Monday, March 14, 2011

Battle over AY timetable goes to court tomorrow, led by BrooklynSpeaks: "benefits should not be conferred as the result of a ruse..."

Coming tomorrow is a hearing in the last Atlantic Yards court case, a challenge to the Empire State Development Corporation (ESDC) that was initially filed in 2009, dismissed in March 2010, resurrected a few months later, partly upheld by a judge, and then waved away by the ESDC.

The details:
Tuesday, March 15, 2:30 PM
New York County Supreme Court
60 Centre Street
Room 335
Manhattan

While a victory would, at best, delay arena construction slightly and require further study of the overall project timetable, the case aims to right the balance between the public interest and a government agency arguably willing to do a developer's bidding.

The case challenges the legitimacy of the ten-year project timetable that the ESDC board assumed when it approved the revised project in September 2009, and the failure of the ESDC to conduct a Supplementary Environmental Impact Statement to study to adverse impacts of a project that could last 25 years.

And, though the Supreme Court Justice Marcy Friedman in December refrained from issuing a stay on construction--a request that's been renewed--the dispute continues, as groups in the coalition BrooklynSpeaks forcefully questioned the ESDC's findings that a 25-year buildout would have no adverse impacts beyond those already studied.

The lead plaintiff in the BrooklynSpeaks coalition is the Prospect Heights Neighborhood Development Council (PHNDC). Among the plaintiffs are several neighborhood groups, residents, and local officials: City Council Member Letititia James, state Senator Velmanette Montgomery, and Assemblyman Jim Brennan.

DDDB steps back

The case consolidates two cases brought by groupings led by BrooklynSpeaks and Develop Don't Destroy Brooklyn, but the latter has submitted only one set of papers since December, as well as joining in the reply papers submitted by BrooklynSpeaks and letting the latter take the lead.

"After five years of litigation, we have become disillusioned with the judiciary, and doubt that any judge will stand up to Ratner and right the countless wrongs he has imposed and continues to impose on our community," commented Candace Carponter, DDDB legal director, in response to my query about DDDB's posture.

"On the other hand, this is BrooklynSpeaks' first lawsuit, and they are more optimistic than we that the court will do the right thing," she added. "Still, we believe in the challenge raised in our joint lawsuit, and don't want anyone to mistake our letting BrooklynSpeaks take the lead as acquiescence in any form. We remain vigilant for opportunities to expose this Project for what it really is."

Indeed, DDDB attorney Jeff Baker will be in court tomorrow arguing to require the ESDC and Forest City Ratner, and their lawyers, to pay DDDB for the costs of the additional legal work "DDDB's lawyers had to perform because ESDC and FCR improperly withheld a key contract from the court last year." (I should have more on this case tomorrow morning.)

Before I get to the current legal arguments, first a refresher on the sequence.

October/November 2009: lawsuits filed

DDDB filed its case in October 2009; BrooklynSpeaks filed a month later.

January 2010: oral argument

At the oral argument, the ESDC cited the Development Agreement, which had not been made available.

March 2010: decision

A day before the arena groundbreaking, Friedman dismissed the cases, albeit with some scathing language, criticizing the ESDC’s “deplorable lack of transparency” and acknowledging that the ESDC’s use of a ten-year timeframe for the project buildout was supported “only minimally.”

She had not allowed the belatedly-released Development Agreement into the record, however, and motions for reargument were filed 4/7/10.

June 2010: reargument

In an unusual reargument of the case, the ESDC was put on the defensive, forced to acknowledge that there are far fewer penalties for delays in completing the Atlantic Yards project as a whole than those for the first phase, which includes the arena and three towers.

November 2010: Friedman issues decision

Citing "what appears to be yet another failure of transparency" on the part of the ESDC, Friedman handed Atlantic Yards opponents and critics their first clear-cut victory, albeit a partial one.

She made a preliminary ruling November 9 that the ESDC make "findings on the impact of the Development Agreement and of the renegotiated MTA agreement on its continued use of a 10 year build-out for the Project, and on whether a Supplemental Environmental Impact Statement [SEIS] is required or warranted."

The Development Agreement, which has a 25-year deadline, was released in January, months after the ten-year date was approved in the Modified General Project Plan, or MGPP, in September 2009.

December 2010 ESDC findings

In response, the ESDC on December 16 issued findings that an SEIS is not necessary, and that that Development Agreement, with its 25-year outside date, had no material effect on reasonableness of a ten-year schedule, . The petitioners sought a stay in Atlantic Yards construction and a re-evaluation of potential project impacts over 25 years.

