Claims mayor tried to sabotage project, run up costs
By Liz Schevtchuk Armstrong
Six days before the March 21 election in which Cold Spring Mayor Dave Merandy sought a second term, Butterfield developer Paul Guillaro sued the village in federal court for $2.5 million, accusing the mayor of attempting to sabotage the project and bankrupt him.
The suit, filed March 15 in the U.S. District Court for Southern New York and served on the village on March 22, alleges Merandy undertook “a malicious and intentional campaign of harassment, usurpation of authority and other unlawful actions” against the developer and his project. The filing does not suggest a motive for the alleged obstruction but does assert the mayor once called Guillaro “just another rich builder trying to take advantage of the village.”
Guillaro filed the action in federal court because he says his constitutional rights to due process were violated. He is far from the first developer to allege this after delays in projects (see below). On Dec. 5, Guillaro filed notice that he intended to sue the village for $2.5 million in state court.
The 13-page federal complaint claims Merandy frequently expressed, in comments “overheard” after Village Board meetings (the suit does not say by whom), a desire to kill the project. It cites Barney Molloy, who lost the mayoral election to Merandy in March 2015, as telling Guillaro that summer that “it was his understanding” that Merandy; the mayor’s wife, former Trustee Stephanie Hawkins; former Trustee Matt Francisco; and Kathleen Foley (a member of the Historic District Review Board, misidentified in the document as a trustee) were “going to do whatever it took” to thwart the project.
Molloy oversaw review of the Butterfield project as Planning Board chairperson from July 2013 to April 2015, when Merandy replaced him with Donald MacDonald. Molloy remained on the board until November 2015, resigning after Merandy named Francisco to succeed MacDonald.
During a Village Board meeting March 16, the day after the court filing, Merandy said he and the village attorneys were confident they will prevail. “I know where I was on this,” he said. “I know where the people in this office were, and the people that are implicated in this, and there is absolutely no truth in it. I’m sorry that it has to come to that … that Mr. Guillaro feels that this is true. We’ll see where it goes. It’s unfortunate.”
He commented after his opponent in the mayoral race, Alison Anthoine, the former president of the Cold Spring Area Chamber of Commerce, raised the issue during the public remarks portion of the meeting.
Thanking Anthoine for the “cheery little note,” Merandy said the lawsuit “is coming at a really perfect time, I have to say,” and quipped: “It’s not political, I don’t think. And you going up there [to speak at the meeting] is not political, either. I’m just saying … Thank you for that information [about the lawsuit] and Mr. Guillaro for the timing on that.”
Merandy suggested at the March 16 meeting that Guillaro had given a deposition, apparently as part of the developer’s Notice of Claim in state court (“it’s probably five pages long and is very favorable to us,” the mayor said). In response to a Freedom of Information Law request from The Current for a copy of the deposition, the village clerk said the mayor was referring to a letter to Merandy from village attorney John Furst, who attended the deposition, and that the letter could not be released because it was shielded by attorney-client privilege.
Neither Furst nor Guillaro’s attorney, Salvatore Ferlazzo of Albany, responded to requests for comment on the legal cases. Nor has Merandy said anything further.
Guillaro has actively pursued redevelopment of the former Butterfield Hospital site since 2011, when he presented a design to the Village Board. After four years of proceedings before assorted committees — a period during which Guillaro says he spent more than $1 million — the Cold Spring Planning Board approved a final site plan consisting of two office-retail buildings; two buildings with 55 market-rate condominiums for older residents; the existing Lahey Pavilion, which contains medical offices; and three single-family homes.
In 2015 Guillaro revised his plan to put a long-discussed, county-run senior center in one of the new office-retail buildings and instead said it would be placed in Lahey, while medical offices would occupy the new building. Guillaro argues in the suit that this swap constituted “a minor modification” but that “Merandy seized upon it” and told the building inspector not authorize it, forcing Guillaro to incur more costs.
The lawsuit recites a litany of other complaints, including that after being elected Merandy fired the consultants on the project, forcing Guillaro to pay to bring new consultants up to speed; intentionally hired an engineering and planning firm based in Connecticut to cost Guillaro money; instructed William Florence, interim village attorney from January to June 2015, to pad bills paid by Guillaro; and insisted on using “engineers, attorneys and other professionals” for tasks previously handled by village officials and the building inspector.
Developers vs. Mayors
As a survey of court cases around the state indicates, Cold Spring is far from the only municipality to be sued by a developer. Five examples:
March 2017: A developer sued Mount Vernon, alleging that the mayor caused a 159-unit apartment complex project to be delayed through arbitrary building-code enforcement because the developer would not hire a friend of the mayor as a consultant. A spokeswoman for the mayor called the allegations “a disgusting smear.”
December 2016: A developer sued Buffalo, alleging the mayor shut down an approved affordable housing project in 2009 because the developer refused to pay a local black minister to join the project. The lawsuit claims that a former deputy mayor says the mayor told him he was tired of “out-of-town white developers” handling such projects.
March 2015: Litigation began in 2012 over a proposed 167-unit housing-and-restaurant complex on the Erie Canal in Pittsford. The developer sued the village. Residents sued the developer. The developer sued the residents. The residents sued the village. Finally, the village board sued its planning board for allegedly allowing the developer to make changes to the approved final site plan and accepting free golf outings.
April 2008: A developer sued Westhampton Beach for $25 million, claiming his plans to build a 39-unit housing complex were illegally delayed by an arbitrary 15-month construction moratorium and the threat of a $300,000 environmental review unless he hired the village planner to create a new plan. The developer’s lawyer said his client had appeared before various village boards 50 to 75 times, which he suggested must be a record.
November 2007: A developer sued the Village of Quogue for $25 million, claiming the mayor and board refused to approve any of three plans to raze a historic building at the city center and replace it with (1) an 11-condo building, (2) a 26,000-square-foot office building or (3) six single-family homes, because he is Italian.
The developer also claimed that Merandy forbade the building inspector and the “director of public works” to take any action on Butterfield without his approval (a charge the suit asserts the inspector and “director of public works” personally confirmed).
Cold Spring does not have a director of public works. Greg Phillips, the superintendent of water and sewers, said on March 22 that the reference was probably to him. He noted that the mayor and trustees comprise the Board of Water Commissioners, with whom a superintendent would discuss important matters.
“If I had a question regarding the Water Code, would I not defer to a conversation with the mayor and/or the board?” he wrote in an email. “This project is unlike any other in our community, and I wanted to make sure that the village’s interests were covered with respect to metering and fees, as well as to review of any portions of the water or sewer utilities not part of the approved site plan. From my end, I see no issues. There were no directives to me from the mayor and/or board.”
Bill Bujarski, the village building inspector, who works part-time, said he had not seen the lawsuit and that, in any event, “it is inappropriate for me to comment, since this is in litigation.”
Whether the allegation referred to Bujarski is unclear. In September 2015, under an agreement with the village, the Town of Philipstown took over the Butterfield inspections. Kevin Donohue, then the town building inspector, left Philipstown in mid-2016 and could not be reached for comment.
The lawsuit further alleges that Merandy made “false statements” to the Putnam County Legislature when he said the county was paying too much to lease the senior-center space, which will cost $4.5 million over 15 years, or $25,000 per month, with all costs included. In reality, Guillaro says in the suit, he is charging the county half the market rate.
Florence said March 17 that although aware of the lawsuit, he was not familiar with the paragraph mentioning him. “I shouldn’t be part of any lawsuit,” he said. “I’m not involved.” He said that he and Merandy had discussed legal bills for Florence’s work advising the Historic District Review Board on architectural features of the Butterfield buildings. Florence said he could not comment on the specific assertions about billing.
However, he said, as the village considered the Butterfield project, “there certainly was obstruction. I don’t think the mayor had anything directly to do with it.” Rather, he continued, in his view the Planning Board “found ways to slow things down and obstruct” so that it “took months and months” to deal with the revamping of the interior arrangements for the Lahey Pavilion and new office building.
Arne Saari, a Planning Board member throughout the Butterfield approval process, expressed doubts on March 22 that anything his board did could make anyone “think we were obstructionist. We went through the normal procedures. The stuff they [Butterfield Realty] requested was all approved.”
Francisco, who became Planning Board chair in November 2015, responded in a comment at highlandscurrent.com that “the public records show that the Planning Board followed the advice of the village attorney at every turn in the processing of the Butterfield site-plan amendment. And as the pressure increased the Village Board, in coordination with the Planning Board, wisely sought out a second legal opinion to be absolutely certain of the correct process.”
“That opinion,” Francisco wrote, “confirmed the Village Attorney’s but went further to say that not only is the Planning Board permitted under code to correct errors but is in fact required under code to correct all errors related to the current application. That was the legal counsel provided and is all a matter of public record.”
MacDonald, the Planning Board chairperson from April to November 2015, wrote at highlandscurrent.com that Guillaro “proposed a new zoning district designation with custom-tailored rights for the use of his property [at Butterfield], which were largely approved by the Village Board. The village attorney, consultants and Planning Board then followed where that portion of Guillaro code lead them.”
Asked to comment further, MacDonald said on March 21 that he has “no direct knowledge as to the events surrounding the proposed location swap of Senior Center and Lahey Pavilion medical office occupancies. That said, while the proposed swap seems to make good sense I do not believe the swap could ever have been classified a ‘minor modification’ to the site plan. While Village Code allows both ‘occupancies’ within the Redevelopment B4-A zoning district, it still requires a Planning Board review of the particular circumstances,” involving parking, safety, and similar concerns, he explained.
“I believe Mayor Merandy was completely correct in his insistence this review take place,” he said. “Since I was not involved, and did not follow closely that review, I cannot comment on that portion of the events.”
Putnam County Legislator Barbara Scuccimarra, who represents Philipstown and has long advocated for the Butterfield senior center, declined to comment on the specifics of the lawsuit. “Let’s see how it plays out,” she said, adding it would “definitely not” delay work on the center, which could be completed by the summer.
Michael Turton contributed reporting.Did you find this article useful or informative? Please consider a contribution to support our nonprofit journalism. Our annual appeal has begun! All gifts of up to $1,000 through Dec. 31 will be matched TWICE! Click here for details. We are able to provide this website and our weekly print paper free to the community -- and pay our writers, photographers and editors for their hard work -- because of the generosity of readers like you.