Court Opinion

ID: 5767698
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:26:11.607052+00
Date Added: 2024-06-11T08:41:41.947767
License: Public Domain

Catterson, J.,
concurs in a separate memorandum as follows: Because I believe that the Urban Development Corporation Act (UDCA) (L 1968, ch 174, § 1, as amended) (McKinney’s Uncons Laws of NY § 6251 et seq.) is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are. “underutilized,” I write separately. I recognize that longstanding and substantial precedent requires a high level of deference to the Empire State Development Corporation’s (hereinafter referred to as ESDC) finding of blight. Reluctantly, therefore I am compelled to accept the majority’s conclusion that there is sufficient evidence of “blight” in the record under this standard of review. 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.
The Atlantic Yards Arena Redevelopment Project (hereinafter referred to as the Project) covers 22 acres in the Prospect Heights neighborhood of Brooklyn. Defendant Forest City Ratner Companies, LLC (hereinafter referred to as FCRC) is the developer of the Project, the largest single-developer project in New York City history. Five of the eight city blocks encompassed by the Project are within the Atlantic Terminal Urban Renewal Area (hereinafter referred to as the ATURA), including eight acres owned by the Metropolitan Transportation Authority (MTA) (hereinafter referred to as Vanderbilt Yards) for use as a below-grade rail yard. The remaining three blocks, 1127, 1128 and 1129, comprise almost 40% of the Project footprint and are not included within the ATURA (hereinafter referred to as non-ATURA). These three blocks are privately-owned contiguous blocks located on the south side of Pacific Street, directly across from the Vanderbilt Yards.
FCRC purchased large portions of these blocks over the past several years. Now, codefendant ESDC, a quasi-governmental *327organization, has labeled the whole area “blighted” and intends taking the lots not owned by FCRC by eminent domain.
In 1968, the ATURA was established by the City of New York to facilitate the redevelopment of an admittedly blighted area of Prospect Heights in Brooklyn. The redevelopment plan for this area has undergone several revisions, the most recent in 2004. In all of those years, the ATURA area has only been expanded once. Several redevelopment projects have been undertaken within the ATURA since its inception and the Vanderbilt Yards are the primary portion of the ATURA that remain undeveloped.
In December 2003, Mayor Bloomberg, FCRC’s principal, Bruce Ratner, and other notables publicly announced that the New Jersey Nets professional basketball team would be purchased by Ratner and moved to Brooklyn to a new arena proposed as part of a multiuse development project.
Progress through the various bureaucratic processes was facilitated by the State through ESDC, a nonelected, quasi-public corporation. The first memorialization of the cooperation between the entities was a memorandum of understanding executed on February 18, 2005 between New York City, the ESDC and FCRC. That same day, and without first issuing a request for proposals, the MTA entered into an agreement with FCRC giving FCRC rights to develop above the MTA’s Vanderbilt Yards. Three months later, the MTA belatedly issued a request for proposals (hereinafter referred to as RFP). Three months after that, the MTA accepted FCRC’s bid.
On September 16, 2005, just two days after the MTA’s acceptance of FCRC’s bid, the ESDC designated itself as the lead agency for the Project under the State Environmental Quality Review Act (hereinafter referred to as SEQRA) and noted for the first time that this project was intended to cure “blight” in the privately owned non-ATURA blocks at issue. Over the next year or so, FCRC and related entities purchased many properties in the Project area. These FCRC properties remained largely vacant as the ESDC conducted the scoping process required under SEQRA. This included an economic impact statement and a “blight study.” The documents necessary to these studies were prepared either directly by or with the close assistance of AKRF, Inc. (hereinafter referred to as AKRF), its perennial environmental consultant.1
On March 31, 2006, the final scoping document was released *328by the ESDC. By May, FCRC and its subsidiaries had acquired a majority of the properties in the three non-ATURA blocks in the Project area. AKRF’s “blight study” was completed, signed by ESDC, and published with the general project plan (hereinafter referred to as the plan) on July 18, 2006. Six days later, on July 24, the plan was released along with a draft environmental impact statement (hereinafter referred to as the DEIS). Among the 3,000-plus pages, there was a notice of public hearing to be held on August 23, 2006 and a notice that the ESDC would accept written comments until September 22, 2006.
The public hearing held on August 23, 2006, drew a crowd of hundreds of local residents. Many were denied access due to overcrowding. The hearing ran three hours overtime, and subsequently two community forums were held on September 12 and 18, 2006.
Despite substantial adverse public response to the findings reported in the DEIS and the plan, a final environmental impact statement (hereinafter referred to as the FEIS) was accepted by the ESDC’s Board of Directors on November 15, 2006. Within days, however, it was discovered that the FEIS had erroneously omitted all of the written comments submitted by members of the community; under SEQRA these were required to be addressed.
