Proponents of Atlantic Yards win Appellate round

Matter of Do Not Destroy Brooklyn v. Urban Dev. Corp. (2009 NY Slip Op 01395). On February 26, the New York Appellate Division, First Part, upheld a lower court ruling by Justice Joan Madden dismissing a lawsuit filed by a group of plaintiffs opposing the Atlantic Yards project. The project would be the largest redevelopment project ever undertaken in New York City. It would include a new 18,000 seat arena for the New Jersey Nets basketball team owned by developer Bruce Ratner. The arena is window dressing for a massive real estate development of 16 towers and 6000 residential units on a 22 acre site located at Flatbush and Atlantic Avenues in downtown Brooklyn. Although the developer won this legal round,  Ratner was negotiating with the MTA about cutting costs as recently as January. And, of course, financing for a project of this size in the current economic climate remains as questionable now as it was in September when Goldman Sachs refused to comment in the Newark Star-Ledger on the financing of the $950 million arena

Read Slip Opinion 01395  here. 

A large part of the project area includes the Atlantic Yards (ATURA), which was previously blighted. The court described the issues raised on appeal as follows:

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 [*3]statutory obligation to consider alternatives to the proposed project not involving that area's development as part of an urban renewal project….” [Slip op. at paragraph 5]

Although vote of the court was 3-0 in favor of the defendants, Justice James M. Catterson issued a separate concurring opinion. Justice Catterson was highly critical of the defendant saying that “…the New York Urban Development Corporation Act is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are ‘underutilized.’” 

This is the third court decision going against the lead plaintiff, Develop Don’t Destroy Brooklyn. The plaintiffs may appeal; however, there is no assurance that the New York Court of Appeals would take the case, as two dissents, out of the five justices hearing the case, in the Appellate Division are necessary in order for the case to proceed as of right to the Court of Appeals. 

Plaintiffs’ attorneys take particular issue with the court decision with regard to the deference given to the blight finding of the trial court. See the reaction from petitioners at Atlantic Yards Report by Norman Oder:

"We are going to request that the Court of Appeals review this case because it is the only court that is able to require a harder look at the facts, rather than blind obeisance given by the Empire State Development Corporation to the dictates of Forest City Ratner," said lead attorney Jeffrey S. Baker, who represents the 26 petitioners, including Develop Don't Destroy Brooklyn, which organized and funded the case.

"Judge Catterson’s concurrence that the ESDC 'is ultimately being used as a tool of the developer' is the reason why extreme deference is not warranted in this case," he said in a statement issued by DDDB. "The Court of Appeals is the only court that can break the chain of previous cases, and we eagerly await our opportunity to argue before it."

Baker added, "The appellate court is constrained by previous decisions regarding the issue of blight, decisions which have shown a high level of deference to government agency decisions. While we recognize the limitations this court is under, we do not think this is a similar type of case, particularly with the severe condemnation of the ESDC’s actions and decisions as put forth in Judge Catterson’s concurrence. This case will provide the Court of Appeals an opportunity to make it clear that judicial review is not a meaningless exercise and require agencies making blight determinations to do so for legitimate reasons and not simply to facilitate the goals of a developer with political connections."

The issuance of deference given to the blight findings of the lower court is important. In fact, the contract with AKRF, the consultant hired to perform the blight study, required the study of market trends around the project site which were never completed. The courts should not be rubber-stamping blight findings based on deference to the initial fact finder. Substantial credible evidence should be the standard. The New Jersey Supreme Court in Gallenthin Realty Development, Inc. v. Borough of Paulsboro (A-51-2006) clarified the standard, reversing the blight finding in that case and issuing an opinion which has become precedential in terms of what the courts should be considering with regard to blight determinations. See blog post about blight determination in Gallenthin.The New York Court of Appeals would do well to grant certification in this case.

Other relevant links:
New York Law Journal: Concerns 'Legitimate' But Project Proceeds (02-27-09)
NoLandGrab: Media coverage (02-27-09)