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Is "adoption" really "approval"? Looking more closely at ESDC board action in July 2006

In the Atlantic Yards chronology, the meaning of one action by the Empire State Development Corporation (ESDC) is a key to whether tax-exempt bonds for the project would be grandfathered in under new Internal Revenue Service (IRS) rules.

Last week, I (like others) concluded that the ESDC's vote to adopt the Atlantic Yards General Project Plan (GPP) at its 7/18/06 meeting likely constituted what the Treasury Department requires as "official action evidencing its preliminary approval of the project before October 19, 2006."

The issue may be more ambiguous. "Adoption" might also be seen merely as an agreement to release a "proposed" plan for public comment. On the other hand, "adoption" of a plan that receives no comment means it will go into effect, which does indicate approval.

(All emphases in text below are added.)

City/state argument

A May 8 letter to the IRS and Treasury Department from the ESDC and the New York City Industrial Development Authority (IDA), which clearly influenced the new regulations, stated:
On July 18, 2006, the ESDC Board approved the General Project Plan (the "GPP") for the Atlantic Yards Land Use Improvement and Civic Project. Adoption of a General Project Plan is ESDC's method of initially approving a project.

Then the letter switched to the word "approved":
We note that the GPP was approved prior to the IRS release of the Stadium PLRs [Private Letter Rulings, which enabled Yankee Stadium and the new Mets stadium] or the Proposed Regulations.

At the meeting

So what exactly happened at the meeting? I attended, and remember the board action as rather pro forma; the real action came afterward in a press conference, during which ESDC Chairman Charles Gargano answered questions not about the funding mechanism but the Draft Environmental Impact Statement and the process for ultimately project approval.

I asked ESDC for a copy of the meeting minutes (PDF), which totaled nine pages and consist mainly of resolutions rather than narrative. The minutes indicate that ESDC board members asked "several logistical questions" and that one wanted to make sure that the agency would use its condemnation powers for a public benefit. There was no apparent discussion of the plan to finance the arena, nor any indication that it was a novel strategy pending approval, in the case of the Yankees and Mets, by the IRS.

The ESDC's adoption vote was a prelude to another action: for purposes of the public hearing(s) required by Section 6 and Section 16 of the New York State Urban Development Corporation Act.... the proposed General Project Plan.
(Emphasis added)

Had the GPP been approved in preliminary fashion or had it simply been proposed? The vote was to approve a resolution that contained the "adoption" of the GPP for the purposes of a public hearing.

Looking at Section 16

Section 16 describes how the ESDC must file copies of the adopted GPP in local municipalities, how it must announce notice of the plan, and how it must announce a public hearing, It adds:
(c) the corporation shall conduct a public hearing pursuant to such notice, provided that such public hearing shall not take place before the adoption or the filing of such plan by the corporation;

In other words, the act of adoption may be akin to "filing," or on the continuum with it. Rather than a preliminary approval, it sounds like an administrative action.

Then again, other language in Section 16 buttresses the argument for preliminary approval: (d) upon a written finding of the chief executive officer of the corporation that no substantive negative testimony or comment has been received at such public hearing, such plan shall be effective at the conclusion of such hearing; provided, however, that if any substantive negative testimony or comment is received at such public hearing, the corporation may, after due consideration of such testimony and comment, affirm, modify or withdraw the plan in the manner provided for the initial filing of such plan in paragraph (a) of this subdivision.

If no negative testimony or comment is heard, the plan becomes effective, so no additional approval is needed.

Contrast

Executive Law § 807, regarding Local land use programs, uses "adoption" as similar to "enactment," rather than filing:
Upon approval, or approval subject to conditions by the agency, and upon valid enactment or adoption of such law or ordinance, the authority of the agency over such uses and facilities pursuant to sections eight hundred six and eight hundred nine of this article shall be vested in the local government,

Looking at the press release

In the 7/18/2006 press release regarding Atlantic Yards, the term "adopted" was used, but there was no mention of "approval":
Charles A. Gargano, Chairman of Empire State Development Corp., today announced the ESDC Board adopted the General Project Plan (GPP), made Land Use Improvement Project Findings and Civic Project Findings available, accepted the Draft Environmental Impact Statement (DEIS), and authorized a public hearing for the Atlantic Yards project in Brooklyn, NY.


The resolution noted that the ESDC found the DEIS "satisfactory." There is no mention in the resolution regarding the GPP that it was considered adequate or satisfactory.

ESDC statements

It's worth noting that the ESDC, in its public statements on similar projects, has used inconsistent language.

In a 4/5/2006 press release on the Javits Convention Center project, both words were used:
Empire State Development Chairman Charles A. Gargano announced today that the General Project Plan (GPP) for the redevelopment of the Jacob K. Javits Center has been adopted by the New York Convention Center Development Corporation (CCDC) and the Empire State Development Corporation (ESDC).

“Today’s approval marks another step forward in the redevelopment of the Jacob K. Javits Center,” CCDC Chairman Gargano said. “The new convention center will provide New York with the world-class, state-of-the-art facility our great city deserves, capable of hosting more conventions, exhibitions and trade shows...."


This year, regarding Columbia University's expansion plan, the 7/17/08 press release did not use the word "approved":
In adopting the General Project Plan, the ESDC board accepted the findings of a neighborhood conditions study conducted by the consulting firm AKRF Inc. and a comprehensive audit of that study by Earth Tech Inc. Both reports found that the area surrounding the project’s 17 buildings was mainly characterized by aging, poorly maintained and functionally obsolete industrial buildings, with little indication of recent reinvestment to revive their generally deteriorated conditions.

The word "accepted" may describe the essence of the board's action; it has neither the time nor expertise nor function to seriously analyze long reports prepared by specialized consultants.

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