Despite citing the ESDC's "deplorable lack of transparency," judge defers to agency in dismissing challenge to 2009 AY approval

Updated 7:30 pm with new statement from DDDB regarding its effort to reopen the case.

Just this morning, I wrote that it was unlikely that the major remaining Atlantic Yards lawsuit, that challenging the Empire State Development Corporation’s (ESDC) September 2009 approval of the 2009 Modified General Project Plan (MGPP), would be embraced by a judge, given the enormous deference courts give to agencies like the ESDC.

Indeed, Justice Marcy Friedman today dismissed (PDF) that challenge, in cases brought by two coalitions of community groups, but did so 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.”

As Develop Don’t Destroy Brooklyn noted, Friedman’s decision “ignores crucial development agreement documents that would prove otherwise, because the ESDC only released those documents after the legal record was closed”—in late January, I’d add, even though the documents were promised early in the month before the oral argument was to take place.

(According to the documents, the developer has 12 years to build Phase 1 and 25 years to build Phase 2.)

DDDB comment

Develop Don't Destroy Brooklyn said:

All experts (except for the one paid for by Forest City Ratner) agree that the project will take 20 years at minimum and documentation and agreements show the ESDC expects the project to take at least that long. Even the former ESDC chairwoman, Marisa Lago, said the project would take decades.

"It is a very sad day for this country, and especially New Yorkers, when a court recognizes that a government agency can make a decision that is completely bereft of transparency, defies the facts, is devoid of common sense and ignores the will of the people and yet the court claims it is powerless to do anything about it," said Develop Don't Destroy Brooklyn legal director Candace Carponter. "When the courts, the legislature and the governor won't hold unelected bureaucrats accountable for acting without reason or transparency, there is literally nowhere for citizens to turn."

"That is the legacy and hallmark of Atlantic Yards—a total failure of democracy."

DDDB said that it and its 19 community group co-plaintiffs would move to have the court reconsider the case, contending:

ESDC lied about requiring FCRC to use "commercially reasonable measures" to complete Atlantic Yards (all of it) by 2019. The Court relied upon that statement by the ESDC and the attorneys for ESDC and FCRC knew it was false.

The Development Agreement—which ESDC withheld until not just after the September, 2009 approval, but until January 2010 after the court argument—provides for Phase II by 2033 and no penalties or assurances.

I suspect, as has been said in court papers, that the term "commercially reasonable" does appear in the Development Agreement; the question is whether that's trumped by the other documents that give the developer a much longer leash.

BrooklynSpeaks response

BrooklynSpeaks, whose members filed a similar lawsuit that was combined with the DDDB suit, also cited Friedman's critical comments and pointed out the contradiction between the master closing documents and the timeline.

The statement said:

It is now clear that the project the agency has agreed to allow the developer to build will have significantly greater environmental impacts and drastically reduced public benefits when compared to those the ESDC had previously disclosed. This sad state of affairs is compounded by the fact that the only environmental impacts studied were those flowing from the 2006 Plan, and the very governmental entities charged with protecting the public from adverse environmental impacts have effectively agreed to look the other way with respect to fifteen additional years of construction.

For now, Atlantic Yards continues to stand alone as a State project with no formal oversight or meaningful public representation in decision-making. However, now that the definitive agreements between ESDC and Forest City Ratner have been made public, the BrooklynSpeaks petitioners are considering further legal options, including seeking reconsideration in light of the new documentation or an appeal. It is long past time that the special treatment enjoyed by this developer end, and Atlantic Yards is brought onto the same playing field as other large ESDC projects.

MTA deal

While the project as approved in 2006 was supposed to take a decade, a revision of the deal for the Metropolitan Transportation Authority’s Vanderbilt Yard gives Forest City Ratner 22 years to pay for the railyard—seemingly a sign that the developer, facing a gentle 6.5% interest rate, can take its time. But the ESDC said that there was nothing to stop FCR from doing it faster.

Friedman wrote:

Under the limited standard for SEQRA review, the court is constrained to hold that ESDC’s elaboration of its reasons for using the 10 year build-out and for not requiring an SEIS was not irrational as a matter of law. ESDC's continuing use of the 10 year build-out was supported—albeit, in this court’s opinion, only minimally—by the factors articulated by ESDC. ESDC did not, for reasons that are unexplained to this date, expressly state, in the documentation prepared in connection with its review of the 2009 plan, that the MTA agreement permitted FCRC to defer acquisition until 2030 of air rights necessary to complete construction of various buildings called for in Phase II of the Project. Contrary to petitioners’ contention, however, the documentation of ESDC’s review unquestionably demonstrates, as found above, that ESDC categorized the MTA agreement as a “major change” to the Project… and was aware of the MTA installment through 2030.

