Matter of Chelsea Bus. & Prop. Owners' Assn., LLC v City of New York

[*1] Matter of Chelsea Bus. & Prop. Owners' Assn., LLC v City of New York 2011 NY Slip Op 50059(U) [30 Misc 3d 1213(A)] Decided on January 10, 2011 Supreme Court, New York County Madden, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 10, 2011
Supreme Court, New York County

In the Matter of the Application of Chelsea Business & Property Owners' Association, LLC, d/b/a CHELSEA FLATIRON COALITION, Petitioner For an Order Pursuant to Article 78 of the Civil Practice Law and Rules

against

The City of New York; SETH DIAMOND, Commissioner for the Department of Homeless Services for the City of New York ("DHS"); GEORGE NASHAK, Deputy Commissioner for Adult Services for DHS; ROBERT D. LIMANDRI, Commissioner for the Department of Buildings of the City of New York ("DOB"); FATMA AMER, P.E., First Deputy Commissioner for DOB; JAMES P. COLGATE, R.A., Assistant Commissioner to Technical Affairs and Code Development for DOB; VITO MUSTACIUOLO, Deputy Commissioner for the Department of Housing, Preservation & Development of the City of New York; BOWERY RESIDENTS' COMMITTEE, INC.; 127 WEST 25TH LLC; and DANIEL SHAVOLIAN, Respondents



113194/10



Daniel S. Connolly, Esq. for petitioner

Bracewell & Giuliani, LLP

1251 Avenue of the Americans, 49th floor

NY NY 10020

212-50-6100

Christopher Gene King, Esq., Assistant Corporation Counsel, Environmental Law Division for respondent City of New York

The City of New York Law Department

100 Church Street NY NY 10007

212-788-1235

Randy Mastro, Esq. for respondent Bowery Residents' Committee

Gibson Dunn & Crutcher, LLP

200 Park Avenue

NY NY 10166

Claude Castro, Esq. for respondents 127 West 25th LLC and Daniel Shavolian

Claude Castro & Associates, PLLC

355 Lexington Ave, Suite 1400

NY NY 10017

Joan A. Madden, J.

Respondent Bowery Residents' Committee, Inc. ("Bowery Residents") seeks a stay of the motion of petitioner Chelsea Business & Property Owners' Association, LLC, d/b/a Chelsea Flatiron Coalition ("Chelsea Coalition") for a preliminary and permanent injunction, and a stay of the underlying Article 78 proceeding in which Chelsea Coalition challenges, inter alia, the Department of Building's ("DOB") issuance of certain building permits.[FN1] Bowery Residents seeks a stay on the grounds that Chelsea Coalition has failed to exhaust its administrative remedies before the Board of Standards and Appeals ("BSA") and that BSA's determination may render this proceeding moot. Chelsea Coalition opposes a stay arguing that exhaustion is not required where, as here, the issues before BSA relate solely to questions of law, or where the administrative remedy cannot offer complete relief against irreparable harm created by the challenged acts. Chelsea Coalition further argues that the court should reserve judgment pending a hearing on the preliminary injunction, and if a stay is granted, it should only apply to the claims based on the DOB permits and zoning issues, and not to the other relief sought.

In the Petition, Chelsea Coalition seeks an order: (1) revoking Bowery Residents' construction permits on the grounds that the DOB failed to enforce certain provisions of the Zoning Resolution of the City of New York ("ZR") and of the Administrative Code of the City of New York, and, that DOB's determinations are arbitrary and capricious; (2) compelling respondent Department of Homeless Services ("DHS") to submit its contract with Bowery Residents regarding the proposed facility to the Comptroller for registration; (3) compelling DHS to conduct a Fair Share review in accordance with Charter § 203; (4) compelling the City to submit the proposed facility to Uniform Land Use Review Procedures ("ULURP") in accordance with Charter§197-c; (5) compelling DHSto conduct environmental reviews under the State [*2]Environmental Quality Review Act ("SEQRA") and City Environmental Quality Review ("CEQR"); (6) preliminarily and permanently enjoining DOB from issuing any construction permits forworkon the proposed facility until compliance with all applicable laws has been demonstrated; and (7) preliminarily and permanently enjoining DOB from issuing any certificate of occupancy for the proposedfacility or permitting occupancy of the proposedfacility until compliance with all applicable laws has beendemonstrated.

