Court criticizes ESDC over Atlantic Yards

Court orders ESDC to consider whether extended timetable for project’s completion requires supplemental environmental review. In 2006, the Empire State Development Corporation approved the general project plan for Forest City Ratner Companies’ Atlantic Yards project in Brooklyn. The $4 billion project includes a sports arena and sixteen high-rise buildings. Ratner agreed to purchase air rights from the Metropolitan Transportation Authority at the beginning of the project in order to facilitate the development of six of the buildings. The project’s environmental review assumed a tenyear build out for the project and a completion date of 2016.

In June 2009, Ratner and the MTA renegotiated the terms of their agreement to permit Ratner to acquire the air rights over a fifteenyear period extending to 2030. In September 2009, ESDC adopted the project’s modified general project plan. ESDC continued to assume a ten-year build out with an estimated project completion date of 2019, and concluded that no additional environmental review was required. Two community groups, Develop Don’t Destroy Brooklyn and the Prospect Heights Neighborhood Development Council, challenged ESDC’s adoption of the modified general project plan. The groups claimed that ESDC ignored the impacts of the renegotiated MTA agreement on the project’s time frame for construction and should have concluded that additional environmental review was warranted.

After the community groups filed their challenge, ESDC and Ratner in December 2009 signed a master development agreement to implement the modified general project plan. The master development agreement required Ratner to substantially complete the project’s final phase in 25 years or by 2035.

Rather than submitting the master development agreement during oral arguments, ESDC relied on a one-page summary of the master development agreement and the modified general project plan to support its reasoning for continuing to use a ten-year build out estimate. The one-page summary cited to the modified general project plan, which required Ratner to use commercially reasonable efforts to complete the project by 2019. Justice Marcy S. Friedman found that ESDC had a rational basis for relying on the ten-year build out and rejected the challenge.

The community groups sought to reargue the case and requested that Justice Friedman accept the master development agreement into the record. Justice Friedman granted the request, finding that ESDC failed to meet its obligation to submit a complete and accurate record during the initial challenge. Justice Friedman criticized ESDC, noting that ESDC admitted in reargument motions that it had anticipated that the master development agreement would include a 25-year completion date prior to approving the modified general project plan. According to Justice Friedman, the MTA agreement’s extension for acquiring air rights, and the development agreement’s 2035 completion date and less stringent enforcement measures raised a “substantial question” as to whether ESDC had a rational basis for using a ten-year build out ending in 2019. She ordered ESDC to make additional findings on the impact of both agreements on the continued use of the ten-year build out, and on whether additional environmental review was required or warranted.

Develop Don’t Destroy Brooklyn Inc. v. Empire State Development Corporation, 2010 NY Slip Op 51907 (1st Dep’t Nov. 9, 2010) (Friedman J.) (Attorneys: Philip E. Karmel, for ESDC; Jeffrey Baker and Albert K. Butzel, for community groups).

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