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Victory in Appellate Court against the City of New York, But Battles Loom

Robert LoScalzo
Willets Point United, Willets Point, Queens County, New York City

Nineteenth Annual National Conference on
Private Property Rights
October 17, 2015
The Century House, Latham, N.Y.


Hello everyone. I see a lot of familiar faces from the previous years I have been here. I'm Robert LoScalzo, documentary video producer, and I have been tracking the circumstances on the ground in Willets Point since 2007 when we began to hear of the City's development plans for the area. I'm designated to present today on behalf of Willets Point United which is an organization of people who intend to keep their properties and operate their businesses there at Willets Point.

This is Joseph Ardizzone who's the sole resident of Willets Point and an owner of property there. And at the back table is Irene Prestigiacomo, also a property owner who has tenants operating businesses there. I've got about half an hour worth of presentations to show and tell here. There has been an interesting development in court during the past year but first I thought I should tell you what were the circumstances that required that anybody had to sue the City in the first place. So, to give you the context I want to start to explain what this development was supposed to be and what has happened.

Willets Point itself is a sixty-two-acre area located about five miles from Manhattan. It's at the confluence of several major highways and it happens to be situated midway between both New York City airports which is an advantage if you were to build a residential community there, but it also has implications for the traffic consequences of citing a mega-development at the nexus of traffic between both the New York City airports as you're going to see.

Willets Point is circled on the projection in red. In the distance you see the old Shea Stadium. And you see that Shea Stadium is situated in the middle of what looks like a gigantic parking lot but is actually mapped parkland. In 2009 Shea Stadium was demolished and the new Citi Field Stadium was constructed on one side of the parking area as close as possible to Willets Point, literally right across the street from the sixty-two acres of Willets Point.

Now, Willets Point is most known by the public for its collection of automotive service businesses. There were two hundred and twenty-five of them at least, by some counts two hundred and sixty, before the recent development attempt started. These are mostly minority-owned businesses operated by new immigrants. The businesses feed off of one another. It's a very dense network of automotive services and it's adored by a lot of the surrounding communities. They rely on these folks for inexpensive work on cars. Now, imbedded within these clusters of businesses are also many other industrial and manufacturing businesses. All these businesses would have to relinquish their properties, vacate the entire area to make way for development that was imposed by the City.

The other thing you need to know about Willets Point, the unique aspect of it is that the City hasn't provided most municipal services that are provided everywhere else. For example, there's no sanitary sewer system. The area relies on cesspools. This is five miles from Manhattan. There's no snow collection in the winter time, little or no street maintenance or repair. Taxes are being paid for those services but the services aren't being received. This results in blight-like conditions in areas that are controlled by the City which then becomes a pretext for redevelopment. The property owners have complained. They've said to the elected officials loud and clear, "We want the services." The response from the City is, "Well, this is a Catch-22. The City cannot invest money for services because the area is slated for redevelopment." So, it's a circular situation.

At any rate, in 2008, then Mayor Bloomberg put forward a generic development plan for the entire sixty-two acres. And the idea was to transform it into New York City's "next great neighborhood." It was deemed an urban renewal area and the specific terms of this plan as it was touted at the time to decision makers — I think it's important to just explain what they intended to do so you can see how they're actually going to do not much of any of it. It was to encompass the entire site, the whole sixty-two acres. And they said that the entire site had to be remediated — environmental remediation of alleged contaminated property there — had to be done all at once because if you remediated just a section then the contamination that would remain in the part you didn't remediate would migrate back and re-contaminate the part that you had spent money to clean because of the high water table there. It was very important at that time that the developer was going to pay the costs which could potentially be a hundred million dollars to remediate that contaminated property. In other words, the public benefit here was that the City of New York would go out into the world, they would find a developer with deep enough pockets to afford to remediate the site and clear it and in exchange for that they would get the property and they would purchase the property, by the way. There were to be fifty-five hundred units of housing, including affordable housing. There was no specific developer attached. This was a generic City plan and that was a sticking point for elected officials during approval because in New York City they always vet a specific plan brought by a particular developer so they can question the developer about the financial feasibility and other aspects. Here they didn't have that but they approved it anyway. But not to worry because when we do pick a developer, they said, a Queens-based Willets Point advisory committee is going to have some say and input over the selection of the developer. The city was supposed to recoup the costs of acquiring the property through the sale to the developer.

