Sutherland v New York City Hous. Dev. Corp.

[*1] Sutherland v New York City Hous. Dev. Corp. 2008 NY Slip Op 51354(U) [20 Misc 3d 1115(A)] [20 Misc 3d 1115(A)] Decided on July 8, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 8, 2008
Supreme Court, New York County

Susan Sutherland, Ian Sutherland, Xiomara Hayes and Eugenio Martinez, Petitioners

against

New York City Housing Development Corporation and AMP Apartments, Inc., Respondents.



114415/07



Petitioners were represented by Patton Eakins & Lipsett, John G. Lipsett, Of Counsel

Respondent New York City Housing Development Corp. was represented by the Michael A. Cardozo, Corporation Counsel of the City of New York, by Daniel Greene, Of Counsel

Respondent AMP Apartments was represented by Fried, Frank, Harris, Shriver & Jacobson, LLP, Malcolm Duncan, Of Counsel

Shirley Werner Kornreich, J.

In this Article 78 proceeding, petitioners challenge a determination by respondent New York City Housing Development Corporation (HDC), dated June 26, 2007 (Negative Declaration), which found that the environment would not be affected by a loan that funded the reservation of 59 out of 269 residential apartments for low income families. Prior to the funding, development of the building had been approved as of right and all of the units were to be rented at market rate. The petition alleges that the Negative Declaration must be vacated because the loan triggered review under the New York State Environmental Quality Review Act (SEQRA) and the New York State Parks, Recreation and Historic Preservation Law (HPL).[FN1] Petitioners ask the court to vacate the Negative Declaration or, if the court rules that the claims under SEQRA and the HPL are moot or barred by laches, to direct HDC to rescind the funding.

Petitioners admit that the building was built as of right, that it is nearly complete, that [*2]they did not bring a proceeding to challenge the construction and that, without the funding, all of the units in the building will be rented at market rate. Nevertheless, they challenge the funding authorized by HDC, on December 8, 2006, which was provided to the developer for the purpose of enabling low income families to rent 20% of the units.

This proceeding was commenced on October 26, 2007, ten months after ground breaking in February 2007 and nine months after "visible" construction commenced in March 2007.[FN2] Prior to answering, respondents HDC and AMP Apartments, LLC (AMP), moved to dismiss on the ground that petitioners lacked standing to maintain the petition. The motion was denied by order of this court, dated April 30, 2008, which directed respondents to answer the petition. Familiarity with the prior decision is assumed, and the facts will be repeated here only as necessary.

Respondents now have answered the petition, raising the defenses of mootness and laches, as well as defending on the merits. They claim that the action is moot because petitioners never moved for a temporary restraining order or preliminary injunction to preserve the status quo and the building is substantially complete. In a letter submitted to the court on June 25, 2008, AMP provided the court with a copy of a temporary certificate of occupancy for the building issued on June 24, 2008. The certificate demonstrates that part of the building is open to the public, including some of the apartments. With respect to laches, respondents argue that AMP has spent more than $59,000,000.00 to construct the building and has gone through most of the process of selecting low income tenants for 20% of the units.

Petitioners' were granted leave to reply and submitted additional papers. Petitioners admit in their reply papers that the building is now nearly complete and the construction is irreversible. In response to the mootness argument, petitioners argue that the funding is not moot and ask the court to vacate the funding if the Negative Declaration is not vacated. Petitioners also state that they brought the proceeding as quickly as possible after the funding, that respondents are not prejudiced by the delay in bringing the proceeding, that petitioners needed time before bringing the proceeding to make Freedom of Information Act Requests and that respondents delayed this proceeding by making a motion to dismiss on the ground of standing. The petition is dismissed on the ground of mootness for the reasons that follow.

