the defendants, including the Cairo Town Board and Town Planning Board, the State Department of Environmental Conservation, State Environmental Facilities Corp. and the State Division of Housing and Community Renewal, presented their cases as to whether the suit was filed after the statute of limitations had lapsed, whether the New York state and Town of Cairo violated the law by not conducting an environmental review for a sewer upgrade project and whether a councilman should have recused himself from all Town Board votes on the project.
The plaintiffs have asked that the Bank of Greene County be added as a party to the suit for its role in granting a $750,000 bond earmarked for funding the sewer project.
Pulver asked how a letter from attorney Andrew Brick of Donald Zee, P.C, lawyer for defendants Charles Maggio and Regan Development Corp., which states his clients’ wish to withdraw a motion to dismiss, affects each party’s arguments.
Lawrence Rappaport of the Office of the Attorney General, who represents the state’s interetsts, agreed that the letter’s meaning was unclear.
“It could very well mean that Maggio will withdraw,” he said.
Rappaport and Cairo Town Attorney Tal Rappleyea agreed that the lawsuit would be moot if Maggio abandons the Alden Terrace project. However, Rappleyea said, there was some question as to the fate of the sewer upgrades if the development was not built.
Plaintiffs’ counsel Andrew Gilchrist of Tuczinski, Cavalier, Gilchrist and Collura, P.C., said the letter offers no indication that the option to purchase the property will not be extended.
He said that because Town documents do not name Alden Terrace but do indicate a reliance of 75 percent of the sewer upgrade’s funding coming from a development, the suit would be relevant, regardless of whether Alden Terrace was built in Cairo.
Brick was absent from the proceedings, and so could not shed light on the motives behind his letter. Neither Brick nor Larry Regan of Regan Development Corp. responded to calls for comment Friday.
Rappaport said the DEC has moved for dismissal of the suit because the petitioners failed to bring a case before the 60-day statute of limitations had elapsed.
The proceeding was brought on Sept. 22, 2008. A longer, four-month statute of limitations was not appropriate to the situation. Later, Rappleyea made the same case. “It was brought way too late,” Rappleyea said.
In June 2007, he said, the Town proposed upgrades to their sewer system to bring it in compliance with a State Pollution Discharge Elimination System permit, and proposed that 75 percent of the cost would come from the project.
The DEC requested revision of the proposal with language regarding projects lying outside the existing sewer district removed. A new proposal was submitted in April 2008.
The DEC also placed a moratorium on connection new buildings to the sewer system was placed until the system met department requirements under the permit.
That the department approved the upgrade was incidental to the legal obligation of the Town to bring its sewer system into compliance with the permit.
Rappaport argued that the plaintiffs have not proved that the department violated laws on conducting a State Environmental Quality Review by approving an engineering report. Rappleyea presented a similar argument that the Town did not violate any laws for not conducting a SEQR. They said that the review was unnecessary because a Consent Order required the sewer system to be upgraded.
Rappaport said that the Environmental Facilities Corp. may have approved a preliminarily review, but the decision was not final. The corporation will provide funding for projects that will bring the system into compliance with the SPDES permit.
Rappaport said that the State Division of Housing and Community Renewal and the State Housing Trust Fund Corp., which are listed together in the suit as one entity, are in fact distinct bodies, each with its own function. The DHCR, he said, will make a determination of tax credits once a project is completed, and the HTC asks for money upfront.
Gilchrist countered that the suit was brought well within the allowable time. Although the Town approved the Alden Terrace project in February 2008, Gilchrist said the resolution was not published until Sept. 10, 2008. The suit was brought 12 days later. He added that the Town voted on a negative declaration on the SEQR determination on Aug. 20, 2008, which was less than four months before the suit was filed.
“There is no question this is timely,” he said.
Gilchrist presented a chart showing the conclusion of the 2007 project proposal and the revised 2008 project proposal. He circled items on the chart to demonstrate the plans’ similarities.
The language regarding projects outside the sewer district, which the DEC had requested removed, was removed and replaced by the term “new customers,” but all other language in the section remained the same.
