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BrooklynSpeaks and DDDB battle ESDC and FCR in inconclusive court hearing over AY timetable impacts; no stay issued; judge won't hear sanctions case

What was likely one of the last court hearings in a long skein of Atlantic Yards legal cases was an inconclusive but hard-fought affair yesterday afternoon in state Supreme Court in Manhattan.

A lawyer for the community coalition BrooklynSpeaks assailed a "cover up" by the Empire State Development Corporation (ESDC) over the legitimacy of the ESDC's response to a court order requiring it to explain why it didn't need issue a Supplementary Environmental Impact Statement to study the impact of a potential 25-year buildout.

In response, the ESDC and developer Forest City Ratner (FCR) forcefully defended themselves.

Supreme Court Justice Marcy Friedman, who in a hearing last June had evinced skepticism toward the ESDC--and issued a ruling in November partly backing community petitioners, requiring the ESDC to make new findings--asked relatively few questions.

The judge, whose default posture seems to be weary, wary skepticism, ultimately expressed some exasperation with both sides.

She heard a request for a stay on Atlantic Yards construction--a request with the provision that ongoing arena construction could continue--but did not indicate when she'd rule.

No hearing on sanctions motion

One thing was clear: Friedman was not about to devote time to
take seriously the unusual motion, filed by Develop Don't Destroy Brooklyn and by Brooklyn Speaks--and later withdrawn by the latter--for sanctions and lawyers' fees from the opposing side, for failure to produce the crucial Development Agreement last year in court.

Though that issue was the subject of some heated legal papers, Friedman said at the outset that she would not devote any oral argument time on it.
(That could mean she simply thought the briefs were sufficient.)

She announced she'd give each side 20 to 30 minutes for their arguments, but they each wound up taking about 45 minutes.

The setting

Unlike the spiffy hearing rooms of Brooklyn Supreme Court or the federal court, or the elegant Appellate Division and Court of Appeals, Manhattan Supreme Court, 60 Centre Street, is a workaday structure housed in a handsome shell.

Friedman's courtroom, with ceilings perhaps 30 feet tall, features wood paneling and essentially blank walls, with the words "In God We Trust" affixed on the wall behind the judge.

Spectators, including two ESDC officials (Arana Hankin and Rachel Shatz) and one from FCR (Jane Marshall), and several community residents/activists, sat in three rows, on worn wooden benches covered with black cushions. About 30 people were present, including those associated with Develop Don't Destroy Brooklyn and BrooklynSpeaks.

Under the benches were pockmarked black tiles; the area that included the lawyers' table and the court reporter featured worn, pepper and salt carpeting, affixed to the floor with some peeling black tape.

As always, it was not quite a fair fight. Al Butzel, attorney for BrooklynSpeaks, and Jeff Baker, attorney for Develop Don't Destroy Brooklyn, faced four attorneys representing the ESDC and FCR, with another nearby, representing the amicus Downtown Brooklyn Partnership, and several in the audience.

Still, at the outset, everyone looked a little tense; even if an agency like the ESDC gets deference from judges, the ESDC had already suffered a partial loss in court.

ESDC attorney Philip Karmel had brought with him not only the typical luggage-like documents briefcase, on wheels, but a black canvas container that looked like a double-wide garment bag. It would be opened later.

The petitioners' case

Butzel, whose clients include the Prospect Heights Neighborhood Development Council, three local elected officials, and other community groups and individuals, laid out the case: the ESDC, when it approved the Modified General Project Plan in September 2009, should have known that there was a likelihood the project could take 25 years, given the 22-year schedule for Forest City Ratner's acquisition of the MTA's Vanderbilt Yard.

But if it had ordered a Supplemental Environmental Impact Statement, that would have delayed approval beyond the end-of-year deadline to get crucial tax-exempt bonds issued.

"That's where we think the cover-up started," asserted Butzel, a wiry, gray-haired veteran of the Westway wars, whose delivery--swallowing some words at times--was such that the court reporter requested him to repeat himself.

While the ESDC continued to insist that a ten-year buildout was rational, their CEO, Marisa Lago, had publicly admitted earlier that year that Atlantic Yards would take "decades."

(The ESDC did not rebut this in oral argument, but said in legal papers that comments in newspapers, outside the record of the case, shouldn't apply.)

Housing market down

Moreover, Butzel said, the housing market had collapsed, and it was impossible to get financing.

The ESDC, he added, relied on a report from KPMG that said that, given the demand for affordable housing, among other things, it was rational to expect the project's 6430 units to be absorbed in a decade.

However, Butzel noted, affordable housing is tied to market-rate housing, for which financing was unavailable.

25 years?

The Development Agreement, which gave 25-year outside dates for the project, was described as irrelevant to the schedule and kept out of court last winter, only to become part of the record after Friedman initially upheld the ESDC and petitioners requested reargument.

In November, Friedman remanded the proceedings "to ESDC for 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 is required or warranted."

The ESDC, which still can appeal that ruling, responded by issuing findings that said no such SEIS was needed.

