Saturday, August 11, 2012

"The Case of the Brooklyn Basketball Arena" makes the Commercial Observer's list of "15 Most Fascinating New York Real Estate Cases"

The Commercial Observer, in its list of the 15 Most Fascinating New York Real Estate Cases of the 21st Century, offers The Case of the Brooklyn Basketball Arena:
To its opponents, Forest City Ratner’s controversial plan to build a basketball arena and 16 commercial and residential high-rise buildings above the former Atlantic Terminal rail yards had all the elements of a land grab, much like the ones orchestrated decades earlier by Robert Moses.
But with few exceptions, the cadre of judges who ruled on the case between 2003 and 2011 has thought differently, deciding that, besides seizing property from residents in Prospect Heights, the powerful Cleveland-based developer should go ahead with plans to build in one of Brooklyn’s most congested neighborhoods, bypass city land-review procedures and amend many of its original plans.
A group of rent stabilized tenants near the arena’s footprint and Develop Don’t Destroy Brooklyn, one of the most visible opponents of the project, filed approximately eight lawsuits over six years, charging the developer with a litany of accusations, including failing to provide an independent appraisal of the yards.
And while the opponents have claimed several small victories, the developer and its supporters have declared victory in nearly two dozen cases.
Despite the deluge of legal attacks, the Brooklyn Nets season opener is set to happen this fall. But even before that happens, Jay-Z, the hip-hop impresario and Brooklyn Nets investor, is set to perform at the Barclays Center later this month.
Small corrections

This gets complicated, so let me offer several smaller corrections and one larger one. The first ruling in the list of cases was in 2006, on a case challenging Forest City Ratner's demolition plans, as well as the state's use of a lawyer who formerly worked for the developer.

Jay-Z's first concert is Sept. 28, not "this month." And if there were "approximately eight lawsuits," how could there be "nearly two dozen cases"? (Maybe "rulings.") And the cases were filed not merely by rent-stabilized tenants and DDDB.

Yes, DDDB organized most of the cases, but the eminent domain cases involved individual plaintiffs, while the challenge to the environmental review, as well as the challenge to the MTA deal revision and the 2009 approval by the Empire State Development Corporation, involved numerous civic groups.

The latter case, in fact, was combined with another case filed by the BrooklynSpeaks coalition, involving more civic groups. And elected officials signed on to two of the cases.

A larger correction

Most importantly, the opponents (and others simply seeking accountability) didn't merely claim "small victories."

In three decisions, two of them community victories, state Supreme Court Justice Marcy Friedman criticized a failure of transparency by the Empire State Development Corporation (ESDC), the state agency overseeing the project, in failing to study the impacts of a potential 25-year project buildout.

First, in March 2010, Friedman upheld the ESDC, despite criticizing the agency's  "deplorable lack of transparency."

Then, November 2010, she cited "what appears to be yet another failure of transparency" and requested new findings.

Then, in July 2011, she concluded:
ESDC’s use of the 10 year build date in approving the 2009 MGPP [Modified General Project Plan] lacked a rational basis and was arbitrary and capricious.
The ESDC and Forest City Ratner appealed, only to be smacked down by the Appellate Division, which unanimously stated:
We agree with Supreme Court that ESDC's use of a 10-year build date under these circumstances lacks a rational basis and is arbitrary and capricious.
By the standards of the state court system, those rulings are significant, since the "rational basis" bar is a low one, and judges rarely intervene into agency decisions. The defendants, who didn't have an automatic appeal at the Court of Appeals, asked for leave to appeal, but were denied.

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