Court Opinion

ID: 9823779
Source: CourtListenerOpinion
Date Created: 2023-09-01 10:11:29.085346+00
Date Added: 2024-06-11T07:39:27.066861
License: Public Domain

Saxe, J.
(dissenting). New York City is in the throes of a long-standing crisis in affordable housing, due in part to high demand, high construction costs and soaring real estate values Csee generally Office of the New York City Comptroller, The Growing Gap: New York City’s Affordability Challenge [Apr. 2014] [The Growing Gap], http://comptroller.nyc.gov/wp-content/uploads/documents/Growing_Gap.pdf [accessed Mar. 8, 2016]). The City Charter assigns to the New York City Department of Housing Preservation and Development (HPD) the task of spearheading the City’s efforts in combating that crisis with the creation and preservation of affordable housing in New York City. The City Council’s enactment of the challenged *218local law constitutes unacceptable injurious and mischievous parochial interference with HPD’s broad oversight of the construction of affordable housing as mandated by the State.
The City Council enacted Local Law No. 44 (2012) of City of New York in 2012 in an effort to control and restrict HPD in this regard. I agree with the position of the City of New York and HPD, to the effect that Local Law 44 improperly contravenes the state legislature’s specific statutory delegations of responsibility to HPD, restricting the manner in which the agency exercises its delegated authority, and should be invalidated on that ground.
The local law adds to title 26 of the Administrative Code of the City of New York a new chapter 10, entitled “Housing Development Project Reporting Requirements.” While the majority characterizes the law as “relating] to the disclosure on a public website of information regarding [HPD’s] ‘affordable housing’ projects,” that “disclosure” is not its sole purpose, and, indeed, is not the aspect of the law with which the City and HPD take issue. Three of its provisions are reporting requirements: two require HPD to report on its website its “prequalified” and “disqualified” lists1 (Administrative Code § 26-902) and its housing development projects (Administrative Code § 26-903);2 another requires developers to report wage information (Administrative Code § 26-904). However, in addition to those reporting requirements, a fourth provision affirmatively directs that certain contractors and subcontractors be deemed ineligible to be included on the prequalified list of contractors and subcontractors. Specifically, Administrative *219Code § 26-905 directs that “any contractor or subcontractor who fails to provide wage reporting information in accordance with section 26-904 of this chapter shall be ineligible to be included on a prequalified list of contractors and subcontractors” (§ 26-905 [a]), and that “any contractor or subcontractor with a history of construction conditions/3 as determined by the department, shall be ineligible to be included on a prequali-fied list of contractors and subcontractors” (§ 26-905 [b]).
The City Council says it was prompted to enact Local Law 44 in reaction to (1) a perceived lack of transparency in HPD’s operations regarding the construction of affordable housing, (2) a City Council investigation finding construction defects on city-supported projects, (3) U.S. Labor Department findings that contractors working under HPD supervision had been violating various rules and regulations, and (4) federal indictments of an HPD assistant commissioner and some developers in connection with a bribery and kickback scheme. Plaintiffs counter that the City Council’s true purpose was to benefit construction trade unions, at the expense of small businesses that compete with union shops for contracts on affordable housing construction projects.
Plaintiffs, a trade association for New York’s affordable housing industry, and contractors or subcontractors that have worked on affordable housing projects, brought this action to challenge Local Law 44. First, they contend that Local Law 44 violates the Due Process Clause under the “stigma plus” rule (see Matter of Lee TT. v Dowling, 87 NY2d 699, 708 [1996]), by requiring HPD to not only publish on the Internet complaints about contractors’ work — without regard to the merit of those *220complaints — but also to debar contractors with a “history” of such complaints from working on affordable housing projects, all without any provision for notice or opportunity to be heard. They also argue that it violates the Equal Protection Clause by making its dictates applicable only to contractors whose annual revenue is $2.5 million or more, or to contractors whose corporate (but not individual) principal owner or officer “conducts or participates . . . in . . . the affairs of” more than one contractor or subcontractor, in which case the annual revenues of such contractors must be aggregated to determine whether the local law’s dictates are applicable to them (Administrative Code § 26-901 [d]). Finally, plaintiffs’ complaint asserts that Local Law 44 is preempted by the state statutes, contending that the law improperly imposes conditions not imposed by state law, and improperly compels HPD to exercise its authority where state law leaves that exercise of authority to HPD’s discretion.
The City Council moved pursuant to CPLR 3211 (a) (7) to dismiss the complaint; New York City and HPD, although nominally defendants, opposed the motion, arguing that Local Law 44 is preempted by the Private Housing Finance Law and the General Municipal Law. Plaintiffs cross-moved pursuant to CPLR 3212 for summary judgment declaring Local Law 44 invalid.
The motion court granted the City Council’s motion to dismiss the complaint (2014 NY Slip Op 32504[U] [2014]), and the majority now affirms. I disagree. While I do not agree with plaintiffs’ due process and equal protection arguments, in my view the conflict preemption argument made by the City and HPD is correct. I would therefore reverse the motion court’s dismissal of this action and declare that Local Law 44 is invalid.
“Municipalities generally have the authority to adopt local laws to the extent that they are not inconsistent with either the State Constitution or any general law” (Eric M. Berman, P.C.v City of New York, 25 NY3d 684, 690 [2015], citing DJL Rest. Corp. v City of New York, 96 NY2d 91, 94 [2001], NY Const, art IX, § 2 [c] [ii], and Municipal Home Rule Law § 10 [1]). “A local law will be preempted either where there is a direct conflict with a state statute (conflict preemption) or where the legislature has indicated its intent to occupy the particular field (field preemption)” (Eric M. Berman, P.C. at 690 [emphasis added]).
*221The City Council suggests that there can be no problem with conflict preemption where the local law avoids a “head-on collision” with state law. But, the avoidance of a “head-on collision” with state law is not the test. While Matter of Lansdown Entertainment Corp. v New York City Dept. of Consumer Affairs (74 NY2d 761 [1989]) found such a “head-on collision” between the challenged local law and state statutes at issue there, it did not hold that such a “collision” was required to find conflict preemption. Indeed, as the Court observed in Lans-down Entertainment, preemption “does not turn on semantics,” but on the true consequences of the local legislation (id. at 764).
