More than ten years later, a judge's decision recognizing developer's commitment to community use of the arena looks unwise
(An ownership group led by Forest City owned 55% of the arena operating company until 2016, when minority owner Mikhail Prokhorov bought the rest. The arena itself is owned nominally by the state to enable tax-exempt financing and exemption from property taxes.)
And that sent me back to the January 2008 decision, by state Supreme Court Justice Joan Madden, in the case challenging the project's environmental review. Denying the community challenge, she wrote:
Petitioners argue that the sports arena portion of the Project does not fall within this statutory definition of a “civic project,” since it will be a for-profit professional sports facility that is leased to a private entity and will have limited availability to civic or community groups.” In response, the ESDC [Empire State Development Corporation, the state authority overseeing/shepherding the project, now known as ESD] asserts that its finding that the Project qualifies as a “civic project” was made not solely on the basis of the arena, “but upon a rational assessment of the many recreational, cultural, educational and other civic benefits the Project will offer.” Specifically, the ESDC points to the “Civic Project Findings” in the GPP [General Project Plan] and the “civic benefits” identified in the FEIS [Final Environmental Impact Statement], which are summarized in its SEQRA [State Environmental Quality Review Act] Findings:Professional sports = "civic project"?
The arena will not only serve as a new home for the Nets, but will also provide a venue for other entertainment and cultural events including cultural gatherings, collegiate competitions, and graduations. The project sponsors [Forest City Ratner] have made a commitment to make available a minimum of ten events at the arena for use by community groups at a reasonable cost (generally the cost of operation).
Madden did not actually have to rule on the contention by the ESDC that the arena's role in "cultural gatherings, collegiate competitions, and graduations" made it a civic project under state law, because, she acknowledged, that wasn't a big deal compared to the "primary use of the arena by the Nets."(Today, at least for now, a judge would have to write, "by the Nets, Islanders, and major events like concerts.")
In determining the “civic project” issue, the court will focus on the question as presented by petitioners, i.e. whether an arena primarily intended for use by a professional basketball team and operated by a private profit-making entity, qualifies as a “civic project” within the meaning of the UDCA [Urban Development Corporation Act]. As to the civic benefits alleged by the ESDC and quoted above, the commitment as to those uses for ten events a year is de minimus [sic] when compared with the primary use of the arena by the Nets, and thus, does not impact on the determination of this issue.(Emphases added)
Getting to the "recreational" civic project
Madden's reasoning, as I wrote at the time, required schoolbook logic. She wrote:
The court must determine the meaning of the word “recreational” as used in the UDCA’s definition of “civic project,” which includes a project “designed and intended for the purpose of providing facilities for . . . recreational . . . purposes.”Of course, by that logic, a game like Shoot the Freak would also be recreational, as I wrote in 2008.
American Heritage Dictionary of the English Language... Webster’s New World Dictionary of the American Language defines “recreation” as “1. refreshment in body or mind, as after work, by some form of play, amusement, or relaxation 2. any form of play, amusement, or relaxation used for this purpose, as games, sports, hobbies, etc.” Applying this definition, the sports arena portion of the Project, which is primarily intended to serve as the home of the Nets basketball franchise, is a facility designed and intended for recreational purposes, as when sports fans attend a professional basketball game, like any other sporting event, they are engaged in a form of amusement, and the fact they enjoy the amusement offered by these events as spectators does not alter their recreational character.
But it's the "recreational" part, not the private enterprise part, that matters, as she wrote:
Petitioners argue that the arena does meet the UDCA definition of “civic project” since it will be leased to and operated by a private for-profit entity and will have limited availability to civic or community groups. Petitioners, however, acknowledge one of the UDCA’s purposes is, as discussed below, to encourage private participation in civic and other projects, and identify no language in the statute either restricting the type or amount of such private participation, or mandating a certain measure of community access to a privately operated facility. While petitioners rely on a separate law enacted in 1993, which created a “sports facilities assistance program,” NY Session Laws 1993, ch. 258, they point to no language in that law indicating an intent to narrow or amend the broad terms of the UDCA. As determined above, the arena is a facility designed and intended for “recreational purposes,” which falls squarely within the UDCA definition of “civic project.”What about the commitment to community events?
Madden did get to the issue of community use of the arena. She wrote:
For the reasons stated above, the ESDC was not irrational or unreasonable in designating the professional sports arena portion of the Project as a “civic project,” as such interpretation comports with the plain meaning of the UDCA. Notwithstanding this conclusion, the parties acknowledge that throughout this process, Forest City has emphasized its clear commitment to make the arena available, albeit on a limited basis, for community and cultural events. The court recognizes the importance of this commitment and that Forest City is bound to provide meaningful access to the community for use of the arena.The court was way overoptimistic, even foolish, it turns out.
Though that commitment was in the CBA, it was either nonbinding or not enforceable. As I wrote in January 2017, all evidence showed that the Community Events program never launched, despite plans to do so. (The executive who claimed it had launched is long gone.)
Madden's previous passage led to a footnote that must have seemed reassuring at the time:
Petitioners contend that the ESDC has not explained the extent to which or on what terms the arena will be made available to community groups. Citing to a report prepared by an outside accounting firm, KPMG, LLP, petitioners assert that the cost of using the arena will exceed $100,000, which includes a base rental of $62,000 and expenses of $41,000. Although not argued by petitioner, the court notes that the report states that this estimate appears to be “high.” Furthermore, it is unclear whether this is the rate that would be applicable to community groups. As indicated above, the “civic benefits” identified in the FEIS explicitly state the arena will be available for use by community groups “at a reasonable cost (generally the cost of operation).” While at this stage of the Project nothing definitive exists as to rental cost to community groups, respondents have made a clear commitment to make the arena available to community groups at a “reasonable cost.”Actually, and as proven in hindsight, the evidence of the clear commitment was pretty thin.