Thursday, March 19, 2009

Willets Point Lawsuit Points Out . . .

The latest news on Willets Point is that a coalition of neighborhood land owners and businesses have sued the City of New York, challenging its redevelopment plans for the area. The twenty-two lawsuit plaintiffs who filed an Article 78 petition on March 11, 2009 are members of Willets Point United Against Eminent Domain Abuse. Included among the plaintiffs is 76-year-old Joseph Ardizzone, who stands to lose the Willets Point home where he has resided since birth. Mr. Ardizzone is the sole residential resident of Willets Point but as the lawsuit points out the neighborhood is “home to approximately 225 businesses” that are “viable and vital” that have “operated in Willets Point for generations” and employ “approximately 1,400-1,800 workers most of whom “speak only Spanish.” (The press release information about the filing of the lawsuit is available at: Wednesday, March 11, 2009, Willets Point United Challenges City’s Environmental Review Files Article 78 Against Mayor, City Council and City Agencies.)

Lawsuit Discussion Plus

This post discusses the lawsuit, particularly its challenge to the city’s indefinite and supposed “public purpose” in condemning Willets Point. For reasons which will become clear, we venture in our discussion to consideration of another city administration supported megaproject, Atlantic Yards, and we also give some attention to the AIG scandal tumult. We suggest you sit back for the adventure.

Willets Point Vibrancy in the Face of City Administration Orchestrated Adversity

Willets Point’s economic vibrancy persists despite, as the lawsuit points out, that the city has “for decades,” going back to Robert Moses in the early 1960s, quested to “condemn Willets Point” and “destroy its businesses and turn it over to developers.” Moses considered it a desirable goal to turn the neighborhood into a parking lot for a baseball stadium (Shea). Moses was successfully fought off by Mario Cuomo when he was a young lawyer at the beginning of his career but the plaintiffs’ lawsuit filed describes how the city has since “systematically deprived Willets Point of the vital infrastructure that every neighborhood needs and is entitled. For example, Willets Point has no functioning storm sewers, sanitary sewers, paved and maintained streets, gutters or fire hydrants, and Willets Point has little or no snow removal or municipal trash removal.”

The plaintiffs brought their petition against Mayor Michael Bloomberg, the New York City Council, the City Planning Commission and Deputy Mayor Robert Lieber.

Background on Willets Point

The filing of this lawsuit provides an updating chapter to the (four-part) story we told about Willets Point in Will It Come? What the Bloomberg Administration Wills at Willets Point (Thursday, December 4, 2008). We were pleased when No Land Grab described our series as a “must read that contains information and analysis that you'll never find in the mainstream media.” The lawsuit’s point of view accords with the analysis we provided in our Will It Come series. We note we intended that eries to provide a neutral analysis of what is going on in Willets Point.

Lawsuit Challenges: Environmental Review and Public Purpose

The lawsuit challenges the adequacy of the environmental review and the city’s lack of public purpose in taking the property through eminent domain. Michael Gerrard of Arnold and Porter, the lead attorney for the plaintiffs, is one of the best lawyers in New York State and probably the number one lawyer in the state when it comes to environmental law. As can then be expected, the papers are extraordinarily strong and well drafted when it comes to stating the suit’s two-pronged attack challenging to the environmental review. Notwithstanding, we find ourselves more immediately fascinated by the public purpose challenge to the use of eminent domain.

Multi-acre Megadevelopment Just a “Starry-eyed Vision”

The city wants to take 61 acres away from those in the neighborhood and give a single developer a 75-acre monopoly for what is likely to be 30 or more years of development. The plaintiffs’ refer to this in their lawsuit as only a “starry-eyed vision” and not a “carefully formulated economic plan” which is what the U.S. Supreme Court’s Kelo case would require at a minimum. The Office of the Deputy Mayor for Development and Rebuilding (the Office held until recently by Deputy Mayor Daniel Doctoroff and now filled by Deputy Mayor Robert Lieber) which is responsible for this project is quoted in the petition as saying that “there is currently no specific development plan.” “In other words,” says the lawsuit, “the city intends to condemn property to implement a development plan that has not even been created yet.”

