Skip to main content

In state court case, questions of “condemnation blight” and "reasonable" efforts to proceed

On Monday morning, when most Atlantic Yards watchers were waiting to learn whether the Supreme Court would hear the AY eminent domain appeal (it said no), another legal drama was playing out in State Supreme Court in Manhattan, before State Supreme Court Justice Jane Solomon. Tenants, nearly all with rent-stabilized leases, in two buildings, are charging (lawsuit, follow-up) that the Empire State Development Corporation (ESDC) is violating a provision of the Eminent Domain Procedure Law (EDPL) that requires disposition of properties within a decade.

Solomon seemed skeptical of the main thrust of the argument made by attorney George Locker, who has filed two previous cases on behalf of the 13 tenants, who live in two Forest City Ratner-owned buildings within the footprint of the planned arena block.

Then again, she did seem somewhat sympathetic to Locker’s effort to paint the footprint as suffering from “condemnation blight,” a state of suspended neglect, and that the project has changed enough to require a public hearing.

The petitioners seek to annul the State Funding Agreement and also to order the court to require another public hearing, based on the law establishing the ESDC.

AY “does not exist”

Locker noted that documents approved in December 2006, including a Modified General Project Plan (GPP), serve as “planning documents” rather than contracts. The first contract is the 9/12/07 State Funding Agreement, which wasn’t revealed until 3/21/08.

The GPP and other documents all state a ten-year timeline to build the project, he said, and everything that required analysis under the law was based on that time frame. “If the funding agreement followed the General Project Plan,” he said, “we wouldn’t be here.”

However, Locker noted that there’s no start date for Phase 1, and that the developer has 12 years from the delivery of property to complete that phase without penalty. As for Phase 2, which would contain 70% of the affordable housing, 70% (alleged) of the jobs, and all the open space, there’s no timetable.

“The bulk of the Atlantic Yards project, as far as the operative contracts are concerned, does not exist,” he said.

While the ESDC has filed a motion to dismiss the case for failure to state a cause of action, “it’s a rather high standard,” Locker said.

“Condemnation blight”

Locker, whose main case relies on an untested area of state law, hearkened back to the 1974 Report of the State Commission on Eminent Domain. “The legislature was very concerned with the passage of time, what they called ‘condemnation blight,’” he said, pointing to a requirement that the condemnor begin proceeding to acquire property within three years. The commission had noted that “the current lack of such a requirement results in tenants vacating the property and destroys an owner’s incentive to maintain such property.”

If property is not acquired in three years, the project would be deemed abandoned. Also, the state must complete the taking of properties in a decade.

Solomon asked what had happened to Locker’s clients. He said the onus remained on the ESDC to acquire title to the buildings they live in. (The use of eminent domain would be a “friendly condemnation” of an FCR-owned building, aimed to extinguish rent-stabilized leases faster than would occur through a typical procedure before the state Division of Housing and Community Renewal.)

“There has been none [acquisition of title] with all of this publicity [about the project]?” Solomon asked a bit quizzically.

“Yes,” Locker responded.

Whose ten years?

He stressed that there was a ten-year limit before a project could be abandoned. “Empire State Development cannot take property by eminent domain, and give itself, or the Ratner organization, the right to abandon it after more than ten years.”

Philip Karmel, representing the ESDC, said the funding agreement has a “limited purpose,” to allow the ESDC to provide $100 million for “certain project-related infrastructure in advance of project documentation.” Such documentation “is still in active negotiation,” he said, with an outer deadline of December 2009.

Karmel said the three-year period to acquire property began only a few months ago at the conclusion of previous litigation Locker had brought. However, he said, “the ten-year period has absolutely no application to this case at all.”

He said it applied only to projects in which the condemnor announced plans to acquire property in multiple stages. Regarding Atlantic Yards, ESDC “intends to acquire all property at once,” he said.

He said another mention of a ten-year period is only relevant if the property remains unimproved--which is not the same as not finishing Phase 1.

