BELVIDERE — Economic development officials moved a step closer to using eminent domain to help build a $500 million cheese plant if the landowner and developer cannot come to an agreement.
The Allegany County Industrial Development Agency board, in a special meeting Monday, unanimously approved a resolution of determination and findings condemning 321 acres of farmland in the towns of Angelica and Amity for a new Great Lakes Cheese Inc. facility.
The resolution is one of the steps on the road to using the legal process to take the property from its owner while providing market rate compensation. However, officials hope that an agreement can be reached between GLC and Marshlands LLC, the property’s owner.
Under the proposal, the site would be used to construct a cheese manufacturing facility with an expected workforce of more than 400 to replace the current facility in the town of Cuba, which employs around 225. Those workers would be offered jobs at the new facility. Officials hope to break ground in the third quarter of this year and be fully operational by Jan. 1, 2025.
IDA board chairman Richard Ewell said that the nation was founded on the “freedom to be left alone, but in this case, over 200 of our friends and neighbors face being left without a job through no fault of their own. We do not want that to happen, the IDA doesn’t want that to happen and I don’t want it to happen.”
OFFICIALS LAMENTED considering eminent domain, preferring a settlement without going to court.
“Despite certain comments at the public hearing, both the IDA and the company have gone to absolutely every extent they can to try to get a deal with these landowners that fairly compensate them and would avoid considering eminent domain,” said Dan Spitzer, an attorney for the IDA. “I’m hopeful the company and the landowners will come to a deal.”
The amount to be paid appears to be a major point of contention in the negotiations, with IDA officials concerned that the disagreement could torpedo the largest single-site economic development project in county history.
Spitzer said that a deal is possible unless “the landowner refuses to negotiate or simply makes a demand that is impossible.”
While IDA officials did not disclose the amount of the offer, they indicated it was roughly eight times what the property was valued at by an independent appraisal.
The properties are assessed at $189,500, according to county records. That figure cannot be used to generate a price for the eminent domain proceedings, instead it is the value used to determine taxes.
IN A LETTER to the IDA — and provided to the Times Herald by attorney John Cappellini of Cuba, who represents the property owner — Cappellini urged the IDA to stop the process.
The property is owned by Marshlands LLC, a corporation which owns land for Mallards Dairies LLC, an Ellicottville-based farm with more than 3,000 dairy cows, according to Cappellini, and produces more than $11 million a year in dairy products.
The farm employs between 35 and 40 workers, the lawyer said.
According to county real property records, property taxes on the farm’s property in the county came to more than $94,000 in 2020, with about $7,700 on the parcels being considered for eminent domain.
“You are taking property from one company and giving it to another? Where is this in the spirit of the Constitution of our country and state?” Cappellini said. “How would you feel if the county wanted to take your home or business and give it to someone else?
“You have decided that one commercial use, The Farm, is somehow less important than a cheese factory,” Cappellini said, noting threats from Great Lakes Cheese to close all area facilities and leave have motivated officials against his client.
“They are extorting from the taxpayers of Allegany County and the County Legislature is complicit,” he said. “They threaten to leave unless you give us what we want. ... How much money is this going to cost the taxpayers of Allegany County?”
CAPPELLINI ADDED there will be no immediate benefit to county taxpayers from the development. If the final project were to be assessed at the $500 million mark, he said, it would generate roughly $24 million a year in property taxes.
However, the Payment in Lieu of Taxes agreement between GLC and the IDA calls for a complete abatement of property taxes — essentially treating the site as if it has no value — for 15 years, followed by decreasing the abatement by 20% for five years and the site being taxed at its full value after a combined 20 years. Over the course of the PILOT, Cappellini said that the company could potentially see up to $360 million in abated taxes.
By comparison, properties listed as owned by Empire Cheese or Great Lakes Cheese in Cuba generated more than $172,000 in 2020 through local, school, county, library and fire taxes, according to online records kept by the Allegany County Office of Real Property Services.
UNDER STATE LAW, Spitzer said, agencies like the IDA have wide latitude to determine public benefit from a project. Noting the jobs that will be saved by the project, “you can stop there,” he told the board, noting the “overwhelming public benefit” of keeping that many employees on the payroll meets the criteria set by the state.
He noted concerns over moving from Cuba to the new site, but said the Cuba jobs are going to be lost whether or not the new facility is built two towns away.
“This is not Amity (and) Angelica versus Cuba, this is Amity (and) Angelica vs ‘bye-bye, New York,’” Spitzer said, noting that if a new plant is not built in the county, the jobs will move out of state.
While the IDA approved the resolution, the process to actually take the property could take years, if it ever happens at all.
Under state law, the property owner has 30 days after notification to challenge the determination in the appellate division of the state’s court system. But even if the determination is upheld, there is no deadline under state law on when a condemned property must be seized and the landowner compensated — with some condemnations going without action for years before the property is taken, while others never occur despite the determination being made.
The eminent domain process, while relatively uncommon in the area, is not unheard of. The process is being used for land along the route of the Northern Access natural gas pipeline under development by National Fuel between Pennsylvania and Erie County. In 2020, the New York State Court of Appeals — the state’s highest court — ruled in favor of National Fuel Gas Supply Corp. in an eminent domain challenge by a town of Clarksville landowner.
NEW YORK HAS has one of the most broad eminent domain laws in the nation, dating back to the early 1800s — and in many circles remains unpopular.
A 2005 U.S. Supreme Court decision in the case of Kelo v. New Haven ruled 5-4 that a government’s taking of private property for private development qualified as “public use” within the meaning of the takings clause of the U.S. Constitution. However, the court left open the right of states to limit such seizures of property.
The Institute for Justice, which represented the homeowners in the Kelo v. New Haven case, ranks New York among the worst for “eminent domain abuse.” The New York State Bar Association convened a task force in 2006 after the Kelo decision, with the group’s final report calling on the state to include more safeguards, require economic development plans and owner impact assessments, expand the amount of time for landowners to sue over such determinations, and additional review of eminent domain takings if there are substantial changes to proposed projects.
However, the Legislature in Albany did not pass any bills in the immediate aftermath of Kelo.
Developments do not always occur in eminent domain cases. In the properties in the Kelo decision, the site remains bare today. As of February, local media reports the site is under consideration for a $30 million government-owned — and tax-exempt — community recreation center.