As Butzel explained, the ESDC issued a Technical Analysis and other documents saying it had been rational in 2009 to assume a ten-year buildout, though now it's clear that the project would take more than ten years, and that the reasonable worst-case scenario of impacts had already been studied.

Butzel asserted that Lago's statement alone should carry the day. "It's one thing for an agency to make a mistake," he said, but the ESDC was operating "in bad faith."

Long-term impacts

As for the ESDC's contention that a ten-year buildout is worse than 25 years, given attenuated impacts, Butzel asked, "where do they get that from? They pluck it out of the air." He asserted the ESDC's analysis missed the long-term impacts on adjoining neighborhoods.

He noted that the ESDC had scoffed at references to the long-term impact of road construction projects like the Cross-Bronx and Gowanus Expressways, so the petitioners had found several experts--including Ron Shiffman, James Goldstein, and Majora Carter--to detail the consequences of delayed construction schedules.

The surface parking lot on Block 1129, the southeast block of the project site, is surrounded on three sides by the Prospect Heights Historic District, he said. "It's going to impact people who live right there."

(The map below is courtesy of photographer Tracy Collins).

"We have come forward with experts," Butzel said. "They haven't identified any experts." While ubiquitous environmental consultant AKRF may have great writers, they "somehow have this expertise."

Under SEQRA [State Environmental Quality Review Act], the burden of bringing forward impacts lies with the agency, he said.

Other issues

Seeing his time limit loom, Butzel briefly addressed other issues. While the open space is supposed to be delivered in ten years, it will take at least 12 years. "They say it's just [a] temporary [impact]," he said, suggesting that there must be a point where "temporary" extends to significance.

Block 1129 was supposed to have surface parking for three years, but now it could be 12 years or more, he noted.

The ESDC's Technical Analysis describes staging for the arena, but not the rest of Phase 1, as it jumps directly to Phase 2, he said.

Stay requested

The court, he concluded, should invalidate the project approval and require the ESDC to issue an SEIS. And while a judge deciding on a stay must balance the equities of both sides, "My view is that they don't deserve any equity," he said.

"I dont think the rule of law was followed here," he concluded, with a touch of grievance. "It can only be vindicated by enjoining this project."

DDDB follow-up

DDDB attorney Jeff Baker got a brief follow-up, adding some new energy. While the ESDC continues to point to FCR's financial interest in getting the project done, given its carrying costs of property purchased, there's nothing in the record, he said, to confirm the developer's plans, nor did the KPMG report lay out cost parameters for the project.

As he did in December, Baker criticized the ESDC's failure to solicit public comment on the Technical Analysis the ESDC issued. And while comments were allowed at the board meeting, no one commenting had had a chance to read the document.

Friedman responded that she'd remanded the case to the ESDC for further findings, but did not order a hearing.

Baker replied that, once the ESDC did a new analysis, "it was incumbent on them to solicit public comment."

He added that the extended timetable also affected analysis of the "supposed benefits," including jobs, affordable housing, tax revenues, and neighborhood improvements. "They can't simply sweep it under the rug," he said.

A Kruger mention

He brought up the scandal that has tinged Forest City Ratner and executive Bruce Bender. "We know, from last week's indictment of Senator [Carl] Kruger, that Forest City Ratner has extraordinary access to decisionmakers." The public deserves access, as well, he said.

(Actually, Kruger was charged, but not via an indictment, which comes from a grand jury, but via a complaint from an FBI agent. Baker might also have mentioned that a tapped conversation between Kruger and FCR executive Bruce Bender showed that the developer was seeking $9 million from the state for its $14 million Carlton Avenue Bridge obligation, a sign that funds are tight.)

He closed by acknowledging that the arena might continue, but the rest of the project "should be stopped" until the ESDC takes a fresh look.

ESDC case

ESDC attorney Karmel, who speaks with a booming, sometimes grating voice, told Friedman that it should come as no surprise that he sees the case very differently.

The ESDC had approved the project in 2009 under a "certain analytic framework," and the court was concerned that the Development Agreement "might have been inconsistent with ESDC's analytic framework," he said, and requested a fresh look.

"We did a significant amount of due diligence," he said, investigating whether project buildings could be constructed in a decade, and looking at long-term trends, including population growth, a tight housing market, and a significant component of affordable housing.

At the same time, Karmel noted, the ESDC looked at a five-year delay and thus examined the impact of a 15-year buildout.

"Then we litigated that this case," he said, which began in the fall of 2009.

"It's certainly going to take more than ten years," he said of the project. While the petitioners' "fundamental premise" is that there's a need for an SEIS, the ESDC looked at impacts in various areas--traffic, noise, neighborhood character--before saying no.

"It's indisputable that this project is going to impact people," he said. "The question is whether it causes new significant adverse impacts."

Friedman interrupted to ask the qualifications of the authors of the Technical Analysis.

Karmel said ESDC relied on the two firms that worked on the original environmental impact statement: AKRF and Philip Habib Associates. "Both are well-known firms."

He said the petitioners argued that ESDC had not looked at the cumulative impacts of delay. "That's simply not true," he said, pointing to paragraph 115 of the ESDC's legal answer (embedded below; see p. 60 of the document).