A new DEIS was prepared and accepted by the ESDC Board on November 27, 2006. On December 8, 2006, AKRF provided the ESDC with a memorandum addressing the written comments received by the public on the blight study. Sparing not a minute for reflection, the ESDC reviewed the memorandum and approved its SEQRA findings and the plan that same day. On December 13, 2006, the MTA’s Board of Directors moved with equal alacrity and approved a “summary” of the SEQRA findings. On December 20, 2006, the New York Public Authorities Control Board also approved the Project.
On April 5, 2007, the petitioners commenced a CPLR article 78 proceeding and action for declaratory judgment by order to show cause, seeking a temporary and preliminary injunction of FCRC’s demolition and construction of the Project. On April 20, 2007, they were denied a temporary restraining order, and on January 11, 2008, the court below denied the motion for a preliminary injunction. In this article 78 proceeding, the petitioners challenge, inter alia, ESDC’s reliance on AKRF’s “blight *329study” to support a determination of blight in the non-ATURA blocks.
Judicial review of this administrative determination is limited to consideration of whether or not that determination is rationally supported. AKRF’s report must be viewed as a whole to determine whether ESDC had a rational basis for accepting the findings of blight; namely, whether the blight finding is supported by evidence of record. The UDCA circumscribes the power of the ESDC and limits ESDC to certain enumerated types of development projects. (Uncons Laws § 6253 (6) (a)-(c); § 6254 [UDCA § 3 (6) (a)-(c); § 4].) The ESDC, pursuant to the UDCA, classified the subject project as a land use improvement project, which is: “A plan or undertaking for the clearance, replanning, reconstruction and rehabilitation or a combination of these and other methods, of a substandard and insanitary area, and for recreational or other facilities incidental or appurtenant thereto, pursuant to and in accordance with article eighteen of the constitution and this act. The terms ‘clearance, replanning, reconstruction and rehabilitation’ shall include renewal, redevelopment, conservation, restoration or improvement or any combination thereof as well as the testing and reporting of methods and techniques for the arrest, prevention and elimination of slums and blight.” (§ 6253 [6] [c].)
The term “substandard or insanitary area” has a specific meaning under the UDCA: “a slum, blighted, deteriorated or deteriorating area, or an area which has a blighting influence on the surrounding area, whether residential, non-residential, commercial, industrial, vacant or land in highways, waterways, railway and subway tracks and yards, bridge and tunnel approaches and entrances, or other similar facilities.” (§ 6253 [12].)
Additionally, the ESDC must make a twofold determination: “That the area in which the project is to be located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area and tends to impair or arrest the sound growth and development of the municipality.” (Uncons Laws § 6260 [c] [1] [UDCA § 10 (c) (1)].)
There is no dispute that the MTA allowed the portion of the Project footprint which it owns, the Vanderbilt Yards, to deteriorate into a substandard, unsanitary, and blighted condition. Furthermore, there is no dispute the blight designation for that area was made decades before the Project was conceived. That portion of the Project area falls squarely within the bounds of the ATURA. However, the important question presented by this appeal is whether there is a rational view of the evidence *330which supports the ESDC’s determination, that the non-ATURA portion of the Project area—tax blocks 1127, 1128, and 1129, which lie south of Pacific Street—was “substandard or insanitary” under the UDCA.
In my view, any determination that these blocks were substandard or insanitary should properly be based on a snapshot of the conditions that prevailed at the time that the Project was announced by FCRC in 2003. Any blight study that does not reflect this temporal limitation would necessarily allow the mere announcement of the massive project to predetermine the outcome of the study. On this point, I believe that the petitioners argue persuasively that any proposed or intended development in these blocks such as the Project would curtail any other private development; and that no new development would occur on property that might be subject to the broad powers of condemnation as wielded by a coalition of the ESDC and FCRC.
The ESDC purported to set out the factors that its consultant AKRF should consider in its blight study. In its contract with AKRF, the ESDC stated that: “The characteristics of blight can include, but are not limited to: physical deficiencies (insanitary/ substandard building conditions, building/housing/fire code violations, site vacancy or underutilization), economic deficience (building vacancies, low rents, high rental turnovers) or other deficiencies (incompatible land uses, multiple ownerships that hamper assemblage of properties, traffic congestions, pollution). Taken together, these characteristics may demonstrate that the area under study is substandard, insanitary, or deteriorating.”
The contract also provided specific criteria and methodology to be used in preparation of the study:
“Using currently available data and information from ESDC and DCR and if necessary a supplemental survey, we will document and record patterns of ownership, utilization of the sites, land use, zoning, and physical conditions for the affected area. This work will also draw on information being gathered for the land use task being performed for the EIS effort, including maps and other graphical data.