The actions of the city have already brought harm to the residents of Willets Point. Even so, the suit’s challenges to the environmental review point out that for various reasons it remains to be determined that anything approximating what is being talked by the city is practically achievable.

“Starry-eyed Vision”: Excuse to Create Developer Monopolies and Holes in the Ground

In our Will It Come series we were similarly inclined to think that the city’s vision seemed more than a trifle “starry-eyed.” Would that we had used the phrase. It occurs to us that the city is attracted to these “starry-eyed visions,” Atlantic Yards being another example, more as an excuse to transfer huge tracts of land from many small owners into the hands of single-developer monopolies. After such transfers, what the project will actually turn out to be then depends upon those monopoly developers. Given the time frames involved what these developers may thereupon build is highly speculative. In the meantime, each generates a giant hole in the ground. In fact, given the 30 or so years it may likely take to fill holes created for either the Willets Point or Atlantic Yards megadevelopments, it is highly speculative that the developers to whom the monopolies are given will be around. Case in point: Forest City Ratner, the developer for Atlantic Yards and one of the developers the city was considering for Willets Point.

Developer Monopolies, Developer Demise and Disappearing Definitions of Public Benefit

The city determined to give Forest City Ratner a bidless monopoly for Atlantic Yards back in 2003. The project has not yet broken ground. Yet already, in the fraction of the 30-year time horizon the megaproject might take, it appears that the developer is very likely to financially succumb and go out of existence. When it does, the definition of what the project is supposed to be essentially disappears with it because the project seems to be little more than what Forest City Ratner has from time to time decided to define it as. As for the financial demise of Forest City Ratner, we think that it couldn’t happen to a subsidy-seeking company that deserves it more.

For more on the pending financial demise of Forest City Ratner see: Tuesday, March 17, 2009, Three months later, Morningstar again says Forest City Enterprises stock is worthless, Thursday, March 12, 2009, Purchase of FCE bonds, sale of FCE properties suggest corporation faces unsteady fate, March 11, 2009, Forest City in the News: Financial Straits Edition, March 16, 2009, Forest City in the News: Financial Straits Edition, Forest City Enterprises, Short on Money, Abandons Fresno Project, 3.14.09, and reporting on a Cleveland Crain’s article, Forest City Enterprises Dumping the Good Stuff Into a Bad Market, 3.17.09.

Abrupt Changes in Project Definition Even in Mid-construction of a Building

How strapped for cash is Forest City Ratner? One newly emerging story provides a clue. The Ratner firm is in the middle of building the Beekman Tower. The Beekman was supposed to the tallest (and probably strangest-looking- it’s Gehry-designed) residential apartment building in New York City. Though construction has only reached floor 38 of its proposed 76 stories, it is already looming oppressively over other buildings to the southeast of City Hall Park. Astoundingly, although the building is actually in construction Forest City Ratner has reportedly filed building plans to cease construction at the 38th floor, right where it is now, only midway up. (See and hear: WNYC’s Downtown Housing Complex May Downsize, by Matthew Schuerman, March 19, 2009.)

Beekman Symbolizes . . . . ?

One wonders. It is amusing to toy with the idea that the building might have been stopped by the mayor himself when he realized how the immensity of the building in his own City Hall backyard might stand as a symbol to influence the debate over his administration’s sell-off of the public realm. (See: Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart.) Realistically, however, we must conclude that this is just a stark example of Forest City Ratner’s reversal of fortune.

Mega-Openings for Mega-Change

The emerging story of the Beekman, just one building, reminds us what we should always remember: Things change. The bigger and more long-term the project, the bigger the potential for changes. When Battery Park City started construction of its first buildings in 1980 all of its residential construction was supposed to be middle-income housing. 30 years later, with Battery Park City almost completed, only a minor fraction of it is middle-income or affordable housing.

