Violet Realty, Inc. v City of Buffalo Common Council

[*1] Violet Realty, Inc. v City of Buffalo Common Council 2006 NY Slip Op 52602(U) [18 Misc 3d 1122(A)] Decided on December 22, 2006 Supreme Court, Erie County Walker, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 22, 2006
Supreme Court, Erie County

Violet Realty, Inc., Petitioner,

against

City of Buffalo Common Council, Buffalo Urban Renewal Agency, 1097 Group, LLC, Respondents.



2006-7429



Robert E. Knoer, Esq.

Knoer, Crawford & Bender, LLP

Attorneys for Petitioner

68 Niagara Street

Buffalo, New York 14202

Marc A. Romanowski, Esq.

Phillips Lytle LLP

Attorneys for 1097 Group

3400 HSBC Center

Buffalo, New York 14203

John T. Kologa, Esq.

Jaeckle Fleischmann & Mugel, LLP

Attorneys for Buffalo Urban Renewal Agency

12 Fountain Plaza

Buffalo, New York 14202

Timothy A. Ball, Esq.

Alisa A. Lukasiewicz, Esq.

City of Buffalo Corporation Counsel

Attorneys for City of Buffalo Corporation Counsel

1100 City Hall

65 Niagara Square

Buffalo, New York 14202

Timothy J. Walker, J.

Petitioner, Violet Realty, Inc. (Petitioner) commenced this Article 78 proceeding by Notice of Petition against Respondents City of Buffalo Common Council (the "Common Council"), Buffalo Urban Renewal Agency ("BURA") and 1097 Group, LLC ("1097 Group") (collectively "Respondents"). Relevant here, Petitioner seeks a Judgment pertaining to the disposition of 50 Court Street (the "Premises"), as follows:

Declaring all actions of BURA and the Common Council authorizing the disposition of the Premises, as well as the Land Disposition Agreement executed pursuant to those authorizations ("LDA"), null and void; and

Mandating that BURA establish rules and procedures for designating a qualified and eligible sponsor prior to disposing of the Premises.

Petitioner's primary contentions are that actions by Respondents Common Council and BURA were arbitrary and capricious and were in violation of law. Respondents moved to dismiss the petition pursuant to CPLR 3211 based upon, inter alia, the applicable statute of limitations and for failure to state a claim, and has otherwise provided a complete record of all prior proceedings leading to Respondents's challenged actions.

FACTS RELEVANT TO THE DECISION

Ellicott Development Company, LLC ("Ellicott Development") and 1097 Group are related entities. In 2003, BURA made the Premises available for redevelopment. On or about January 15, 2003, Ellicott Development submitted a request to become the "Redeveloper" for the Premises. Ellicott Development proposed to construct a 200,000 to 300,000 square foot Class-A office building there, and on the adjacent property located at 30 Court Street (collectively, the "Project"). On January 23, 2003, BURA approved Ellicott Development as the "Redeveloper" for a six-month period.

Shortly after Ellicott Development's original submission, Petitioner sent a letter to Buffalo Common Council member Brian C. Davis, citing concerns about parking for the Project.

The Premises are located within the Downtown Opportunity District ("DOD") pursuant to the Charter and Code of the City of Buffalo ("Buffalo Code"). The DOD allows the establishment, as of right, of residential, office, retail and hotel uses, among others. See, Buffalo Code §511-71. 50 Court Street is abutted by the Liberty Bank Building, the Main Place Tower, the Main-Court Building, the Convention Towers, the Adams Parking Ramp and the Erie County Office Building.

The DOD is part of the City's Downtown Area Zone (See, Buffalo Code, Article VXII) and was created for the purpose of revitalizing Downtown:

The Common Council finds that the present Central Business District regulations, adopted in 1953, no longer represent current goals and objectives for the downtown area. The Common Council finds that a new zoning scheme for downtown is needed to build upon Downtown's recent revitalization, to support Downtown's role as the center of employment and [*2]growth in Erie and Niagara Counties, to enhance the entertainment, retail, residential and public uses of a zone therein and to take advantage of the development potential afforded by the Light Rail Rapid Transit and Main Street Pedestrian Mall.

(See, Buffalo code § 511-69).