(The difference seems to be a differing perspective on what cumulative delay means. The ESDC points to a "holistic consideration" of impacts such as urban design, traffic, and noise, while the petitioners say, for example, that the impact of the surface parking lot was not fully studied.)

As for the charge that a ten-year deadline was chosen as a reasonable worst-case scenario in an arbitrary way, he responded that such a timetable concentrates construction impacts.

Visual aids

Karmel told the judge he'd like to reference the site plan, and took out a large cardboard panel from that black carrying case. FCR attorney Jeffrey Braun held the panel steady as Karmel, facing the judge, pointed to various places.

He suggested that those on Dean Street near the arena would face the most impacts during construction of the arena and the two nearest buildings; "the duration of construction does not take 25 years."

Those at the Newswalk condo on Block 11128 are across the street from three building sites. "Clearly, construction on the block [across the street] is not going to take 25 years," he said. "It's going to take a number of years."

"All we heard was that they disagree with our conclusions, not why our reasoning" is wrong, he said.

"There was always going to be a surface parking lot," he said, calling it "a severely blighted area," citing the Blight Study in the record. (Of course, the Court of Appeals, backing eminent domain in late 2009, referred to "relatively mild conditions of urban blight."

Karmel took out a rendering of the parking lot, acknowledging that "the illustrations may have gone a little overboard with the happy people."

He noted that the parking lot must be screened, and there must be plantings; light will be directed downward.

(I couldn't actually see the rendering, but I believe it's the one at right, which was issued last December.)

While the surface parking lot can hold 1100 cars, ultimately that southeast block would hold 2070 underground spaces, meaning that traffic would be less during the time of the surface lot.

And that surface parking lot will not last 25 years at the maximum size, he said, because the first tower on Block 1129 must begin by 2010.

Cutting to the chase

As Karmel hit the half-hour mark, Friedman asked him to address why the 2010 Technical Analysis was sufficient "to cure any irrationalities in the prior analysis," even as she recognized he's not conceding such irrationalities.

"We believe that what we did… was reasonable," Karmel said, noting that the ESDC would seek a reversal of Friedman's prior opinion.

While the petitioners said there were "incurable defects,' that's not consistent with the court's prior opinion," he said.

In closing

As for the requested stay on construction, "the practical impacts would be catastrophic," both to the project and the surrounding area, Karmel said.

Delays do not trigger an SEIS, he said, concluding that "I categorically reject" allegations of bad faith.

FCR case

Forest City Ratner attorney Braun targeted Butzel's complaints about experts, noting that it's not customary to identify the individual writers of an environmental impact statement.

Raising his voice and essentially hectoring, Braun asserted that clients go to AKRF because they have great resources.

Every practitioner in this field, he said loudly, knows of AKRF. "They are the gold standard." AKRF has been hired by the city of New York to prepare the CEQR Technical Manual, he pointed out.

[NoLandGrab: Our favorite part? Forest City attorney Jeffrey Braun getting himself extolling the virtues of ubiquitous environmental impact consultant AKRF, calling them "rigorous" and the "gold standard" for such firms. Had we been able to cross-examine, we would have asked him, in all their rigor, how many times they've ever found a project had unacceptable impacts. If he could cite just one instance, we'd throw in the towel.

I'd remind people of the ESDC admission, at an oversight hearing held by state Senator Bill Perkins, that AKRF has never provided a determination that did not lead to a blight finding.]

Broadening the defense, annoying the judge

Braun went on to attack the petitioners' overall case, criticizing "a series of false assumptions."

Friedman interrupted, noting that, at the outset, Braun was to limit himself to the question of a stay. "I do have a jury waiting," she said, indicating she'd given the lawyers more time than initially promised.

Braun talked over the judge at times, and at one point registered his agreement with her.

"It's very nice of you to concede that," Friedman responded drily.

Braun quickly described the scope of work at the project site, including infrastructure work, a new transit connection, environmental remediation, nearly-complete demolition, and "building the arena, which is very far along."

To bolster the last point, he handed out copies of a photo of the arena taken earlier in the day.

As Braun began to talk about the Modified General Project Plan, Friedman interrupted to ask if there was anything not in the legal papers to which he wished to call attention.

He said no.


Butzel got a very brief rebuttal, insisting that "they still miss the point" about cumulative impacts.

Baker noted that the defendants did not respond to his criticism about the lack of any financial plan for construction.

Then, as Baker criticized the failure of the ESDC to take a hard look at impacts, Friedman interrupted and--though Baker had not gone so far as Braun--criticized both sides for hyperbole.

Baker closed by arguing that the request for a public hearing had been misinterpreted: "We are not saying SEQRA [State Environmental Quality Review Act] requires a hearing, it's the UDC [Urban Development Corporation] Act."

"Until the last five minutes," Friedman observed, it had been a very helpful oral argument.

She asked the lawyers to stick around briefly so the jury, which had been waiting elsewhere, could see there was a reason for the delay.

ESDC Answer to Supplemental Petition PHNDC Proceeding Feb 18, 2011


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