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BUSINESS AND RESIDENTS ALLIANCE OF EAST HARLEM v. MARTINEZ

June 11, 2004.

BUSINESS AND RESIDENTS ALLIANCE OF EAST HARLEM, an unincorporated association, RAYMOND PLUMEY, P.C., THOMAS DONAVAN, JOHN KOZLER, IRENE SMITH, CHARLES IULO, PASQUALE PALMIEREI, and GLORIA QUINONES, Plaintiffs,
v.
MEL MARTINEZ, in his official capacity as Secretary of the United States Department of Housing and Urban Development, TOMMY THOMPSON, in his official capacity as Secretary of the United States Department of Health and Human Services, UPPER MANHATTAN EMPOWERMENT ZONE CORPORATION, NEW YORK EMPOWERMENT ZONE CORPORATION and TIAGO HOLDINGS, LLC, Defendants.



The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge

MEMORANDUM OPINION and ORDER

I. INTRODUCTION

  This application for a preliminary injunction and cross-motion to dismiss relate to construction of a shopping center in the East Harlem area of Manhattan along FDR Drive between 116th and 119th Streets. The development is known as the East River Plaza Project ("the Project").

  Plaintiffs are an unincorporated association of East Harlem residents and a group of local residents and property owners. Plaintiffs' Memorandum of Law ("Pl.") at 2. Defendants are the U.S. Department of Housing and Urban Development ("HUD"), the U.S. Department of Health and Human Services ("HHS") (collectively "the Federal Defendants"), the Upper Manhattan Empowerment Zone Corporation ("UMEZ"), the New York Empowerment Zone Corporation ("NYEZC") (collectively "the State Defendants"), and Tiago Holdings, LLC ("Tiago" or private defendant). Pl. at 2. The State Defendants are New York corporations whose function is to foster development in the area near the proposed project. Federal Defendants' Memorandum of Law ("Def.") at 8. Tiago is the owner of the site of the Project, formerly the site of the Washburn Wire Factory ("the Factory"). Pl. at 2, 4.

  Beginning in July 2003, plaintiffs moved by Order to Show Cause for a preliminary injunction preventing demolition of the Factory until the Federal Defendants had conducted a review of the impact of the Project on historical resources as required by Section 106 of the National Historic Preservation Act ("NHPA"). Def. at 13. On August 19, 2003, this Court denied the motion and instructed plaintiffs to submit additional statements outlining the remaining relief requested. Def. at 13-14. Defendants were likewise given opportunity to respond to plaintiffs' statements. The Federal Defendants did respond; the State Defendants and Tiago rested on their earlier submissions. The results of plaintiffs' statements and Federal Defendants' response are the instant motions.

  Plaintiffs seek a preliminary injunction halting construction at the factory site until the Federal Defendants have conducted a review pursuant to Section 106 of the NHPA. Def. at 14. Plaintiffs argue that proximity of the Project to one historic resource listed on the National Register of Historic Places, the Thomas Jefferson Play Center, and three potential historic resources, the Manhattan Center for Science and Mathematics, a warehouse at 2138-2152 First Avenue, and a building at 204 East 116th Street, warrant Section 106 review. Def. at 14-15. The Federal Defendants contend that Section 106 review is unnecessary because the Project is controlled and implemented by state and local entities, and that therefore the claim should be dismissed and a preliminary injunction denied. The State Defendants and Tiago, in their August 2003 submissions, similarly raised the issue of lack of federal control. Throughout the course of this litigation, all parties have submitted and relied upon voluminous affidavits and declarations.*fn1

  For the reasons given below, the application for a preliminary injunction is denied, and summary judgment is granted in favor of defendants.

  II. FACTS

  The Federal Defendants offer a lengthy statement of facts in support of their contention that review under Section 106 of the NHPA is not required in the instant action. The Court summarizes those factual assertions here.

  This case revolves around New York City's "Empowerment Zones" ("EZs"): those urban areas designated by the Secretary of HUD as eligible for tax incentives and special consideration for programs of federal assistance. See 24 C.F.R. § 597.3 (2004). The nominating bodies develop a "Strategic Plan" ("SP") for each EZ that sets forth the goals and vision for the EZ. Id.; see Def. at 4. After designation, HUD's role is simply to periodically review the actions and measure the progress of the EZ to ensure compliance with the SP. Def. at 4-5. Should an EZ fail to meet the goals set forth in the SP, HUD may revoke the area's EZ designation. Def. at 5.

  EZs receive federal funding not from HUD, but from HHS in the form of Social Services Block Grants ("Block Grants"). Def. at 6. These grants are given to state agencies for specific purposes in accordance with the SP. Def. at 6. HHS has no role in the specific disbursement of Block Grant funds. Def. at 7. Instead, the state grantees remove, or "draw down" funds from their accounts as needed, subject to certain regulations. Def. at 7. HUD also has no control or approval power concerning the Block Grant funds. Def. at 8.

  In New York City, HUD designated an EZ, including the Upper Manhattan neighborhood that encompasses the former site of the Factory. Def. at 6. HHS allocated $100 million in Block Grants to the Empire State Development Corporation ("ESDC"), a state agency. Def. at 7, 8. ESDC, in turn, created the New York Empowerment Zone Corporation ("NYEZC") to monitor New York City's EZs. Def. at 8. NYEZC selects EZ projects, including the East River Plaza Project as issue here, in accordance with procedures outlined in a Memorandum of Understanding ("MOU") to which the state, the city, the Upper Manhattan Empowerment Zone Corporation ("UMEZ"), and another constituent organization are parties. Def. at 8-9. Although HUD served as a non-voting director of NYEZC through 2002, neither HUD nor HHS are parties to the MOU. Def. at 8 n. 3, 9.

  HUD is a party, however, to a Memorandum of Agreement with the city and the state, which calls for periodic reporting and findings on continued EZ eligibility. Def. at 11. Again, HUD may revoke EZ designation but has no power to select specific projects or to set budgets for projects. Def. at 11.

  Funding of specific projects within New York City's EZ is determined by local entities, which, under the MOU, involves requesting funding from state agencies, reviewing for compliance with SPs, selecting service providers and vendors, and monitoring performance of those providers. Def. at 10. NYEZC has approved, but not yet obligated or released, $15 million for the East River Plaza Project, of which $5 million is potentially ...


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