Background

By lease dated November 8, 2005 (Lease), The Cathedral Church of St. John the Divine in the City and Diocese of New York (Cathedral) conveyed to Avalon Bay Communities, Inc. (Avalon Bay), premises located on the southeast portion of the Cathedral's grounds or close (Close). Respondent AMP is a subsidiary that was formed by Avalon Bay to develop the premises. Article 20 of the Lease contained an agreement for Avalon Bay to develop a portion of the land owned by the Cathedral, including an apartment building located at 401 West 110th Street, containing 296 market rate rental apartments (Building). The Cathedral sits on a 13-acre site. [*3]

The Building fronts on the north side of Cathedral Parkway,[FN3] also known as West 110th Street, in the City of New York, Borough of Manhattan, facing apartments in buildings on the south side of Cathedral Parkway, 412 and 424 West 110th Street, in which petitioners reside. It is undisputed that petitioners had direct views of the Cathedral and Close from their apartments, which are now obstructed by the Building.

Community opposition to the proposed development resulted in an amendment to the Lease, dated August 11, 2006 (Amendment). The Amendment, altered Article 20 of the Lease to provide that Avalon Bay would "diligently endeavor to cause the Initial Construction to constitute an 80/20 Building." An 80/20 building is one that is 80% percent market rate and 20% affordable housing, defined as housing for families earning 50% or less of the adjusted median income. If Avalon Bay could not "obtain approval or bonding capacity" to construct an 80/20 Building, the Amendment provided that the Lease would remain in full force and effect, including Avalon Bay's right and obligation to develop the premises. In other words, the Building would be constructed whether or not Avalon Bay received financing to facilitate the construction of 59 affordable units.

On December 8, 2006, respondent HDC passed a resolution (Funding Resolution) authorizing the issuance of bonds for the Building in an amount not to exceed $115,000,000.00, on a partially tax exempt basis.

The Negative Declaration issued on June 26, 2007. It found that the funding by HDC would have no environmental impact for the following reasons: 4. Description of Proposed HDC Action:The provision of financing the construction [sic] of one 18-story building with a total of 296 residential units plus subcellar and cellar, and a 168-space garage to serve tenants of the new building and the Cathedral Church of St. John the Devine [sic].... As a result of the funding assistance the ground lessee and the ground lessor have agreed that twenty percent of the residential units would be reserved for families earning up to 50% of the adjusted median income, while the remaining units would be for market-rate rentals. Should this assistance not be available the building would be developed as a 100% market rate rental development. A MARKET RATE RENTAL DEVELOPMENT IS PERMITTED ON THIS SITE IRRESPECTIVE OF THIS NOTICE AS EVIDENCED BY THE APPLICANT'S RECEIPT OF ALL RELEVANT NEW YORK CITY APPROVALS AND PERMITS AND THE COMMENCEMENT OF CONSTRUCTION PURSUANT TO SUCH APPROVALS/PERMITS PRIOR TO THE ISSUANCE OF THIS NOTICE....6. Reasons Supporting This Determination:See the Environmental Assessment Statements for this project which set forth the environmental review. HDC has thoroughly analyzed this project using the criteria set forth in 6 NYCRR 617.7(c) to determine whether the project may have [*4]significant adverse impact on the environment.A comprehensive review has determined that the project will be consistent with all guidelines outlined in the CEQR Technical Manual. No adverse socioeconomic effects are expected from the renovation and conversion of new housing. Appropriate analysis has determined that the project is not expected to have a significant impact upon the surrounding area. There will be no impact on cultural resources, and no significant issues involving hazardous materials were identified. No significant adverse impacts were found to be created due to the project.

The following facts concerning the history of the Cathedral and Close are not in dispute. In 1997, the New York State Office of Parks, Recreation and Historic Preservation (OHP) evaluated the Cathedral, the Close and other structures within it, and found that the Cathedral was eligible for inclusion in the National Register of Historic Places (National Register). In 1978, OHP nominated the Cathedral for inclusion in the National Register. On February 9, 2007, the OHP wrote a letter to STV Incorporated [FN4] stating that the Cathedral campus (the Close) where the Building is located had been determined to be eligible for listing on the State and National Registers of Historic Places. The letter further stated that the Building would have an adverse impact upon the Cathedral and Close.