This proceeding involves the renovation of a building located at 127 West 25th Street in Chelsea. The renovations are pursuant to a lease between the landlord and Bowery Residents, which provides accommodations and other services to the homeless. According to Bowery Residents, the renovations are to implement programs to be located within the premises, including a Reception Center and a 200-bed shelter. In his affidavit, Lawrence Rosenblatt, the Executive Director of Bowery Residents, states that the primary goal of the renovation "is to provide temporary, transitional accommodations to New York City's neediest homeless individuals and to help them find permanent housing." However, as explained at oral argument by counsel for Bowery Residents, the plan envisions an "integrated campus," in which part of the premises will be used for providing ancillary services to its temporary residents, many of whom have substance abuse and mental health issues, and part of the premises will be used for professional offices for Bowery Residents' staff. These services include intake assessments, physical and mental evaluations, and certain treatment and counseling from physicians, nurses and other providers. Lawrence Rosenblatt describes these services as "ancillary health related components [that] are secondary to and merely supportive of . . . [the] primary purpose . . . [and] the overwhelming majority of staff at the Chelsea facility will be employed in non-medical functions."

Chelsea Coalition contends that the DOB in approving permits for the proposed facility improperly designated the premises a "transient hotel" when in reality it is a "community facility." In support of this contention, Chelsea Coalition argues that the proposed facility will be a 328-bed, 100,000 square foot in-patient and out-patient drug and alcohol rehabilitation facility and homeless shelter for the mentally ill. Chelsea asserts that the proposed facility is " a community facility' under the ZR such as a non-profit institution with sleeping accommodations,' a health-related facility,' a domiciliary care facility' and/or diagnostic or treatment health care facility.'"[FN2] Chelsea Coalition contends that the DOB approved the permits by improperly designating the proposed facility as a Use Group 5 transient hotel and Use Group 6 professional offices. According to Chelsea Coalition, while a hotel and professional offices are permitted uses in the area under the ZR, a community facility such as the health care and social services facility at issue here, is not.

In support of its contention that the proposed facility is not a transient hotel within the meaning of the ZR and is in fact a community facility, Chelsea Coalition points out that the facility will not be open to the general public, that medical and counseling services will be provided, and that the plans include nurses' stations and examining rooms. Specifically, Chelsea Coalition asserts that half the building will be devoted to providing medical and various social [*3]services, and that the other half will be used for a homeless shelter. Chelsea Coalition also points to four sets of plans Bowery Residents has submitted in connection with the renovations, three to DOB and one set to the New York State Office of Alcoholism and Substance Abuse Services ("OASAS"). Chelsea Coalition contends that Bowery Residents submitted different sets of plans to different agencies, and as an example, points out that the plans submitted to OASAS detail nurses' stations and examining rooms, while those submitted to DOB do not.

Chelsea Coalition argues that the determination as to whether the DOB properly issued permits and whether the proposed facility is a community facility are questions of law which do not require exhaustion of administrative remedies. Chelsea further argues that a community facility implicates community oriented processes, such as environmental reviews pursuant to CEQR and SEQRA, and reviews under fair share laws and ULURP. Chelsea Coalition argues that continued construction without such reviews results in irreparable harm as it deprives the community of input into governmental decision making provided for under the regulatory schemes of these laws.

In support of its motion, Bowery Residents contends that the DOB properly issued the permits and that different plans result from evolution of the plans for the project, as it works with individual agencies to address their specific concerns and areas of responsibilities. For example, Bowery Residents alleges that plans submitted to OASAS detail nursing stations as it is the agency which approves operating certification for providing such services. Bowery Residents also contends that the parties dispute certain facts and the relevance of the facts as to whether the proposed facility is a community based facility. Bowery Residents points to the disagreement of the parties as to the relevance of the duration of stay of its clients and the relevance of the percentage of administrative, management, medical and other staff to DOB's determinations. As to the claims in the Petition that the proposed facility is a community facility and continued construction will deprive the community of input into governmental decision-making under CEQR and SEQRA, and fair share and ULURP reviews, Bowery Residents does not argue that these claims are unripe based on failure to exhaust administrative remedies. Rather, it argues that the claims are unripe as there has been no relevant City action to mandate reviews under CEQR, SEQRA, ULURP or fair share review laws. In support of this argument, Bowery Residents asserts that the DHS has not entered into a contract with it, and Bowery Residents is renovating the building pursuant to its lease with a private party, and using its own and other privately obtained funds.

As to whether exhaustion of administrative remedies before the BSA is required, the Court of Appeals has frequently recognized that the BSA is comprised of experts in land use and planning, and that its interpretation of the Zoning Resolutions is entitled to deference. So long as its interpretation is neither irrational, unreasonable nor inconsistent with the governing statute, it will be upheld. Of course, this principle does not apply to purely legal determinations; where the question is one of pure legal interpretation of statutory terms, deference to the BSA is not required. However, when applying its special expertise in a particular field to interpret statutory language, an agency's rationale construction is entitled to deference.

