Eminent Domain: A Conflict Grows in Brooklyn

"We initiated this litigation not just because of our deep concerns about the project proposed by Ratner, but also because the environmental review process, as executed by the ESDC, is stacked so heavily in favor of developers, and against community...We are optimistic that the Appellate Division will agree with Justice Edmead that 'business as usual' at the ESDC is no longer acceptable when it comes to sharing attorneys with developers." -- Candace Carponter, Legal Chair for Develop Don't Destroy Brooklyn

In a scathing opinion, New York State Supreme Court Judge Carol Edmead ruled in favor of property owners and other community organizations and forced attorney David Paget to disqualify himself for representing the Empire State Development Corporation (ESDC).

The ESDC is the agency in charge of overseeing developer Bruce Ratner's massive project for Prospect Heights, Brooklyn, located at Flatbush and Atlantic Avenues. Paget had previously represented Forest City Ratner (FCR) privately on the same project and then became ESDC's lawyer. The judge called this "a severe crippling appearance of impropriety" and scoffed at the agency lawyer's arguments that the relationship was "collaborative." The agency plans to appeal the decision.

The Court concluded:

Potentially, the interests of Ratner Companies, as an applicant or project sponsor, are adverse to the interests of the ESDC, which is charged with the responsibility to protect the environment and regulate the activities of individuals and corporations so that "due consideration is given to preventing environmental damage." The oft bottom-line, profit-making pursuits of real estate development corporations, may not necessarily align with the stated, valid environmental interests of the ESDC, whose very function in this matter is to subject the proposed action to a high level of environmental review. Thus, the simultaneous representation of the ESDC and Ratner Companies is prima facie evidence of a conflict of interest....
Further, the Court is cognizant that Mr. Paget and his firm are members of a boutique, discrete area. However, avoiding even the appearance of impropriety is critical in a case of this magnitude and with such long-lasting effects the Borough of Brooklyn and the City of New York generally."

The opinion of the Court was grounded on the New York State Code of Professional Responsibility DR5-105 (A) and (B) (22 NYC RR §1200.24) which provides:

A lawyer shall decline proffered employment if the exercise of independent professional judgment on behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interest....A lawyer shall not continue multiple employment if the exercise of independent professional judgment on behalf of a client will be or is likely to be adversely affected by the lawyer's representation of another client, or if it would be likely to involve the lawyer in representing differing interests....

The Court gave FCR permission to demolish three building owned by Ratner; The demolition was opposed by the plaintiffs. By far the more significant issue was Paget's conflict of interest which the Court dealt with summarily in favor of the plaintiffs. This decision was the first skirmish in what promises to be a long and protracted battle over the scope of the proposed development.

Delays caused by this litigation and other procedural steps necessary to the project have caused the New Jersey Nets basketball team to seek an extension of their current lease with the New Jersey Sports and Exposition Authority, the landlord for the Meadowlands arena in East Rutherford, New Jersey. "The Nets and the New Jersey Sports and Exposition Authority are now in serious negotiations to keep the team at Continental Airlines Arena through the end of the decade." See the February 10, 2006 Star-Ledger article.

Our view of the New Jersey Nets aspect of this deal is that they are the window dressing for a massive real estate project which is FCR's prime objective. The scope of this project is enormous. The project, as described by Judge Edmead in her opinion, sits on 22 acres and includes a new arena of 850,000 square feet accommodating 20,500 spectators. It also includes 7300 residential units, 4000 parking spaces, and a 180-room hotel. More importantly, the project includes 9-million square feet of residential, office, and commercial space in 16 high rise towers. This is a virtual city within the city, and its impacts on existing neighborhoods, infrastructure, and lifestyle will be significant.

A project of this scope is of great importance to all concerned, and the public should have faith that the ESDC review process is not tainted by insider dealing and favoritism. See Norman Oder's commentary on Charles Gargano, ESDC chairman, quoting extensively from an interview with Gargano by Brian Leher of WNYC-FM.

Oder writes: "Can the agency be expected to do a fair job in both promoting economic development and evaluating the environmental impact of the proposed Atlantic Yards development? ESDC Chairman Charles Gargano gives little cause for confidence. He recently said he knew nothing of any conflict of interest posed by the agency's lawyer, didn't know the agency rents space in a mall owned by Ratner, and endorsed the Atlantic Yards project without reservation, even before the environmental impact statement has been issued."

These facts echo precisely the concurring opinion of Justice Kennedy in the Kelo case:
"A court confronted with a plausible accusation of impermissible favoritism to private parties should treat the objection as a serious one and review the record to see if it has merit."

Download the opinion of Judge Carol Edmead.
Note: This document is a large file: 3MB pdf.

Written By:joanne seminara On February 16, 2006 5:39 PM

Bill and Susan:
Thanks for your fine blog. The pattern repeats itself again and again. The people and agencies (here, Gargano and ESDC) charged with protecting the public interest are in league with the developers. An appearance of impropriety, indeed! What ever happened to the quaint notion of government of, by and for the people?
Regards, Joanne Seminara

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