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Develop Don't Destroy v. Urban Development Corp.

February 26, 2009


Order and judgment (one paper), Supreme Court, New York County (Joan A. Madden, J.), entered January 17, 2008, inter alia, dismissing the action challenging various administrative findings concerning the Atlantic Yards Arena Redevelopment Project, affirmed, without costs.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Gonzalez, J.P., Sweeny, Catterson, DeGrasse, JJ.


Respondent Forest City Ratner Companies (FCRC) has proposed to construct a vast and purportedly transformational mixed-use development on a 22-acre swath of real estate in Brooklyn extending eastward from the junction of Atlantic and Flatbush Avenues. "Atlantic Yards," as the project is called by reason of its planned situation atop of and in blocks adjacent to the rail yards serving the LIRR Atlantic Terminal, is to include 16 high rise structures and a sports arena. Six-thousand four-hundred thirty housing units, more than a third of which will be "affordable," are to be accommodated in the project's towers along with hundreds of thousands of square feet of space dedicated to commercial purposes. Also to be included within the project footprint is an 18,000-seat arena, intended to serve, inter alia, as the new home of the Nets, the National Basketball Association franchise now situated in New Jersey, which would, upon its move to the new arena, become Brooklyn's first major professional sports team since the Dodgers left the borough for Los Angeles in 1957. The proposed arena's design is by the eminent American architect, Frank Gehry, and the eight acres of open space to be situated amid the arena and the project's other structures are to be laid out according to the plans of the highly regarded landscape architect, Laurie Olin. Other promised benefits of the project include improved access to the major transit hub already located at its site and construction of a new, covered LIRR rail yard.

The project has been shepherded through its preconstruction phases and otherwise promoted by respondent New York State Urban Development Corporation, doing business as the Empire State Development Corporation (ESDC). In addition to acting as the "lead agency" in connection with the project's environmental review (see generally 6 NYCRR 617.2[u]), the ESDC has obtained authorization from the State Legislature and respondent New York State Public Authorities Control Board (PACB) to finance a portion of the project through a bond issue. It has also made certain findings simultaneously placing the project within its purview and exempting it from compliance with otherwise applicable City zoning and land use laws (see McKinney's Uncons Laws of NY § 6266[3] [Urban Development Corporation Act § 16(3), as added by L 1968, ch 174 § 1], [hereinafter cited as Uncons Laws § 6266(3) or UDCA § 6266(3)]), namely, that the project qualifies as a "land use improvement project" pursuant to UDCA 6260(c) and 6253(6)(c), based upon blight at its site, and that the project's proposed arena qualifies under UDCA 6260(d) and 6253(6)(d) as a "civic project." Also, in collateral proceedings the ESDC has exercised its condemnation power (see UDCA 6255[7]) on the project's behalf (see Matter of Anderson v New York State Urban Dev. Corp., 45 AD3d 583 [2007], lv denied 10 NY3d 710 [2008]) and has defended that exercise against constitutional challenge (see Goldstein v Pataki, 516 F3d 50 [2008], cert denied US , 128 S Ct 2964 [2008]).

The project footprint extends over eight city blocks, the majority of which are now occupied by subgrade rail yards lying within an area that has, since 1968, been designated the Atlantic Terminal Urban Renewal Area (ATURA). There is no dispute that this previously designated area is in fact blighted and that the proposed development, insofar as it affects this area, has been properly deemed a "land use improvement project." Adjoining the rail cut on its southern side, however, lie two full blocks and part of a third that are not within ATURA but are within the FCRC project footprint. These non-ATURA project blocks, although never previously earmarked for urban renewal, have, since the announcement of the project, been found blighted by the ESDC and thus proper for development under the ESDC's auspices, along with the contiguous rail yard blocks, as a "land use improvement project."

While the principal focus of this appeal would appear to be upon the propriety of the ESDC's UDCA findings that the non-ATURA project blocks are blighted and that the proposed arena qualifies as a "civic project," petitioners in this hybrid article 78/declaratory judgment action have also raised numerous challenges to the adequacy of respondents' compliance with the State Environmental Quality Review Act (SEQRA), several of which survive for our review. Petitioners urge (1) that the PACB determination approving the ESDC's financial participation in the project was improper in the absence of environmental findings by the PACB; (2) that the ESDC's environmental review was deficient due to its failure to address the risk of a terrorist attack upon the project; (3) that the "build years" used by the ESDC in its Environmental Impact Statement (EIS) were irrational and skewed the ensuing analysis of the project's environmental effects; and (4) that because the ESDC failed to study and give due consideration to real estate market trends in the non-ATURA project area, it could not have adequately discharged its statutory obligation to consider alternatives to the proposed project not involving that area's development as part of an urban renewal project. We address these SEQRA claims first and then turn to the claims arising under the UDCA.

Ordinarily, under SEQRA an involved agency must, when exercising discretion to approve an action for which an EIS is required, make certain statutorily enumerated environmental findings based on the EIS (see ECL 8-0109[8]; 6 NYCRR 617.11[d]). This requirement, however, is logically premised upon the relevance of the EIS to the decision the agency is called upon to make. Accordingly, where the decision, although discretionary, is governed by criteria unrelated to the environmental concerns addressed in an EIS, environmental findings based on the EIS are unnecessary as it would be pointless to mandate reliance on an EIS in the interest of informed decision-making in circumstances where the EIS is by hypothesis irrelevant to and cannot inform the decision to be made (see Incorporated Vil. of Atl. Beach v Gavalas, 81 NY2d 322, 326 [1993]). Here, the PACB's approval of the ESDC's financial participation in the project was governed by closely drawn statutory criteria specifically relevant to a distinct, statutorily prescribed inquiry, i.e., whether "there [were] commitments of funds sufficient to finance the acquisition and construction" of the project (Public Authorities Law § 51[3]). Plainly, this singular, discrete financial inquiry would not have been usefully informed by the EIS's account of the project's environmental effect and, accordingly, did not trigger an obligation to make environmental findings pursuant to ECL 8-0109(8).

Petitioners' remaining SEQRA claims allege substantive deficiencies in the project's EIS. However, our power to review the substantive adequacy of an EIS is extremely limited. It is by now a familiar refrain that we may not disturb an agency determination as substantively flawed unless it is affected by an error of law, arbitrary and capricious, or constitutes an abuse of discretion (see CPLR 7803[3]; Akpan v Koch, 75 NY2d 561, 570 [1990]; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 416 [1986]), and, in the context of reviewing a lead agency's SEQRA determination, this generally expressed limitation has been understood to confine judicial inquiry to a "review [of] the record to determine whether the agency identified the relevant areas of environmental concern, took a hard look at them, and made a reasoned elaboration of the basis for its determination" (id. at 417 [internal quotation marks and citations omitted]). In assessing whether an agency has met its substantive SEQRA obligations, the appropriate judicial focus is not upon the agency's ultimate judgments but upon the deliberative process by which they were reached, and the touchstone is reasonableness. "Not every conceivable environmental impact, mitigating measure or alternative must be identified and addressed before a FEIS will satisfy the substantive requirements of SEQRA. The degree of detail with which each factor must be discussed obviously will vary with the circumstances and nature of the proposal" (Jackson, 67 NY2d at 417 [internal quotation marks and citations omitted]).

While the 3500-page final EIS approved by the ESDC in connection with the proposed project provides impressively detailed analyses of the project's anticipated environmental impacts in 16 separately identified areas, petitioners contend that it fails to identify and take a "hard look" at a relevant area of environmental concern because it does not address the risk of a terrorist incident at the project site. But SEQRA contains no provision expressly requiring an EIS to address the risk of terrorism and, indeed, it would not appear that terrorism may ordinarily be viewed as an "environmental impact of [a] proposed action" (ECL 8-0109[2][b] [emphasis added]) within the statute's purview. We do not, however, find it necessary to determine whether consideration of the prospect of terrorism may ever lie within the scope of the environmental review mandated by the statute, and leave open the possibility that there may be a case in which a proposed action will by its very nature present a significantly elevated risk of terrorism and consequent environmental detriment, i.e., a case in which the risk and its potential adverse environmental impacts may in a real sense be said to stem from the action itself rather than an independent ambient source (see e.g. San Luis Obispo Mothers for Peace v Nuclear Regulatory Commn., 449 F3d 1016 [2006], cert denied 549 US 1124 [2007]). For now, it suffices to observe that the project at issue does not pose extraordinary inherent risks; it does not involve the siting of a nuclear storage facility (id.), or a biological weapons laboratory (Tri-Valley Cares v Department of Energy, 203 Fed Appx 105, 107 [2006]), or any comparably risk-elevating action, but rather the creation of a venue dedicated to routine residential, commercial and recreational purposes (see 6 NYCRR 617.9[b][6]). These latter purposes, even when realized in the form of a major urban development situated at a pre-existing transit hub, do not so clearly increase the risk of terrorism, much less of terror-induced environmental harm, as to render the lead agency's determination not to address terrorism as an environmental impact of the proposed action unreasonable as a matter of law.