Traffic from the project was to be alleviated by two new highway ramps going to and from the Van Wyck Expressway which happens to be a federal highway. And for those who may be familiar with the area, the traffic from the development would add to the existing gridlock conditions that already exist here. It being the location of Citi Field and when the Mets games are played particularly, there's a bottleneck condition. So, you basically, by developing this area, you would create more of a bottleneck than exists now at this area located right between both of New York City's airports.

Well, the two new highway ramps that would supposedly cope with all of this, they have to be reviewed and approved by the state DOT (Department of Transportation) and the Federal Highway Administration. So, Willets Point United saw in that an opportunity to perhaps delay the project or to challenge it. So, Willets Point United hired Brian Ketcham, a traffic engineer who previously helped to defeat New York City Westway project in the 1980's. What Ketcham discovered were severely inconsistent traffic reports. And I mean one report submitted to federal regulators that could not be reconciled meaningfully with the prior report that was submitted to the council. And there are technical reasons why those reports were put together in those ways. But, basically, inconsistent reports. The ramps aren't going to function as they claimed and this, and the involvement of Ketcham, threw a temporary monkey wrench into the approval process for the two ramps. Without the ramps you cannot develop the sixty-two-acre site.

So, the City came back with this. The City counters by announcing a phased development in 2011. And guess what? There will be no new highway ramps for the first phase. So, they're looking to see "what's the maximum development we can do without a ramp" in the event that these ramps aren't going to be there. They call that Phase One and it's twenty-three acres. Where's Phase One located? Well, it's directly across the street from Citi Field stadium. So, also in 2011 the City issued a request for proposals to develop that Phase One area. They're supposed to develop within those boundaries on the map there where you see development envisioned. This is not supposed to involve any other property. The City then instituted eminent domain to acquire the Phase One property and the property owners challenged the validity of the condemnation procedure. It wasn't pertaining to the dollar amounts, the lawsuit was pertaining to whether the City had followed proper procedure. That is, you had a lot of Spanish speaking businesses here whose fixtures would be condemned. They were not notified of any public hearing in Spanish. When they attended the hearing there was no translation present. So for those people there was really no hearing or public opportunity at all.

So, that challenge was made. They sued the City. Property Rights Foundation of America submitted an amicus brief in that case. And a remarkable thing happened. Just three days before the case was to be heard in court for argument the City withdrew its eminent domain determination and findings effectively cancelling that instance of eminent domain. It might be unprecedented for the City to back off of a large-scale condemnation like this. Meanwhile, the mere threat of eminent domain and a pending lawsuit that didn't look at the time to be very promising was enough to persuade many of the property owners in that area to willingly sell the property. That is, the City came to them and said, "You see how this is going to shake down. There's an eminent domain proceeding which you're likely to lose, so make a deal with us now or you'll be sorry later." And so, a lot of people made that deal. Their tenants, the ones who sold, then became tenants of the City which acquired the property.

Meanwhile, the City received four responses to its request for proposals to develop the Phase One twenty-three-acre site. Three of them, which you see synopsized here, conformed to the specifications of the RFP (Request for Proposals). But according to the City they would have required excessive City subsidies. The fourth response they received to the RFP — I want you to pay attention to that parking lot just to the left of Citi Field stadium there. You see what happens now with this fourth proposal… That's the fourth proposal. And it says, "The project calls for the creation of a world-class casino-hotel entertainment destination," but on the other side of Citi Field. Now this is property that is not described in the RFP. No one has ever said that anything should happen there. So, they've shifted the development from Willets Point to the west of Citi Field, which happens to be closer to the subway stop. Who proposed this: Sterling Equities, which is owned by the owners of the New York Mets who operate Citi Field stadium, and Related Companies, a partner, and one other partner.

They also said this project does not include housing as they envisioned it, which was news to us because this was touted in 2008 as principally a housing development. And they would construct little or nothing on Willets Point Phase One property for reasons that they explained. The remediation is costly and complicated. Extending utilities there is a burden. There's a high water table. So, it's very clear that what they were after was building something of this nature or a casino west of Citi Field. And if you remember this is the point in the decision making when the City has all four of these proposals, when the City is supposed to go to the Willets Point advisory committee, based in Queens, lay the proposals on the table and say, "What do you folks think? What direction do you want to go in?"

