District 4 Presidents' Council v Franchise & Concession Review Comm. of City of New York

[*1] District 4 Presidents' Council v Franchise & Concession Review Comm. of City of New York 2008 NY Slip Op 50173(U) [18 Misc 3d 1123(A)] Decided on January 30, 2008 Supreme Court, New York County Kornreich, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 30, 2008
Supreme Court, New York County

District 4 Presidents' Council, the Citywide Council on High Schools, Eugenia Simmons-Taylor, Marcia Ortiz & Matthew Washington, Petitioners,

against

The Franchise and Concession Review Committee of the City of New York, Michael R. Bloomberg, Mayor, Anthony Crowell, Special Counsel to Mayor Michael R. Bloomberg, William C. Thompson, Jr., Comptroller of the City Of New York, Mark Page, Director of the New York City Office of Management and Budget, Scott Stringer, President, Borough of Manhattan, Each in His Official Capacity as Member of the Franchise And Concession Review Committee of the City of New York, the New York City Department of Parks and Recreation & the City of New York, Respondents.



108327/07

Shirley W. Kornreich, J.

Motion Sequences 001, 002 and 003 are hereby consolidated for disposition.

In this Article 78 proceeding, petitioners challenge a February 14, 2007 award by respondent the Franchise Concession Review Committee (FCRC) of the City of New York (City). The concession agreement, entitled "Randall's Island Sports Fields Improvement Project Agreement" (Concession), provided for the construction and operation of sports fields on parkland at Randall's Island. Petitioners claim that the Concession was a "major concession" within the meaning of the City Charter (Charter) §374(b) and its implementing regulations, 62 RCNY §§7-01 through 7-03, and should have triggered review under the City's Uniform Land Use Review Procedure (ULURP), §§197-c and 197-d of the Charter, a process that was not followed. Also before the court are motions by petitioners to amend the petition to add two new claims (Motion Seq. 002) and requesting disclosure (Motion Seq. 003).

I.Factual Background [*2]

The terms of the Concession are contained in an agreement between Randall's Island Sports Foundation (RISF), a not-for-profit corporation, the Randall's Island Fields Group, LLC (School Group), comprised of twenty private schools, and the City acting through the New York City Department of Parks and Recreation (Parks). Under the Concession, the City agreed to allocate $65,194,452.00 in its budget during the years 2006 through 2009 to pay for the construction of new sports fields on at least 12.5 acres on Randall's Island and the reconfiguration and improvement of the existing 36 sports fields and adjacent land. Respondents' Answer, verified on August 15, 2007, admitted that 12.5 acres of the land to be developed included "the Central Fields, which is currently used for parking, and ...Sunken Garden Fields, which has been unused and strewn with garbage and other debris." Answer, ¶60 and fn. 7. In the section of the Concession entitled "Grant of Concession," RISF is granted the right to: upgrade and develop the Sports Fields and to use, operate, manage and maintain the Sports Fields during the period ("Concession Period") beginning on the date that upon which 75% of the Sports Fields are Substantially Complete ("Commencement Date"), and ending on the twentieth anniversary of the Commencement Date.

Concession §2.01.

Moreover, the Concession provides that RISF will give the School Group a sub-concession. In consideration of yearly payments, the School Group will receive annual permits for twenty years enabling it to use two-thirds of the Randall's Island playing fields during the peak after-school hours of 3 p.m. to 6 p.m. during the twenty- week school year (after school ). Other users, including the public schools, will be permitted to use the remaining one-third of the sports fields after school during the twenty years. The School Group will pay RISF $2,630,000.00 per year over those twenty years, and RISF will be obligated to use $400,000.00 of this amount annually to defray maintenance expenses. The yearly balance of $2,230,000.00 will be paid to the City. The Concession is dated as of June 27, 2007, but provided that its term commences April 1, 2007 and ends at the end of the "Concession Period." Concession, §2.02(a) and title page. Hence, the City is to finance construction costs of more than $65,000,000.00 in 2006 through 2009 and will receive $44,600,000.00 from the School Group over twenty years, beginning when 75% of the fields are substantially complete.