To be sure, tragic experience counsels that even venues designed to accommodate relatively benign uses may become terrorist targets and that security must be a concern in the planning of any public project, particularly one concentrating large numbers of people. We have recently affirmed the obligation of landlords,under tort law, to take reasonable measures to secure their premises against actual reasonably foreseeable risks of terrorist predation (see Nash v Port Auth. of N.Y. & N.J., 51 AD3d 337 [2008]). At issue here, however, is not the extent of a landlord's common-law security obligation, but the scope of the lead agency's statutory planning obligation publicly to identify the significant environmental impacts of a proposed action, and, ordinarily, terrorism does not fall under that latter rubric.

Turning now to the "build year" issue, it is petitioners' contention that the build years, i.e., the time periods by which the phases of the project were predicted to be substantially operational, were intentionally underestimated in the project EIS and that the EIS's disclosure of the project's environmental impacts was consequently fatally skewed. The record, however, discloses that in selecting the build years to be used in the EIS, the lead agency did not arbitrarily select a build year it found favorable but relied upon the detailed construction schedules of the project's highly experienced general contractor and upon the opinions of its own consultants and an independent contractor. It is, of course, possible that the lengths of the projected build-out periods (4 years for the first phase of the project, including the arena, and 10 years for the remaining elements) were underestimated, but the ultimate accuracy of the estimates is neither within our competence to judge nor dispositive of the issue properly before us, which is simply whether the lead agency's selection of build dates based on its independent review of the extensive construction scheduling data obtained from the project contractor may be deemed irrational or arbitrary and capricious (see Akpan, 75 NY2d at 572-573), and it may not. The build dates having been rationally selected, there can be no viable legal claim that the EIS was vitiated simply by their use. Indeed, we have, in rejecting a similar challenge to an EIS, held that reliance on a particular build date, even if inaccurate, will not affect the validity of the basic data utilized in an EIS (Matter of Committee to Preserve Brighton Beach & Manhattan Beach v Council of City of N.Y., 214 AD2d 335, 337 [1995], lv denied 87 NY2d 802 [1995]).

Petitioners' final appellate claim of substantive inadequacy in the EIS focuses upon the EIS's consideration of alternatives to the proposed action. Petitioners do not contend that the lead agency wholly failed to discharge its statutory obligation to consider feasible alternatives to the FCRC project (see ECL 8-0109[2][d]), for the EIS in fact contains a separately headed, highly detailed 83-page section discussing various alternatives, including one involving no action and another contemplating a lower density, arenaless development not encompassing the non-ATURA project blocks. Petitioners' contention is rather that the lead agency did not take into account in the EIS prevailing real estate trends, particularly as they affected and had become manifest in the non-ATURA project area at the time of the project's announcement, and thus could not have reasonably concluded that the proposed project was to be preferred to its alternatives for its purportedly unique capacity to alleviate blight in the non-ATURA blocks. This argument, however, necessarily supposes that the lead agency's judgment as to the relative desirability of the proposed project must have turned upon the project's purported efficacy as a means of improving the non-ATURA blocks. It is, however, clear from the EIS that the lead agency's rationale for preferring the proposed project was not so singularly grounded. The proposed project, in distinction to the alternatives preferred by petitioners, included an architecturally distinguished arena that would house a major professional sports franchise, an elaborate new subway entrance, a new and improved LIRR rail yard, improved pedestrian and bicycle linkages connecting the project and the surrounding neighborhoods on the north-south axis, an on-site stormwater drainage system, and eight acres of open space landscaped by Laurie Olin. It also made provision for significantly more affordable housing than would have been developed under alternative scenarios, and, by reason of its scale and range of uses, promised economic and fiscal benefits exceeding those expected to be generated under the other plans. To be sure, as the EIS discloses, there were more adverse impacts associated with the proposed project than with its less ambitious alternatives, but, on balance, there is no tenable argument that the lead agency's preference for the FCRC project, arrived at after an evidently conscientious weighing of alternatives, was not rationally and sufficiently based on the project's distinctive constellation of otherwise unattainable benefits. Certainly, the lead agency did not in this case exceed the "considerable latitude" afforded it under SEQRA to evaluate environmental effects and choose among alternatives (Jackson, 67 NY2d at 417).

Petitioners also challenge the designation of the non-ATURA project area as a UDCA "land use improvement project" on the ground that gentrification of the area had progressed appreciably due to market forces and would have run its course if permitted to do so. In this context, however, the thrust of the argument is not that a feasible alternative to the proposed action was unreasonably rejected by the ESDC, but more fundamentally that the ESDC had no legitimate role to play with respect to the blocks in question since they are not in fact "substandard and insanitary" and accordingly not a proper subject of an ESDC sponsored "plan or undertaking for the[ir] clearance, replanning, reconstruction and rehabilitation" (UCDA 6253[6][c]).

Before considering this issue and petitioners' challenge to the other proffered justification for the ESDC's sponsorship of proposed project, i.e., that it is a "civic project" within the meaning of UDCA 6253(6)(d), we note that the constitutional sufficiency of the public purposes upon which the ESDC's involvement in the Atlantic Yards project as a condemnor was predicated has been the subject of now completed litigation. In Goldstein v Pataki (516 F3d 50 [2008], supra), the Second Circuit Court of Appeals held that the ESDC's exercise of its eminent domain power to take private property for the project, and specifically to take private property within the non-ATURA project blocks, was supported by the project's rational relation to "several classic public uses whose objective basis is not in doubt" (id. at 63). Among these "classic public uses" were the alleviation of blight in both the ATURA and non-ATURA project areas and the provision of a sporting arena (id. at 55, 58-59, 62). In rejecting the plaintiffs' claim that these purposes were under the specific circumstances presented inadequate to support the ESDC's exercise of its eminent domain power, indeed that they amounted to no more than pretexts for bestowing a private benefit upon FCRC, the court, citing numerous authorities, but most notably Berman v Parker (348 US 26 [1954]) and Hawaii Hous. Auth. v Midkiff (467 US 229 [1984]), emphasized that it is an essentially legislative, and not a judicial function to define the public agenda, and, accordingly, that in all but the most extraordinary cases - those in which there is no conceivable public purpose to be served - courts reviewing the adequacy of a use advanced in support of an exercise of the eminent domain power are bound to defer to the public purpose findings of the legislature and its agencies (Goldstein, 516 F3d at 57-60). In this last connection, the court specifically rejected the contention that the findings of the ESDC were, by reason of its status as a public benefit corporation, non-legislative and thus undeserving of deference, holding instead that, in making the findings upon which its exercise of the takings power was to rest, most particularly those contained in its Blight Study, the ESDC acted as an agent of the Legislature (id. at 60). In any case, it was, according to the court, undisputed that over half the project area was in fact blighted, and that there was significant blight in the Takings Area (i.e., the non-ATURA project area) amid which the plaintiffs' properties were situated. That the plaintiffs' properties were not themselves blighted did not require alteration of the project footprint since "community redevelopment programs need not, by force of the Constitution, be on a piecemeal basis - lot by lot building by building" (id. quoting Berman, 348 US at 35), and "once it has been shown that the surrounding area is blighted, the state may condemn unblighted parcels as part of an overall plan to improve a blighted area" (id., quoting In re G. & A. Books, Inc., 770 F2d 288, 297 [2d Cir 1985]).

While petitioners' challenges to the ESDC's findings authorizing the project as one for the public purposes of land use improvement (UDCA 6260[c]) and the provision of civic facilities (UDCA 6260[d]) are not legally precluded by Goldstein, post-Goldstein petitioners are reduced to arguing that although the uses of the project are sufficiently public to support a justly compensated taking of property within the project footprint by the ESDC through its power of eminent domain, the identical uses will not support redevelopment of the very same property pursuant to the UDCA. This posited, evidently anomalous disparity finds no support in the cases, which, as a matter of basic constitutional design, counsel extreme judicial circumspection in assessing the adequacy of the public purposes advanced by the legislature and its agencies in support of government actions falling, even arguably, within the state's police power. As Justice Douglas wrote in Berman, "[t]he definition [of the police power] is essentially the product of legislative determinations addressed to the purposes of government . . . Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive" (348 US at 32). This admonition has been strictly followed and nowhere more so than in cases where the purpose advanced for the proposed governmental action is, as it was in Berman and is here, that of alleviating or preventing "substandard and insanitary" conditions, or "blight."