They didn't do that. Mayor Bloomberg circumvented that committee, rejected the three proposals that came close to what the City's original vision was for the area and designated this plan to construct a 1.4-million-square-foot entertainment and retail center — a megamall essentially — on parkland west of Citi Field. Who proposed this? Joint Ventures Sterling and Related, which they're calling Queens Development Group. And this looks a lot like their casino plan. But the casino is now being called a shopping mall. At any rate, it would displace the parking. When you build anything on that area you've got to put the parking somewhere. Where would it go? It will shift the parking onto the Willets Point property. Allegedly they'll come back in the year 2025 and begin to construct housing. But there are reasons why that is suspect.

If that seems like a bait and switch, well, a lot of people at the time had that reaction, too. The plan differs in many big ways from what was promoted and approved in 2008. I'd like to show you just a few of them. The housing that was touted as the lynchpin, the "next great neighborhood," now the housing is delayed until the year 2025. The developer can even opt out of building any housing by paying what would be to them a "cost of doing business" penalty of $35 million dollars. The housing is contingent on there being new highway ramps which are still litigable which no one is contractually obligated to build. Instead of housing, they want to put that megamall there on the parkland property. So, the public picked up on this and objected to it loud and clear. Back in 2008, the City said it was going to recoup the cost of acquiring all of the Willets Point property. The City then went on to spend $400 million — plus or minus — to acquire the Phase One property. But now instead of recouping that cost, the Queens Development Group will pay one dollar for twenty-three acres located five miles from Manhattan. The public picked up on that, too. And it was recognized as a shameful steal.

Also, whereas in 2008 the City had claimed it was essential to remediate all sixty-two acres of Willets Point at once, now twenty-three acres would somehow be cordoned off for remediation. So, we don't understand how if you couldn't do that in 2008, all of a sudden it becomes technically feasible to do. In 2008 the City said the developer would be paying the cost of remediation. Instead, now the Queens Development Group would receive a $99 million capital grant, $40 million of which would pay the cost of remediation. If you add all of this up, the cost to taxpayers would be significantly higher than was ever said in 2008 when the plan was actually approved. The costs are actually shifting onto the taxpayers.

But most significant for the lawsuit that I'm going to describe, the project expanded from sixty-two acres which you see on the bottom right there which was approved in 2008 to 108.9 acres when you factor in this mall to be built on the other side of the stadium. And it prioritizes the construction of this megamall on that parkland. And everyone understood this is parkland. You're building a commercial shopping mall on mapped City parkland. The developers' answer to that was essentially, "Relax, this is only being used as a parking lot. It's paved over with asphalt. This is where people park when they go to Mets games. End of story. You're wasting your time complaining or objecting." But, and here you see the existing condition of what they would propose to do. I've got this map here just so you understand that Queens' largest park — roughly a thousand acres — and the site that we're talking about is within the mapped territory of that park there at the upper left. So, that's the context.

But what you need to understand is that there are many, many public events that are held on that parkland. So, while the developer claims, "We're just talking about a parking lot," we have events like this: Men's health Urbanathlon, which starts on the parkland at issue and then continues its route throughout the park, so it's a perfect example of how that parking lot area is considered to be and is used as part of the park at large. This is a fun event: a Glow in the Dark 5K run and a dance party. These photos are mostly from their website or Facebook page. There's a wheelchair softball tournament that's held annually right there on that parkland which we're not supposed to be concerned about because it's merely paved over asphalt. Something called the Electric Daisy Carnival with thousands of people there, a Ferris wheel temporarily erected, Cirque du Soleil and my favorite, ironically, at the Mets' own website, they offer that parkland for public use. "Contact us to arrange any of these events." And they acknowledge that the area is perfect for big events. Well, we happen to agree. So, why would they want to displace all of that?

All of those events would be displaced from that area if you construct a permanent 1.4-million-square-foot shopping mall there. So, the public understood this. The reaction to the proposal was very negative. It riled up community groups, defenders of parkland, and the nearby neighborhoods of Corona and Jackson Heights which are almost adjacent to where this area is. They simply don't want a megamall at their doorstep. One that was never discussed during public review and approval back in 2008. So, two lawsuits were filed challenging the construction of what they're calling the Willets West Mall on parkland without legislative approval.