In response to the standing motion, petitioners claimed that the harm that they suffered was the loss of their views of the historic Cathedral and Close, as well as the effect on their neighborhood of the loss of the historic resources. Respondents countered that petitioners' alleged injuries did not result from HDC's funding. They asserted that petitioners had not suffered an injury in fact with a nexus to the challenged funding because without it, the Building would still be there, all of the apartments would be rented at market value, the losers would be 59 low income families and the winner would be respondent AMP not petitioners.

In denying the standing motion, this court ruled that petitioners had alleged an adverse effect on their views of historic and environmental resources, which was sufficient to allege an injury in fact for purposes of the HPL and SEQRA.The court rejected respondents' argument that petitioners lacked standing because the funding did not injure them. Ironically, petitioners have now changed their position. Although petitioners' standing depended on injuries resulting from the construction, they now admit that "the proceeding was not instituted to challenge construction of the building," but urge that they are entitled to an order directing AMP to return the funding.

Discussion

The court rules that petitioners do not have standing to challenge the funding of the project. They cannot show that they were injured by the funding, which affects only the income level of the tenants who will live in the Building. NY State Ass'n. of Nurse Anesthetists v. Novello, 2 NY3d 207, 211 (2004)(standing requires direct harm); Transactive Corp. v. New York State Dep't. of Soc. Servs., 92 NY2d 579, 587 (1998)(plaintiff must show injury arises from [*5]challenged administrative determination). Their petition and affidavits allege injuries that relate to the loss of their views and changes in the character of historic resources in their neighborhood, not from apartments rented to low income tenants.

Further, the court holds that petitioners' claims under SEQRA and the HPL are moot. In cases involving construction, chief among the considerations in evaluating mootness is whether the challenger sought injunctive relief to maintain the status quo by stopping construction. Matter of Dreikausen v. Zoning Board of Appeals, 98 NY2d 165, 173 (2002). However, "relief remains at least theoretically available even after completion of the project, ... structures changing the use of property most often can be destroyed" and "a race to completion cannot be determinative, and cannot frustrate appropriate administrative review." Id. at 172.Factors weighing against mootness are whether a party proceeded in bad faith and without authority. Id. There is an exception to mootness for "recurring novel or substantial issues ... sufficiently evanescent to evade review otherwise." Matter of Citineighbors Coalition of Carnegie Hill v. New York City Landmarks Preservation Commission, 2 NY3d 727, 729 (2004). However, in a SEQRA context, the exception for novel recurrent matters that will evade review can be avoided by a prompt request for injunctive relief. Id. at 730.

Here, petitioners have watched the construction of the Building from their windows since, at the latest, March of 2007, and have not requested injunctive relief. The Building is now substantially complete. Respondents did not act in bad faith. Initially the Building was to be constructed as of right. The funding for low income apartments was the result of community input. Reviewing the record as a whole, HDC did not issue the Negative Declaration in bad faith because it is true that the Building would have been built whether or not the funding was provided. In addition, while HDC should have issued a final written decision under the HPL when it decided to terminate consultation with OHP, 9 NYCRR 428.10(d), the record reflects that HDC did consult and consider mitigation or avoidance of adverse impacts on historical resources. Among those considerations was that the Cathedral needed money for repairs. The petition is moot because environmental and historical review will not restore petitioners' views of the Cathedral. The requested rescission of funding will result only in a loss of low income housing on the Upper West Side. Accordingly, it is

ORDERED, ADJUDGED and DECREED that the petition is denied and dismissed as moot, with prejudice.

Dated: July 8, 2008ENTER:

_______________________

J.S.C. Footnotes

Footnote 1: SEQRA is codified as Environmental Conservation Law (ECL), §8-0101 et seq. and its implementing regulations are contained in 9 NYCRR §617.1 et seq. HPL is codified as HPL §14.01 et seq. and its implementing regulations are contained in 9 NYCRR §426.1 et seq.

Footnote 2: The dates for commencement of construction are taken from respondents' papers. According to petitioners, construction began earlier, in January 2007.

Footnote 3: This court's decision on the standing motion erroneously stated that the Building faced the north side of Cathedral Parkway.

Footnote 4: The record does not disclose the relationship between STV Incorporated and this proceeding.