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Goldstein v. New York State Urban Development Corp.

May 12, 2009

IN THE MATTER OF DANIEL GOLDSTEIN, ET AL., PETITIONERS,
v.
NEW YORK STATE URBAN DEVELOPMENT CORPORATION, D/B/A EMPIRE STATE DEVELOPMENT CORPORATION, RESPONDENT.



PROCEEDING pursuant to EDPL 207 to review a determination of the New York State Urban Development Corporation, d/b/a Empire State Development Corporation, dated December 8, 2006, made after a public hearing, authorizing the condemnation of certain real property.

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.

ROBERT A. SPOLZINO, J.P., ANITA R. FLORIO, HOWARD MILLER and RANDALL T. ENG, JJ.

OPINION & JUDGMENT

ENG, J.A 22-acre redevelopment project known as Atlantic Yards proposes to bring to Brooklyn a professional basketball team, thousands of new residential units, and millions of square feet of office space, revitalizing an area which had long been designated as blighted. The petitioners are a group of residents and business owners whose homes and businesses have been slated for condemnation in order to facilitate advancement of the project. Seeking redress in federal court, the petitioners unsuccessfully challenged the taking of their homes and businesses under the theory that the condemnation violated the Public Use clause of the Fifth Amendment to the United States Constitution. The petitioners now bring this proceeding pursuant to EDPL 207, urging this Court to find that the New York Constitution imposes a more restrictive standard for the taking of private property than that imposed by the United States Constitution, and that the more restrictive standard has not been satisfied in this case. For the reasons which follow, we reject the petitioner's claim that the Public Use clause of the New York Constitution must be read literally to allow the taking of private property only where that property is to be held open for common use by all members of the public. We find that, on the record in this case, the condemnation does not violate the Public Use clause of the New York Constitution because it cannot be said that the public benefits which the Atlantic Yards project is expected to yield are incidental or pretextual in comparison to the benefit that will be bestowed upon the project's private developer. Accordingly, we confirm the determination to acquire the petitioners' properties by condemnation.

On December 11, 2003, the Forest City Ratner Companies (hereinafter Forest City) publicly announced a plan to redevelop a 22-acre area located south of Atlantic Avenue near downtown Brooklyn, which was later dubbed the Atlantic Yards Land Use Improvement and Civic Project (hereinafter Atlantic Yards). Approximately 40% of the proposed Atlantic Yards project site is occupied by the century-old Vanderbilt Rail Yard, owned by the Metropolitan Transit Authority (hereinafter the MTA). The Vanderbilt Rail Yard, which is situated below grade and surrounded by a 10-foot-high chain link fence, serves as an active storage and maintenance yard for Long Island Rail Road equipment and retired MTA buses.

At some point after it announced its plan to redevelop the area, Forest City sought the partnership of the New York State Urban Development Corporation, d/b/a Empire State Development Corporation (hereinafter ESDC). ESDC is a public benefit corporation created by the State of New York to promote the growth and development of the State's municipalities by, among other things, undertaking public and private improvement programs to reinvigorate blighted and economically distressed areas (see McKinney's Uncons Laws of NY § 6252). To accomplish its mission, ESDC has been granted the authority to acquire property through the exercise of eminent domain (see McKinney's Uncons Laws of NY § 6263).

On February 18, 2005, Forest City and ESDC entered into two Memoranda of Understanding to jointly pursue the development and construction of the Atlantic Yards project. As envisioned by the General Project Plan subsequently adopted by ESDC, a cornerstone in the redevelopment of this area is the construction of a state-of-the-art, publicly-owned arena to serve as the home for the professional basketball team currently known as the New Jersey Nets, which is owned by Forest City's principal, Bruce Ratner. The arena is also intended to provide athletic facilities for colleges within the City of New York, and a venue for a variety of entertainment, educational, and civic events. In addition, the project provides for the construction of a new subway connection to accommodate visitors to the arena; the construction of a platform over and reconfiguration of the rail yard; the construction of 16 buildings which will include residential units, office space, retail space, and community facilities offering health care and child care services; and the creation of eight acres of publicly-accessible open space. The project is anticipated to create between 5,325 and 6,430 housing units, of which 2,250 are expected to be affordable for low- and middle-income families.

Prior to undertaking the development of the Atlantic Yards project, ESDC commissioned a blight study of the 22-acre project site, which encompasses approximately eight city blocks. The blight study, completed in July 2006, provided ESDC with an overview of the physical and use characteristics of each block, detailed profiles of each lot contained on those blocks, and photographs of the exterior of the lots. The study noted that five of the blocks comprising the project site, or approximately 63%, were located within the boundaries of an area that has since 1968 been designated the Atlantic Terminal Urban Renewal Area (hereinafter the Renewal Area). The City mapped out this area for redevelopment more than 40 years ago because of substandard and unsanitary conditions, and has reaffirmed its designation as a blighted area as recently as 2004. Although the study noted that conditions in most of the Renewal Area, including the blocks immediately north of Atlantic Avenue, had greatly improved, it concluded that conditions in the portion of the Renewal Area south of Atlantic Avenue had yet to improve beyond the conditions that originally led the City to designate the area as blighted. The study attributed the lack of improved conditions in this portion of the project site to the presence of the open, below-grade rail yards which had created a gap in the urban landscape and discouraged street-level activity. The study further found that the rail yards had a blighting effect on adjacent blocks south of the rail yards, and that the non-rail-yard portion of the project site was characterized by substandard conditions, including vacant and underutilized buildings and vacant lots. According to the study, another principal reason why the entire project site had remained in a state of physical disrepair and had not experienced an upward swing in economic activity was that it had historically been held under the ownership of multiple parties, thus hindering the site assemblage necessary for redevelopment. Based upon the conclusions reached in the study, on July 18, 2006, ESDC adopted a resolution which, in accordance with the New York State Urban Development Corporation Act (McKinney's Uncons Laws of NY § 6251 et seq.; L 1968, ch 174, as amended), included findings that the project site was a substandard or unsanitary area which tended to impair or arrest the sound growth and development of the municipality in which it is situated, and that the project consisted of a plan for the rehabilitation of the area.