The ESDC responded with a flurry of arguments, notably that the arena is already well in progress, and that the 25-year outside date for project construction was long ago disclosed.

The findings were criticized by BrooklynSpeaks as obfuscatory and evasive. The meeting, argued DDDB attorney Jeff Baker, included an illegal executive session and denied the public the opportunity to comment on the findings.

December 2010: no stay

A week later, the petitioners withdrew their request for a stay on construction because it was too soon to have a court argument about the ESDC's findings.

New legal papers would have to be exchanged. Now those papers are before the court.

The BrooklynSpeaks Supplemental Petition


The Supplemental Petition updates the initial 11/18/09 petition, asking the court to not only annul the September 2009 approval of the MGPP but also the December 2010 ESDC findings.

It also asks the court to direct the ESDC to reconsider the need for an SEIS, and to stay some or all of the project until and until the ESDC has complied with the law by granting a valid approval of the MGPP or an amended MGPP.

In December, the ESDC found that it appeared unlikely Atlantic Yards could be built in ten years, but concluded that, even if construction lasted 25 years, it would not result in any new significant adverse environmental impacts, and thus would not warrant an SEIS.

BrooklynSpeaks' petition charges, the 2009 Technical Memorandum, and thus ESDC's approval of the MGPP, failed to address a buildout that would extend to 2035, failed to identify or evaluate the adverse impacts on adjoining neighborhoods of 25 years of construction, "such as occurred during the construction of the Cross-Bronx Expressway," failed to identify or evaluate the adverse impacts of extended vacant lots, and failed to take a hard look at indefinite surface parking, given that arena parking was supposed to go underground after three years.

(The reference to a highway that displaced thousands is a stretch.)

Given market conditions, the MTA Agreement and the Development Agreement, ESDC had to recognize construction would go far beyond ten years and up to 25 years, and "if it did not recognize that to be the case, that was the result of self-willed ignorance and failing to make a reasonable effort to ascertain the realities," according to the petition.

Thus, according to the petition, the ESDC did not analyze the reasonable worst case scenario of a 25-year construction term:
ESDC's assertion in its December 16 Findings that the MDA and the timetable it set out had no material effect on the reasonableness of using a 10-year construction schedule is arbitrary and irrational, if not dishonest.
Moreover, the filing charges that the Technical Analysis dealt with neighborhood impacts in an isolated rather than cumulative manner, and was not based on a firm construction plan, in contrast to the 2006 FEIS.

It failed to look at the impact of using Block 1129 as an open parking lot for 12 to 15 years, since the analyses conducted in 2006 and 2009 only considered it for three to four years. Nor did it evaluate the impacts from adding "stackers," a feature identified for the first time in the December 2010 analysis, according to the petition.

None of the analyses identified or evaluated the impact of multiple daily events at the arena, such as the recently-announced booking of the Ringling Brothers Circus, according to the petition.

Though the construction schedule has changed, plans for staging are in flux, which makes it "likely, if not inevitable, that a significant amount of staging will have to be accommodated on public streets, rather than on the Project site," as was evaluated in 2006 and 2009.

Beyond that, two interim parking lots with 652 spaces on Block 1120--the block between Pacific Street and Atlantic, Sixth, and Carlton avenues, which contains both railyard and ground-level property--have been eliminated, according to the petition.

Butzel affirmation

Al Butzel, attorney for the BrooklynSpeaks petitioners, notes in an affirmation that, while the petitioners questioned ten-year buildout because of not only the realities of the market but also the MTA agreement, the ESDC dismissed a 2030 end date as theoretical.

ESDC represented to the court that the belatedly released Development Agreement (MDA) added nothing new, but Butzel disagrees:
It was a result of this misrepresentation--and ESDC's failure to provide the Court with a document that it had to know bore directly on the Petitioners' claims--that the Court was misled into concluding that there was enough in the record--albeit barely--to support ESDC's continued use of the 10-year buildout.
While the ESDC did make findings in response to the court, the question is whether they are rational, and whether the 9/17/09 approval of the MGPP "was somehow cured by the new analysis and findings," according to Butzel.

But they are after the fact and can't be substituted--and the belated Technical Analysis is deficient, argues Butzel:
The transparent nature of the ESDC's claiming that the schedules in the MDA and the MTA Agreement had no significance is underscored by the agency's second grudging finding that as of December 2010, 'it appears unlikely that the Project will be constructed on a 10-year schedule.' That is a gross understatement.