Cases establish that where a local law frustrates the operation of state law, the local law must give way. Here, for a variety of reasons, Local Law 44 operates to interfere with and frustrate the operation of applicable state laws. For example, a local law requiring final approval by the New York City Council for the operation of a commuter van service was invalidated on the ground that state law required the City to designate an agency to perform that function, and the Taxi and Limousine Commission had been so designated (see Ricketts v City of New York, 281 AD2d 245 [1st Dept 2001], appeal dismissed 96 NY2d 897 [2001]; Giuliani v Council of City of N.Y., 181 Misc 2d 830 [Sup Ct, NY County 1999]). Similarly, in Mayor of City of N.Y. v Council of City of N.Y. (235 AD2d 230 [1st Dept 1997], lv denied 89 NY2d 815 [1997]), this Court held a local law invalid because it in effect gave the City Council an authority to appoint officers, conflicting with the City Charter provision granting the Mayor exclusive authority to make such appointments.
The New York City Charter assigns to HPD the mandate of preserving and creating affordable housing in New York City (see NY City Charter § 1802). To accomplish that task, the state' statutory scheme, contained in General Municipal Law articles 15 and 16 and Private Housing Finance Law articles 8, 8-A, 15 and 22, has equipped HPD with a variety of tools, including tax incentives, loans, and the sale of city property at below-market rates to developers who will construct affordable housing. That legislative scheme provides the framework for accomplishing such construction. It does not merely put HPD in charge of directing the use of federal, state, and municipal financial assistance for these projects in New York City (although those tasks are among HPD’s responsibilities); the *222statutory framework generally names HPD as supervisory agency (see Private Housing Finance Law §§ 2 [15]; 572 [14]; 801 [1]; 1151 [9]; General Municipal Law § 692 [4]). Looked at as a whole, the state statutes vest HPD with broad authority over the creation, rehabilitation, maintenance, and improvement of affordable housing (see NY City Charter § 1802).
There are certain specified powers that the state statutory scheme delegates to others, so HPD cannot be said to have been given exclusive authority. Certain powers are delegated to the Mayor, such as the authority to approve the terms and conditions of any urban renewal plan (see General Municipal Law art 15), and that of approving sales or leases pursuant to General Municipal Law articles 15 and 16 (see General Municipal Law §§ 507 [2] [d]; 695 [2] [a]; [4]). The City Council is also given certain specified responsibilities, such as designating urban renewal or Urban Development Action Area Program (UDAAP) areas (see General Municipal Law §§ 504, 693, 697), and approving urban renewal projects as a matter of land use (General Municipal Law § 696; Private Housing Finance Law § 577). As those provisions illustrate, when the statutory scheme contemplates the assignment of authority to the City Council, it is clearly stated (see e.g. General Municipal Law § 694 [5]; Private Housing Finance Law § 452 [2]). But, the overall legislative scheme makes HPD ultimately responsible for arranging for the creation of affordable housing, including the selection of developers to work on projects. In this respect, the legislature did not delegate coextensive authority to the City Council.
As HPD explains, it has the ultimate responsibility to prudently use taxpayer funds while simultaneously obtaining quality work from the entities performing the construction work on those projects. In doing so, it must compete with the private sector to attract qualified and reliable contractors and subcontractors that are willing to submit bids and perform work on affordable housing projects. As each project is negotiated by HPD, both as to its scope, its financing and its construction participants, HPD must determine what burdens and conditions can realistically be imposed on the developers and contractors without putting the success of the project at risk. It is critical to HPD’s ability to perform its assigned tasks that it retains discretion and flexibility in making those arrangements.
As the City and HPD point out, Local Law 44 conflicts with the general grant of broad supervisory authority given to HPD *223by the statutory scheme over the construction of affordable housing in New York City. The state statutes put HPD in charge of making the necessary arrangements and negotiations for the creation of affordable housing. Local Law 44 contravenes that authority by imposing additional terms and conditions on the means by which HPD goes about accomplishing its task.
The City Council protests that Local Law 44 is, essentially, merely a disclosure statute, requiring developers to report wages paid to workers on city-supported projects, and HPD to provide information about the scope, location and participants in publicly-funded development projects, and to report complaints made about companies paid with public funds. But, in fact, Local Law 44 is not limited to imposing some additional reporting requirements. The enactment also requires that, in some circumstances, the reported information be used in determining who may or may not be hired.
Not only does the local law improperly interfere with HPD’s authority under the City Charter and the statutory scheme, but the wage-reporting provisions of Local Law 44 would operate largely to impose additional costs, regulatory burdens and red tape on the responsible and law-abiding businesses and entities partnering with HPD, while very likely failing to unmask those who misclassify or underpay workers. Nor can its reporting requirements be dismissed as merely tracking the requirements of the Labor Law. For example, a contractor who assigns a worker to an HPD project for part of the week and a non-HPD project for the rest of the week will need to track that worker’s dates of work, hours, pay, deductions, and allowances separately for HPD projects and non-HPD projects; this goes well beyond what the Labor Law requires (see Labor Law §§ 195 [3]; 661). Essentially, application of those reporting requiréments of the challenged local law will force HPD to require its construction partners to undertake new and burdensome reporting arrangements.
As HPD acknowledges, legitimate and serious complaints are a consequence when the work of a municipal organization is of this magnitude. But, the facts that such problems arise, or are reported in the media, does not change the statutory framework for the creation of affordable housing, and does not authorize the City Council to usurp HPD’s role in confronting and addressing such problems. Furthermore, the pending criminal indictments reflect that to the extent any individuals *224involved in the process engage in criminality, the present criminal justice system is capable of discerning and handling them.
The Council’s effort to exercise local legislative authority over the terms of participation in state housing programs cannot be squared with the state legislature’s delegation of authority to HPD.
Renwick, J.P., and Richter, JJ., concur; Saxe, J., dissents in a separate opinion.
Order, Supreme Court, New York County, entered on or about September 29, 2014, modified, on the law, to declare Local Law 44 constitutional, and, as so modified, affirmed, without costs.

