        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

242
CA 16-01420
PRESENT: WHALEN, P.J., CENTRA, PERADOTTO, DEJOSEPH, AND SCUDDER, JJ.


IN THE MATTER OF BETHLEHEM STEEL CORPORATION,
PETITIONER-APPELLANT,

                    V                             MEMORANDUM AND ORDER

COUNTY OF ERIE AND ERIE COUNTY SEWER DISTRICT
NO. 6, RESPONDENTS-RESPONDENTS.


PHILLIPS LYTLE LLP, BUFFALO (CRAIG A. LESLIE OF COUNSEL), FOR
PETITIONER-APPELLANT.

HODGSON RUSS LLP, BUFFALO (DANIEL A. SPITZER OF COUNSEL), FOR
RESPONDENTS-RESPONDENTS.


     Appeal from a judgment (denominated order and judgment) of the
Supreme Court, Erie County (Timothy J. Walker, A.J.), entered October
30, 2015 in CPLR article 78 proceedings. The judgment granted the
motion of respondents for leave to amend their answers and for summary
judgment and denied the motion of petitioner for summary judgment.

     It is hereby ORDERED that the judgment so appealed from is
unanimously modified on the law by vacating the first decretal
paragraph and denying that part of respondents’ motion for leave to
amend their answers and as modified the judgment is affirmed without
costs.

     Memorandum: Petitioner commenced these consolidated CPLR article
78 proceedings in the years 2002-2006 and 2008-2015 challenging the
sanitary sewer assessments for its 1,000-acre property located in
sewer district No. 6, operated by respondents. Petitioner alleges
that the assessments are arbitrary and capricious and without a
rational basis insofar as they include a “parcel charge,” and that
they are in violation of petitioner’s substantive due process and
equal protection rights. As a preliminary matter, we agree with
petitioner that Supreme Court abused its discretion in granting that
part of respondents’ motion seeking leave to amend their answers to
allege additional affirmative defenses where, as here, there was an
extended delay in moving to amend the answers and a failure on the
part of respondents to establish a reasonable excuse for the delay
(see generally Webber v Webber, 145 AD3d 1499, 1503; Jablonski v
County of Erie, 286 AD2d 927, 928). We therefore modify the judgment
accordingly.

     Disregarding respondents’ amended answers, we nevertheless reject
                                 -2-                           242
                                                         CA 16-01420

petitioner’s contention that the court erred in granting that part of
respondents’ motion seeking summary judgment dismissing the petitions
and denying its motion for summary judgment seeking a reduction in the
respective assessments and a corresponding refund of payments. It is
undisputed that, when petitioner announced that it was closing its
steel production plant, the City of Lackawanna faced severe financial
difficulties, in part due to the approximately $10 million debt that
was incurred in upgrading its sewer infrastructure. A plan was
developed whereby respondent County of Erie (County) would take over
the sewer operations and create a new district as a benefit assessment
district, respondent Erie County Sewer District No. 6 (District),
which was defined by the Lackawanna city limits.

     In order to fund the related costs and debt, a three-part formula
was developed to determine the amount each property owner would be
assessed for sanitary sewer benefits. Two of the three components of
the formula are not at issue, i.e., the use charge and the valuation
charge based on the assessed value of each property. At issue here is
the third component: the parcel charge, a benefit charge that varies
depending on the nature and size of the property. All residential
properties are assessed one parcel charge, regardless of size. All
nonresidential properties less than one acre also are assessed one
parcel charge. The remaining nonresidential properties, of which
there are approximately 180, are assessed five parcel charges per
acre, known as the “five times multiplier.” Respondents’ employee
explained in a deposition that the five times multiplier was developed
because approximately 60% of an acre can be developed for residential
use and the remaining 40% is comprised of rights-of-way. He explained
that the average residential parcel size is 4,800 square feet, and
thus “60 percent of one acre would be the equivalent of about five
times 4,800 square feet.” He explained that the nonresidential
property owners whose property exceeds one acre were treated as having
the most benefit from the system because the system can accommodate
any future development on the property.

     It is well established that “[t]here is a presumption of validity
to the assessments requiring petitioners to show by affirmative proof
that they have not benefited from the improvement or that it is
nonassessable in the first instance” (Matter of Nolan v Bureau of
Assessors of N.Y. City Fin. Admin., 31 NY2d 90, 93, remittitur amended
31 NY2d 696, rearg denied 31 NY2d 1059; see Pikas v Town of Grand Is.,
106 AD2d 887, 888-889). Furthermore, “[i]t is well settled that even
property that has no current use for sewer services can be deemed
[benefited] by the improvement” (Matter of Carriero v Town Bd. of the
Town of Stillwater, 72 AD3d 1479, 1480). We conclude that respondents
established their entitlement to judgment that the parcel charge has a
rational basis, is not arbitrary and capricious and does not violate
petitioner’s constitutional rights, and that petitioner failed to
raise an issue of fact sufficient to defeat the motion (see generally
Zuckerman v City of New York, 49 NY2d 557, 562).

     We conclude that there is a “rational basis for [the] legislative
classification” inasmuch as larger nonresidential properties have the
most potential for future development and increased use of the system
                                 -3-                           242
                                                         CA 16-01420

(Arcuri v Village of Remsen, 202 AD2d 991, 992). We further conclude
that “there is nothing inherently improper with relating the amount of
benefits received to [acreage]” (Pikas, 106 AD2d at 888), and that
respondents established that the parcel charge, including the five
times multiplier, is a rational, nonarbitrary manner in which to
apportion the sewer costs in the District (see generally Watergate II
Apts. v Buffalo Sewer Auth., 46 NY2d 52, 61). We have reviewed
petitioner’s remaining contentions and conclude that they are without
merit.




Entered:   March 24, 2017                       Frances E. Cafarell
                                                Clerk of the Court