...The thin thread that ESDC seeks to hold on to, which, unlike Spiderman's has no bearing strength, is the claim that whatever the situation today and whatever the dates reflected in the MDA and the MTA Agreement, the agency had a rational basis in September 2009 to conclude that the Project would be completed in 10 years. This is a claim that cannot withstand objective scrutiny--the circumstances and documents involved simply do not support that contention.
What's the evidence?

An April 2009 quote from then-ESDC CEO Marisa Lago, who said the project would last decades. Moreover, last September, Bruce Ratner contended the ten-year timeline was never supposed to be the actual schedule.

The filing takes aim at an unnamed expert report, that of KPMG:
If ESDC was able to find an 'expert' to opine that it was 'not unreasonable' to assume that the market could absorb the 8000 plus new units that the Project included [actually 6430], it was an opinion that ran counter to all the objective and reported data. Moreover, it was an opinion that did not purport to deal with the issue of whether a 10-year build-out could be financed given restrictive bank lending policies.
(I've written at length about the dubiousness of the KPMG analysis.)

The filing points out that the ESDC is trying to have it both ways, disclaiming the likelihood of a longer buildout while acknowledging that the 2009 renegotiations--buying the MTA site in stages, and at least two phases of condemnation, rather than one, both saving FCR cash flow--aimed to allow construction to proceed "notwithstanding the downturn in the real estate market."

The MTA agreement alone should have alerted the ESDC to the irrationality of continuing to use a ten-year buildout, but that was not in the interest of ESDC or FCR--and it could have threatened the latter's financing plans for the arena, since it had a 2009 deadline for the issuance of tax-exempt bonds, Butzel states.

What's the meaning of the outside date of 2035? The ESDC says "negotiated contractual deadlines are not synonymous with reasonably expected project completion dates." The petitioners say that, just as easily, the work could go on even longer.

SEQRA requires evaluation of duration as part of a reasonable worst-case scenario.

"The bottom line is that ESDC wanted to have it both ways and, as a result, overreached," Butzel contends. While it agreed to restructure the business deal, but it didn't want that new deal to delay the project:
The answer--to assert that the Project would still be completed in 10 years--was, on its face, the simplest choice, especially because the terms of the MTA Agreement and the MDA were not then public. But when those documents did become public, the staff could foresee themselves hoisted by their own petard. From that time on, all their efforts have been to conceal or dismiss the realities reflected in the terms set forth in those agreements.
The Technical Analysis provided in December, even if persuasive, cannot cure the failure to provide such an evaluation in 2009, he argues. And it's not legitimate, as it fails to consider the impact of construction over 25 years.

And while the Technical Analysis acknowledges "significant adverse neighborhood character impacts," it analyzes them separately--traffic, noise, neighborhood character--and says they'd be localized. There's no overall analysis, with no supporting studies or comparisons are offered.

Also, while the ESDC acknowledges temporary impacts, such as for the lack of open space, would extend longer, they could last 15 years longer than assumed in the FEIS. "It as if time has no bearing on the assessment of impacts," Butzel states, "But the law does not support such an approach."

(I wrote previously about how the ESDC and a judge have considered delayed benefits and extended impacts an example of the meaningless of time.)

Butzel cites several deficiencies in the Technical Analysis. It points to interim surface parking on Block 1129, between two blocks in the Prospect Heights Historic District and directly across the street from a residential area.

Demands on that lot have increased, given the abandonment of a plan for other interim parking lots, which has led to "stackers" to meet the demand. (See p. 49 of the Technical Analysis.) That will add to noise, but that was not analyzed, nor were any noise impacts of a surface parking lot.

Two interim surface parking lots assumed in the 2006 plan--both on Block 1120, between Atlantic, Sixth, and Carlton avenues, and Pacific Street, have been eliminated, presumably because certain properties have not been acquired. This change has not been explained or studied, Butzel says.

He cites a delay in underground parking for the arena and an extension of time for construction staging on Block 1129, the southeast block.

Pertz affidavit

Butzel points to an affidavit from Stuart Pertz, an architect and former member of the City Planning Commission, which targets the absence of a detailed plan or schedule regarding the 25-year construction effort.

That means sites used for staging are not identified and it's impossible to assess specific impacts of the elongated buildout.

Pertz notes that the FEIS considers the impact of the complete project, but not the additional 15 years of parking, temporary traffic diversion and extension of disruption. He states the project likely will change:
Without a plan that says what will be built and when, it is impossible to assess with any semblance of accuracy, what specifically the impact would be.
Atlantic Yards, he notes, could increase road usage, overwhelm the community with "temporary" parking, and delay or impede essential mitigation.