II.Discussion

A.ULURP

Section 374 of the Charter prescribes procedures that must be followed when a City agency approves a concession.[FN1] FCRC approval of a concession award is mandatory and, if the [*3]concession is major, it must be reviewed under ULURP. ULURP provides: a. No city agency shall grant a concession without either complying with the procedures established by the franchise and concession review committee or obtaining the approval of the committee prior to granting the concession.b. The city planning commission shall adopt rules that either list major concessions or establish a procedure for determining whether a concession is a major concession. A "major concession" shall mean a concession that has significant land use impacts and implications, as determined by the commission, or for which the preparation of an environmental impact statement is required by law. All major concessions shall be subject to review and approval pursuant to section one hundred ninety-seven-c and section one hundred ninety-seven-d.

Charter, §374.

Section 197-c of the Charter requires that certain categories of applications for "approvals, contracts, consents, permits or the authorization thereof respecting the use, development or improvement of real property subject to city regulation" shall be reviewed pursuant to ULURP. One of the categories is a major concession under §374. Charter §197-c(a)(6).

Pursuant to §374(b), the City Planning Commission adopted regulations defining the term "major concession." 62 RCNY 7-01 et seq. Section 7-01 provides that a concession is major and subject to ULURP review if: (a) it has been determined pursuant to City Environmental Quality Review to require an Environmental Impact Statement, or(b) except as provided in § 7-03, the concession will cause one or more of the thresholds set forth in § 7-02 to be exceeded.

One of these thresholds contained in §7-02(g) is "an open use which occupies over 30,000 square feet of a separate parcel of parkland." The court takes judicial notice that 30,000 square feet is equal to slightly over two-thirds of an acre.[FN2]

Section 7-03(d) provides the following exception to the threshold limits of a non-major concession: (d) Any renewal, reissuance, extension, amendment of an existing concession or issuance of a new concession which continues a currently existing use or which permits a use which existed lawfully on the property at any point in the preceding two years, whether operated by a private or public entity, provided that any extension or amendment or the cumulative effect of any amendments or extensions made over any five year period does not include modifications which when added to the existing concession, cause any threshold of § 7-02 to be [*4]exceeded and increase the size of an existing concession by ten percent or more....

Respondents argue that the existing use exception in §7-03(d) should be measured from two years before the "Concession Period" as defined in §2.01 of the Concession, instead of from two years before the Concession was approved or became effective by its own terms. As the "Commencement Date" of the "Concession Period" is defined as 75% substantial completion of construction, respondents contend that the 12.5 acres on Randall's Island which will be converted from its current use to sports fields will continue an existing use because the construction on this acreage will be substantially completed and in use when the "Concession Period" begins. .

The court disagrees with this strained interpretation of the Concession, an interpretation designed to evade ULURP review under the governing statutes and regulations. Essentially respondents attempt to alter reality that the Concession was awarded prior to the conversion to playing fields of the12.5 acre parking area and fallow field.

The Concession is a unified contract that authorizes the development and improvement of City real property. The grant of the Concession, by its own terms, includes the grant to RISF of the right to "upgrade and develop the Sports Fields" and to "operate, manage and maintain" the fields. The Concession was approved on February 14, 2007, it commences by it own terms on April 1, 2007 and its effective date is as of June 27, 2007. The Concession clearly has been issued and, as respondents' papers admit, construction on the 12.5 acres is underway. Annexed to the Concession is a timetable indicating that the 12.5 acres is to be developed by RISF in Phase IB, between May 2007 and November 2008. See Answer, Exh. 13, Exh. D thereto.

The court further rejects respondents' argument that the exception in §7-03(d) applies because petitioners have not demonstrated that the Concession affects ten percent or more of an existing concession. The ten percent language in the regulation applies to an "extension or amendment or the cumulative effect of any amendments or extensions made over any five year period" to an "existing concession." It does not apply to issuance of a new concession.

