Friday, September 26, 2008

Does AY "exist"? State judge dismisses lawsuit that challenged AY deadline and sought new hearing

A “smaller” lawsuit involving the Atlantic Yards project has been dismissed by a State Supreme Court justice, who rejected charges by tenants in two AY footprint buildings that the Empire State Development Corporation (ESDC) is violating a provision of state law that requires disposition of properties within a decade and should hold another hearing because the project has changed considerably.

As I wrote, during a hearing on the case in June, Justice Jane Solomon seemed skeptical of the main thrust of the argument made by attorney George Locker, who has filed two previous (and unsuccessful) cases on behalf of the 13 tenants, who live in two Forest City Ratner-owned buildings on Dean and Pacific streets. Her five-page decision (PDF) gave no credence to the petitioners’ claims, despite significant public doubts about the project’s timetables. Locker said an appeal would be filed.

(Develop Don’t Destroy Brooklyn has organized and largely funded two other pending cases, one challenging the use of eminent domain and the other challenging the legitimacy of the environmental review.)

Main goal of the case

The petitioners sought to annul the State Funding Agreement signed September 12, 2007 to the extent it permits the acquired property to remain undeveloped for a period of more than ten years--twelve years, actually, before penalties--and it to the extent it “purports to give [ESDC] the option to reacquire such property as remains undeveloped for four years,” according to the decision. This issue had not been raised in any previous case.

No standing

The ESDC, however, argued that the petitioners lack standing and failed to state a claim. Solomon noted that, in a prior case involving Locker’s clients, the Appellate Division did agree that petitioners had standing under Section 103 of the Eminent Domain Procedure Law (EDPL), which defines a “condemnee” as “the holder of any right, title, interest, lien, charge or encumbrance in real property subject to an acquisition or proposed acquisition.” However, the section of the EDPL at issue in this case (406), makes reference only to “fee owners” but not to “condemnees” or tenants, she wrote.

During the court hearing in June, Philip Karmel, the attorney for the ESDC, pointed out that the law says the condemnor would have to sell the property back to “the original fee owner”--which would not include the petitioners.

Abandonment questions

Does the language in the funding agreement violate EDPL 406? Solomon wrote:
The statute is focused on abandonment of the project, and subsequent disposition of the property to a private owner. There simply are neither allegations nor proof in petitioners' papers that the project is or will be abandoned, that the property will not be timely improved or that it is intended to be conveyed to a private user without giving the fee owner a right of first refusal.

In court, Karmel argued that the law 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.

Has project changed enough for hearing?

The petitioners also wanted the court to require another public hearing, based on the law establishing the ESDC, because the project has changed significantly. Though Atlantic Yards, when approved in December 2006, was anticipated to take a decade, 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, and there’s no timetable for Phase 2, which would included 11 of 16 towers. “The bulk of the Atlantic Yards project, as far as the operative contracts are concerned, does not exist,” Locker argued in court.

Solomon, despite expressing surprise in the court hearing that eminent domain had not commenced despite “all of this publicity” about the project, dispatched the petitioners’ argument in one sentence:
Similarly, as argued by Respondent, there is no evidence that the challenged agreement is not consistent with the contemplated project and existing general project plan so as to bring into play the need for a public hearing.


In court, ESDC lawyer Karmel had said that further documentation would emerge, requiring the developer to use “commercially reasonable efforts” to move forward.

Solomon took no notice of the statement in court by ESDC co-counsel Charles Webb that condemnations would begin “in October or November of ’08,” a date that seemed unrealistic--and now seems even more unrealistic, given pending legal cases.

The "elephant in the room"

Locker commented yesterday, “There is an elephant in the room. It is a project that does not exist. Choose to see the elephant, and the legal reasoning follows. Choose to ignore the elephant, and you have Judge Solomon's decision.”

He added, “In a prior but unrelated decision, the Appellate Division ordered ESDC to hold a hearing when the project that it had proposed was changed. Judge Solomon avoided the hearing issue entirely by saying it's the same project. How come Bruce Ratner won't contractually commit to a ten year project, Phase II has no time limit, but Judge Solomon finds there's no evidence it's not the same project?”

“So we will appeal to the Appellate Division, and see whether the Appellate Division chooses to see the elephant in the room. Maybe by then, the Court will have decided that the area is not blighted,” he said, referring to the September 16 argument in the case challenging the AY environmental review. “We will also give the Appellate Division the opportunity to decide whether the project exists at all."

Locker also questioned whether the judge was correct regarding whether his clients have standing in the case, which is more of a stretch--and could preclude the appeals court from even considering whether the project exists.

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