Memorandum of Law

The legal argument, according to a BrooklynSpeaks Memorandum of Law, is that a court must determine whether an agency identified the relevant areas of environmental concern, took a "hard look" at potential impacts, and made a "reasoned elaboration" of the basis for its determination.

Justice Friedman previously looked askance at the third factor, given the contradiction between the Development Agreement and the Modified General Project Plan, or MGPP.

While the ESDC tried to explain how a ten-year buildout would be rational, BrooklynSpeaks argues that, with the confluence of factors--including the Lago statement, the MTA payment schedule, and the Development Agreement--"there should be no reasonable doubt" that the ESDC knew it would take longer.

But this would have required an SEIS, which the ESDC and FCR didn't want to conduct.

What to do? If the court agrees that there's no "reasoned elaboration," it should annul the approval and direct ESDC to reconsider its approval only after it has identified the impacts of a 25-year buildout and made a rational decision on whether to prepare an SEIS.

Beyond that, even if the ESDC had a basis to think that the ten-year schedule might be met, it in 2009 still should have evaluated a 25-year buildout as a reasonable worst-case scenario, given the MTA agreement and the Development Agreement.

Even if 2010 Technical Analysis is deemed adequate, it can't cure the failure of the ESDC board to have had such an evaluation of a 25-year buildout when it approved the MGPP in 2009, BrooklynSpeaks argues.

The ESDC "has acted in doubtful good faith," given the failure to promptly disclose the terms of the MTA agreement, bring the Development Agreement to the Court's attention, and the response, last month, that "is patently contradicted by the facts."

"ESDC's attitude that it can pretty much do what it wants has not escaped the notice of the courts," the memo states, pointing to previous Friedman decisions as well as a scathing commentary by Justice James Catterson of the Appellate Division in a decision (later reversed) involving the Columbia University expansion.

What's the remedy?

The petitioners want the MGPP to be annulled. Should further work be stayed? Yes, because the work is proceeding under an illegal and invalid approval.

And Forest City Ratner is building the arena only because the ESDC failed to disclose the Development Agreement, which led to Friedman's 3/10/10 decision and allowed the developer to draw down from escrow the proceeds of the bond sale, the memo states.

(A footnote acknowledges that it's murky, that Friedman could have ruled against the ESDC but fashioned a remedy that still allowed the bond sale.)

Without a stay, construction will continue, causing irreparable injury to community members and petitioner organizations.

Unclean hands

As for the balancing of equities, while Forest City has already invested a lot into the arena and construction is in full swing, any injury to them by reason of a stay "would be self-created."

Nor do the ESDC nor FCR come to the court with "clean hands and thus should not be heard to complain of injuries that they are in part responsible for creating."

While an injunction against all continuing work would be appropriate, the petitioners allow that the injunction could be stayed to allow continued work on the arena, but all other work, including efforts to convert Block 1129 to a parking lot, should be enjoined until there's compliance.

(The ESDC and FCR say it's all of a piece; indeed, you can't have the arena without the parking lot.)

Despite the developer's investments, it's not too late to modify the project. And, the memo concludes:
Finally, given the efforts of ESDC and FCRC to conceal their awareness that completion of the Project [in] 10 years was not possible (or not realistic), they do not come to the Court with clean hands and thus should not be heard to complain of injuries that they are in part responsible for creating.
The response: FCR

Forest City Ratner, in its answer, denies most of the allegations in the supplemental petition. It says that many of the objections were raised previously, should have been filed earlier, or are outside the scope of the case.

FCR is now fairly vague about the benefits:
The Project also is anticipated to create several thousand new jobs and hundreds of millions of dollars of additional tax revenues for the State and the City.
Its language suggests somehow that commercial activity at the Barclays Center is of relatively limited importance:
In addition to serving as the home of the Nets, the arena will host amateur athletic events, circuses and other family shows, graduations and other civic, community-sponsored and entertainment events.
Note that a "family" show is a commercial event geared to families, that high-profile college hoops is "amateur," and there surely will be more concerts than graduations.

The filing repeats the boilerplate claim that the Community Benefits Agreement is "historic" and contains "carefully articulated commitments to the local communities."

Impact attenuated

FCR argues that an extended build-out is not a worst-case scenario because it would entail less simultaneous construction activities at any time. While there was an examination of "neighborhood character" under state law, there's no category called "fabric of the neighborhood," language used by the petitioners.

Contrary to the petitioners' contention, there was no need to consider a 25-year construction schedule, "because there is no intention to build the Project over 25 years," FCR asserts. Beyond that, the impacts of the parking lot on noise "have been adequately studied."

Responding to some specific concerns, FCR notes that circuses attract smaller crowds than basketball games, "the worst-case scenario of arena use," and multiple daily performances will occur "on only a handful of occasions."

No construction staging would occur on public streets.

There'd be no loss of parking, FCR states The arena would be accommodated by 1100 spaces on Block 1129 and off-site public parking. When Buildings 2, 3, and 4 on the arena block and Site 5 would be constructed, 400 spaces would be added at the later, and 250 on the arena block.

If necessary, 103 or more additional surface parking spaces would be found on Block 1120. This implies that most of the spaces originally expected on that block would not be built, at least initially.

ESDC answer

The ESDC notes that it retained a construction consulting firm to scrutinize FCR's revised 10-year construction schedule "to determine its feasibility from a constructability perspective," and said the answer was yes.

(That, of course, is a narrow, technical analysis.)

The ESDC noted that the 2009 Technical Memorandum included a "Delayed Schedule Analysis," which found that a longer period of time--15 years, until 2024--would reduce the intensity of construction activity and thus impacts in quantitative terms but not result in new significant impacts.

Also, in 2009, the ESDC board members had the KPMG report and an an abstract of project leases, which indicated a 25-year lease for parcels in Phase 2.

The ESDC notes that the construction staging area, upon completion of the arena, would be moved to the northeast corner of Block 1129, the intersection of Pacific Street (now closed) and Vanderbilt Avenue, thus away from residences on Dean Street and Carlton Avenue in the other direction.

Response to charges

As for the petitioners' charges that neighborhood impacts were addressed on an isolated, localized basis, the ESDC says the study areas used met or exceeded those recommended in the City's CEQR Technical Manual--and additional modeling was done regarding air quality and noise. The impact of the surface parking lot was studied, the ESDC says.

The ESDC notes that it provided a seven-stage construction outline, and it's not feasible to "provide a more 'firm' schedule for this or any similar multi-building project that cannot be financed upfront."

No parking shortfall is anticipated, and part of Block 1120 remains available for surface parking.

As for the Pertz affidavit, the ESDC says he "provides no basis for his apparent contention that the far smaller interim surface parking lot on Block 1120 would generate more traffic than the much larger parking lot on Block 1129 in the permanent condition."

The only remaining issue, according to the ESDC, "is whether ESDC's findings of December 16, 2010, made in response to the Remand Order, were arbitrary and capricious"--a high bar.

The Memoranda of Law

ESDC, in its memorandum of law, says it did make the two findings Friedman required, and that it did not limit its analysis to a ten-year schedule in 2009, as it examined the impact of a delay to 2024, agreeing it would not warrant an SEIS.

The standard of review, the ESDC notes, is deferential to the agency--only something "arbitrary, capricious, or unsupported by the evidence" can be rejected.

Beyond Forest City's obligation to use commercially reasonable efforts to complete the project in ten years, various agreements aim to facilitate construction at a commercially reasonable pace, including streamlined design review procedures, the memorandum states.

Beyond the penalties--up to $10,000 per day but potentially only $1000--the developer has an incentive to pursue the project because undeveloped land does not earn substantial return:
Petitioners disregard the details of the agreements, making no mention of the "commercially reasonable effort" provisions of the Development Agreement, the two-tiered obligations of FCRC in building out the Project, the streamlined process for advancing the Project design, or any other aspect of the agreements.
Yes, acknowledges the ESDC, market conditions were down in 2009:
But a market downturn in 2009 does not establish that ESDC erred in its assessment of long-term market conditions through 2019, which relied upon such broad demographic factors as the expected increase in Brooklyn's population during that time frame and the Borough's tight housing market.
(Emphasis in original)

News accounts, the ESDC states, are not admissible in this proceeding, as the court has said, nor do the "purported statements" address the ESDC's analytical efforts.

As for the worst-case scenario, "petitioners focus myopically on the duration of construction," while ESDC "reasonably and correctly balanced other factors such as the intensity and scope of construction activities."

The new 2010 Technical Analysis confirms the previous conclusion, in the 2009 Technical Memorandum, that a delay in construction would not warrant preparation of an SEIS.

The petitioners, according to the ESDC, fail to acknowledge the "exhaustive analysis" in the FEIS nor "make the slightest mention" of the delayed buildout (of 15 years) described in the 2009 Technical Memorandum.

As to the charge that ESDC "addressed neighborhood impacts on an isolated, localized basis," the agency responds that "Petitioners' claim confuses the conclusion of the analysis with some artificial limitation on its scope."

The memo states:
It is self-evident that the impacts of such a development plan--which would resemble the steady progress of the successful Times Square, Riverside South, and Battery Park City projects--are a far cry from those that may have resulted from the "slash and burn" methods employed in construction the Cross-Bronx or Gowanus Expressways more than a half-century ago.
No hearing was required before the ESDC made its findings, the ESDC says.

Stay should be denied

While the ESDC argues that the proceedings should be dismissed, if the court does hold that ESDC violated SEQRA (State Environmental Quality Review Act), it should allow construction to proceed during any further environmental review.

There's a high threshold to issue an injunction, and continued work on the project does not harm petitioners concerned by delay in the project, the ESDC argues. Moreover, the project elements currently under construction would not be the subject of any SEIS:
Whatever the merits of this dispute, there is no caselaw of which ESDC is aware in which a court stopped construction of a major public or private project because of the potential for a delay in the construction of certain project elements.
Moreover, petitioners did not ask for an injunction between March and November of 2010, a sign that they did not feel substantial injury, the ESDC argues.

Forest City Ratner Memorandum of Law

FCR notes that, while the Court in November "was not satisfied that the record demonstrated that ESDC had fully complied with its obligations under SEQRA, it also was not persuaded that ESDC was required to prepare an SEIS."

It is "preposterous," Forest City contends, to argue that ESDC knew when it approved the 2009 MGPP in September 2009 that the project would not be completed in ten years, as it was not behind schedule as it is now.

And it's possible that market conditions will allow the project to get done in only a little more than ten years, and less than the 15-year buildout the ESDC looked at in 2009 Technical Memorandum, FCR suggests.

Regarding criticisms of the ESDC's 2010 Technical Analysis, FCR points out, for example, that there's no explanation why views of a parking lot on Block 1129, which would have screening and landscaping, would be any worse than "views of deteriorated old buildings showing indicia of blight."

Construction staging will not be located on public streets, the memo states. Beyond Block 1129, staging areas for other buildings would be on the building sites themselves, as well as on the west end of Block 1128, at Sixth Avenue between Dean and Pacific streets.

As for the Pertz affidavit, criticism of delays in mitigation measures, argues FCR, are a half-truth, because the need for certain mitigation, such as schools, open space, and road improvements, also would be delayed in the event of a 25-year buildout.

As for an injunction, the injury to the developers "would be so severe in comparison to the alleged harm," FCR states:
Hundreds of millions of dollars (including about $231 million in public funds) already have been spent in furtherance of the Project, and FCRC has made contractual commitments to spend hundreds of millions of additional dollars. As described in the Gilmartin affidavit, an injunction would cause FCRC severe financial injury, and it also would put hundreds of innocent unionized construction workers out of work.
The amicus

I wrote how the Downtown Brooklyn Partnership , with individual affidavits from representatives of Long Island University and the Brooklyn Academy of Music, asked to intervene in the case, urging that the court not stay the project.

BrooklynSpeaks reply memorandum

In a reply memorandum of law, the petitioners contend that "ESDC bet on a long shot," continuing to maintain that the project could be built in ten years despite the collapse of both the residential and commercial real estate market:
The respondents, however, continue to contend that their 10-year bet was not a loser. In this regard, they acknowledge that the 10-year build-out is not going to happen. But they insist that the results of the race are irrelevant, insist that they placed their bet on a rational basis and contend that the finish line order should be disregarded. In this, we submit, ESDC and FCRC are beating a dead horse.
The petitioners say the ESDC and Forest City misinterpreted the court's order. They analyzed how the MDA (Master Development Agreement) affected the ten-year timetable, and said it didn't.

But the court wanted the ESDC to analyze how the MDA and the MTA agreement "bore on the continuing validity of the timetable," given that the decision to analyze construction impacts on the basis of a ten-year buildout was made before they were finalized.

The memo states:
The heart of the respondents' arguments is that the completion dates do not necessarily represent that dates when different elements of the Project may be finished--they could be completed in advance of those dates. The Petitioners agree that this is possible--but no more possible than that the Project and its elements will be completed after those dates. Just as a "for instance," the three projects that ESDC cites in a different context--42nd Street, Riverside South and Battery Park City--remain unfinished after 26 years, 30 years, and 40 years, respectively.
Incentives for completion

The memo notes that Forest City "pressed not only for a 25-year period" for completion, but also sought to save on cash flow by deferring $80 million in payments to the MTA for the Vanderbilt Yard.