ULURP review was mandated. It is unmistakable that two years before the Concession was issued, 12.5 acres were not used for sports fields and, consequently, the Concession was major.[FN3] The exception in 7-03(d) is for the "issuance of a new concession which continues a currently existing use." Issuance occurred when the FCRC approved the Concession or, at the very latest, on the Concession's effective date, June 27, 2007. Allowing the City to avoid ULURP review by drafting terms to redefine when a concession has been granted would undermine ULURP's purpose of requiring community input on significant land use decisions regarding public land.

B.Motion to Amend

Petitioners move to amend the petition to assert two causes of action: 1) that the [*5]Concession was subject to review under the New York State Environmental Quality Review Act (SEQRA), New York State Environmental Conservation Law §§ 8-0101et seq. and its implementing regulations, 6 NYCRR §§ 617.1 et seq.; and 2) that the Concession was subject to the competitive public bidding requirements of the Charter, §§ 312 and 313 and 9 RCNY §1-02(a). Petitioners filed the petition on June 14, 2007 and made the motion to amend on September 12, 2007, less than three months later.

Petitioners contend that the facts underlying the amendments were unknown and unknowable before respondents answered the petition on August 15, 2007. In addition, they argue that the amendments relate back to the initial petition. Respondents oppose the amendments and assert that the applicable four month statute of limitations, CPLR §217, bars both amendments. Respondents also claim that the amendments are untimely as petitioner had notice at least four months before the petition was filed that Parks had made a negative declaration under SEQRA and that FCRC had agreed to award the Concession without competitive public bidding.

CPLR §217 provides that: a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner or the person whom he represents in law or in fact, or after the respondent's refusal, upon the demand of the petitioner or the person whom he represents, to perform its duty....

In a situation where a quasi-legislative determination affecting the public is made, the statute of limitations begins to run on the date an official promulgation is issued and filed. Owners Committee on Electric Rates, Inc. v. Public Service Com., 76 NY2d 779 (1990), adopting reasoning of dissent by Levine, J., 150 AD2d 45, 53 (1st Dept. 1989). The policy underpinning the rule is that notice to the public at large is not practicable and the statute begins to run when the final determination is readily ascertainable. Id. Where a party would expect to receive notice of a determination, but has not, the statute begins to run when the party knew or should have known of the determination. 90-92 Wadsworth Ave. Tenants Ass'n v. City of New York Dep't of Hous. Preservation & Dev., 227 AD2d 331 (1st Dept. 1997).

1.SEQRA

On July 28, 2006, Parks issued a Memorandum stating that "the Randall's Island Sports Fields Development Project is a Type II action having no potential for significant adverse environmental impacts and therefore not subject to further environmental review" (Negative Declaration). In describing the project, Parks made assertions of fact that are at odds with facts in the record before this court. The Negative Declaration stated that the project involved "reconstructing existing ball fields" and that "[t]he new fields will be located within areas currently used as playing fields...." Parks then concluded that a Negative Declaration was warranted because the project involved "[r]eplacement, rehabilitation or reconstruction of a structure or facility, in kind, on the same site;" and "routine or continuing agency administration and management, not including new programs or major reordering of priorities that affect the environment." As noted above, not all of the new fields to be developed by RISF will be on land previously dedicated to playing fields. [*6]

The record contains no proof of notice that Parks was making a SEQRA determination before the Negative Declaration was issued. See Affidavit of Aimee Boden, Sworn to on October 30, 2007, Exh. 1 and ¶¶ 9-16. To prove notice, respondents rely upon the fact that on February 14, 2007, the date that the Concession was approved at an FCRC meeting, a representative of the City's Law Department, Howard Friedman, made the following statement: The Parks Department, I think in July of last year, made a Type 2 determination that there's no potential for significant adverse environmental impact, and therefore there was no need for further environmental review.

Petition, Exh. C, Transcript of February 14, 2007, p. 22. The petition was filed exactly four months after February 14, 2007.