New York Botanical Garden v Board of Standards and Appeals of the City of New York, 91 NY2d 413, 419 (1998) [internal citations and quotations omitted].

Here, at this stage of the proceedings and on the record before this court, it cannot be said [*4]that the DOB determinations at issue, are questions of "pure legal interpretations of statutory terms." Rather, the legal analysis is fact driven and requires, inter alia, an intricate analysis of criteria for evaluating and categorizing use within the contextual framework of the ZR. As identified by the parties, some of the factors involved in this analysis are the configuration of the premises in relation to its stated purpose or intended use, percentages of different categories of staff, definitions related to use and BSA precedent. Issues of this nature and complexity should be presented in the first instance to BSA, "the administrative body with the necessary expertise to consider the underlying merits." Weissman v City of New York, 96 AD2d 454, 456 (1st Dept), app dism 60 NY2d 815 (1983) (tenement owners' failure to exhaust administrative remedies through review before BSA dispositive where BSA had the necessary expertise and primary jurisdiction to consider complex issues involving the interpretation of zoning resolutions).

The court rejects Chelsea Coalition's argument that a stay should not be granted as BSA cannot grant complete relief against the irreparable harm it alleges has been created by DOB's issuance of the permits. Specifically, the relief Chelsea Coalition argues that the BSA cannot grant is injunctive relief barring the construction. Chelsea Coalition points to Lesron Junior, Inc. v. Feinberg, 13 AD2d 90 (1st Dept 1961), in support of this argument. The court concludes that the facts in this action which involve renovation of an existing building, are distinguishable from those in Lesron where the issues involved new construction. In Lesron, the court found irreparable harm on the grounds that BSA could not grant plaintiffs an injunction against the erection of an illegal structure where the construction involved a 16-story tower building allegedly being built in violation of both the Multiple Dwelling Law and the ZR, and which tower would obstruct the light and air of the adjoining building. Here, the construction involves interior renovations of an existing building, and it cannot be said that interior renovations may result in harm comparable to that resulting from the erection of a new building. The fact that the renovations may include replacement of much of the interior infrastructure including the HVAC, electrical and fire systems, and the replacement of all floors, the roof and the basement such that they may fairly be characterized as a "gut renovation," does not change this conclusion.

Based on these conclusions, the court grants Bowery Residents' motion for a stay on the grounds that Chelsea Coalition has failed to exhaust its administrative remedies, to the extent of staying the claims relating to DOB's determinations including the permits it issued in connection with the construction at the building.

As to Chelsea Coalition's claims that the community is deprived of input into governmental decision-making under CEQR and SEQRA, and that reviews are required under ULURP and fair share laws, the stay is denied. The record is insufficiently developed for a determination of the issues raised with respect to these claims. Significantly, while the City respondents participated to some extent in oral arguments on this motion, it did not submit papers. The issues related to these claims will be considered in connection with Chelsea Coalition's motion for a preliminary injunction and the court is setting a briefing schedule and a date for oral argument as indicated below.

Accordingly, it is

ORDERED that the motion of respondent Bowery Residents' Committee, Inc. is granted only to the extent that the claims related to the Department of Buildings' determinations are stayed until further order of this court or a determination by the Board of Standards and Appeals, [*5]and the motion is denied as to the remaining claims; and it is further

ORDERED that within 15 days of the date of this order, respondents shall serve and file opposition to petitioner's motion for a preliminary injunction as to the claims unrelated to the determinations of the Department of Buildings; and it is further

ORDERED that petitioner shall serve and file reply papers, if any, within seven days of receipt of the opposition papers; and it is further

ORDERED that all papers are to be filed with the Clerk of Part 11 (Room 351); and it is further

ORDERED that the parties shall appear for oral argument on February 7, 2011 at 3:30 pm, in Part 11, Room 351 60 Centre Street; and it is further

ORDERED that at oral argument respondent Bowery Residents' Committee, Inc. shall inform the court and petitioner of the status of the construction and the expected date of occupancy, and the City respondents shall inform the court and petitioner of the status of relevant contracts and reviews.

Dated: January 10, 2011ENTER:

_________________________

J. S. C. Footnotes

Footnote 1:Bowery Residents also sought a stay of a previous briefing schedule in connection with the request for a preliminary injunction which schedule this court vacated in an interim order dated November 29, 2010.

Footnote 2:In support, the Petition points to Zoning Regulations §§ 22-13 and 22-14, and Fischer v Taub, 127 Misc 2d 518, 525-26 (App Term, 1st Dept 1984).