It Doesn’t Take a Bankruptcy to Redefine a Monopoly Megadevelopment

It doesn’t even require the bankruptcy of a company like Forest City Ratner to make entirely speculative in nature decades-long megaprojects over which developers have been given rights. All it takes is a change in the company’s financial condition or the economy and whatever “starry-eyed vision” the city accepted can change dramatically. Even with Forest City Ratner still technically on the scene there are no New York politicians who know what currently constitutes the project. That is, if they ever did.

As City Councilman David Yassky recently commented “I don't think the project as put forward by Forest City Ratner and approved by the State is going to be built. There just isn't the funding for it. It doesn't work in this economy. It's really time to go back to basics and say 'what do we want at that site?'” (See: Atlantic Yards on BCAT. Councilman Yassky Makes Some Interesting Comments, 2.23.09) And people like William Thompson, the City Comptroller and candidate for mayor, are noting that they don’t know what the Atlantic Yards project is.

The Atlantic Yards megadevelopment is totally undefined even though it is, in theory, much farther along than the Willets Point megadevelopment that is many acres more than Atlantic Yards. Perhaps the most defined aspect of Atlantic Yards, the proposed arena, is being subjected to such a total redesign-overhaul that it will be unrecognizable and unlike anything that was previously officially speculated about.

Private Developers Should Not Define Public Benefit

Of course, it is not good for megadevelopments to be designed by developers/subsidy collectors who will thereby be defining the benefit that will be delivered to the public. Norman Oder of Atlantic Yards Report astutely picked up that this is even acknowledged by city officials when it serves them to do so. “Having a for-profit developer write these zoning amendments is the equivalent of having a Big Tobacco lobbyist write anti-smoking legislation,” says a city official. They were talking about Coney Island, but they could be talking about the design of Atlantic Yard’s 22 acres or the 75 acres of Willets Point. (See: Tuesday, March 17, 2009, City criticizes developer for writing Coney zoning amendments, but has not criticized source of AY design guidelines and the original Daily News article providing source materials, Local Brooklyn politicians push developer's zoning changes for Coney Island, by Rachel Monahan, Sunday, March 15th 2009.)

Public Benefit is Vague When “Defined” by Private Developers Pursuing Private Benefit

It isn’t good to have developers/subsidy collectors drive the design and definition of the project and benefit the public is getting. When you give a megadevelopment monopoly to single developer that is exactly what you are doing. We have commented before that granting these monopolies before projects are defined allows developers to blackmail the public for delivery of more public subsidy, something that Forest City Ratner has already proved it can and will do. An example: Forest City Ratner’s aforementioned Frank Gehry-designed Beekman project in Manhattan. (See: Monday, September 8, 2008, Endorsements for Paul Newell for 64th Assembly District Seat.)

Production of Possible Public Benefit Becomes Trade Secret

The problem is that with an undefined project which has been given to a developer as a monopoly, the developer’s financial needs drive what the project is. That is unless and until the secret of what the project is goes with the developer/subsidy collector to their financial grave.

We have learned that assigning the project’s creation to the developer turns what should be public information into a privatized “trade secret” that the government helps conceal from the public. (See: Friday, February 20, 2009, Is the cost of Atlantic Yards now a "trade secret"? NYC EDC foils FOIL request.)

With these trade secrets intact, the developer/subsidy collector first designs the project to provide the level of private benefit and profit for themselves that they find satisfactory. At least in the case of Atlantic Yards, this level of private benefit was not weighed against the level of benefit that the developer designed the project to possibly deliver to the public. For a discussion of recent public agency testimony on this subject see: Missing a Leg To Stand On: ESDC Didn’t Consider Developer Profit, the Main Thing Atlantic Yards is About (Thursday, March 5, 2009).

Forest City Ratner: Reports of Seedy Lobbying

Gardeners talk about how dying plants parched for water and nourishment don’t curl up and die in the way that you might intuitively expect: Before they succumb, the dying plants put all their remaining resources and energy into flowering and seeding. Similarly, the financially parched Forest City Ratner, while doing little else right now (certainly not building) is reportedly spending huge sums on lobbying right now. All told when federal lobbying is added to the lobbying of New York state and local officials, the sum is assuredly exceeds a million this year. (See: Monday, March 16, 2009, Despite Atlantic Yards slowdown, Forest City Ratner spent $928,652 in 2008 on city/state lobbying.