. “ ‘Prequalified list’ means a list that identifies entities that are prequalified to be selected as developers and that was compiled, modified or used by the department to select developers within the immediately preceding five-year period; provided, however that the term ‘prequalified list’ shall also include a list of entities that the department compiles and makes available to developers to assist in the selection of contractors and subcontractors to perform project work” (Administrative Code § 26-901 Efl).
“ ‘Disqualified list’ means a list that identifies entities that are precluded by the department from being selected as developers where ‘disqualified’ shall mean debarred, suspended or otherwise prohibited for any length of time. Such term shall also include a list of entities that are ineligible to be included on a list of prequalified contractors or subcontractors” (Administrative Code § 26-901 [g]).

. The city appellants do not challenge the provision of the local law requiring HPD to report information about its own activities.

. “ ‘Construction condition’ means:
“(1) a violation of the New York city construction codes issued to a housing development project, a developer or a covered contractor of such housing development project, during the project work or within a five-year period following the completion of such project;
“(2) a complaint related to the construction quality of a housing development project received by the department during the project work or within a five-year period following the completion of such project;
“(3) a determination by the department, during the project work or within a five-year period following completion of such project, that the construction quality of a housing development project does not comply with applicable law or does not conform to 'customary standards for construction in the city of New York” (Administrative Code § 26-901 [b]).