Friday, April 09, 2010

Did Gerges decision in March moot final Atlantic Yards case? Same grounds, new context. Oral argument Monday should be vigorous.

The one extant Atlantic Yards lawsuit (not counting the effort to reopen another) approaches an oral argument at 9:30 am on Monday, April 12.

The suit (Williams vs. New York State Urban Development Corporation), filed by several property owners facing condemnation, challenges the Empire State Development Corporation's failure to issue a new Determination & Findings (D&F) based on the argument that the project changed so much from 2006--when it was supposed to be completed within a decade--that there was no longer a basis for an eminent domain finding.

After all, the Development Agreement signed last December 23 but not revealed until January 25, gives the developer six years to build the arena, 12 years to build Phase 1, 15 years to start construction of the platform, and 25 years to finish the project.

At essence is this:
This case presents the question of where – on the continuum from no changes to the factual basis for an [Eminent Domain Procedure Law] § 204 determination to profound material changes – a case must fall before those changes merit an order compelling a condemning authority to supplement, amend or renew its determination.
Arguments rejected

The same arguments--including a revised deal with the Metropolitan Transportation Authority for the Vanderbilt Yard--were dimissed by Supreme Court Justice Abraham Gerges in his decision last month rejecting an effort by condemnees to stop the ESDC from pursuing eminent domain.

Matthew Brinckerhoff, the attorney for the property owners, argued in court that the Atlantic Yards eminent domain case was evaluated solely on the record as of December 2006. "The fact that they changed the project so much has to be considered by someone," he said.

However, Gerges refused to consider the Development Agreement, which is also key to the effort to reopen the case challenging the ESDC's 2009 approval of the project.

What's the difference now? "If you read Justice Gerges's opinion carefully, it's pretty clear that he's dismissing the fundamental claim on timeliness grounds," Brinckerhoff said yesterday.

And the cases on which Gerges relied, regarding a vesting proceeding, shouldn't apply to the broader challenge to the ESDC's actions, Brinckerhoff contended, noting that he expects the ESDC to argue to Justice Marcy Friedman Monday that Gerges's decision makes this case moot.

(Friedman was the judge in the case that was yesterday pushed for reconsideration.)

In other cases, of course, courts have typically deferred to the ESDC and Friedman, in her ruling in March, wrote, "At this late juncture, petitioners’ redress is a matter for the political will." Then again, the Development Agreement--outside of the "the political will"--has not yet been grappled with in court.

What if the new case is successful? "Ultimately, what we're saying is that 2006 determination can't be predicate for condemning these properties," Brinckerhoff said, noting that the question of judicial relief was not clear. "It seems that we'd have a good argument" that property now owned by the ESDC but not in their possession would have to be transferred back.

The lawsuit

The lawsuit, filed January 19, seeks to compel the ESDC "to consider the 'public use to be served' by the proposed Atlantic Yards Land Use Improvement and Civic Project as of 2010 (rather than 2006) and issue a new, supplemental, or amended 'determination and findings.'"

It points out that, in the case challenging eminent domain, the ESDC argued that the court should ignore events that occurred after the 2006 D&F because they weren't part of the record.

However, on 9/17/09, ESDC Chairman-designate Dennis Mullen issued a memo that indicated that the project might be reduced--the lawsuit more definitively claimed it "had... been reduced"--about 35% to 5,145,000 square feet and that the affordable housing would be contingent upon provision of subsidies.

The Development Agreement

A Memorandum of Law dated February 3 cited the Development Agreement, relying on my blog:
Although the documents are voluminous and complex, a review by Mr. Norman Oder – an award winning freelance journalist – who has reviewed some of the byzantine materials, has put the lie to Respondent’s prior assurances that the project will by completed in 10 years or less. See Atlantic Yards Report, Despite Promise of Ten-Year AY Buildout, ESDC Deadlines Allow 12 Years for Phase 1, 15 Years to Start Platform, 25 Years for Full Project, Jan. 27, 2010.11 The newly disclosed documents reveal that the deadlines “imposed” by Respondent on Ratner bear almost no relationship to the 2009 MGPP, much less the superceded 2006 MGPP
upon which Respondent’s 2006 D&F is based, and allow instead for:
  • six years to build the arena
  • three or four years to start construction of the first tower
  • five or six years to start construction of the second tower
  • ten years to start construction of the third tower
  • 12 years to build Phase 1 (which can be much smaller than officially promised)
  • 15 years to start construction of the platform over the railyard
  • 25 years to finish the project (which can be much smaller than officially promised)
That delay cast in doubt the 2006 D&F, which claimed that the “principal public use, benefit and purpose of the Project” was “to eliminate the blighted conditions on the Project Site and the blighting influence of the below-grade rail yard.” Given that Atlantic Yards could take 25 years, the "alleged blight and blighted influence of the below-grade rail yard" would be extended rather than removed.

