ESDC, Forest City to appeal state court judge's ruling that requires Supplemental Environmental Impact Statement; legislators had asked state to comply with decision

Does the impact of extended Atlantic Yards construction, which could last 25 years, need to be studied further?

No, say the Empire State Development Corporation (ESDC) and Forest City Ratner. They're appealing two decisions made by state Supreme Court Justice Marcy Friedman--strong criticisms of the state's processes--leading to 7/13/11 ruling and order that the ESDC conduct further environmental review, including a Supplemental Environmental Impact Statement (SEIS).

[Update: the state agency, even though it is appealing, will still conduct an SEIS.]

The defense argument, as described further below, is that it was "rational in all respects, and adequately supported by the record" for the state to assume a ten-year buildout and to assume that no significant adverse environmental impacts had not already been analyzed.

The question for the appellate court is whether, indeed, it was "rational"--not clear and convincing but simply "rational." That's a very low bar for a state agency to meet in an environmental review proceeding, which is why Friedman's rulings against the state were unusual.

The petitioners

The petitioners--in two combined cases--include civic groups organized by BrooklynSpeaks and Develop Don't Destroy Brooklyn (DDDB), as well as several individuals and local elected officials. The appeal decision was announced yesterday by BrooklynSpeaks, which in recent months has taken more of a leading role in the litigation.

Said Gib Veconi of the Prospect Heights Neighborhood Development Council, a member of BrooklynSpeaks:

The 2009 Atlantic Yards plan may have been negotiated under the previous administration, but the July court decision makes it Governor Cuomo’s problem now. We expected the Governor to follow through on his promises to reform State government, turn around delayed development at Atlantic Yards, and make this project work for Brooklyn and for New York State. Instead, it looks like he’s willing to continue to run interference for Forest City Ratner, and keep the community and its elected representatives tied up in court while Brooklynites wait for jobs and housing.

Note that the petitioners in this case, though they have supported what they consider better plans for jobs and housing at the Atlantic Yards site, have been primarily concerned about the impact of the project on the immediate communities.

Legislators had requested compliance

In letters posted yesterday by BrooklynSpeaks, local legislators who are plaintiffs in the case had unsuccessfully urged Kenneth Adams, President and CEO of the ESDC (aka Empire State Development) not to appeal the deicision.

One letter came from Assemblymembers Hakeem Jeffries and Joan Millman, and state Senators Velmanette Montgomery and Eric Adams. They wrote 8/12/11:

More than seven years have passed since Atlantic Yards’ announcement, and almost five years have passed since its original plan was approved. In that time, we have seen the promises of affordable housing and local jobs move nearly a generation into the future. Phase 1 of the 2009 MGPP is already more than a year behind schedule. The neighborhoods surrounding the project have experienced well-documented health and quality of life issues from project construction, and we remain concerned about even greater impacts from the following :

• changes to the arena design that diminish or remove mitigations described in the FEIS which were intended to lessen the impact of siting an arena in a residential neighborhood;
• the delay of more than a decade in creating open space planned for the project’s second phase; the space will instead be used for a surface parking lot that will increase traffic impacts, negatively effect air quality and decrease quality of life in the surrounding neighborhoods;
• the developer’s commitment to build only a fraction of the affordable housing originally promised for the site, resulting in the construction of only slightly more units of affordable housing than have been displaced;
• a net negative economic impact for the taxpayers of New York State and New York City resulting from an Atlantic Yards Arena ; and
• a significant delay in the decking of the Vanderbilt rail yards, raising the likelihood that the project will fail to realize its goals of connecting Fort Greene, Prospect Heights, Boerum Hill and Park Slope and removing the blighting influence of the rail yards.

We therefore call on ESDC to accept the court’s order, and take immediate action to comply with it in good faith. We strongly urge you to take this opportunity to accelerate the delivery of promised public benefits, and to involve local communities and their elected officials to plan changes that reduce the impacts of extended Atlantic Yards construction.

Note that the state would surely dispute those contentions, arguing that the project, including the affordable housing commitments, will eventually get done. Still, the surface parking lot and arena design changes are clear.

(The New York City Independent Budget Office said the arena would be a direct loss to the city, not the state, but it would be a loss to the state were opportunity costs--foregone gains--calculated.)

Wrote Assemblyman Jim Brennan, who chairs the Committee on Corporations, Authorities, and Commissions (and thus oversees the ESDC), in a 7/15/11 letter:

I believe that it is in the interest of the whole Brooklyn community to comply with Judge Friedman’s order to proceed with a Supplemental Environmental Impact Statement “assessing the environmental impacts of delay in Phase II construction” pursuant to the law as spelled out in the State Environmental Quality Review Act.

Case history

The case already has had a tangled history. The suit was filed 11/19/09, challenging the ESDC's 9/17/09 approval of a Modified General Project Plan (MGPP) that revised a 2006 MGPP. Notably, the 2009 MGPP allowed for condemnation of the project site in stages, rather than all at once, thus saving Forest City significant cash flow.

Friedman, after hearing oral arguments 1/19/10, rejected the petition on 3/10/10, a day before the arena groundbreaking. In that decision, Friedman criticized the ESDC’s “deplorable lack of transparency” and acknowledged that the ESDC’s use of a ten-year timeframe for the project buildout in the Modified General Project Plan (MGPP) was supported “only minimally.”

In that case, the main ammunition against the decade-long promise was an agreement with the MTA that allows 22 years to pay for Vanderbilt Yard development rights.

However, there was much more reason for skepticism. The Development Agreement, signed in late December 2009, was not released until January 25, about three weeks after ESDC spokeswoman Elizabeth Mitchell told me the documents would be made available.

Friedman did not allow it to be entered into the record for the case. It showed a clear contradiction with the professed time frame.

Reopening the case

So, both sets of petitioners asked Friedman to reopen the case, which she did, acknowledging a misapprehension--though not quite a mistake on her part--about the Development Agreement.

In an 11/9/10 decision, 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, though it still could appeal that ruling, responded in December by issuing findings that said no such SEIS was needed, arguing that the Development Agreement and the MTA agreement did not have a material effect on whether it was reasonable to use an assumed ten-year buildout, and an extended buildout would not result in any significant new adverse environmental impacts not previously identified and studied.

The petitioners disagreed. Friedman heard oral arguments in the latest phase of the case on 3/15/11.

In her July 2011 ruling, Friedman pointed to the contrast between a requirement that the developer use "commercially reasonable" efforts and a Development Agreement that allows 25 years:

In short, ESDC’s invocation of the commercially reasonable effort provision rings hollow in the face of the specific deadlines in the Development Agreement – discussed at length in the November 9, 2010 decision and not disputed by ESDC on the remand – which clearly contemplate a schedule for construction of the post-arena phase of the Project that may not see even one Phase II building “initiated” until 2020, that does not require commencement of the construction of the platform on which 6 of the 11 Phase II buildings will be built until 2025, and that may extend beyond the purported 2019 build date for 16 years, until 2035.

The court accordingly finds that ESDC’s use of the 10 year build date in approving the 2009 MGPP lacked a rational basis and was arbitrary and capricious. In so holding, the court recognizes, as the Appellate Division held in a prior litigation involving the Atlantic Yards Project, that a mere inaccuracy in the build date will not invalidate the basic data used in the agency’s environmental assessment... However, as the Court also held, ESDC’s choice of the build year is not immune to judicial review but, rather, is subject to review under the rational basis or arbitrary and capricious standard that is applicable to judicial scrutiny of any agency action in an Article 78 proceeding. In the instant case, ESDC’s continuing use of the 10 year build date was not merely inaccurate; it lacked a rational basis, given the major change in deadlines reflected in the MTA and Development Agreements.

Friedman found that the ESDC's December 2010 Technical Analysis "does not undertake a meaningful assessment of the impacts of the potentially vastly extended period of construction on the various areas of environmental concern," such as traffic, noise, and safety.

She wrote:

The conclusion in the Technical Analysis that an extended delay to 2035 would not have significant adverse environmental impacts that were not addressed in the FEIS is, in turn, based on the repeated assertions that the delay in the build-out would result in prolonged but less “intense” construction, and that most environmental impacts are driven by intensity rather than duration.

The Technical Analysis, which was prepared with marked speed in the month after the remand, does not support these findings with any technical studies on the effects of significantly prolonged construction on various areas of environmental concern. Rather, it appears to take the position that it is a matter of common sense that less intense construction will result in lower impacts for conditions such as traffic, noise, and air quality.

Even assuming arguendo that ESDC’s common sense assumption is correct, under established standards for environmental impact analysis, the duration of construction activities is a factor that is required to be taken into account in assessing the impacts on both environmental conditions such as traffic, noise, and air quality, which are amenable to quantitative analysis, and conditions such as neighborhood character, open space, and socioeconomic conditions, which are largely subject to qualitative analysis.

FCR's pre-argument papers

I have seen Forest City Ratner's pre-argument legal papers, not those from the ESDC, though I presume they make similar points. (They will be followed by full exchange of legal briefs and, ultimately, argument before an appellate court.) FCR states:

Under SEQRA [State Environmental Review Quality Act] and controlling precedent, it is within the discretion of an agency to determine whether to prepare an SEIS. There is no requirement under SEQRA to guarantee a build year or construction period. An SEIS may be required if an approval that changes a project has significant adverse environmental impacts that were not adequately addressed in the final environmental impact statement. The Supreme Court erroneously disregarded these principles.

Here, there were no significant changes to the Project. ESDC determined in September 2009 that it was reasonable to use an assumed 10-year build-out as the basis for its environmental analysis and that no SEIS was necessary. This position was rational in all respects, and adequately supported by the record. Neither the terms of the Development Agreement nor the MTA agreement compelled a contrary view. Under both the 2009 MGPP and the Development Agreement, FCRC was obligated to use commercially reasonable efforts to complete both phases of the Project by 2019.

In response to the remand order, ESDC again determined in December 2010, based on a thorough Technical Analysis, that no significant adverse environmental impacts that had not already been analyzed in the final EIS and a 2009 Technical Memorandum would result from an extended build out to 2035. This position was rational in all respects, and supported by the record. The Supreme Court erroneously substituted its judgment for that of the agency by concluding that ESDC did not take a hard look at the purported extended period of construction of Phase II of the Project on various areas of environmental concern. Neither petitioners nor the Court identified an adverse impacts that need to be studied in an SEIS.

In a pre-argument statement filed in response to Friedman's November 2010 ruling and dated 2/18/11, FCR added this:

The Development Agreement thus explicitly provides that FCRC "agrees to use commercially reasonable efforts to cause the substantial completion of the Project to occur by December 31, 2019," and provides for liquidated damages and other remedies at equity and law. The Development Agreement further provides that none of the other provisions in the Development Agreement trumps FCRC's obligation to use commercially reasonable efforts to complete the Project within that time frame. The Supreme Court erroneously found that these provisions did not evidence such a commitment by FCRC.

Jeffries Letter to Adams 81211

Brennan Letter to Adams 71511