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In effort to appeal EIS case, plaintiffs charge "evidence of corruption" in ESDC's blight study

On the same day that developer Forest City Enterprises asserted in a press release that "only one material lawsuit" is pending in the Atlantic Yards case, project opponent Develop Don't Destroy Brooklyn (DDDB) announced that one other lawsuit may indeed be alive.

In an effort to reverse an appeals court’s February decision rejecting an appeal of a trial judge's dismissal of the case challenging the Atlantic Yards environmental review, DDDB and 25 co-plaintiff community and civic groups have asked (PDF) the Appellate Division, First Department, to allow the state’s highest court to review the decision, arguing that the blight study by Empire State Development Corporation (ESDC) did not contain simply errors or misjudgments but rather is associated with “evidence of corruption” and that a for-profit company should not be able to lease a publicly-owned arena for a dollar a year.

Decision said to be tainted

The ESDC, argue the appellants, was “purposefully disregarding the contrary economic conditions and development trends which it asked its own consultant, AKRF, to study; knowingly misrepresenting the effect of the Vanderbilt Rail Yards on the non-ATURA [Atlantic Terminal Urban Renewal Area] portion as impeding development, while the non-ATURA portion and adjacent areas were enjoying substantial, desirable private redevelopment and rapidly rising property values; and knowingly misrepresenting the crime rate in the non-ATURA portion as higher than surrounding areas, while its own data showed just the opposite.”

“Simply put, New York law requires ESDC to do more than simply throw out a number of purported justifications for its “blight” determination without regard to truth, accuracy, or logic, secure in the knowledge that as long as any one of its proffered justifications can be called ‘rational,’ its blight determination will not be disturbed by judicial review,” the petitioners argue.

Thus the “the court should find the agency’s ultimate determination irremediably tainted, regardless of whether a few of its proffered justifications might arguably be valid.”

While the four judges acknowledged that “our power to review the substantive adequacy of an EIS [Environmental Impact Statement] is extremely limited,” the petitioners argue that, in this case, “[i]t is not a question of the courts substituting their judgment for the agency’s; rather, it is matter of the courts requiring an agency to be truthful and unbiased in making its judgment.”

Appeal not automatic

The appeal, filed as an affirmation by attorney Jeff Baker, is not automatic, and the defendants in Develop Don't Destroy Brooklyn, et al., v. Urban Development Corporation dba Empire State Development Corporation, et al. almost certainly will oppose the case moving forward.

The ESDC has less than two weeks to respond, and the Appellate Division's decision on whether to move the appeal should come down within 60 days.

Should the appeal not be granted, the plaintiffs will then appeal directly to the Court of Appeals.

If both are denied, that would leave the eminent domain case as the only extant major case challenging Atlantic Yards. That case is very likely a win for the state, and, unless there’s a split decision guaranteeing an appeal, the plaintiffs would also request leave to appeal.

However, if the case does go to the Court of Appeals, that would push the timetable for briefing and argument to the fall, further delaying the developer's stated plans to break ground this year and open the arena in 2011.

From the concurrence, a need for new standards

James Catterson, one of the four judges on the panel, filed a concurring opinion that read like a dissent, and the petitioners relied significantly on this.

“As Justice Catterson of this Court noted in his concurring opinion, the obvious point raised by petitioners and dismissed by ESDC is that if the non-ATURA properties were in the midst of an economic revival, it would be counter to ESDC’s mandate to step in, stop all productive development, and, in partnership with a private enterprise, develop the neighborhood according to its own vision of urban utopia, complete with professional basketball for the masses,” the appeal states.

“Nevertheless, Justice Catterson felt compelled to join the majority in upholding ESDC’s findings and determinations regarding the Project, despite his belief that ESDC’s analysis did not provide a rational basis for its finding that the entire Project area is “blighted”, based on a perceived standard of review under which courts would be compelled to defer to ESDC’s findings and determinations as long as ESDC can provide any arguably plausible justification for them, regardless of how contrary they may be to the clearly stated purposes and plain language of ESDC’s enabling statutes and the environmental laws which ESDC is obliged to follow,” the appeal continues.