Chronologically, the first one that was filed is this group. The Sunrise Cooperative is a group of approximately forty-five tenant businesses in Willets Point. What they were seeking were more funds than the City or the developer were willing to provide to pay for their lease and renovation of a site in the Bronx where they could relocate. And, looking back on what has happened, the conventional wisdom is that they filed that lawsuit as leverage to extract additional dollars from the City and from the developer rather than any legitimate attempt to stop development of the parkland. That case was filed on February 3, 2015, by Urban Justice Center which provides pro bono legal and advocacy services. But there's another lawsuit that went the distance. City Club of New York filed its lawsuit challenging the alienation of parkland for a megamall without legislative approval. That's February 10, so just a week later. The plaintiffs there are City Club of New York but also State Senator Tony Avella. That case is Avella v. City of New York. The Queens Civic Congress is a plaintiff representing a hundred civic organizations throughout the borough of Queens, New York City Park Advocates, users of the park, a person whose residence actually overlooks the area where the mall would be built and obstructing their enjoyment of the view. And Irene and Joe are plaintiffs, as are other folks there in Willets Point. So this lawsuit had broad support from other community groups which were not plaintiffs but literally rallied in favor of the challenge. The defendants were City of New York, involved agencies, and the developers were Sterling, Related, and their entity Queens Development Group. To defend against the lawsuit Queens Development Group hires Judith Kaye, the former Chief Judge of New York State Court of Appeals, who is now of counsel at Skadden, Arps.

The plaintiff's case at first boiled down to this: There is a Public Trust Doctrine pertaining to parkland. And it says that once land has been dedicated to use as a park it cannot be diverted for uses other than recreation without legislative approval. The authorization contained in the act must be plainly conferred, specific, direct, or explicit. In this case the plaintiffs are saying there has been no such legislative approval. And as the plaintiffs put it in their initial petition, "Neither the state legislature nor the City Council nor the City Planning Commission nor any of these other boards had any opportunity to consider or to vote on the development of the parkland as a shopping mall." But defendants counter that there has already been legislation in 1961 for the financing and construction of Shea Stadium on that same site. Defendants believe that the 1961 law provides all of the approval that is needed for the Willets West megamall, now. And that's the text, the relevant clip from the 1961 law. Yes?

Audience member: What was the date on the last statute or the Public Trust Doctrine what date was the legislative enacted for that?

Mr. LoScalzo: I think it's a case law thing.

Audience member: Case law, okay.

Mr. LoScalzo: In other words, take a look at Williams v. Gallatin, but it's widely recognized. But I do want to point out a few things about this law that they were relying on. And you see here this is pertaining to the construction of Shea Stadium in 1961. And it's talking about the lessee of the site having the right to do these things which includes the right to use the stadium and the grounds for purposes that include improvement of trade and commerce. So, these are the critical words here that were very heavily discussed and litigated over more lawyerly pages than you can possibly imagine. But two key points, basically, were argued.

Defendants say the 1961 law which you see here, allows us to use the site for improvement of trade and commerce. And our shopping mall will fit that description. The plaintiffs respond, "No. What the 1961 law allows is the use of the stadium and the parking areas. Not the bare land." Nothing in the 1961 law allows the stadium and parking areas to be demolished and supplanted by other structures including a shopping mall. Moreover, unlike the stadium to which the law pertains, a commercial shopping mall happens to not be a public use. The key purpose of the 1961 law is to specify the public uses that could be made of this parkland to ensure compliance of the lessee with the state constitution's gift and loan clause. So, it's a bit more complicated than you see here and that we have time to get into.

The second point. Defendants say that revitalizing Willets Point depends on our constructing the shopping mall on the parkland. You know the pictures that you saw before of the so-called blighted area, you certainly don't want that to stay the way that it is. And we've shown you a clear pathway forward but we need to be allowed to construct a shopping mall on parkland. They've actually told the judges in the case, "If the court disallows the shopping mall, it will also scuttle the only viable development plan for Willets Point." To which the plaintiffs respond, "The question of developing Willets Point is not before the court. The only question is whether the legislature has explicitly authorized constructing a shopping mall on the parkland." So, at State Supreme Court, which in New York is where you start out, Judge Manuel Mendez heard the case. Judith Kaye, the former chief judge, personally argued the defendants' case. And you can see the dynamic here and imagine, if you will, Judge Kaye coming into Judge Mendez's courtroom and telling him there is no problem. We have an interpretation of the statute that allows the mall.