Turns out to Be a Small World When You Are Too Big: DDDB Points Out How AIG Bailout and Atlantic Yards Have Collided

Because they are both so big, it is perhaps not surprising that a link has been found between the AIG and Atlantic Yards. “Too big to fail” in the case of the scandalized insurance giant AIG and just too damn big in the case of Atlantic Yards. (BTW: Remember Willets Point is bigger.)

As people closely following the scandal know, AIG has been routing federal bail out money around the world and to Wall Street, essentially buying favor with big firms and banks by unnecessarily paying 100% on the dollar to extinguish collateral obligations which should have been extinguished with much lower negotiated discount sums. This has turned into windfall infusions of cash, a counterintuitive reward for financial companies who (foolishly?) placed their bets on AIG’s unregulated derivatives and CDO division being sound. As Develop Don’t Destroy pointed out, and a number of news organizations are following up upon, because Barclays Bank received substantial windfall moneys in this fashion that money is essentially funding the Barclays $400 million vanity advertising expenditure on the naming rights for Atlantic Yards arena. That vanity expenditure was likely to be cancelled and then Barclays received the windfall and extended its commitment to the name rights advertising. (See: Money: Taxpayers to AIG to Barclays to Ratner, 3.16.09, U.S. Taxpayers To Pick Up Tab for Barclays' Vanity Project, 3.17.09, Gonzalez: If Ever Built, Call It "American Bailout Arena" 3.17.09, Following the AIG Bailout Money to Brooklyn, 3.17.09, "U.S. Taxpayer Bailout for U.K. Bank Center", 3.09.09.

The latest on this is that City Council Member Tish James is calling on Barclays to pull out of the naming-rights deal saying:

“Taxpayers are more willing to support efforts to free up lending for critical needs but they will not and should not support frivolous naming-rights deals like this one”

“Deals like this put the legitimacy of all future public spending in jeopardy, as well as jeopardize public trust in the government’s commitments of public money. . .”
(See: Councilwoman James: Barclays Should Pull Out of Naming-rights Deal, 3.18.09 and March 18, 2009, Trickle-down economics in Brooklyn, by Michael O'Keeffe.)

AIG and Big Monodeveloper Megadevelopments: The Thematic and Cultural Link of Subsidy Bear-Hugs

The above story about AIG/Atlantic Yards links is certainly arresting but we see other AIG/Atlantic Yards connections that may be even more worthy of attention, involving the tales of the $160 million in “retention bonuses” now generating outrage. (The total amount of these retention bonuses is eventually supposed to tally around one billion dollars.)

Consider the similarities: Like Forest City Ratner, huge AIG was headed for bankruptcy. Essentially, AIG was bankrupt except for the fact that the government stepped into a subsidizing partnership relationship with AIG. Through its subsidies, the government owns 79.9% of AIG. Similarly, the government is subsidizing Atlantic Yards so heavily with taxpayer money that it is paying for substantially more than half of the $4.4 + billion price tag of Atlantic Yards. In each case we are discovering how rushed and badly thought out the government’s provision of subsidies has turned out to be.

AIG’s undiscounted billions of dollars in payouts to banks like Barclays are an example of how poorly managed the AIG government subsidies are, but people probably understand the problem reflected in the case of the AIG “retention bonuses” better. Let’s look at the roots of the problem. First, AIG insiders made a bet that the government would not let AIG fail, that the government would step into the trap of a debilitating subsidy bear-hug. (Had the government let AIG go into bankruptcy any “bonuses” could have been restructured out of existence.) Second, the AIG insiders used their inside advantage and knowledge to stay a step ahead of the government in engineering a diversion of government subsidy funds to their personal benefit.