ESDC response and defense

The ESDC, in response, offered a rather weak defense, attacking the messenger rather than the facts:
Their allegations (which are put forward by quoting a web site “blog”) are inconsistent with the plain terms of the Development Agreement, which requires that the Project be constructed in accordance with the 2009 MGPP. See Development Agreement at pp. 4-5 (“Project Description”); p. 10 (requiring that the 2009 MGPP requirements be satisfied); p. 4 (requiring that FCRC use commercially reasonable efforts to complete the entire Project by 2019); p. 21 (requiring that the Project “shall have not less than the required Project Site Affordable Housing Units,” a term defined at page 15 of Appendix A to mean the 2,250 affordable housing unit required by the 2009 MGPP).
On somewhat firmer ground, attorney Philip Karmel pointed out that in 2006 and 2009 ESDC documents had anticipated that subsidies would be needed for affordable housing. And he quoted a decision by Supreme Court Justice Michael Stallman, who upheld a challenge to the MTA's revision of the Vanderbilt Yard deal.

In a Memorandum of Law, the ESDC further stated:
The Development Agreement expressly provides that the deadlines and periods set forth in Article VIII, which covers Construction Activities, “shall not modify, limit or otherwise impair” FCRC’s obligation under Section 2.2 of the agreement to use commercially reasonable efforts to substantially complete the Project by December 31, 2019, which is in full accord with the MGPP.
The Leichter case

The ESDC's Memorandum of Law also cited a case known as Leichter, which affirms that a condemning authority may make even significant changes to a project plan after the issuance of its determination and findings.

Gerges, in his decision, also cited Leichter, involving changes to the Times Square plan.

Petitioners' response

In a response to the ESDC dated February 22, the petitioners asked the court to allow "an amended verified petition, so that Respondent will be required to answer each factual allegation separately and so that the pleading can reflect material facts that were first revealed after this action was filed."

(By adding the Development Agreement to the petition, rather than a legal memorandum, it becomes part of the record that could be evaluated by a court on appeal. Friedman has not ruled on the motion, but will consider it Monday.)

Such material facts include the Development Agreement and the extensions implied. (The response also erroneously asserted that the project minimum was now 4,470,000 square feet. That omits the arena, which would add another 675,000 square feet.)

In an accompanying memorandum of law dated February 22, Brinckerhoff criticized the ESDC's tactics:
Rather than interpose a verified answer addressing the detailed factual allegations in Petitioners’ verified pleading – many that Respondent would be forced to admit under oath – Respondent has chosen to move to dismiss under CPLR 3211 and 7804(f), and sought leave to “interpose an Answer,” in “the event that the Court denies” the motion to dismiss.

...Second, Respondent’s motion contests the well pleaded allegations in Petitioners’ verified pleading, and relies on its own self-serving characterization of selected documents and an attorney’s affirmation. This is not the stuff of which motions to dismiss as a matter of law are made.
What about Leichter? The memorandum states:
Respondent’s motion to dismiss relies exclusively on Leichter v. N.Y. State Urban Dev. Corp.... Leichter is inapposite for two reasons. First, the project alterations challenged by the petitioners in Leichter were limited to: (1) “the proposed use of a site originally designated as a wholesale facility mart . . . to encompass a commercial office tower”; and (2) a change from simultaneous to sequential site acquisitions. Here, of course, the breadth and scope of the changes set forth above and in the verified pleading, is substantial and materially effects Respondent’s 2006 findings of public use, benefit and purpose pursuant to EDPL § 204(B).

...Here, Respondent cannot meaningfully dispute that the projected ten year build out, upon which the entire 2006 D&F is premised, is now a fantasy with 25 years being the true build out period, and with no guarantee that phase two will ever be built. This, in turn, means that the site it found to be “characterized” by blight in 2006 may not be remediated for more than 25 years, if ever. It also means that the projected economic benefits, i.e., jobs and tax revenues, must be correspondingly reduced to zero.

...Leichter stands for the modest proposition that the change from simultaneous to staged acquisitions standing alone requires a public hearing where the impact on prior public use, benefit or purpose findings are considered, but not necessarily new or amended EDPL §204(B) findings. Leichter does not, however, as Respondent would have it, hold that EDPL §204(B) findings are inviolate and can be used as the predicate for property seizures irrespective of whether the perceived public benefits have been utterly gutted.
A more direct response

In a legal document filed yesterday in a separate case, attorney Jeff Baker, representing Develop Don't Destroy Brooklyn and other groups, took more direct aim at the ESDC's defenses:
This Court relied on ESDC’s representations regarding its assurance that it will require commercially reasonable efforts to require FCRC to complete the project by 2019. However, while that term is used in a general provision of the Development Agreement, the more specific requirements of Articles 8 and 17 of the Agreement control over the vague provision of Sec. 2.2.
(Emphasis in original. See documents embedded below.)

Bad faith

As I wrote yesterday, the petitioners might have gone even farther, charging bad faith. Remember, the Development Agreement, signed December 23, 2009, was not released until January 25, about three weeks after ESDC spokeswoman Elizabeth Mitchell told me the documents would be made available.
Atlantic Yards Development Agreement Section 2.3
Atlantic Yards Development Agreement Section 8
Atlantic Yards Development Agreement 17.2

No comments:

Post a Comment