Following a public hearing on December 8, 2006, ESDC issued its determination and findings in accordance with EDPL 204. In its determination, ESDC specified that the "public use, benefit and purpose of the project is to eliminate blighted conditions on the Project Site and the blighting influence of the below-grade [rail] [y]ard." ESDC further declared that the project would serve the public purposes of providing recreational and community facilities, improvements to mass transit and infrastructure, affordable housing, job creation, and increased tax revenues for the City and State. In light of its finding that the planned redevelopment served a public use, benefit, or purpose, ESDC concluded that it should exercise its power of condemnation in order to implement the project.

Within 30 days after ESDC's determination, the petitioners, who live or own businesses in the portion of the project site which lies outside of the boundary of the designated Renewal Area, commenced an action (hereinafter the federal action) in the United States District Court for the Eastern District of New York, challenging the proposed taking of their properties. In the complaint in the federal action, the petitioners primarily asserted that the proposed condemnation of their properties violated the Public Use clause of the Fifth Amendment to the United States Constitution since the government officials who had approved it were substantially motivated by a desire to confer a private benefit on Forest City's principal, Bruce Ratner, and that the public uses identified by ESDC were pretexts for a private taking. The petitioners also asserted a state-law claim under the EDPL. The United States District Court dismissed the claims under federal law for failure to state a claim upon which relief could be granted, and declined to exercise supplemental jurisdiction over the state-law claim (see Goldstein v Pataki, 488 F Supp 2d 254). Accordingly, the petitioners' state law claim was dismissed without prejudice (id. at 291). In concluding that the complaint in the federal action failed to state a viable claim that the condemnation violated the Fifth Amendment, the United States District Court pointed out that, by the petitioners' own admission, the project would serve several well-established public uses, including the remediation of blight, the construction of a sports arena, and the creation of new housing (id. at 286-287). The United States District Court further found that the allegations in the petitioners' federal complaint were insufficient to support a conclusion that the public purposes allegedly promoted or advanced by the project were mere pretexts to confer a private benefit on the private developer (id. at 291). The United States Court of Appeals for the Second Circuit (hereinafter the Second Circuit) affirmed the dismissal of the claims in the federal action, acknowledging the hardship that the exercise of eminent domain may have on individual property owners, but agreeing that the complaint failed to state a Fifth Amendment claim (see Goldstein v Pataki, 516 F3d 50).

Within six months after the Second Circuit affirmed the dismissal of the complaint in the federal action, the petitioners commenced this EDPL proceeding, asserting that the proposed taking of their properties is unlawful because it violates the Public Use clause of NY Constitution, article I, § 7. The petitioners further allege that the project contravenes NY Constitution, article XVIII, § 6, because State funds are to be used to defray infrastructure costs associated with the construction of new housing units without restricting those housing units to use by low-income persons. The petitioners also maintain that the condemnation of their properties violates their due process and equal protection rights (see NY Const, art I, §§ 6, 11).

A threshold procedural issue which we must resolve before reaching the merits of the constitutional claims raised herein is whether the petition must be dismissed as untimely pursuant to EDPL 207(A). This statute provides, in pertinent part, that persons aggrieved by a condemnor's determination "may seek judicial review thereof" in the appropriate judicial department of the Appellate Division "within 30 days after the condemnor's completion of its publication of the determination." It is undisputed that the petitioners asserted a state-law cause of action under the EDPL in the federal action within 30 days after publication of ESDC's determination, and thus this proceeding would have been timely had it been commenced at the time that the federal action was commenced. Furthermore, since the United States District Court declined to exercise jurisdiction over the supplemental state-law claim and dismissed it without prejudice, it is clear that the state-law claim was not adjudicated on the merits (see Stylianou v Incorporated Vil. of Old Field, 23 AD3d 454, 457; Denehy v St. John's Queens Hosp., 114 AD2d 991, 992; see also Van Hof v Town of Warwick, 249 AD2d 382, 383; Travelers Indem. Co. v Sarkisian, 139 AD2d 27, 29). Under these circumstances, the petitioners would ordinarily be entitled to the benefit of CPLR 205(a), a remedial statute which affords a litigant a six-month grace period within which to recommence an action which has been dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or the entry of a final judgment on the merits (see Stylianou v Incorporated Vil. of Old Field, 23 AD3d at 457; Denehy v St. John's Queens Hosp., 114 AD2d at 992).

However, the toll of CPLR 205(a) does not apply when the statutory time bar to the commencement of an action operates as a condition precedent rather than as a statute of limitations (see Yonkers Contr. Co. v Port Auth. Trans-Hudson Corp., 93 NY2d 375, 378). The rationale for this distinction is that a statute of limitations suspends the remedy provided by a right of action, while a condition precedent conditions the very existence of a right of action, thus creating a substantive limitation (see Yonkers Contr. Co. v Port Auth. Trans-Hudson Corp., 93 NY2d at 378). Stressing the legislative intent that challenges to a condemnation determination be brought expeditiously, ESDC urges us to find that the 30-day time period set forth in EDPL 207(A) operates as a condition precedent, and that the six-month grace period of CPLR 205(a) is thus unavailable to the petitioners. ESDC maintains that, by electing to challenge ...


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