That dismissal upheld Supreme Court Justice Joan Madden’s dismissal of the case. Briefs from the defendant ESDC are due this month. The Court of Appeals, which is already considering an appeal in the separate case challenging the use of eminent domain, is not required to accept this case.
The February ruling, for example, neglected to address the claim that the ESDC, in the Blight Study conducted by environmental consultant AKRF, manipulated statistics to contend that the 22-acre project site suffered from more criminal activity than nearby areas. (In my coverage in February, I missed this omission.)
The petitioners note that AKRF
responded to public complaints that it had misrepresented crime data in the non-ATURA sectors by simply asserting that it had “accurately described the blighted conditions on the project site.”
The memorandum of law quotes Catterson, who charged that the Urban Development Corporation Act (UDCA) “is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are ‘underutilized’.” He also pointed out that, if the ESDC acknowledged that properties in the footprint outside the Atlantic Terminal Urban Renewal Area (ATURA) were valuable for developers, the ESDC would not have stepped in.
(A couple of arguments in the previous iteration of the case, such as ESDC's failure to analyze the threat of terrorism or its production of an unrealistic project timetable, have been dropped in this appeal.)
Standard of review
The petitioners argue that the state’s highest court must step in to clarify the law:
Nevertheless, Justice Catterson felt compelled to join the majority in upholding ESDC’s findings and determinations regarding the Project, based on a perceived standard of review under which courts are compelled to defer to ESDC’s findings and determinations as long as ESDC can provide any arguably plausible justification for them, regardless of how contrary they may be to the clearly stated purposes and plain language of ESDC’s enabling statutes and the environmental laws which ESDC is obliged to follow. Appellants respectfully submit that the Court of Appeals should review this case to determine the boundaries of judicial review of ESDC’s determinations under the applicable provisions of the UDCA and the New York State Environmental Quality Review Act (“SEQRA”), New York Environmental Conservation Law (“ECL”)
Blocks at issue
The petitioners note:
Three of the blocks that make up the Project area – designated Blocks 1127, [a segment of] 1128,4and 1129, comprising around 40 percent of the Project footprint – are not included within ATURA, and had never before been designated blighted by any governmental entity.
There is no indication in the record prior to September 2005 that the Non-ATURA Blocks were included in the Project area for any reason other than to make the Project larger and more profitable for FCRC and Bruce Ratner than it would be if the Project were limited to property within ATURA.
That, however, is a bit of a stretch. Block 1127, bounded by Pacific and Dean streets and Sixth, Flatbush, and Fifth avenues, was included because the arena would extend from Atlantic Avenue and Dean Street.
Lack of trend study
The petitioners note that the Blight Study omitted any analysis of real estate rents and values, as was requested in the original contract with AKRF. (That contract was discovered only through a Freedom of Information Law request I filed.)
The petitioners argue that the ESDC's actions were illegitimate:
The courts below... limited their review to whether ESDC has stated any plausible rationale at all for its findings. Thus, the Appellate Division upheld ESDC’s designation of the entire Project area as blighted, despite ESDC’s purposeful omission of contrary economic, real estate and development data from the Blight Study, and its knowing misrepresentation of relevant crime data, on the ground that ESDC also cited other factors which courts in this State have previously found indicative of “substandard and insanitary” conditions.
New York law should and does require ESDC to do more than simply throw out a number of purported justifications for its findings without regard to truth, accuracy, or logic, secure in the knowledge that as long as at least some of its proffered justifications can be called “rational”, its findings will not be disturbed by judicial review. To the contrary, where, as here, an agency blatantly misrepresents the facts and disregards contrary evidence, courts should find the agency’s ultimate determination irremediably tainted, regardless of whether a few of its proffered justifications might arguably be valid.
Courts need not substitute their judgment for that of a governmental agency, but they can and must require an agency to be truthful and unbiased in making its judgment.
In a footnote, the brief cites two articles that appeared before the project was announced in 2003:
See, e.g., Rachelle Garbarine, “Residential Real Estate: 2 Brooklyn Business Sites Converting,” NEW YORK TIMES, August 30, 2002, at B6 (“In the onetime manufacturing neighborhood around Dean and Pacific Streets in Prospect Heights, Brooklyn, the conversion of old warehouses and factories to housing marches on”.) (R. 550a – 551a); Eric Neutusch, Here Comes the Neighborhood: Prospect Heights, BROOKLYN RAIL, Autumn 2002, (“The empty industrial lots along Dean and Pacific Streets are being rejuvenated by a residential housing boom.”)
(Note that the URL for the Brooklyn Rail article is incorrect in the legal memo.)
The importance of trends
The petitioners argue that
in order for ESDC to undertake a “land use improvement project”, it is required to make findings that, among other things, the project area “is a substandard or insanitary area, or is in danger of becoming substandard or insanitary and tends to impair or arrest the sound growth and development of the municipality”.
(emphasis added in brief)
it is undisputed the area was undergoing a well documented economic revival and redevelopment boom when the Project was announced in December 2003 and continuing through 2006 when the Blight Study was published.
In fact, honest analyses of property value trends, economic activity, and rents in and around the Project area would have substantially undermined ESDC’s claim that the Project was needed to cure blight in any of the Project area, including the Vanderbilt Yards, because the neighborhood’s redevelopment and economic revival were literally lapping at the borders of the MTA-owned yards.