A map included with the 2007 plan showed a sewer line extension stretching down Route 32 to Main Street and connecting to the proposed development. A second sewer district on the map included the development. The 2008 map showed the line running from Route 23 to Main Street with no initial connection to a development or a second sewer district indicated on the map.
The 2008 plan, Gilchrist said, still said that 75 percent of the sewer cost would come from the development. “That was arbitrary and capricious,” he said.
He said that the sewer district was barely a year old when it started having problems. Although the initial Inflow and Infiltration Report was completed in 2001, the Town did not take steps to rectify the problems until 2007, or roughly when Alden Terrace was proposed.
“If they have to fix the I-and-I, why are they building?” he said.
He countered Rappaport’s argument that the DHCR and HTC are separate entities by pointing out that they share staff and a letterhead, which is why both names were given in the suit as one entity.
He noted that the system would accept another 60,000 gallons from an out-of-district source even though the inflow and infiltration problems had not been fully addressed.
Rappaport then pointed out that Gilchrist had overlooked the moratorium on making new connections to the system.
Gilchrist said the plans indicate that if additional users increase the inflow by 60,000 gallons, those users will pay for 75 percent of the project.
Rappaport said that the DEC had approved the upgrades, not how the upgrades would be funded.
Gilchrist said that the taxpayer organization that brought the suit was formed specifically to address taxpayer issues in the Town.
Then, he brought up the matter of Councilman Raymond Suttmeier’s failure to recuse himself from the initial vote to approve the project as well as subsequent votes to spend money. He said that because Suttmeier is part-owner of a property adjacent to the proposed Alden Terrace site, the councilman was obligated to disclose his interest.
Rappleyea countered that Suttmeier had presented the court with an affidavit that indicated he and various members of his family owned land next to the site, but that he had no direct interest in the development project.
Pulver turned next to a recently filed motion to name the Bank of Greene County as a party to the suit. He asked Gilchrist how the purchase affected his clients.
Gilchrist alleged that the $750,000 loan was only possible because of improper action by Cairo Town Supervisor John Coyne.
Coyne signed a certificate that affirmed that there was no pending litigation surrounding the project for which the money was to be used.
Gilchrist said that taxpayers in Cairo would have to pay the bank if fines were levied.
“This town is ready to go and spend that money,” Gilchrist said.
Rappaport said the town had been dragging its feet on complying until the DEC imposed a fine, and that the DEC would have imposed another fine on the Town if sand filter work had not been done. Part of the $750,000 has been used for filter work.
Rappaport asked if the petitioners really wanted their town to be subject to another fine.
Rappleyea said that although he was not present at the bond closing, the bond package and proceeding was similar to that of a mortgage closing. The package contained a document that allowed for any error to be corrected at a later date.
The erroneous certificate had been replaced in the bank file with a document that acknowledged the litigation.
“There is absolutely no fraud here,” he said.
Charles H. Schaefer of Deily & Schaefer in Catskill, representing the Bank of Greene County, urged the Court to consider and decide the pending dismissal motions before considering the motion to include the Bank in the lawsuit.
Schaefer presented a signed affidavit from Bank of Greene County President Donald Gibson stating “the legal challenge to the Bond Resolution was not known to the Bank at the tine the BAN was purchased, and was not discussed with the issuer or its representatives prior to or at the BAN closing.”
The bank, Schaefer said, was presented with a bond package prepared by the Cairo’s Bond Counsel. The bank reviewed the package, he said, and no unusual issues or problems were encountered or disclosed.
He said the bank is a community bank and regularly purchases obligations of local municipalities for investment portfolio. He said the market for such securities has shrank since the recent economic crisis began. The bank’s role in these transactions is more even more critical than ever, he said.
He said the bank was committed to make sure Cairo residents enjoyed a good quality of life and a good sewer system. The bank would not default on the loan, he said.
Gilchrist said that Coyne sent a letter on Dec. 30, 2008 stating that there was a lawsuit that sought to halt the project and that legal issues were addressed by the time of the BAN.
Rappaport said the letter had allowed the DEC to extend the date for sand filter installation. He said that the petitioner’s motion to name the bank as a party was premature. Inclusion of the bank would only make it harder for the Town to comply with the Consent Order, he said.
Pulver ruled that the letter from Brick would be added to the record.