The Self-Interested Behavior Evident at AIG

The evidence in the case of AIG? At the time the contracts were written for the “retention bonuses” it was clear that AIG was headed for a bad year. We would expect that somebody in the know would have understood that AIG was very likely tubing. The contracts were written by insider-drafters to protect insider-recipients of the bonuses by specifying that if (as certainly turned out to be the case) 2008 was a worse financial year than 2007 the bonus payments would be no less than they had been in 2007. Though the bonuses were officially “retention bonuses” they went also to individuals who left the firm. As Hank Greenberg, former head of AIG (who was forced out after an Eliot Spitzer investigation) pointed out on Charlie Rose Tuesday night, the bonuses vitiated the purpose of provisions pursuant to which the special AIG unit had been set up that were structured so that the profits (or lack thereof) of people in that AIG unit would be at risk if there was poor performance.

The AIG unit not only wasn’t profitable, it took AIG into virtual bankruptcy. The New York Times front page print edition headline dubs it the “Havoc-causing Unit.” (The on-line edition changes the headline. See: 418 Got A.I.G. Bonuses; Outcry Grows in Capital: Data From Cuomo’s Office Show Payments to Nearly All in Havoc-Causing Unit/Outcry Builds in Washington for Recovery of A.I.G. Bonuses, By Jackie Calmes and Louise Story, March 17, 2009.)

Forest City Ratner’s Similarly Self-defeating Subsidy Bear-hug: The Rewards for Havoc and “Bring Your Own Blight”

Similarly, Forest City Ratner is hoping that the government will enter into a self-defeating subsidy bear-hug even if it is turning into a zombie developer. The theory with AIG was that sufficient additional “havoc” would be wreaked if AIG was not saved. Similarly Forest City pursuing a BYOB (“Bring Your Own Blight”) policy has done everything it could to make a hole in the ground big enough so that politicians could be convinced that they had no other choice but to accept its zombie subsidy bear-hug. (See: December 3, 2008, Lessons from the Ward Bakery demo.*) This is the logic the city is setting up for at Willis Point as well.

(* The latest on the BYOB front materialized yesterday. It turns out that all of the reported crime relied upon in order to find “blight” in the Atlantic Yards footprint was actually in the new shopping mall buildings built, owned and operated by Forest City Ratner. See: Wednesday, March 18, 2009, Case closed (and Blight Study bogus): high crime in Sector 88E relates to Ratner's malls, not AY footprint.)

Terminal Frustration: Obama’s Crew Were Flubbing AIG

The men the Obama administration appointed to handle the AIG bailout have been flubbing it. Probably too influenced by Wall Street’s point of view, they just didn’t get what was wrong. They started out with a tone-deaf handling of the bonuses this past Sunday on the talk show circuit where they were saying that the AIG bonuses were contracts that had to be honored and that there were also policy reasons to honor the “contracts” which means that they probably weren’t thinking very hard about how to get out of them. The sanctity of contract theory was defended by Andrew Ross Sorkin of the New York Times. (See: The Case for Paying Out Bonuses at A.I.G., March 16, 2009.) As for the additional policy reasons to retain these people, Sorkin writes:

Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.
Fallacy of Giving People Rights to Clean Up Their Own Mess

The way in which the retained AIG staff unnecessarily paid out windfall payments to banks like Barclays on an undiscounted, unnegotiated basis belies Mr. Sorkin’s theory. Besides, the AIG personnel involved had previously demonstrated their incompetence (many didn’t stay around anyway); they have now throughly demonstrated their venality and, in a tremendously down Wall Street market, there are more than enough competent individuals to easily hire more competent replacements.

In yesterday’s Times it was pointed out that it would not be difficult to replace the individuals these bonuses were meant to “retain” (Economic Scene: Paying Workers More to Fix Their Own Mess, by David Leonhardt, March 17, 2009.)

Mr. Leonhardt writes:

. . . . executives and bankers had an incentive to create rules that would reward them no matter what. The country is now living with the consequences.
So any attempt to build a new financial system, one that’s less susceptible to bubble, bust and bailout, will have to include a new approach to pay.
* * * *
Simon Johnson, a former chief economist at the International Monetary Fund, has pointed out that in financial crises, bankers often exaggerate the difficulty of cleaning up their mess. They do so partly to justify their own continued importance and also to fight off calls for a government takeover of banks. In reality, Mr. Johnson says, the mechanics of cleaning up hobbled banks turned out to be fairly straightforward during other recent crises, like the Asian one in the ’90s.
* * * *
Throughout this crisis, policy makers, starting with President George Bush and Ben Bernanke and now including President Obama, have been a bit too deferential to Wall Street.
A Clarion Call to Repudiate Self-Serving Contracts

While it is important to have a world where contracts are honored, the self-serving background under which these contracts were crafted certainly provides grounds for their repudiation. That is what President Obama, his Treasury Department officials and just about everyone else are now calling for. The contracts ought to be void as against public policy since they were premised upon an expectation (and actually required) that the government would rescue AIG from bankruptcy to protect the public from the jeopardy the AIG division manufactured.

The self-serving “contracts” with zombie developer/subsidy collector Forest City Ratner respecting Atlantic Yards ought to be similarly repudiated. There are probably even more grounds and reasons for doing so than with the AIG retention bonus contracts. (See: Friday, December 26, 2008, A New Year’s Revolution List (Starting 2009 Off Clean: Pull the Plug On Atlantic Yards)) We think that politicians who are not exploring these options are behaving in fashion similarly tone-deaf to the earlier behavior of Timothy Geitner and his staff.

Bloomberg Administration’s Embrace of Zombie-Hugs

What is the Bloomberg administration likely to do? It seems that the primary goal of the Bloomberg administration in situations like Atlantic Yards and Willets Point is not to build particular projects for which it has only “starry-eyed visions” but only to put large tracts of property into the hands of monopoly developers. It is likely that the Bloomberg administration will not want to pull the plug on these transfers until such limping developers have reached the ultimate nadir of a complete and total financial demise.

Keeping up with the Updates on the Declining Willets Point Developer List

We should note that super-large megaprojects reduce to a very small club, the list of “competing” developers that might (and sometimes don’t actually) “bid” for the development. After our Will It Come series it was reported how the original list of eight potential monopoly developers for Willets Points had dwindled to five, partly by reason of Forest City Ratner’s financial debilitation, and that a realistic appraisal probably thereupon reduced that list to what may be only two developers. (See: Friday, December 19, 2008, Let's take a look at the Willets Point finalists, part 1. and Tuesday, January 27, 2009, Let's take a look at the Willets Point finalists, part 2) Our own guess is that despite its recently reported problems, Muss Development probably still considers itself in the running. Should they?

These short lists of what must be very big developers means that every developer on these lists is likely to have exceptional access directly to the mayor.

The Zombie Developer “Que Sera, Sera” Answer to the “Whatever That Might Be” Theory of Determining Public Purpose

It may seem that we have gone rather far afield from where we started; talking about the Willets Point laws suit. Not really. Asserting that the state and federal constitutions require that plans justifying proposed condemnations must be reasonably ascertainable so that if the condemned property owners “are to be forced to sacrifice their livelihoods, they at least have the right to know the use for which their sacrifice is made” the papers declare (in paragraph 114 of the petition):

New York City cannot take Petitioners' businesses, property and homes based solely on the assertion that the future use of the property -- whatever that might be -- would be for a public purpose.
“Whatever that might be,” is so poorly defined as to be virtually unknown. But to the extent Atlantic Yards foreshadows the future of Willets Point the “whatever that might be” is likely to be similarly defined by the subsidy bear-hug embrace of a failing developer that is putting its own interest first and predominantly ahead of the public’s. Are the chances against lightning striking twice so remote that Willets Point will not also wind up with a failing developer? We don’t think so. It has only taken from March 2006 until now for six out of eight of the “finalist developers” to be falling off the list for various financial reasons. Therefore, why expect the remaining two won’t turn zombie or worse during the 30 or more years the firm finally selected will have a monopoly during which time it will be defining the answer to the question what public purpose is inherent in “whatever that might be.”

Reviewing the Review, The Insufficiency of What Goes on in a Bad Environment

Though the part of the Willets Point petition focusing on the city’s lack of defined public purpose in condemning Willets Point is the part that interests us most, we are not surprised by how much more of the legal petition focuses on the city’s failure to properly follow environmental review procedures. We are not surprised because our state and city government don’t seem to want New York citizens to have protective rights against government-assisted takings under either the Bill of Rights of either the federal or state constitutions. And our courts often don’t seem to want to contradict these abusive government inclinations. Therefore, challenges to environmental process almost have to serve as a stand-in for the better constitutional protections we lack. It is also not surprising because the lack of public purpose driving these land transfers to developers generates associated flaws in the environmental process.

Because the city transfers of sections of the city to monopoly developers have a different relationship with the determination of public purpose than they are supposed to, they treat the environmental review process as if it is a forgone conclusion rather than a deliberative process weighing and exploring relevant facts. Accordingly, the transfers flirt with disastrous flaws and attorney Michael Gerrard did a good job of identifying such flaws with respect to Willets Point.

The Deputy Mayor for Development’s Office Environmental Responsibilities: And How Was an Odd Grab of Power Exercised?

Notably, the role of “lead agency” for the required environmental reviews was undertaken by the Office of the Deputy Mayor for Development and Rebuilding. As noted earlier, this is the office held until recently by Deputy Mayor Daniel Doctoroff and now filled by Deputy Mayor Robert Lieber. The petition asserts that:

. . .the Deputy Mayor's Office is not even a proper lead agency, since it lacks the power to fund, approve or directly undertake the Development Plan. Indeed, the Deputy Mayor's Office has not even issued a statement of findings as required by SEQRA and CEQR.

Even if it were a proper lead agency (and it was not), however, the Deputy Mayor's Office also failed to perform the paramount function of a SEQRA lead agency: it failed to take a hard look at a number key environmental impacts of the Development Plan.
Getting more technical, the papers say:

The NYC Charter and Code do not vest any powers in the Deputy Mayor's Office -- rather, the Mayor must vest powers in the Deputy Mayor. See New York City Charter § 7 ("The mayor shall appoint one or more deputy mayors with such duties and responsibilities as the mayor determines."). Upon information and belief, there has been no applicable delegation of power to the Deputy Mayor's Office. Even if there were, it would not be sufficient to authorize the Deputy Mayor's Office to serve as lead agency, since under applicable precedent the role of lead agency is non-delegable. E.g. Coca-Cola Bottling Co. v. Board of Estimate of the City of New York, 72 N.Y.2d 674, 536 N.Y.S.2d 33 (1988).
We have noted the ongoing problems the mayor’s office has with conflicts of interest and delegations of authority when it comes to the large real estate transactions going on in New York. (See: Monday, February 2, 2009, The Good News IS the Bad News: Thanks A lot for Mayor Bloomberg’s “Charity”.) It would be too time-consuming to review them again here but one of the major concerns in this regard is about what kind of quid-pro-quoing could possibly be going on in the mayor’s office either directly or through his deputy mayors.

We find it interesting that Willets Point was under the auspices of the Deputy Mayor’s Office rather than being handled directly by a fully capable development agency. The petition offers a rationale furnished by the city administration for the Deputy Mayor’s office conducting the environmental review which is ominously unreassuring in terms of quid-pro-quoing (at paragraph 104):

In an effort to defend its role, the Deputy Mayor’s Office claims otherwise:
The Office of the Deputy Mayor for Economic Development is representing the City, which is undertaking this initiative, issuing the developer RFP, selecting the developer, and providing funding, and thus is the appropriate lead agency for this project.
Why would a city administration office that is incapable of taking a hard look at the environmental impact statements and which neglects to follow through with the required findings thereunder, be selecting the monopoly developer for a 75-acre swath of city acreage?

Detailing what Was Overlooked in Environmental Review

The petition goes on in excruciating detail documenting the ways in which the environmental review fell short. In addition to the state and city environmental review acts (SEQRA and CEQR) the petition deals with city failures to comply with:

• requirements of the New York State Department of Transportation
• the National Environmental Policy Act
• the Safe Drinking Water Act
• the National Interstate and Defense Highways Act of 1956
• National Fire Protection Association standards for adequacy of emergency response services
The lawsuit says that the Deputy Mayor’s Office failed to properly disclose significant, unmitigated adverse impacts to regional highways as well as failing to properly disclose the approval process for highway modifications, suggesting that (as is probably so) the city hasn’t even started the process of obtaining state or federal approvals.

Among other things the lawsuit says were not considered was significant new traffic congestion (with the location of ramps or even the possibility thereof not yet properly been considered):

61. One example of the severity of the impacts can be seen in the traffic on the ramp from the westbound Northern Boulevard to the southbound Van Wyck Expressway. Even on days without baseball games, a comparison of data tables in the FGEIS indicates that traffic on the ramp will drop during the weekday afternoon rush hour from 28.9 mph to 1.4 mph (!). (Ex. 1, FGEIS at 17-73, 17-77.) In other words, a person walking at an average speed of 3 mph wouldmove twice as fast as a car on the ramp.
Writing about the unaddressed prospect of the contamination of the aquifer under Willets Point:

88. Willets Point sits over an aquifer that has been designated a sole-source aquifer within the meaning of Section 1424(e) of the Safe Drinking Water Act. See 49 Fed. Reg. 2950 (Jan. 24, 1984). When the fill presses down on the soil, the fill will squeeze the soil like a sponge and inject its contaminants into the aquifer and New York City’s water system. (Ex. 2, Tab A - Adler Letter at 6-7.)
Aside from not taking the required hard look at these things the suit depicts the Deputy Mayor’s Office as cavalier. Asked to consider emergency response times when the highways are overburdened with new ramps (see above):

84. When these concerns were presented to the Deputy Mayor's Office, however, the Deputy Mayor's Office refused to evaluate them. Instead, the Deputy Mayor's Office offered – without supporting data or studies -- the extraordinary response that emergency services would not degrade at all.
Back to Kelo and the Violation of the Constitutional Protections Against Taking Without a Public Purpose

The suit points out that with none of these environmental considerations examined the development plan is not "finalized" and “indeed, it does not yet exist” and therefore cannot be upheld under Kelo as providing the public purpose required for a taking of private property. The suit points out that undetermined questions such as whether required access ramps can serve the project:

are not just an ancillary feature of the Development Plan, but rather “an integral part of the Plan.”
The suit says that without them the Kelo requirement of a “carefully formulated . . . economic development plan” is also absent, as well as Kelo’s requirement that the plan’s “purpose is legitimate and its means are not irrational.”

Parking the City’s “Starry-eyed Vision”

If, as appears, the city is incapable of envisioning the plan it wants for Willets Point with enough clarity to conduct a proper environmental review that can pass muster, perhaps the city should just plan on replacing Willets Point with a giant parking lot. After all, if Robert Moses had been allowed his wish Willets Point would have been turned into a parking lot for Shea Stadium though, now that it has survived about three-quarters of a century, Willets Point has succeeded in outliving Shea Stadium, just demolished, which was in use for only 44 of those years.

These days, saying that you want to tear down a time-tested neighborhood to put up a parking lot doesn’t pass muster with the public. That’s why "starry-eyed visions" are pressed into service. Still, without real plans, "starry-eyed visions" often turn into nothing more than parking lots. If Atlantic Yards foretells Willets Point’s future, pay attention: It looks exceedingly possible that much or all of the Atlantic Yards won’t be anything but a giant parking lot for decades. (See: The Municipal Art Society’s Atlantic Lots.)

Can it be? Is it possible that when the city speaks in terms of "starry-eyed visions" it is content when it gets parking lots instead?

(Above image representing the future of Atlantic Yards site from Municipal Art Society’s Atlantic Lots. Original Aerial Photograph by Jonathan Barkey.)

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