Judge Mendez dismissed the case on August 15, 2014, finding that construction of the megamall on parkland is permitted under the 1961 law. And from his decision the Public Trust Doctrine does not apply. The improvement of trade and commerce resulting from the leasing on the parkland including use as a shopping mall is part of the development plan for purposes of creating an entire special district and community which ultimately will result in the public benefit of removal of urban blight from Willets Point. So, buying into defendant's arguments here.

But, I would say with due respect to Judge Mendez, removal of blight and urban renewal at Willets Point are not uses of the parkland that were explicitly authorized back in 1961 by the legislature. The plaintiffs believe that Judge Mendez misinterpreted the 1961 law. They appealed to the Appellate Division First Department and that oral argument was held on April 15. And there it was a panel of four judges. That's a photo of the interior which is on the National Register of Historic Places. I found this picture on the Internet. There are very few pictures because they don't permit any photography inside there.

The judges' questions and statements at the oral arguments seemed to indicate they might agree more with the plaintiffs. I was there. We were all there and two things in particular that I look back and think of is the first question that they asked, almost immediately at the beginning. They asked the plaintiff's counsel, "What's the title of the 1961 statute that we're disputing here?" And the answer is it's "Renting of Stadium in Flushing Meadow Park Exemption from Down Payment Requirements." So, almost from the get-go the statute is telling you, "We're discussing here, Shea Stadium." This is not constructing megamalls fifty years in the future. And there ensued in court that day discussion of the gift and loan Clause of the Constitution and why this statute was structured the way that it was.

The second thing I remember very well from that day is at one point defendants' counsel came on strong and was arguing that the development that they're proposing to this parkland has been "ninety years in the making." That the City has been trying to do something about Willets Point and so their proposal was ninety years in the making. To which one of the judges said, "If that is really so, then the legislature could have been very specific to include revitalization of Willets Point in the 1961 statute. Yet they did not do that." So, almost at every turn that day at the oral argument the judges were actually picking on what the defendants' counsels were arguing. But they seemed to be supportive of the plaintiffs. And that reading of the tea leaves was correct.

On July 2, 2015 the Appellate Division First Department issued its unanimous decision. "No reasonable reading of the administrative code from 1961 allows for the conclusion that the legislature contemplated, much less gave permission for a shopping mall unrelated to the stadium to be constructed in the park. Here, while there is a legislative mandate for the use of the park that mandate does not encompass the use proposed by respondents. The Willets West project must be enjoined."

This is where the whole matter sits now. So, as of right now there is no path forward for any development on the parkland west of Citi Field or even at Willets Point because their development of Willets Point relied on that. There is the possibility of an appeal to the Court of Appeals in Albany but for the developers in the city, or losers at the moment, appealing to the Court of Appeals is not as of right. They must seek leave of the Court of Appeals to hear the case. So then, the question becomes would New York City now under Mayor Bill de Blasio, who has replaced Michael Bloomberg in the project, move forward. Would Mayor de Blasio want to appeal. The project was started under Bloomberg. Now de Blasio has to decide whether to join an appeal. The New York Times covered this very nicely complete with a photograph of the parkland and the proposed development. What happened is Mayor de Blasio announced that the City would not join the developer in seeking leave to appeal. He says the project isn't worth the fight. It doesn't emphasize the housing and the affordable housing which were the reasons why de Blasio as a councilperson back in 2008 actually voted to approve the generic plan but the plan that ultimately evolved has differed so much that I guess he feels that isn't going to be supported. He went as far as to say it isn't worth the fight.