Under the circumstances, petitioners do not demonstrate that ESDC lacked a rational basis for its intent to require FCRC to make a separate commitment, notwithstanding the MTA agreement, to use commercially reasonable efforts to complete the Project within 10 years.

She added in a footnote:

Documentation of this commitment was not in existence at the time of ESDC’s June 23, 2009 approval of, and September 17, 2009 resolution affirming, the 2009 MGPP. To the extent that petitioners now claim that the documentation that was subsequently negotiated does not provide adequate guarantees that the Project will be built within the 10 year period, that issue is not before this court. Under long settled authority, a court reviewing an agency’s determination is confined to the facts and record adduced before the agency.

That means that the ESDC got away with claiming in court that a separate development agreement requires Forest City Ratner to "use commercially reasonable efforts... to complete the entire Project by 2019."

DDDB attorney Jeff Baker in court said the term "commercially reasonable" is so vague it's worthless. He called the ESDC action "a classic bait and switch."

Whether or not the development agreement was released, abstracts of the development leases released in September indicated that the developer would have 25 years to build the project.

The limited role of the court

Friedman wrote:

In conducting a SEQRA review, a court is precluded from making substantive judgments on the evidence or “evaluat[ing] de novo the data presented to the agency.” This court may not make any independent findings of fact or any independent determination on the impact of the changes in the plan for the Project and therefore may not, and does not, make its own evaluation of the effect of the MTA agreement on the buildout of the Project, the likelihood of the potential for delay as a result of the agreement, or the need for an SEIS; its role is restricted to determining whether ESDC had a rational basis for its determination.

Still, she was dismayed:

While the court cannot find that ESDC lacked any rational basis for its use of the 10 year build-out for the Project, the court cannot ignore the deplorable lack of transparency that characterized ESDC’s review of the 2009 MGPP. Although the MTA agreement was identified as a major change in ESDC’s staff’s June 23, 2009 and September 17, 2009 memoranda, these memoranda did not contain any explicit discussion of the impact of the installment schedule on the build-out of the Project. Neither ESDC’s Technical Memorandum nor its Summary and Responses to the public comments mentioned the MTA agreement by name. The MTA agreement was the elephant in the room. Although ESDC articulated reasons for its continued use of the 10-year buildout that are marginally sufficient to survive judicial scrutiny under the limited SEQRA standard of review, ESDC’s consideration of the modification of the plan lacked the candor that the public was entitled to expect, particularly in light of the scale of the Project and its impact on the community.

A political issue?

The judge concluded that the horse had already left the barn and that the issue was not one for the courts--a questionable conclusion.

She wrote:

Here , too, it is quite possible, as petitioners have done, to dispute ESDC’s assumption of a 10 year buildout for the Project to disapprove its failure to address more directly the impact of the MTA agreement on the completion of the Project, and to disagree strongly with ESDC’s decision, as a quasi-public agency, to permit construction to proceed on the arena without greater certainty that the surrounding Brooklyn neighborhoods will not be subjected to the deleterious, if not blighting, effects of significantly prolonged construction. As of the date petitioners field this current environmental challenge, however, the Project was already well underway: The Appellate Division of this Department had affirmed ESDC’s 2006 approval of the Project plan, and the Court of Appeals has recently declined to review the case. During this litigation, ESDC has expended or approve disbursements of $75 million of the $100 million State-appropriated monies for this Project, and has received $85 million of $100 million that the City has committed to the project. FCRC has expended over $350 million in acquiring properties for the Project and in demolishing over 30 vacant buildings on the site. FCRC has also already performed extensive work on the infrastructure of the Project (e.g., relocation of sewers and utilities) and on construction of temporary rail yard. At this late juncture, petitioners’ redress is a matter for the political will, and not for this court which is constrained, under the limited standard for SEQRA review, to reject petitioners’ challenge.

That’s an interesting argument, because it could just as easily have been said that large sums of money had been spent and disbursed when Forest City Ratner went back to the ESDC and the MTA to revise the agreements.