Residents failed to show ESDC acted without rational basis. Brooklyn residents sued the Empire State Development Corporation, the MTA and the State Public Authorities Control Board, arguing that the agencies wrongfully approved the $4 billion project to redevelop the Atlantic Terminal area. The project would replace residential and commercial structures with a mixed-use development that would include an 18,000-seat arena designed by Frank Gehry for the Nets professional basketball team, a 180-room hotel, 16 high-rise apartment and office buildings, and eight acres of open space. 3 CityLand135 (Oct. 15, 2006).

Residents claimed that ESDC violated the Urban Development Corporation Act, or UDCA, and the state environmental review process, or SEQRA, when it approved the project. They argued that ESDC is not authorized under the UDCA to undertake the project because ESDC wrongfully designated it as a “civic project” even though the sports facility would mainly serve a for-profit, private entity. Similarly, the residents claimed that ESDC violated the UDCA when it designated the project as a “land improvement project” to address blight, arguing that the project site includes areas “in the midst of a residential real estate boom” as owners are converting industrial buildings to residences to meet growing demand. Lastly, the residents accused ESDC of violating SEQRA by failing to take the requisite “hard look” at certain environmental concerns, such as the risk of a terrorist attack.

Supreme Court Judge Joan A. Madden rejected the residents’ arguments, finding that ESDC did not violate either the UDCA or SEQRA. Judge Madden affirmed the civic project designation, noting that the purpose of the UDCA is to engage private, commercial entities to serve certain public, civic purposes. Moreover, Judge Madden ruled that the sports arena would be used for “recreational purposes,” which include attending sporting events as a spectator. Therefore, the construction of the sports arena falls within the definition of a civic project.

Judge Madden also affirmed ESDC’s land improvement designation, noting that the majority of the project site, including the Vanderbilt Yards, falls within the Atlantic Terminal Urban Renewal Area, which the City has designated as blighted ten times, first in 1968 and most recently in 2004. The unblighted parcels within the project site are part of an overall plan to improve a predominately blighted area, which, according to Judge Madden, forms a sufficient rational basis for ESDC’s determination.

Lastly, Judge Madden ruled that ESDC took the necessary “hard look” at all the potential environmental concerns in its findings, noting that although terrorism represents a valid public policy issue, it is not covered by SEQRA.

Develop Don’t Destroy Brooklyn, Inc. et al. v. Urban Development Corp. d/b/a Empire State Development Corp. et al., 104597/2007 (N.Y.Cty.Sup.Ct. Jan. 11, 2008) (Madden, J.) (Jeffrey S. Baker, Esq., for Petitioners; Philip E. Karmel, Esq., David Paget, Esq., for ESDC).

CITYLAND Comment: Petitioners plan to appeal this decision.