So, the City has declined to fight in court the land there and ultimately Queens Development Group is alone now seeking leave to the Court of Appeals to appeal. We're waiting now to hear whether the court declines or accepts the case. I would like to note here that Judith Kaye represents the developer, Queens Development Group, which seeking leave of the Court of Appeals and she heads the search committee for a new chief judge of the Court of Appeals. So, if the court does decide to take the case, this raises certain questions of what will happen when a judge that she has had a hand in appointing is now the chief judge and the case needs to be argued, which we assume would be next year. Of course, the plaintiffs prefer that the Court of Appeals rejects even hearing the case. And considering how iron-clad the Appellate Division decision was in saying there was no reasonable reading of this law, maybe they will decline to take the case.

I also want to say that aside from pursuing this in court, the developer does have one other option. They could seek state legislation authorizing construction of the megamall. But typically, when the legislature authorizes alienation of parkland, you have to replace the parkland. And it wouldn't be easy in this case in this area of Queens and it's over forty acres. So, we think that that option is not a good one for them, either.

Meanwhile at Willets Point, the Phase One area, the twenty-three acres opposite the stadium, that area is now empty. Let's say ninety-nine percent empty. Twenty-three acres. Presuming that the Court of Appeals does not reverse the Appellate Division, then Mayor de Blasio will have to decide what to do with the Willets Point Phase One property.

Willets Point United has a few suggestions for de Blasio. What they recommend is abandon these failed plans to put housing in this area. It isn't going to work. There's no administration that's been able to ever accomplish it and there's no reason to think this will be any different The City should take the funds that it was going to give the developer to pay for remediation and remediate that site right now. There isn't any reason they can't do that. Install the sanitary sewers, provide the services that have been denied for decades and then the City ought to just lease or sell the Phase One area for commercial and industrial use which has none of the traffic concerns or any other issues.

The Phase Two area, which is forty acres, is untouched. It's more or less business as usual there.

So, just to conclude with whatever happens to the Sunrise Cooperative lawsuit. What happened with these folks is they found a site in the Bronx — a warehouse — which is a potential relocation site. They're leasing it for $73,000 per month. That site has to be completely customized, gutted, renovated, subdivided, outfitted for forty-five automotive businesses. That's a very costly enterprise. So, Sunrise settled the lawsuit because the City and developer agreed to give them $5.8 million which they can use for rent and renovations provided, however, that the Sunrise businesses had to vacate Willets Point, Phase One, by June 1. So, they traded off accepting the dollars but you have to leave Willets Point. June 1 came but the businesses did not vacate. They said they couldn't do it because there had been no progress whatsoever to renovate the site at the Bronx. That was because they didn't have the work permits from the building department which is really interesting because Urban Justice Center which represented Sunrise in its lawsuit against the City was also operating as an independent contractor or contractor to the City of New York, the Economic Development Corporation. Under that contract it is Urban Justice Center that was to manage preparation of the Bronx location including relocation, due diligence assistance and permitting. That's the actual contract page there. So, did they drop the ball or what's the story?

When questioned in June about the lack of permits Urban Justice Center told the press, "We don't do permits." So, this is a real mystery and I suspect eventually we'll find out what happened here.

On June 5, a couple of days later, the City evicted the Sunrise businesses from the Phase One area. Unnecessarily, as it turns out, because a month later the Appellate Division court would halt the whole project that required them to vacate. Sunrise claims that the City will still provide to them the $5.8 million. The New York One news channel reported that renovation of the Bronx site is underway. It will be completed in five months. Whether the businesses will survive elsewhere until then, we don't know.

And the saga continues. And I'm done.

Any questions?

Carol LaGrasse: I wondered if Irene and Joe would just say hello.

Joseph Ardizzone: My name is Joseph Ardizzone. I've been at Willets Point Boulevard for eighty-three years, born and raised there. The City of New York now wants to dispense with me and get rid of me. I've done a lot. I think the City is wrong and therefore I'm proud to be here.

Irene Prestigiacomo: Hi. I'm Irene Prestigiacomo. I want to thank you all very much. If it were not for Carol and Peter and Robert and Joe we wouldn't be where we are today. They have done tremendous work, sacrifice and were it not Robert's knowledge and his sticking with us, because he didn't have to. They have made all this possible and you here attending these meetings and these seminars. It's so crucial. It's so really crucial. And what Jeremy said today about the law, the case law being involved in this, and how we discerned stuff and how we misinterpreted especially the young people. My daughter is a lawyer and it's a constant battle with her over what's going on. Thank you very much. I appreciate everything that you do. And we just have to keep up the good fight.

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