Two approvals were required to proceed with the Project. First, the City of Buffalo Planning Board ("Planning Board") was required to grant Citywide Site Plan Approval under Buffalo Code §§ 511-145 and 511-146. Second, BURA, as the owner of the Premises, was required to execute a Land Disposition Agreement ("LDA") subject to final approval by the Common Council.

In December, 2003, an Application for Site Plan Approval was submitted to the Planning Board for a building consisting of eleven (11) floors and totaling 250,000 square feet plus two levels of underground parking. BURA was then designated as the lead agency pursuant to the State Environmental Quality Review Act ("SEQRA") and the Buffalo Code. After completing a detailed analysis of the Project, BURA issued a negative declaration on or about December 18, 2003. Thereafter, on or about February 26, 2004, Petitioner filed suit against the Planning Board, BURA and Ellicott Development (among others) concerning the Premises and/or Project ("Action 1").

On April 5, 2004, Ellicott Development proposed certain modifications (the "Revised Plans") including: (i) changing the top four floors of the building from hotel to office use; (ii) increasing the overall size of the building to approximately 335,000 square feet (increasing the amount of office space in the building from 180,000 square feet to 275,000 square feet); (iii) modifying the parking levels from two full levels to one and one-half levels; (iv) providing for a 15-foot step-back along the front of the building (Court Street); and (v) modifying the exterior of the building wall from a pre-stone design to a glass curtain wall design.

On May 4, 2004, the Planning Board held a public hearing to review the Revised Plans. At the meeting, Petitioner spoke in opposition. On May 28, 2004, BURA issued an amended negative declaration. The Project was then approved by the Planning Board on or about June 1, 2004. BURA later redesignated Ellicott Development as the "Redeveloper" on January 8, 2004 and again on July 8, 2004 (for successive 6-month periods).

Action 1 was ultimately dismissed by the trial court on July 27, 2004. Petitioner appealed, and the Appellate Division Fourth Department affirmed and upheld BURA's amended negative declaration. Violet Realty, Inc. v. City of Buffalo Planning Board, 20 A.D. 3rd 901 [4th Dept 2005]. Petitioner's motion for leave to appeal from the Fourth Department's decision was denied (In the Matter of Violet Realty, 5 N.Y. 3rd 713 [2005]. BURA again designated Ellicott Development as the "Redeveloper" for the Premises and the revised Project (previously approved by the Planning Board).

BURA and Ellicott Development then began negotiating the LDA and the purchase price for the Premises. At its November 23, 2005 meeting, BURA was asked to review a draft of the LDA. Petitioner attended the meeting, and submitted an offer to purchase the Premises, for the purpose of constructing a surface parking lot. During that meeting, the Chairman of BURA (then Mayor Anthony Masiello) explained that an 11-story office building with subsurface parking (proposed by Ellicott Development) was far superior to the surface parking lot proposed by Petitioner. He also noted that Ellicott Development's Project removed an eyesore from the [*3]corridor between Niagara Square and Lafayette Square, and that 1500 additional parking spaces had been recently created nearby at the Augspurger and Mohawk Ramps.

BURA then ordered two appraisals of the Premises. Upon review of the appraisals, BURA extended an offer to Ellicott Development to enter into the LDA at a price of Seven Hundred Thousand Dollars ($700,000), with One Hundred-Fifty Thousand Dollars ($150,000) of that amount to be held in escrow to be used for the cost of removing any foundation remnants at the site. On or about December 27, 2005, five of nine members of the Common Council voted in favor of the LDA.

After further negotiations between the parties, BURA approved a revised LDA on or about April 4, 2006, calling for a purchase price of Seven Hundred Thousand Dollars ($700,000) with no funds to be held in escrow. On May 4, 2006, the Common Council voted to approve the LDA by a 7-1 vote.

ANALYSIS AND DETERMINATION

A. Statute of Limitations.

New York's four-month statute of limitations requires that actions against a governmental body or officer be commenced within four months after the determination to be reviewed becomes final. CPLR 217(1). A determination is deemed final and an action accrues when a party is given unequivocal and unambiguous notice of a decision which is adverse to its position. Queensborough Cmty. Coll. V. State Human Rights Appeal Bd., 41 NY2d 926 (1977). See also, Mohawk Group, L.P. v. Town of Amherst Industrial Development Agency, 309 AD2d 1184, 1186 [4th Dept 2003]; Schultz v. Town Board of the Town of Queensburg, 253 AD2d 956, 957 [3rd 1998].