The SEQRA claim does not relate back to the original petition under CPLR §203(f)[FN4] because it did not give notice that an environmental challenge was being made or mention the "transactions or occurrences" that would undergird such a theory. Lai Chun Chan Jin v. Board of Estimate, 101 AD2d 97 (1st Dept. 1984)(proposed amendment to assert environmental review challenge did not relate back to zoning challenge). The February 14 transcript in which Mr. Friedman's statement appears was annexed as Exhibit C to the original petition in this proceeding and it was apparent by then that the project went beyond reconstructing the existing fields. For that reason, the determination was "readily ascertainable" when petitioners received the transcript of the hearing. Accordingly, petitioners' contention that the facts regarding the determination were unknown and unknowable until respondents filed their answer on August 15, 2007 is not borne out by the record. However, there are issues of fact raised by the motion to add the SEQRA claim because the record does not reveal when petitioners first obtained the February 14 transcript or could have ascertained that the Negative Declaration had been made. Respondents' position that a stray statement made at a hearing that was later transcribed constitutes notice as of the date of the hearing is not persuasive. Two of the petitioners, members of the affected Community Board 11, were present at the public hearing on February 13, but there was no mention of the Negative Declaration. The record is silent on notice of the February 14 hearing. In consequence, it is not clear that the statement by Mr. Friedman was readily ascertainable by petitioners as of February 14 for purposes of fixing the date on which the statute of limitations began to run. Nor does the court accept respondents' statement that petitioners must have known of the Negative Declaration because without it ULURP review would have been mandatory, or that petitioners should have inferred that no environmental impact statement was deemed necessary from the absence of notice of a draft environmental impact statement. The opposite inference could also be drawn that silence meant that no SEQRA determination had been made as yet. The record before the court indicates that petitioners knew of the February 14 transcript on or before June 14, 2007, when the petition was filed, and that they moved to amend less than [*7]three months later on September 12, 2007. The question that remains is how long before June 14, 2007, did petitioners know or could they have readily ascertained that a Negative Declaration had been issued by Parks. A hearing is necessary to resolve this limited issue. CPLR §7804(h).

2.Competitive Bidding

A City agency has authority to dispense with competitive public bidding for a concession by following the procedure set forth in 12 RCNY §1-13, which provides as follows: (a) No agency shall enter into a concession agreement without soliciting bids or proposals as set forth in § 1-11 and § 1-12 of this Chapter unless the Franchise and Concession Review Committee reviews and approves a different procedure. Agencies that wish to enter into Agreements such as Not-for-Profit Concession Agreements and Sole Source Concession Agreements must therefore obtain prior Committee approval of different procurement procedures.(b) Requests for approval of a different procedure shall be forwarded to the Committee and shall include:

(1) a statement of the procedure for which approval is requested;

(2) a summary of the terms and conditions of each concession involved;

(3) an explanation of the reasons for not soliciting bids or proposals as set forth in § 1-11 and § 1-12 of this Chapter;

(4) a statement that each affected community board has received written notice at least 40 days in advance of the Committee meeting that the Agency is seeking Committee approval of a different procedure, together with a listing of each community board and the date of such notification. Such statement may be waived with the unanimous approval of the Committee upon a written statement from the Agency of the exigent circumstances; and

(5) all other relevant information. (c) If the Committee approves a different procedure, the agency shall submit the concession agreement it proposes to enter into as a result of that procedure for prior approval by the Committee together with a completed Vendex questionnaire when the concession has a value that when aggregated with the value of all other contracts held by the same concessionaire is valued at one hundred thousand dollars or more. Significant concession agreements shall be subject to the public hearing requirements set forth in § 1-12(u) of this Chapter. No concession agreement to be awarded by a different procedure shall go into effect until the Committee has approved it.

