Skip to main content

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

Comments

Popular posts from this blog

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.