Also, while KPMG based its opinion on the timetable on the strong demand for affordable housing, the latter is to be integrated with market-rate housing, for which financing had already collapsed by mid-2009.

Moreover, the Development Agreement makes the obligation to construct affordable housing on the ability to obtain government subsidies, which is hardly guaranteed.

While the ESDC says the failure to impose significant penalties on Phase 2 construction is because FCR's self-interest would push it to move forward, "To us, this seems a poor substitute for specified penalties imposed in the public's interest."

Moreover, the failure to have evaluated the impacts of a longer construction schedule in 2009 could not be cured by the 2010 Technical Analysis. Thus the MGPP should be evaluated anew.

Construction of the Cross-Bronx and Gowanus expressways also proceeded incrementally, the reply states, though it does not address whether a more apt comparison is another real estate project.

There's no proof of the qualifications of the persons who wrote the Technical Analysis, the response states. And the delay in the open space is not made meaningless because project housing is delayed, since open space was also supposed to serve the surrounding community.

As for construction staging, the Technical Analysis ignores the plans for Buildings 1 through (Site) 5 around the arena block, "when the work is likely to spill into the streets," given the burdens on Block 1129 to accommodate worker parking, Arena parking, police parking and more.

While the 2006 FEIS recognized that outdoor crowds could create a noise problem, it said "people attending events would not be expected to congregate in any significant numbers on Dean Street or other relatively quiet streets"--an assertion now belied by plans for surface parking on Block 1129 across from residential buildings.

(According to a footnote, the 2010 Technical Analysis, on p. 44, states that the 1100 parking spaces on Block 1129 would "accommodate parking demand from the arena and other Project buildings," an apparent effort to add a new use that has not been analyzed.)

Moreover, staging on the north side of Block 1129 would still be only 100 feet from residences.

Would surface parking be less impactful than many more underground parking spaces? The ESDC's dismissal of concerns ignores the visible noise of surface parking, that it could last 15 years instead of four years, and than it could accommodate two or more shifts on a day.

As for the claim that the circus would not be a worst-case scenario, because it attracts fewer people than a basketball game, the circus regularly fills Madison Square Garden, according to the memo.

"Doubtful good faith" and a stay request

The conclusion:
In this case, we believe that ESDC acted in doubtful good faith in adhering to a 10-year buildout when it evaluated construction impacts in the 2009 Technical Memorandum, and it compounded that behavior by failing to disclose the terms of the MDA when the case was first argued to the Court. Indeed, it continues to press the same story even now, after it has become apparent and has been acknowledged that a 10-year schedule cannot be met. ESDC is unrepentant in its denials and unjustified in its adhering to an unjustifiable position.
Arguing again for a stay, the petitioners make two arguments:
As a first thought, the petitioners submit that ESDC and FCRC should not be rewarded for having concealed the terms of the MDA until after the bond proceeds were released and that a proper remedy would be to enjoin them from continuing the construction that the proceeds are financing until there is compliance with SEQRA. But there is another interest to be served. That is the interest in preserving the rule of law. Whatever public benefits the respondents may claim will derive from the Project--and the petitioners have a quite different view on that score--those benefits should not be conferred as the result of a ruse or on the basis of illegal action. We live in a society in which the ends are generally thought not to justify the means unless the means themselves are in conformity with the law. If the Court concludes that there has not been conformity in this case, to allow the work set in motion by the illegality to continue would, the petitioners submit, serve to undercut, rather than validate, the rule of law.

The petitioners recognize that because the Arena is already well advanced, it may well be inevitable that one day it will be completed. The petitioners lost their chance to stop Arena construction when the bond proceeds were released and work on the Arena was allowed to proceed unimpeded. But that simply reinforces the importance of halting construction for the time being. There is little chance a stay will stop work for any great length of time. It will, however, send a message that the law is there for a purpose and that it is not to be subverted by attempts to conceal.
The affidavits

As I wrote earlier, three experts back the BrooklynSpeaks filing with affidavits In his affidavit, Ron Shiffman, professor of urban planning at Pratt Institute, argues that it's "an obvious omission" for the state to have bypassed city environmental review guidelines to offer an interim build year for projects whose duration is expected to be greater than ten years.