“More specifically, the blight study will include the following tasks:
“A. Determine the study area for analysis of blight conditions and prepare and draft criteria that will be used as the basis for the blight study area, in consultation with state and city agencies, including ESDC and DCE
“B. Document blighted conditions, including the following:
*331“• Analyze residential and commercial rents on the project site and within the study areas;
“• Analyze assessed value trends on the project site, and compare to sample blocks with comparable uses in the study area, such as the Atlantic Center;
“• Describe residential and commercial vacancy trends;
“• Compare current economic activity on the project site, such as direct and indirect employment, with relevant surrounding sites;
“• Review New York City Police Department (NYPD) crime statistics for the affected area; and
“• Identify physical conditions, including New York City Department of Buildings (DOB) building code and other pertinent violations (e.g. New York City Fire Department, Department of Environmental Projection, etc.), and determine Certificate of Occupancy compliance on the project site.
“C. Identify/estimate the public benefit generated by the proposed project, including estimates of construction period and operating period, including direct and indirect employment, wages and salaries, and non-real estate taxes generated. This task assumes that an economic and fiscal impact analysis has been previously performed by AKRF for FCR Sports, LLC.”
The blight study, however, seamlessly combined the ATURA area with the three non-ATURA city blocks. The “executive summary” to the blight study, in a less than admirable sleight of hand, sets out the goals for the ATURA that were articulated in 2004. That study succinctly captures the respondents’ view of the entire project and this litigation. The summary begins with observations limited to the ATURA and the City’s most recent plan for the ATURA; the 10th amendment to a plan originally drafted in 1968:
“• Redevelop the Area in a comprehensive manner, removing blight and maximizing appropriate land use.
“• Remove or rehabilitate substandard and insanitary structures.
“• Remove impediments to land assemblage and orderly development.
*332“• Strengthen the tax base of the City by encouraging development and employment opportunities in the Area.
“• Provide new housing of high quality and/or rehabilitated housing of upgraded quality.
“• Provide appropriate community facilities, parks and recreational uses, retail shopping, public parking, and private parking.
“• Provide a stable environment with the Area which will not be a blighting influence on surrounding neighborhoods. ’ ’
Thus, AKRF was tasked with reconciling the goals of redevelopment with the actual conditions as they existed in both the ATURA and non-ATURA properties at the time the study was conducted.
In my view, the petitioners are correct in asserting that the blight study failed to comport with the majority of the specific criteria set out in AKRF’s contract. Furthermore, 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 announcement, is ludicrous on several levels.
Initially, it should be noted that ESDC offers no legal support for that claim other than the obvious point that ESDC is permitted by statute to revitalize blighted areas. Second, ESDC’s contract with AKRF as described above, clearly contemplated that AKRF would analyze both assessed value trends and current economic activity at the site and surrounding area. Finally, 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.
It is undisputed that the record contains several examples of redevelopment in this area that occurred prior to the announcement of the Project. In 2002, the Spalding Factory across from the Vanderbilt Yards was converted into 21 loft condominiums; Newswalk, a 137-unit luxury condominium building opened in the former Daily News printing plant; and the Atlantic Art Building opened with 31 luxury condominium units in 2003. *333Other developers in the area have also filed plans with the Buildings Department for conversion of space from industrial to housing. This rapid, private residential redevelopment of the area was commonly known and publicly reported in newspapers and periodicals. Even after the ESDC’s announcement of the Project, surrounding property values continued to climb with townhouses selling for as much as $1.5 million last year. Newswalk, whose market value is high whether through direct purchase or eminent domain, has been carved out of the Project’s plan.2
Were this redevelopment more expansive and pervasive in the non-ATURA area, the petitioners would carry the day. Unfortunately for that position, FCRC’s purchase of a significant portion of the non-ATURA area as well as many other dilapidated properties still held in private ownership and set out in the record supports, by the barest minimum, the agency’s determination of blight. It is clearly within the agency’s expertise to consider the effect of FCRC’s conscious decision to allow its properties located within the non-ATURA area to lay fallow.
While I deplore the destruction of the neighborhood in this fashion, I cannot say, as a matter of law, that the ESDC did not have sufficient evidence of record to find “blight.” [See 2008 NY Slip Op 30104(U).]

. It should be noted that AKRF and the ESDC were recently criticized by this Court for their failure to maintain a relationship separate and distinct from the developer in another gargantuan project. (See Matter of Tuck-It-*328Away Assoc., L.P. v Empire State Dev. Corp., 54 AD3d 154 [2008, Catterson, J.].)

. Should ESDC be able to take the properties within the scope of the Project by eminent domain, the condominium units at the former Spalding Factory and the Atlantic Ant Building, located on the same block, will be demolished.