Condemnees and fee owners

Do the petitioners have standing? Locker pointed to a previous case in which the ESDC said--and judges affirmed--the tenants did in fact have ownership rights via their leases and could be treated as condemnees. However, Karmel pointed out that the law says the condemnor must sell it back to “the original fee owner”--and the petitioners, despite having ownership rights, never owned their buildings.

Solomon seemed convinced. “You’re not an original fee owner,” the judge said of Locker.

Karmel noted that the previous case had established Locker’s clients as condemnees.

“That’s different,“ said the judge. Karmel concurred, saying that the previous case was based on a different section of the EDPL.

Project murkiness

Locker returned to the timetable issue, which buttresses his argument that the project has changed and requires a new public hearing. The funding agreement, he said, “says the Ratner organization has an unlimited time to build 70 percent of the project.” About eight months after the December 2006 determination and findings, “the project essentially disappears.”

Locker added that City Comptroller William Thompson had said publicly, most recently in press coverage last week, that he didn’t know what Atlantic Yards is.

“Reasonable” efforts to proceed

Karmel attempted to rebut those concerns. “The foundation stone is the funding agreement,” he said, adding that the claim that there is no deadline “is a complete and total mischaracterization.” Rather, the developer is required to use “commercially reasonable efforts” to move forward.

What does that mean?

“It means you have to try your hardest,” he said.

Solomon was skeptical, asking if such efforts could have anything to do with “external circumstances” (presumably the credit market, among other things).

“They should be taken into account,” Karmel acknowledged. (He did not use the word “draconian”--a term used in legal papers--to describe the penalties the ESDC would levy.)

Co-counsel Charles Webb said that condemnations would begin “in October or November of ’08,” a date that apparently disregards the likelihood that other pending cases may slow the process.

And the time period, Solomon asked, to complete the condemnations is “07 to 10”?

Webb concurred.

“All the while we have condemnation blight,” Solomon mused, “but Mr. Karmel would say they’re working on the infrastructure.”

The judge said she wasn’t sure she’d have a decision before the end of the summer.


  1. This is so obviously NOT an approved megaproject. Any doubts? The words of ESDC’s own representative Philip Karmel above establish this. He says the funding agreement, (he called it the “foundation stone”- really?) “has a “limited purpose,” to allow the ESDC to provide $100 million for “certain project-related infrastructure in advance of project documentation.” Such documentation “is still in active negotiation.”

    `Active negotiation?’

    ESDC’s ill-conceived notion that Ratner has some sort of theoretical monopoly on this non- approved as yet undefined megadevelopment needs to be jettisoned. It makes it impossible to effectively or `actively’ negotiate for the State’s or public’s benefit.

    When Karmel endeavored as best he could to assert that the “foundation stone” funding agreement actually somehow obligates Ratner in any important respect he quoted from the agreement that the developer is required to use “commercially reasonable efforts” to move forward.

    Gosh & Golly-Gee! Is this the strongest provision of the agreement he could cite and what does that mean?

    What does it mean?

    It means that the notion of the Ratner monopoly ensconced in the funding agreement is being used by Ratner as the basis to bully the public. He threatens to leave the public with a Ratner-created-wasteland unless the public antes up more subsidy in amounts not yet specified.

    Do Karmel, or ESDC appreciate the supreme irony in this? Or, are they just content that because they have `obligated’ Ratner he is ‘trying his hardest’ to make the best of his granted monopoly.- `Trying his hardest `to soak the public?’

    Jettisoning the idea Ratner has a monopoly on development in the area opens up crucial possibilities for appropriate principled development in the Vanderbilt Yards area. ESDC doesn’t seem to understand this. They don’t seem to be willing to negotiate for it. Accordingly, removing ESDC from the Atlantic Yards picture as proposed by recent legislation offers some remarkable potential benefit.


    For more information on the Atlantic Yards Development Trust and the Atlantic Yards Governance Act see: Push for AY Development Trust begins; how much power would it have?

    Michael D. D. White
    Noticing New York

  2. Now Ratner has to look forward to another hearing in the fall. Tough way to raise financing ...


Post a Comment

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…