These terms, whose potentially capacious reference has not been meaningfully reduced by statutory definition (see e.g. UDCA 6253[12]), are to be understood "liberally" so as not to unduly constrict the governmental prerogative to take measures directed at improving the urban environment (see Yonkers Community Dev. Agency v Morris, 37 NY2d 478, 481-484 [1975]). This definitional check upon judicial revision of determinations substantially and appropriately committed to the policy-making branches of government is complemented and reinforced by a standard of review that may with great understatement be described as lenient: "When [the agencies to which the initial blight determination has been committed] have made their finding, not corruptly or irrationally or baselessly, there is nothing for the courts to do about it, unless every act and decision of other departments of government is subject to revision by the courts" (Kaskel v Impellitteri, 306 NY 73, 78 [1953], cert denied 347 US 934 [1954]).

Contrary to petitioners' argument, there exists no ground to suppose that this standard, compelling deference to agency blight findings when they are not utterly without rational basis, is applicable only in the context of evaluating whether there is a sufficient public use to support condemnation. Condemnation is not an end in itself, but merely an instrument for the achievement of a social purpose, here urban redevelopment (see Berman, 348 US at 33; Rosenthal & Rosenthal, Inc. v New York State Urban Dev. Corp., 771 F2d 44, 46 [1985], cert denied 475 US 1018 [1986]). Courts, even in the condemnation context, have understood that the issue before them in determining whether property was blighted was not simply whether it could be condemned and cleared but ultimately whether by reason of blight it "qualifie[d] for renewal" (Yonkers Community Dev. Agency, 37 NY2d at 484; and see Kaskel, 306 NY at 79 [framing the inquiry in the condemnation proceeding as whether the property at issue was "so substandard or insanitary, or both, as to justify clearance and redevelopment under the law" (emphasis added)]). The essential purpose of the blight finding in connection with condemnation, i.e., to qualify property for urban renewal, is not different under the ESDC's enabling statute (UDCA 6260), and, accordingly, the adequacy of blight findings in the two contexts should not be judged by different standards. What is fundamentally at issue in both contexts is the extent of the government's unitary power to define, and act in pursuance of a public purpose. It makes no difference that the agency through which the government has here acted, the ESDC, is organized as a public benefit corporation. It is nonetheless a "governmental agency of the state, constituting a political subdivision [thereof]" (UDCA 6254[1]) and, as such, its public purpose findings within the scope of its legislative authorization are entitled to extraordinary judicial deference (see Kaskel, 306 NY at 78-80; and see Goldstein, 516 F3d at 60; Jackson, 67 NY2d at 424-425 [1986]; Matter of West 41st St. Realty v New York State Urban Dev. Corp., 298 AD2d 1, 6-7 [2002], appeal dismissed 98 NY2d 727 [2002], cert denied 537 US 1191 [2003]; East Thirteenth St. Community Assn. v New York State Urban Dev. Corp., 189 AD2d 352, 359 [1993], affd 84 NY2d 287 [1994]). We have, of course, employed this deferential standard, not only in the condemnation context, but also in reviewing blight findings made by the ESDC pursuant to UDCA 6260(c) (see Tribeca Community Assn. v New York State Urban Dev. Corp., 200 AD2d 536, 537 [1994], lv denied 84 NY2d 805 [1994]), and in judging the the adequacy of the blight predicate for an urban renewal designation pursuant to article 15 of the General Municipal Law (see Jo & Wo Realty Corp. v City of New York, 157 AD2d 205, 217-218 [1990], affd on other grounds 76 NY2d 962 [1990]).

Petitioners naturally seek to bring their claims within the very narrow circumstances hypothetically reserved by Kaskel for judicial scrutiny, i.e., where an area's physical condition "might be such that it would be irrational and baseless to call it substandard or insanitary" (306 NY at 80). However, the facts are very much against them. Indeed, this case is in significant respects very much like Kaskel, in which blight findings were upheld for an area including the part of Columbus Circle upon which the Coliseum was to be erected. Like petitioners, Kaskel maintained that the proposed development encompassed areas which, although contiguous, were of distinctly different character, one displaying indicia of blight and the other, the area on Columbus Circle, being relatively free of such conditions (id. at 82-83 [Van Voorhis J., dissenting]). Also, similar to the argument petitioners now make, Kaskel maintained that the allegedly distinct, non-blighted Columbus Circle area had been made part of the proposed urban renewal project area, not because it was blighted but because it was coveted by the developer as a site for the ...

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