No such notice was provided to Petitioner until (at best) May 4, 2006, when the Common Council approved the LDA.

Equally important, the time period does not begin to run until the petitioner has "suffered a concrete injury not amendable to further administrative review and corrective action." (Matter of City of New York, 6 NY3d 540, 548 [2006]; see also, Matter of Best Pay Phones, Inc. V. Dept. Of Info. Tech. & Telecom. Of City of New York, 5 NY3d 30, 34 [2005]). Petitioner could not have suffered "concrete injury" until the Common Council approved the LDA. Until that event occurred, Petitioner's injury was only contingent - it would have suffered no injury at all if the LDA had not been approved.

Accordingly, the Petition was timely filed.

B. Merits of the Petition

Initially, the court notes that the record has been fully presented in the respective parties' papers and pleadings, and it is clear that no dispute as to the relevant and material facts exists. Therefore, the court will address the merits of the petition. (See, In the Matter of Nassau BOCES Central Council of Teachers, 63 NY2d 100 [1984]; Citizens Against Retail Sprawl v. Giza, 280 AD2d 234 [4th Dept 2001]; Rauer v. State University of New York, 159 AD2d 835 [3d Dept 1990]).

Section 501 of the Urban Renewal Law authorizes BURA to act to "protect and promote the safety, health, morals and welfare of the people of the state and to promote the sound growth and development" in order to combat blight by, among other methods, the "replanning, [*4]reconstruction, redevelopment, rehabilitation [and] restoration" of blighted areas, "the undertaking of ... private improvement programs related thereto and the encouragement of participation in these programs by private enterprise." NY Gen. Mun. §501 (McKinney 1999.) The Urban Renewal Law also authorizes agencies such as BURA to establish and implement "rules and procedures" for the disposition of properties to private developers and for designating qualified and eligible sponsors. NY Gen. Mun. §507(2) (c) and (d).

When analyzing agency decisions, courts must limit their review to whether the action was taken in accordance with an agency's own rules and regulations; and whether the rationale supporting the agency's decision is supported by the facts in the record. (Amere Holding Corp. v. Bell, 44 AD2d 578 [2d Dept 1974], rev'd on other grounds, Amere Holding Corp. v. Bell, 37 NY2d 925 [1975]). Where an agency has been endowed with broad powers to regulate in the public interest, the New York Courts are loathe to reject reasonable acts designed to further the regulatory scheme. (See, City of New York v. State of New York Commission on Cable Television, 47 NY2d 89, 92 [1979]). Where property is not disposed of pursuant to a competitive bidding process, urban renewal agencies are not required to use any particular method to select a sponsor qualified under the Urban Renewal Law. (See, Jo & Wo Realty Corp. v. City of New York, 157 AD2d 205, 212, aff'd, 76 NY2d 962 [1990]; see also, Cicalo v. New York City Housing and Devel. Admin., 79 Misc 2d 769, 774 [NY Co. 1974]).

1097 Group was designated as the "Redeveloper" of the Premises and made a party to an LDA with BURA pursuant to BURA's "Redeveloper Procedures Guidebook"(the "Guidebook"). The Guidebook contains the established rules and procedures prescribed by BURA as required by GML §507(2).

The Guidebook requires that, following "approval of the general Project concept and Site Plan," the Redeveloper must submit a letter to BURA "requesting to be designated as the Redeveloper of the selected site," which letter must include specific required information. After the letter has been submitted to BURA for at least one week, BURA may meet to discuss the requested designation and, if deemed appropriate, to designate the applicant as the site Redeveloper, subject to the completion of certain enumerated tasks. Following the designation of a Redeveloper for a particular site, the Guidebook provides that BURA will then negotiate an LDA with the Redeveloper which must ultimately be approved both by BURA and the Common Council.

On January 15, 2003, Ellicott Development submitted a letter to BURA requesting to be designated the Redeveloper of the Premises. On January 23, 2003, BURA reviewed Ellicott Development's request and designated it as the "Redeveloper." BURA and 1097 Group then began negotiating the LDA which was approved by BURA on April 4, 2006 and by the Common Council on May 4, 2006.

