Ready to Sue Over Deal Gone Bad

Until last week, Thomas Miller was a Democratic nominee for East Hampton Town Trustee. But Mr. Miller withdrew his name on July 13, and is threatening to sue the town for rezoning his property, a result of the update to the town comprehensive plan.

Mr. Miller, a retired East Hampton Town police officer, and his wife, Lianne Miller, own a farm of almost 15 acres on Three Mile Harbor Road in East Hampton. They board horses there, and lease part of the property to Cedar Walk Nursery. The property, zoned for one-acre residential lots, was changed to three-acre residential zoning in the comprehensive plan update.

Since 2001, the Millers and town officials have been discussing a town purchase of development rights on 12 acres of the farm. The Millers wanted to keep three house lots - one that already holds their house, and two for their children's future use.

The Millers submitted a subdivision proposal to the town planning board in 2003 that showed a potential for 10 approximately one-acre lots and a six-acre agricultural reserve, under one-acre zoning, with the potential for development dictating its value. Over the years, negotiations went back and forth, with several appraisals conducted and offers made.

A purchase price of $1.8 million for the 12 acres of development rights was agreed to on May 4, according to the Millers and their attorney, David Eagan - two days before the town board formally adopted the new comprehensive plan and zoning.

With an oral agreement reached, Mr. Eagan said, he and his clients "expected the property to be taken out of the rezonings." Instead, when the comprehensive plan was passed, the land was rezoned for residential lots of at least three acres.

According to a policy adopted by the town board, properties that the town was interested in buying would not be exempted from rezoning unless a public hearing had been held, and a resolution passed by the board authorizing a sales contract to be signed.

The Miller farm was originally recommended for five-acre residential zoning based on its location in a groundwater protection area and to protect its farm soils. However, in discussions of objections to rezoning proposals, board members decided that three-acre zoning would adequately protect it.

The zoning change, allowing subdivision only into four three-acre lots, scuttled the Millers' plan, and affected the potential value of the site. The town has now offered $1.3 million to buy development rights on two three-acre lots, plus a wetlands area. The Millers would keep the other two three-acre lots.

"We would have subdivided into enough lots for our family four years ago if we had known," Mrs. Miller said Tuesday. She said they had had other offers for the land, but had declined because they preferred to sell the development rights to the town.

"If it was pure profit, they wouldn't even be talking to the town," Mr. Eagan said. "It was a win-win."

As they worked to finish the comprehensive plan, town officials were faced with the conflict of ongoing negotiations for a number of properties that had also been recommended for upzoning. Because upzoning limits development potential it could also affect land value, posing a conflict of interest for the town.

"It's very hard to be doing a comprehensive plan and heading toward zone changes, and doing acquisition at the same time," Job Potter, the town councilman in charge of land purchases, said Tuesday.

"Our position has always been that negotiations are separate and that they will move forward at their own pace," Supervisor Bill McGintee said in March, during a discussion about properties for which the town was negotiating. They included Camp Blue Bay in East Hampton, where the town hopes to buy a conservation easement, and Gardiner's Island.

Camp Blue Bay was rezoned because no agreement was reached before May 6; easements were finalized on Gardiner's Island before the passage of the comprehensive plan. Other properties that the town has on its acquisition list, including Montauk acreage owned by Dick Cavett and Carrie Nye, and woodland owned by the Ross School, were also rezoned.

"Where do you stop if you don't set a standard and stick to it?" Mr. Potter asked Tuesday. "It was more important in the big picture to complete the comprehensive plan and the upzonings than to buy any one of these."

It was the responsibility of the Millers and their attorney "to watch that clock," Mr. Potter said. "It's not our job as the town to get to people and say, 'Accept this offer or your zoning will change.'"

"We've dealt with them the same way we've dealt with everybody else," he said. Other property owners, Mr. Potter noted, had "determined it was in their best interest" to accept a purchase offer by the town in advance of the passage of the comprehensive plan, precluding a proposed zoning change.

According to the resolution adopting the new town zoning maps, "factors that were considered by the town board in making any changes included whether a landowner had been in long and intensive negotiations for a property for land preservation and a change in zoning would upset the public good that would be achieved by bringing such discussion to conclusion."

The Millers said that they understood from town officials that if they were in "good-faith negotiations," their land wouldn't be upzoned. "Basically, they went back on their word," Ms. Miller said. "We had a deal; they should have stuck by it."

Mr. Eagan said that the town had set a "purely arbitrary cutoff" point for rezoning exemptions and that the town could make an exception to its own rule. The exception should be made out of "a general sense of fair play," Mr. Eagan said.

"There is no legal impediment to them righting this wrong," he said. "It's their town attorney's unwillingness to make an exception to their own self-imposed rules. If it doesn't happen, the town will be liable for violating the Millers's constitutional rights."

The attorney said that federal case law establishes that "it is fundamentally unfair to actively negotiate at the same time as you're threatening to upzone."

"If this doesn't get fixed, we're going to bring a full-blown lawsuit against the town for the illegal upzoning of this property . . . for negotiating and bringing these people to the 11th hour and then rezoning them."

Mrs. Miller, a member of the Bennett family, said the farm had been in her family, which includes branches of the Conklin and Lester families, from about 1760.

"We spent thousands of dollars on surveying and attorneys' fees to get this done," Mrs. Miller said. "We're very frustrated."

"We put faith in the town," her husband said. "We're in a position now with them not buying the development rights, we're going to have to sell the place, or sue."

"There were statements being made that the upzonings were not going to hurt local people," Mr. Eagan said. "These people have been hit pretty hard." He said he believed the probable outcome would be one in which "no one wins," with the court invalidating the rezoning and the Millers subdividing and selling 10 house lots to pay their costs. "And the town gets 10 house lots when they could have had three, and a horse farm."

"The die is cast on this thing, and we have to work it through at the zoning that it is now," Mr. Potter said. But, he added, "It's an unfortunate thing that it worked out this way. We're truly sympathetic to what has happened here. We haven't given up on trying to find an outcome that will satisfy everybody."

He said the town would seek new appraisals of the property, under its current zoning, and had asked Kathleen Kennedy of the Peconic Land Trust to review different potential development and purchase scenarios, in an effort to justify a sales price on which both buyer and seller could agree. The town has followed a policy of not paying more than 110 percent of a property's appraised value.

"They haven't lost their property; they've lost an opportunity," Mr. Potter said. "They still are sitting with almost 15 acres of land; they have a lot of value there. They have a lot of options."

The East Hampton Town Democratic Committee is discussing whether to replace Mr. Miller with another trustee candidate, according to its co-chairman, Bob Schaeffer. According to Board of Election rules, a decision will have to be made by tomorrow.