That, they say, is a reason for the Court of Appeals to step in and “determine the boundaries of judicial review of ESDC’s determinations.”

(DDDB's press release quotes Catterson's opinion: "However, I reject the majority's core reasoning, that a perfunctory ‘blight study’ performed years after the conception of a vast development project should serve as the rational basis for a determination that a neighborhood is indeed blighted.… ESDC's contention that as 'a matter of law,' ESDC could only look at conditions contemporaneous with the study, which was conducted years after the [project’s] announcement, is ludicrous on several levels.")

Standard of review

The appellants note that the court relied heavily on two cases that required it “to afford a high level of deference” to the ESDC’s decision. 

However, they argue, the two cases relied under section 51 of the General Municipal Law, for which redress is available only in case of fraud or illegality, whereas this is “an ‘Article 78' proceeding dealing with a situation wherein it might be claimed that public officials, although acting within their powers, are doing so in a way that is arbitrary or capricious.”

In this case, the ESDC, for example, neglected the market study it required its consultant, AKRF, to perform--the request for which was in an AKRF contract I discovered after filing a Freedom of Information Law request.

“[T]here is no dispute that ESDC contracted with AKRF for a study of the development trends in and around the Project area, even though it later chose to ignore development trends and denied that they are relevant to its blight determination. Nor is there any dispute that the non-ATURA blocks and surrounding areas were undergoing well documented, substantial, desirable residential redevelopment both before and after the announcement of the Project and ESDC’s blight study," the appeal states.

"The record in this case leaves no room for any reasonable doubt that ESDC knew very well that its claims that, without the Project, ‘significant new development’ of the non-ATURA area ‘is considered unlikely given the blighting influence of the rail yard and the predominance of low-density manufacturing zoning on the project site’, and that the non-ATURA area 'would remain blighted' without the project, were unsupported by any evidence, and were false when they made them." the petitioners contend.

(I had called the “no redevelopment without AY” claim one of the least credible statements in the environmental review.)

Economic conditions and development trends

The Urban Development Corporation Act, which established the parent agency of the ESDC, is supposed to address areas which are “slum or blighted, or which are becoming slum or blighted areas . . . all of which impair or arrest the sound growth if the area, community or municipality, and the state as a whole.”

The appeal cites Catterson’s observation that that ESDC’s conduct was “ludicrous”--and the appeal contends it was therefore not rational and thus should be overturned.

“Civic project”?

While a federal appellate court in the eminent domain case agreed that a sports arena may serve a “public purpose” under the U.S. Constitution, the plaintiffs, according to the appeal, can still challenge the arena as a “civic project” under state law, contending that the appeals court “nevertheless proceeded to conflate the two issues.”

While the Court of Appeals did allow that a sports arena operated privately for profit may still serve a “public purpose,” the petitioners acknowledge, the case at hand was based on a differing governing statute, while the UDCA limits the ESDC’s ability to lease an arena to government agencies, public corporations, or “any other entity which is carrying out a community, municipal, public service or other civic purpose.” 

And that, they say, should not mean a real estate develper with a dollar-a-year lease, who would get all profits from the arena, including naming rights and sponsorship deals.

They assert that it’s circular logic: “In effect, the court determined that the private, for-profit FCRC subsidiary to which ESDC would lease the Barclays Center Arena would be engaged in a ‘public service or other civic purpose’... merely because the Barclays Center Arena has already been designated a ‘civic project.’”

In conclusion

The appeal concludes, “By its Decision herein, this Court has clouded the “arbitrary and capricious” standard of review of ESDC’s determinations with the more deferential standard of a taxpayer action, and incorrectly conflated constitutional requirements applicable to condemnation issues with the specific statutory requirements of the UDCA and SEQRA [State Environmental Quality Review Act]."

"Appellants respectfully submit that the Court of Appeals should address and clarify these issues, by recognizing that the proper focus of the courts’ review of ESDC’s conduct and determinations herein is not simply public policy or what constitutes a ‘public purpose’ under constitutional standards, but, rather, whether ESDC was within its legislatively proscribed authority, and whether it acted arbitrarily and capriciously, when it decided to demolish and rebuild a thriving urban neighborhood without taking an unbiased, objective, and rational look at the evidence before it.”