Petitioner incorrectly cites 9 NYCRR § 1802 for its claim that BURA failed to comply with procedural requirements applicable to the disposition of the Premises. These regulations are only applicable to projects involving State funding. This is confirmed by Section 507(2)(d) of the Urban Renewal Law, which provides that the Commissioner's approval need only be obtained where the Project is "aided by a state loan, periodic subsidy or capital grant or in which [A]pplication has been made for such loan, subsidy or grant." NY Gen. Mun. §507(2)(d) (McKinney 1999). See also, 9 NYCRR 1802.2 ("Disposition Procedures"), which provides that "[w]here State financial assistance is to be made available or where an [a]pplication therefore [*5]has been made," the agency must undertake certain required actions to satisfy the New York State Commissioner of Housing and Community Renewal. (Emphasis added).

The record reflects that the Project does not involve any state loans, subsidies, grants or other state funding. Because no such aid has been or will be required, 9 NYCRR 1802 is inapplicable here.

The New York courts have afforded urban renewal agencies broad discretion when evaluating the suitability of projects. As stated in Amere Holding Corp. v. Bell, 44 AD2d 578 [2d Dept. 1974], rev'd on other grounds, 37 NY2d 925 [1975], the question is whether the action of BURA was "arbitrary and capricious." The courts have repeatedly refused to interpose their discretion into the management and operation of public enterprises. Nor will they usurp the lawful acts of elected officials charged with the management of these enterprises. (Abrams v. New York City Transit Authority, 39 NY2d 990, 992 [1976]). Nothing in the Urban Renewal Law requires an agency to reach a particular result on any issue, or permits the courts to second-guess the agency's choice. (Matter of Jackson v. New York State Urban Dev. Corp., 67 NY2d 400, 416-17 [1986]). A decision by an urban renewal agency can only be annulled if arbitrary, capricious or unsupported by substantial evidence. (Id.) No such proof has been offered in this case.

Instead, the record establishes that BURA and the Common Council approved the LDA after determining that the City of Buffalo would be better served by an 11-story office building with Class-A office space and subsurface parking than by an additional surface parking lot. On November 23, 2005, BURA determined that there is a need for Class-A office space in downtown Buffalo; that the Project is a "quality, credible Project" which will eliminate two eye-sores in the corridor between Niagara Square and Lafayette Square; that the Project is a "far better project for the future of the City than parking lots"; and that, with regard to parking concerns, the City of Buffalo recently acquired 1500 enclosed and covered parking spaces in downtown Buffalo at the Augspurger and Mohawk ramps and that both are in close proximity to the Main and Court location.

On December 8, 2005, BURA determined that "a parking ramp is not a good reuse" of the Premises and that the Project would generate approximately $1.2 million annually in tax revenues. Then, after performing due diligence concerning the fair market value of the property, BURA extended 1097 Group an offer to enter into the LDA for the transfer for $700,000 with $150,000 to be held in escrow for the removal of underground foundation remnants, if necessary to build the new building. After further negotiations, 1097 Group agreed to remove the escrow provision.

Finally, on February 21, 2006 BURA determined that, based on the required "hard look", it had properly issued a negative declaration regarding the environmental impact of the Project and that no additional SEQRA action was necessary prior to Common Council action regarding the land transfer.

BURA exercised sound decision making on an extensive record after thorough review of all relevant information before deciding to enter into the LDA with 1097 Group. The Project was subject to a repeated review by BURA over the three years that the application was before the agency, thorough review by the Planning Board and further review and consideration by the Common Council. The Project was modified to comply with zoning requirements and the price was renegotiated after final appraisals were completed. There was no abuse of BURA's [*6]discretion in making its decisions concerning the Project or the disposition of the Premises by sale to 1097 Group.

The Court has reviewed and considered Petitioner's remaining contentions in opposition to the motion to dismiss and finds them to be without merit.

Accordingly, the motion to dismiss is granted, and the Petition is hereby dismissed.

Respondents shall submit a Judgment in accordance with this decision and order within ten (10) days hereof.

_____________________________________

Hon. Timothy J. Walker, J.S.C.

ENTER: