Wednesday, January 02, 2008

Atlantic Yards: legal endgame in 2008?

Is Atlantic Yards on the rocks or steaming steadily and calmly ahead?

The answer is neither and, though it's surely a safer bet to back the big money (the developer and the city/state) behind the project, until final court decisions emerge regarding two cases challenging the project--cases in which oral arguments drew too little press attention--Atlantic Yards still faces a big question mark.

{See below for updates on the number of plaintiffs.]

Divergent predictions

City Council Member Letitia James went out on a limb (in the words of No Land Grab's Lumi Rolley) and offered the 2008 prediction, in Gotham Gazette, that "[t]he Atlantic Yards project will go down in flames." Develop Don't Destroy Brooklyn suggested that "Atlantic Yards Seems To Be Failing."

That certainly didn't impress Curbed, which Monday declared, in the category of Biggest Neighborhood Controversies of the Year:
3) Atlantic Yards. As buildings fall, the opposition battles on. We're talking about the Nets season, of course.

And Forest City Enterprises executive Bob O'Brien said in September that the developer (parent of Forest City Ratner) expected the lawsuits challenging the project to be cleared by the first half of Fiscal Year 2008, which would be July 31, 2008.

Indeed, despite challenges in the credit market and delays in the project, the developer and government agencies, proceeding with pre-construction demolition and infrastructure work, are acting as if the project, though delayed, is hardly troubled.

There is steady change in the project footprint, but for now we should remember that the facts on the ground are finite: pre-construction work is not actual construction.

The environmental lawsuit

Lawsuits that challenge the environmental review for such projects rarely succeed, and Kent Barwick of the Municipal Art Society explained his organization's unwillingness to join in the suit by saying that in-house lawyers thought success was unlikely.

Then again, state Supreme Court Justice Joan A. Madden at times seemed skeptical of defense arguments during the epic hearing in the case last May. And she's taken months longer than expected to rule.

Does that delay offer any hints of her decision? Not really--only that she's taking quite seriously a lengthy record, with some important contested issues.

No matter which side wins, the loser undoubtedly will appeal and, all things being equal, the defendant Empire State Development Corporation has an edge in state courts, given the history of such cases. That doesn't mean all things would be equal, however.

Assuming Madden rules within the next weeks, it's not unreasonable to expect an appeal to be resolved sometime within the year, but not necessarily by the end of July.

The eminent domain case

The federal eminent domain case was expected to have a bigger chance at stopping the project, but it was dismissed in June by U.S. District Judge Nicholas Garaufis. A three-judge appeals court panel heard the appeal in October and was skeptical toward the plaintiffs. So the defendants clearly have an edge.

Given that this is a dispute about law rather than a fact-finding enterprise, the record is a lot smaller than that faced by Madden. So a decision should come sooner rather than later.

If it's in favor of the plaintiffs, the defendants (state, city, developer, etc.), I speculate, would not risk the delay of a Supreme Court appeal but rather proceed with discovery and let the case move ahead with the hope that they still would prevail. Either way, the case almost certainly would not be resolved by the end of July.

Plaintiffs' dilemma

If, however, the court upholds Garaufis's decision, then the plaintiffs (13 originally, but the number may vary slightly) would be under the gun, and the group likely would split. Each member is undoubtedly motivated by varying degrees of principle, orneriness, and pragmatism.

[Updated: Despite a report in September that two plaintiffs had settled, they have not officially left the case, so the total for now is 14, given that one plaintiff was added. Lawyer Jennifer Levy states: "We represent six of the tenant-plaintiffs. Two have signed agreements – but we have not yet filed a Notice of Discontinuance with the Court. Two (and perhaps three) others are negotiating."

The cost of settlement with the rental tenants undoubtedly would be lower than with the plaintiffs who are owners. Of the 14 plaintiffs, six are rental tenants.]

Before any appeal to the U.S. Supreme Court, the ESDC might move toward condemnation or Forest City Ratner might make settlement offers to make the case go away. Some plaintiffs, as is typical in cases where the resolution is unclear, would be tempted to settle rather than face continued uncertainty.

That would leave the plaintiffs motivated most by principle and opposition to the project to consider the appeal, which would require significant fundraising by lawsuit organizer Develop Don't Destroy Brooklyn.

Then again, the appeal might attract funds from some ideological opponents of eminent domain, even though the case would not aim to overturn the Kelo vs. New London decision--hated by the right-wing and a lightning rod for reform among a wider ideological spectrum--but ask the court to give that decision additional teeth.

Supreme Court roulette

Any Supreme Court appeal would be a longshot; the court accepts only about two percent of the cases sent its way. The votes of four justices are required to hear a case, and almost certainly the four right-wing members of the court would be sympathetic to the plaintiffs.

But their decision to hear the case also would hinge on 1) whether they thought they could get Justice Anthony Kennedy, the swing vote, to join them on a case that seems to violate some of the indicia for legitimate use of eminent domain (e.g., a variety of development plans from the start) he set out in his Kelo concurrence and 2) whether they think the time is right to revisit eminent domain and/or what other eminent domain cases are also being appealed.

The state option

{Updated: A reader points out that the eminent domain plaintiffs also could file objections in state court under the Eminent Domain Procedure Law. The odds are long against the plaintiffs, but that could take up to a year to resolve.

Would a dismissal of the federal case lead the ESDC to simply proceed with condemnations, as a commenter below suggests is the most likely outcome? Perhaps, but only if the plaintiffs choose not to refile the case in state court.]

Timetable questions

So, as my speculation suggests, while it's possible that the lawsuits could be cleared in seven months, several scenarios challenge that.

Given the shifting construction estimates regarding the project by Forest City Ratner, which only recently acknowledged the Atlantic Yards arena wouldn't open in 2009, it's reasonable to be skeptical about the July 2008 prediction.

After all, Forest City Enterprises' Chuck Ratner last March acknowledged:
We are terrible, and we’ve been a developer for 50 years, on these big multi-use, public private urban developments, to be able to predict when it will go from idea to reality.


That's the best bet, for now.

3 comments:

  1. You fail to mention that the first move the defendants will make is to have the court vacate the temporary restraining order and proceed with condemnations...which is the most likely outcome. There is NOTHING to suggest that the defendants will have to wait for the Supreme Court to rule. This is particularly likely as the 13 dwindle. "Number will vary" is by the way a thoroughly dishonest and disingenuous way to describe the number of plaintiffs remaining. Why not state the reality: several have left and several others are negotiating. You are doing exactly what you accuse the Times of doing.

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  2. Brilliant and thoughtful analysis, as usual. Thank you Norman Oder and Happy New Year.

    William Harris, Boerum Hill

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  3. I've updated my post: While the state may push for condemnations as the most likely outcome if the appeals court upholds Judge Garaufis, the plaintiffs, if they refile the suit in state court, would stave off the condemndation process again.

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