He adds:
Economic uncertainty may have prompted the developer to renegotiate the project delivery schedule, but an equally appropriate response by the ESDC should have been to consider the opportunity to subdivide the property in the project footprint and bid out development to others in order to reduce completion risk.
He cites delays in the Atlantic Terminal Urban Renewal Area (ATURA), which overlaps the AY site:
The outcome of the "planner's blight" introduced with the demolition of the Atlantic Terminal area was to extend deteriorating conditions south of the area now part of the Atlantic Yards footprint. Manufacturing businesses closed, and investment in residential buildings lagged, creating the justification for the finding of blight that allowed Atlantic Yards to condemn property through the use of eminent domain.
James Goldstein, Senior Fellow and Director of the Sustainable Communities program at Tellus Institute, a nonprofit research and policy organization in Boston, in his affidavit, points to the impact of delays in three projects, two in the Boston area, one in New London, CT:
The recent cases of Filene’s One Franklin development, Harvard’s Allston Initiative, and New London’s Fort Trumbull project all highlight the quantifiable and qualitative costs that arise in the course of unanticipated project delays. They invite a much more deliberate reconsideration of expectations about project costs and benefits once a delay occurs and, as in the case of One Franklin, demand a much more thorough analysis of the unanticipated impacts that inevitably arise from those delays.
The state and Forest City Ratner, I'll note, have not revised their cost-benefit estimates.

Majora Carter, the former executive director of Sustainable South Bronx and the current President of the Majora Carter Group, in her affidavit, challenges the ESDC’s argument about the non-impact of 15 more years of construction:
This conclusion is not just counterintuitive. It reflects a national trend in land use policy that prioritizes the interests of private developers over the sustainability of vibrant communities.
She contrasts the city's plan for Melrose Commons in the Bronx, originally devised without public input but then substantially revised with such input, with Atlantic Yards:
Although the Atlantic Yards developer has executed a so-called "community benefits agreement" with organizations responsible for providing services related to jobs and housing, that is not a substitute for a meaningful dialogue with community stakeholders on the design and implementation of the project.
DDDB response

DDDB filed a seven-page response, as well as joining in and supporting the reply papers submitted by the petitioners in the companion case.

The memo states:
Respondents continue to engage in contortions of logic to push this project forward and to avoid the careful and honest consideration that is required to assure that ESDC complies with its obligation under SEQRA...

ESDC's blind determination to hold to the 2019 completion date continues to flout the clear provisions of the Development Agreement as well as the provisions of the revised agreement with the MTA...

Respondents' arguments consist entirely of the claim that FCRC has invested considerable funds to date and has a financial interest in completing the project as fast as possible considering market conditions. ESDC also argues that the various agreements are designed to "facilitate" construction at a reasonable pace.

However, what is striking is the total absence of any information whatsoever from FCRC attesting [to] the financial viability of the project and its projections of when and how it will finance its completion.

...As noted in detail in the original petition and supporting papers, there are opportunities for FCRC to abandon Phase II without any financial penalties to the MTA and cut its losses on the project. There is no evidence that the December 2010 ESDC findings ever considered that possibility.
Need for more public process

As for the need for an SEIS, DDDB contrasts this case to one known as Riverkeeper, wherein the government agency undertook years of review:
Here a rationale was written to justify a predetermined outcome and meet deadlines to obtain financing. The 2010 Technical Memorandum was not even made available for public review and comment before the ESDC voted to approve it on December 16th.
Nor did any ESDC board member have questions. Nor did any staff person respond to public comments.

Just as in 2009, a new technical analysis should have triggered another public hearing, DDDB says.

Verified Supplemental Petition, Friedman case January 2011

Pertz Affidavit, Friedman case January 2011

Notice of Supplemental Petition, Friedman case January 2011
Memo of Law, Friedman case January 2011

Al Butzel Affirmation and Exhibits, Friedman case January 2011


FCR Answer in Friedman Supplemental Case

FCR Answer/2 in Friedman Supplemental Case

FCR Memorandum of Law in Friedman Supplemental Case

ESDC Answer to Supplemental Petition PHNDC Proceeding Feb 18, 2011

ESDC Memorandum of Law in Friedman Supplemental Case

Karmel Affirmation in Friedman Supplemental Case

BrooklynSpeaks Reply to Esdc Response

Ron Shiffman Affidavit, Friedman Case

James Goldstein Affidavit, Friedman Case

Majora Carter Affidavit, Friedman Case


DDDB Reply Brief in Friedman Case, 3/3/11

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