OSWEGO – Port City officials Monday night took the first step toward repossessing the Oswego Yacht Club building through eminent domain after the club mounted a legal challenge to the city’s lease termination effort.
The Oswego Common Council terminated a lease agreement between the city and the Oswego Yacht Club (OYC) in August, and the club filed a legal challenge claiming the lease for the club’s headquarters on the International Pier was unlawfully terminated. Port City officials are pivoting toward eminent domain to take back the structure.
City officials voted to break the lease because the use of the pier and the building has “drastically changed,” according to Oswego Mayor Billy Barlow, who said it’s “no longer sensible to use the building as a private club.” Barlow has continually called the International Pier underutilized, and said revamping the parcel is an important part of the city’s waterfront redevelopment plan.
“There is no asset in this community more important than our waterfront, the marina and the pier,” Barlow said. “There is no project more important to our waterfront than the marina improvements and the pier improvements.”
The city’s efforts to oust the Yacht Club from the International Pier were spurred by a $6.5 million grant awarded to Oswego as part of the state’s Lake Ontario Resiliency and Economic Development Initiative (REDI) to transform the pier from it’s current status as a gravel drive to a “pedestrian-oriented boardwalk.”
The International Pier contains a single building that for more than a decade has housed OYC, which first signed its lease for the premises in 2009 when the Port Authority of Oswego owned the property. The city of Oswego took possession of the property in 2012 and inherited the lease, which under its current extension would run through March 2025.
In August, the city voted to terminate that lease agreement despite significant objection from OYC members, including Commodore Phil McBrearty, who told councilors in August the organization did not believe there was “legal justification for termination of the lease.”
Barlow says ousting OYC from the building is necessary to accomplish the goals of the city’s multi-million dollar waterfront redevelopment.
The OYC lawsuit, filed Sept. 23, claims the city violated its lease rights with the August termination of the agreement. City officials at the time cited a clause that allowed for the lease termination if the property were partially destroyed — which the city argued would occur with the redevelopment of the International Pier — but the yacht club’s challenge points out the property is “not currently demolished” and notes the city is speculating the premises may be voluntarily demolished by the city in the future.
Whether or not the city has a right to terminate the lease is still an open question, but the city plans to start an eminent domain proceeding in order to take back its own property and continue with the construction and development of the International Pier, City Attorney Kevin Caraccioli said.
The eminent domain proceedings would be “essentially in the nature of a countersuit,” according to Caraccioli, as a response to OYC’s lawsuit against the city for breach of contract.
“I am proposing that we now, unfortunately, have to sue the Oswego Yacht Club to take back our own property under eminent domain,” Caraccioli said.
Eminent domain is the government’s power to take private property and convert it to public use. Governments, however, are required to provide property owners with compensation when taking property via eminent domain.
In an eminent domain proceeding, the issue at hand would be the valuation of the lease, or what, if anything, the yacht club might be owed in compensation.
Typically used for the takeover of private property for public use, in this instance the city would be repossessing a city-owned building that was leased to a private entity. Caraccioli said OYC’s lease agreement could provide the club with the right to compensation.
Caraccioli said initial conversations with OYC attorneys indicated the club would not contest the city’s right to take back the building via eminent domain, but noted the issue at hand would be the value of the lease and the compensation owed to the club.
“That may be a fairly easy calculation, but then again it may not,” Caraccioli said. “This is certainly going to be an issue of valuation. It does require an appraisal and, if we ever get to a hearing, an expert to testify to that effect.”
The yacht club, in it’s filing last month, said “monetary damages are not an adequate remedy for the city’s breach” of the lease, claiming the property “offers unique access to Oswego’s only deep-water marina” and the “location is critical for maintaining OYC’s public presence and recruiting new members.”
“OYC’s monetary damages from the city’s unilateral attempt to terminate the lease are difficult, if not impossible to calculate,” the filing states.
Efforts to reach attorneys at Syracuse-based Costello, Cooney and Fearon, who are representing OYC, have so far been unsuccessful.
The city Administrative Services Committee on Monday night authorized the hiring of Syracuse-based firm Barclay Damon to handle the eminent domain proceedings, which Caraccioli described as a “very specialized area of law.”
The full Common Council is likely to vote on the matter at the body’s meeting Oct. 13.
The eminent domain proceedings, according to Caraccioli, would be filed in New York State Supreme Court, which is the same venue in which OYC’s lawsuit against the city was filed.
Exact costs of the legal action were not presented Monday, but city documents show officials are anticipating the proceedings “could cost as much as $50,000.” Funds for the proceeding are expected to come from the city’s self-insurance defense fund, Caraccioli said, adding there is “enough money in that account.”
Last week Barlow said the International Pier is an important part of the city’s waterfront revival, and he would ask the council for “whatever resources” are needed.
The legal proceedings, Barlow said, would not hold up the impending redevelopment of the pier, which he said would be under construction and transformed regardless of the legal proceedings or outcome.
“Their lawsuit is only about the building itself and we will continue to do all the work we need to do all the way around that building,” the mayor said, adding the “avoidable lawsuit” would not slow, stop or change the project.