As proved by Extell Development Corporation’s bid for the rights to develop the yards – put together and submitted within just 45 days after MTA issued its belated RFP – all that was needed for desirable development of the Vanderbilt Yards to occur was for MTA actually to make them available for development.
The Appellate Division’s analysis that the “proffered objectives of the Project might rationally be deemed a cognizable ‘public purpose’”” was in error, the petitioners say, because the court didn’t analyze whether “the sound growth and development of the municipality” was impaired.
The Appellate Division ruling
The February ruling assumed that the ESDC made its judgment based on some assumptions that, as of 2009, arguably no longer obtain, such as the presence of architect Frank Gehry, the (timely) expectation of an Urban Room and eight acres of open space, and even a “new and improved” railyard:
Petitioners' contention is rather that the lead agency did not take into account in the EIS prevailing real estate trends, particularly as they affected and had become manifest in the non-ATURA project area at the time of the project's announcement, and thus could not have reasonably concluded that the proposed project was to be preferred to its alternatives for its purportedly unique capacity to alleviate blight in the non-ATURA blocks. This argument, however, necessarily supposes that the lead agency's judgment as to the relative desirability of the proposed project must have turned upon the project's purported efficacy as a means of improving the non-ATURA blocks. It is, however, clear from the EIS that the lead agency's rationale for preferring the proposed project was not so singularly grounded. The proposed project, in distinction to the alternatives preferred by petitioners, included an architecturally distinguished arena that would house a major professional sports franchise, an elaborate new subway entrance, a new and improved LIRR rail yard, improved pedestrian and bicycle linkages connecting the project and the surrounding neighborhoods on the north-south axis, an on-site stormwater drainage system, and eight acres of open space landscaped by Laurie Olin. It also made provision for significantly more affordable housing than would have been developed under alternative scenarios, and, by reason of its scale and range of uses, promised economic and fiscal benefits exceeding those expected to be generated under the other plans.
The new memorandum of law points out how much has been postponed and that the ESDC, in a previous brief, had cited the presence of "noted architect Frank Gehry."
The legal definition of blight, the Appellate Division noted, is highly malleable, given that, in a previous decision, the court had agreed that
the Coliseum site at Columbus Circle (now the location of the Time Warner Building)—undoubtedly, even at the time of the litigation, one of the most valuable pieces of real estate in the City, bordering upon the very exclusive southwestern corner of Central Park—was blighted and thus appropriate for designation as an urban renewal site... notwithstanding the site's obvious, indisputable potential for private development. The point to be made is that "blight" has proved over time to be a highly malleable and elastic concept capable of enormously diverse application. This is not in the main attributable to the ingenuity of consultants eager to please the developers who pay their bills, but because the concept, within the field of its likely use, is more facilitative than limiting.
That seems like a significant challenge for the petitioners to overcome. In this case, however, they argue that a higher standard of judicial review is required than in the Coliseum case.
Additionally, the petitioners challenge the designation of an arena leased to an operated by a private, for-profit entity as a purported “civic project”:
While a for-profit sports arena might conceivably serve a cognizable civic purpose, the State Legislature has not authorized ESDC to undertake as a “civic project” a professional basketball arena to be operated solely for the purpose of generating profits for a private developer.
The petitioners charge error in the decision below:
While a professional sports arena may, in appropriate circumstances, be deemed a “civic project” under the UDCA, the UDCA permits ESDC to lease a “civic project” to a private entity only if that entity “is carrying out a community, municipal, public service or other civic purpose.” The Appellate Division incorrectly interpreted that statute so as to render the quoted language superfluous, by deeming any private, for-profit business entity operating a professional sports arena to be “carrying out . . . a civic purpose”, which contravenes the plain language of the statute as a whole. This issue had not previously been considered by any court in this State.
The petitioners acknowledge that the Appellate Division cited the federal eminent domain case Goldstein v. Pataki, which found:
a sports arena may serve a “public purpose” under the takings clause of the United States Constitution. While the Appellate Division acknowledged that that holding does not preclude plaintiffs’ challenge to ESDC’s designation of the Project as a “civic project” under the UDCA, it nevertheless proceeded to conflate the two issues, finding an “evidently anomalous disparity” between finding that a sports arena is a “public purpose” under the takings clause and the argument that, in the particular circumstances of this case, it still may not qualify as a “civic project” under the UDCA. That was error. Petitioners do not dispute that ESDC might rationally determine, under appropriate circumstances, that a privately operated sports arena made available for community and civic events on an affordable, substantial basis could be a “civic project” under the UDCA. But the Appellate Division failed to consider the UDCA’s express limitations of ESDC’s ability to lease a civic project to a non-public entity, and thereby failed to note the distinctions between ESDC’s authority to undertake a “civic project” under the UDCA, and the scope of the term “public purpose” in the context of the takings clause.
In a footnote, the petitioners add:
Nor does the general statement of legislative findings and purposes of the UDCA encouraging “maximum participation” of the private sector in ESDC’s projects obviate the legislature’s explicit limitations of the type of entities to which a “civic project” may be leased or sold.