On August 31, 2006, Parks wrote a letter to Community Board 11 stating that it would be presenting to FCRC a "sole source agreement with RISF for the use, maintenance, and management of the fields" on Randall's Island. The letter stated that Parks and RISF would undertake "major capital work" and that upon completion there would be "34 brand new fields." The letter concluded with an offer to answer any questions, but did not state when FCRC would meet to vote on the sole source proposal. Subsequently, there were notices in the City Register, on the weekdays from October 2 through October 11, 2006, informing the public that FCRC would hold a meeting on October 11, 2006, exactly forty-one days after the date of the letter to the Community Board. The notices did not state the subject matter of the meeting. Respondents contend that prior to the October 11, meeting members of the community could have obtained a [*8]copy of a concession agreement pre-solicitation memorandum prepared by Parks. The pre-solicitation memorandum described the Concession as a sole source agreement. On October 11, 2006, FCRC held its meeting and authorized negotiation of the sole source Concession with RISF. On January 22, 2007, Parks wrote a letter to the Chairperson of Community Board 11 notifying it of a public hearing on February 13, 2007 concerning the sole source agreement with RISF and stating that the Concession was available for inspection. The petition admits that notice of the public hearing was published in the City Register from January 23 to February 13, 2007. At the public hearing on February 13, 2007, which two of the petitioners attended, comments were made describing the Concession as "sole-source" and "no-bid." Petition, Exh. B, pp. 72 and 115.

The motion to amend to add the competitive bidding claim is denied as petitioners could have readily ascertained that the Concession would be awarded without public bidding more than four months before the petition was filed. Although notice of the October 11, 2006 was less than perfect because the notices in the City Register did not state the subject of the meeting, the statute begins to run when the party knew or should have known of the determination. 90-92 Wadsworth Ave. Tenants Ass'n v. City of New York Dep't of Hous. Preservation & Dev., 227 AD2d 331 (1st Dept. 1997). Here, the determination was readily ascertainable when the letter was sent in January 2007 and again at the public hearing on February 13, 2007. The claim was already barred by the statute of limitations when the original petition was filed on June 14, 2007, more than four months after the public hearing on February 13, 2007, and, therefore, even had the original petition given respondent notice of the underlying sole source claim, relation back does not apply.

C.Discovery

Petitioners' discovery motion is partly directed to their ULURP claim and partly to their SEQRA claim. The ULURP discovery motion is moot. Since the issue of whether the SEQRA claim may be interposed is still outstanding, the motion will be held in abeyance pending the hearing ordered on the statute of limitations issue. Accordingly, it is

ORDERED and ADJUDGED that the petition is granted to the extent that the determination of the New York City Franchise Concession Review Committee, dated February 14, 2007, approving the Randall's Island Sports Fields Improvement Project Agreement is hereby vacated and annulled; and it is further

ORDERED that the motion to amend the petition to assert a claim under SEQRA is granted solely to the extent that the parties shall appear for a hearing in Part 54, Room 1227, on February 20, 2008, at the Courthouse located at 111 Centre Street, New York, New York at 2:15 in the afternoon, for a hearing on the limited issue of how long before June 14, 2007 petitioners knew or could have readily ascertained that a Negative Declaration had been issued by the New York City Department of Parks and Recreation and the court reserves decision on the SEQRA amendment pending the hearing; and it is further

ORDERED that the motion to amend the petition to assert a competitive public bidding claim under Charter, §§ 312 and 313 and 9 RCNY §1-02(a) is denied; and it is further

ORDERED that the motion for disclosure is held in abeyance pending the hearing and determination of the motion to amend the petition to assert a claim under SEQRA.

Dated: January 30, 2008 ENTER:

_______________________________________

J.S.C. Footnotes

Footnote 1: Charter §362(a) defines a concession as "a grant made by an agency for the private use of city-owned property for which the city receives compensation other than in the form of a fee to cover administrative costs, except that concessions shall not include franchises, revocable consents and leases."

Footnote 2:An acre equals 43,560 square feet and, therefore, 30,000 square feet equals 0.69 acres (30,000 /43,560=0.688).

Footnote 3:The record is unclear as to the acreage of areas other than the 12.5 acres that will undergo a change of use. Respondents have provided the court with no figures setting forth the acreage of land surrounding the present playing fields. They argue unpersuasively that "active recreational use" is synonymous with sports fields and, thus, all the reconfigured fields will continue an existing use. It is not necessary to resolve this issue in order to determine that a major concession was issued.

Footnote 4: CPLR §203(f) provides that "[a] claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading."