Butterfield Developer Sues Village in Federal Court (Updated)

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.

Developer Paul Guillaro and his attorney, Steven Barshov, at a Planning Board meeting in June 2016 (file photo by M. Turton)

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.

Dave Merandy at a mayoral candidate forum on March 13 (photo by Ross Corsair)

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.”

Mayoral candidate Alison Anthoine speaking during the public comments portion of the March 16 village board meeting. (Photo by Michael Turton)

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.”

Planning Board Chairperson Matt Francisco (right) at a meeting in June 2016 (file photo by Michael Turton)

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.

19 Responses to "Butterfield Developer Sues Village in Federal Court (Updated)"

  1. Ethan Timm   March 18, 2017 at 12:30 am

    I don’t understand how the developer of such a large and complicated project can assert that he should not be subject to the same planning and zoning hurdles (and headaches) that the rest of the community deals with on a regular basis.

    Sure, the numbers he’s looking at may seem larger, but I doubt they are larger on a percentage-of-project-cost basis.

    I can’t imagine what the loss of this suit would do to Cold Spring, our home. That the village’s newest corporate resident is actively trying to destroy the village via litigation is a travesty.

    Should we give up everything we hold dear so a developer can extract value from a piece of land more expediently?

    Perhaps this is a time to re-imagine what could become of Butterfield, particularly given Julia Butterfield’s original intentions for the property.

    Reply
  2. Ann Fanizzi   March 18, 2017 at 8:11 am

    From my close reading of the articles in this paper and attendance at legislative meetings, it is evident to me that Mr. Guillaro has taken the well-trod route of so many developers: blame the legally constituted, conscientious governing agents for the developers’ own self-inflicted errors that resulted in cost overruns and scheduling delays.

    Reply
  3. Christopher Daly   March 18, 2017 at 9:15 am

    The filed complaint is a hoot to read.

    First off, it’s filed in federal instead of state court, which automatically suggests Guillaro recognizes the weakness of his case in eyes of state law. If the village actually did usurp authority, as the suit claims, that’s not a constitutional fight — that would need to play out in a New York court because it would be New York law. But instead they level that acquisition and then tip-toe around it, assuming it to be true. Which is the very definition of an alternate fact.

    Second, it is rife with second hand overheards, hearsay and conspiracy theories. It’s 13 pages of cheap, dime-store novel thrills.

    And if Allison Anthoine happens to win? Does anyone think this lawsuit continues? That’s called extortion, by the way.

    Reply
  4. Travis Fyfe   March 18, 2017 at 9:53 am

    What is this article about? Scare tactics and baloney mostly? How do you publish stuff like this? Actually maybe “publish” is too generous of a word. How do you regurgitate this type of blatant one-sided drivel as news? Every article ever about anyone getting sued at least asks the accused for a comment. Instead this article just says that people say they heard someone else say something?! That is the weakest, most undemocratic type of thing yet from the paper. Really very shameful. Try reporting facts and if none are available yet, at least give both sides a chance to speak. Give the man a chance to defend himself for Pete’s sake or for at least the sake of journalism.

    Reply
  5. John Plummer   March 18, 2017 at 10:15 am

    Dave Merandy’s track record as mayor, as a member of the Town Board, as Haldane school board president, speaks volumes; the developer’s record also speaks loud and clear. Dave is a champion for our community. The developer is not. Dave fights for taxpayers every day. The developer does not. Dave has done tremendous good in only two years as mayor. The developer has stalled and plays the blame game. If some people are trying to make this election about whether or not we trust Dave or the developer and his cronies, then those people are making a grave error. Dave is a trusted champion for our village. Period.

    Reply
  6. Thomas Carrigan   March 18, 2017 at 11:54 am

    This article, which mostly repeats the details of the lawsuit, feels inflated. It either needs to be 100 pages to do justice to the twists and turns the Butterfield project has taken and the evasive bait-and-switch tactics of the developer, or it could be two paragraphs. “Guillaro” appears 17 times in the text of the article: “Guillaro says,” “Guillaro’s money,” and so on. By just copy-and-pasting what’s in the lawsuit the article risks appearing to be a brief filed on behalf of the plaintiff rather than an investigation of the issue.

    Reply
  7. Aaron Wolfe   March 18, 2017 at 12:46 pm

    Cold Spring residents should see this lawsuit as it is, part of Guillaro’s deliberate public-relations effort to manipulate Cold Spring officials and voters, which has been ongoing for years. A review of his threats (many lawsuits), cancelled and reinstated plans (he took his marbles and went home more than once), and praise for the village (every time he got his way) would make an interesting story indeed.

    From that perspective this suit, coming at election time like most of his actions, is merely another tactic in his awkward strategy to build what he wants.

    Because this latest threat would be financially devastating to the village and many taxpayers, The Current should talk further to the mayor and planning board chair so we can all have better understanding of the nature of the suit.

    Bill Florence, who gets the last word in this article, was hired by the Village Board unanimously with only three members present, including Cathryn Fadde and Mike Bowman, who campaigned for office on getting Butterfield approved. Florence also has a history with Guillaro going back to the late 1980s in Peekskill when Florence was the city attorney and Guillaro was an active developer there.

    Florence was the village attorney for only six months, January through June 2015, so it’s odd that he is the legal expert for this article. That’s a two-month overlap with the current board. He even says “I’m not involved.”

    This is not to disparage Florence, who is a kind gentleman with regular business before various village boards to this day, but only to say that understanding the full legal picture requires hearing from the mayor, planning board chair and the current village attorney.

    Reply
  8. Matt Francisco   March 18, 2017 at 1:26 pm

    It is critical for the reader to understand that Mr. Florence is not the village attorney. He was an interim attorney for a short time ending in May 2015. Butterfield was not referred to the Planning Board until February 2016, long after his departure. I cannot explain Mr Florence’s comments but I am looking forward to him doing so as he will now most certainly be required to do. Further, I cannot understand why this reporter would seek comment from a prior, uninformed, former interim attorney but not the current, fully informed village attorney nor the mayor named in the claim. But I look forward to an explanation of this as well.

    For those that have not followed this closely, 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 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.

    Finally, and most importantly to me, remember these aren’t politicians with agendas that are being discussed here, these are your neighbors. This isn’t Carmel or Washington, but your neighbors doing their best to give back to Cold Spring. Yes agreements are important, but none more so to me than the social contract of neighbors living side by side. Many of us within a few feet.

    Reply
  9. Patty Villanova   March 18, 2017 at 2:20 pm

    Does anyone believe in property rights or should we just pay taxes and let the government tell us how to use our land?

    Reply
  10. Steve Laifer   March 18, 2017 at 2:40 pm

    This lawsuit is a meritless farce; a pure Trumpian/Roy Cohn bullying tactic to sully and sabotage the election of a popular mayor who acts in the best interests of Cold Spring Village homeowners and taxpayers rather than entitled, politically-connected outsider developers used to getting their way. Mr. Guillaro would like us to change our elected government to people who will readily rubber stamp his profit-seeking business plans to our detriment. I’m sorry, but the good people of Cold Spring will not be cowed; we are not frightened or fooled by this frivolous lawsuit, and we stand in solidarity against outside interlopers and their transparent lowbrow attempts to oust the community members we have chosen and rely on to faithfully represent us.

    Reply
  11. Donald MacDonald   March 18, 2017 at 9:32 pm

    It’s a bit rich to comment about the state of Mr. Guillaro’s property rights considering it was Mr. Guillaro who proposed a new zoning district designation with custom-tailored rights for the use of his property, 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.

    Reply
  12. Michael Robinson   March 19, 2017 at 10:10 am

    It used to be the PCNR who was the purveyor of the October surprises. The world has truly turned upside down when it’s this paper that’s doing it, sensationalizing a meritless news story at election time. This is the same skewed reporting with obvious political prejudice that used to come from across the street. This article balances all the purported claims against the mayor based on complete hearsay with — What? Comments the mayor made right when he was slapped in the face with the suit? An attorney who wasn’t even working for the village during the time he’s giving testimony to? I am exceptionally disappointed in the reporter and the editor.

    Reply
  13. Sara Dulaney   March 19, 2017 at 3:20 pm

    Why is the Lahey Pavilion now “for lease”?

    Reply
  14. Ann Fanizzi   March 19, 2017 at 3:55 pm

    It is certainly March madness in Cold Spring, but the madness falls heavily on the applicant who chose the time of the mayoralty election to spring his federal lawsuit. There is another metaphor here, but I will forego the temptation and have mercy on the readers.

    Reply
  15. Dave Marion   March 20, 2017 at 12:38 pm

    It is often said “the truth will set you free,” and while some will see this lawsuit as the truth, I ask everyone to read the meeting minutes, view the videos of the current Village Board, Planning Board and the Historic Review Board. You’ll find that the various boards followed the Code, which is all that can legally be done. They don’t make up the rules — they follow them, with the guidance of the Village Attorney.

    If you look at the record you’ll find your neighbors on these boards trying to get through the process of reviewing the developer’s submittals for changes, regardless of how late they were submitted. You’ll also find that even when the submittals came in late the meeting agendas were adjusted to include their actions in the earliest possible meeting.

    Keep in mind also that the developer had previously received full approval for his project. However, nearing the scheduled date of the condominium construction completion (even though this work had not even started), he opted to make changes to his project that required new village approvals and then further delayed the process by not providing required submittals in a timely manner (months late).

    It is interesting that this paper reported this story loaded with unsupported comments while knowing the facts from having attended numerous meetings on this subject. It’s a shame that this once-trusted publication is now swayed into sensationalism of none facts. Has the PCNR’s previous owner bought The Highlands Current with the proceeds of that sale?

    Reply
  16. Michael Junjulas   March 21, 2017 at 1:01 am

    Wow, just wow. Don’t like the newspaper story regardless of who wrote it, or what newspaper. You didn’t like what it is about, so you dragged out the crosses — no, better yet, the PCNR — and crucified the reporter to its cover for writing a newspaper article.

    Oh, how quick the table turns….

    Nice article. I thought it was informative. Thanks Liz. If you can’t reach some of the knives, I can help.

    Reply
  17. Patty Villanova   March 21, 2017 at 9:18 am

    The people of Cold Spring never cease to amaze me. They have a vibrant Main Street with dozens of upscale businesses that bring in lots of free tourism money to offset their taxes. They have a developer who’s proven his chops by creating million-dollar condos out of a decrepit lumber yard and who now is trying to invest millions of his own money to further improve the town for all the residents with Butterfield.

    Instead of being grateful and celebrating their good fortune, it seems that the residents and their elected officials are doing everything they can to shut down the merchants and the developer and to harass them at every turn. Maybe they are all so wealthy they don’t need our money.

    Reply
  18. FJ Spinelli   March 27, 2017 at 10:45 am

    This 2012 federal case (Fortress Bible Church vs. Finer) ended with a $6.5 million settlement by the Town of Greenburgh for utilizing delaying tactics through the planning process. Insurance covered the first $1 million and taxpayers paid the rest.

    “Same circus, different clowns” appears to be what the plaintiff will attempt to prove.

    Reply
  19. Carolyn Bachan   March 28, 2017 at 9:26 am

    Not exactly and not so fast — the Fortress Bible Church case was decided principally on RLUIPA (Religious Land Use, etc., Act) and the establishment clause to the First Amendment (I’m not a lawyer but I watched the Gorsuch hearings end-to-end on CSpan). No comparison here.

    Reply

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