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Preserving a Park to Save Willets Point's Industrial Community — An Update

Robert LoScalzo
LoScalzo Media Design LLC
Queens, New York

Twentieth Annual National Conference on
Private Property Rights
October 22, 2016
The Century House, Latham, N.Y.

 

Hello. I'm Robert LoScalzo, and this will be an update on an effort to preserve certain parkland in Queens, New York, which also has big implications for the nearby industrial neighborhood of Willets Point.

I'm speaking on behalf of Willets Point United, a group of property and business owners engaged in a years-long battle against the City of New York and developers who want to take over the property.

Along the way, Willets Point United members have sued to challenge the City's attempt to use eminent domain — a case in which the Property Rights Foundation of America filed an Amicus brief, and which ended with the City withdrawing its condemnation. Willets Point United has exposed illegal lobbying against Willets Point, done by a former official who was funded by the City. And Willets Point United has exposed the skepticism of state and federal regulatory agencies, regarding the feasibility of what the City wants to do at Willets Point.

We've discussed those things here at prior conferences. Today I'd like to concentrate on a very interesting pending lawsuit.

At this time last year, Willets Point property owners and other petitioners had received a unanimous decision of the Appellate Division First Department in their favor, defeating the City of New York and a team of developers, and enjoining construction of a commercial shopping mall on certain New York City parkland.

Because that shopping mall is part-and-parcel of a larger project to demolish and eliminate the existing Willets Point buildings and businesses, and to redevelop Willets Point property, the outcome of the parkland case is important to Willets Point property owners as well as hundreds of industrial businesses that operate there.

Last year, we were waiting to see whether the Court of Appeals, New York's highest court, would take up this case. Indeed, the Court of Appeals did decide to hear the case. The oral argument will be some time next year.

So, I'd like to bring you up to date on what's happened during the past year — but first stepping back to see how it came to be, that small industrial business and property owners, plus interested civic organizations, are put in a position of waging a legal battle against the City and some of the most powerful development forces around.

Introducing Willets Point

In Queens, New York, roughly 5 miles from Manhattan, there's an industrial neighborhood called Willets Point. It's triangle-shaped, roughly 62 acres, unlike anywhere else in the City. For decades, it's been home to 250 industrial businesses, including waste transfer facilities, construction companies, food manufacturers and distributors, even a company that recycles sawdust into animal bedding and sweeping compound.

But the majority of Willets Point businesses are automotive mechanics, bodywork shops, and car dismantlers that resell used parts. There are scores of these businesses, block after block, which both compete with and refer customers to one another. They're an inexpensive way to solve automotive problems. Many of the businesses are owned and operated by immigrants from a variety of countries.

Despite such a concentration of business activity, for decades the City of New York has withheld basic municipal services from Willets Point, that are provided everywhere else. Most notably, the City makes virtually no effort to maintain the streets, despite the pleas of property and business owners. This hinders the productivity of the area and discourages customers. There's no snow collection in the winter. The City never installed a sanitary sewer system. The businesses rely on cesspools — and this is just five miles from Manhattan.

So although the businesses are just as "presentable" as businesses anywhere else, at Willets Point the City has deliberately neglected the public areas, allowed conditions in the public spaces to fester, and the area to acquire a reputation as "blighted." Then, the City has leveraged the self-serving blight that it created, to justify removing all of the property owners and businesses, and handing the area to developers in the name of urban renewal.

Under then-Mayor Bloomberg, that is what the City set in motion. After a very contentious process that we don't have time here to recount, in 2008 the New York City Council approved a generic development plan for all 62 acres of Willets Point, which the City said would transform the area into New York City's next great neighborhood. Some of the key aspects of the project were:

o Willets Point was declared an urban renewal area, which can be a basis for the City to use eminent domain to acquire the property;

o The project would remediate alleged contamination throughout Willets Point property;

o The lynchpin of the project was supposed to be 5,500 units of housing, 35 percent of which would be "affordable housing;"

o Existing Willets Point businesses would be relocated;

o The City would recoup the high cost to taxpayers of acquiring the property, through the eventual sale to the developer.

No other property beyond Willets Point was implicated.

What else is around?

At that time, just west of Willets Point, there was Shea Stadium, home of the New York Mets baseball team. The stadium sits on public parkland. To understand the larger context, let's zoom all the way out. Here you see what is called Flushing Meadows Corona Park — the largest park in Queens, at 1,255 acres. At the northern end, there's Shea Stadium situated within the park. Shea was some distance away from Willets Point, and was surrounded on all sides by parkland — used as parking areas for people attending Mets games. It's parkland, but it's paved over (asphalt).

An owner of the Mets, Fred Wilpon, is also an owner of the real estate development firm Sterling Equities. It so happens that in 1993, the Mets produced a report analyzing the feasibility of developing all of the nearby property, including Wiliest Point, into "a unique 110 acre Sports, Entertainment and Business Complex." So, they've had their eyes on the nearby Willets Point property.

In 2009, Shea Stadium was demolished and replaced by the newly-built Citi Field stadium. Citi Field is situated directly across the street from Willets Point. Instead of being surrounded by parkland and parking spaces, now the parking area is consolidated, off to the west of Citi Field stadium.

Meanwhile, in 2011, the City issued a Request for Proposals to develop what they call "Phase One" of Willets Point — 23 acres, or one third of the entire site, that are located directly across from Citi Field stadium

No other property was implicated by the RFP.

In 2012, the Bloomberg administration rejected several proposals that conformed to the RFP, and announced that a joint venture of Sterling Equities, owned by the owners of the Mets, and Related Companies were chosen as the developer. That joint venture goes by the name Queens Development Group.

Mayor Bloomberg announced that Queens Development group would develop not only Phase One of Willets Point, but that the project would expand to encompass the parkland property located west of Citi Field stadium, for which the Mets hold the lease, where Queens Development Group would construct a 1.4 million square foot mega-shopping mall named "Willets West." On parkland.

The developer would not seek any state legislative approval to use the parkland for a private commercial purpose, and the mall would not undergo the City's land use review procedure.

Obviously this differs from what what was approved back in 2008. Under Mayor Bloomberg's deal with Queens Development Group, here is what would happen:

o Queens Development Group would pay $1 (one dollar) for the 23 acres of Willets Point Phase One property, located just five miles from Manhattan. You can forget about the City recouping the hundreds of millions of taxpayer dollars spent to acquire the property; just gift the 23 acres to the developer for $1.

That did not go over well, and was called a "shameful steal" by the press.

o Next, the developer would demolish the structures in the Phase One area, remediate the property, and construct temporary parking on most of the area, to replace the parking spaces that will be lost to the shopping mall. There would also be some retail and a hotel.

o Then, they would construct the Willets West mega-mall on the parkland.

o In subsequent years, they would construct parking garages to the south.

o Then finally, in the year 2025 at the earliest, they would construct 2,490 units of housing at Willets Point. However, the contract provides that the developer may opt out of building any housing, by paying a $35 million cost-of-doing-business penalty; and, unless the City first builds new highway access ramps to and from the area, the developer is not obligated to build the housing.

So, we could well end up with a shopping mall, and just a parking lot. After evicting hundreds of businesses from Willets Point to do this. That is not what was promised in 2008.

It was supposed to be housing; that was the lynchpin. Now it's a mall-centric project, with housing not guaranteed.

This did not go over well, and was called out in the press as a "bait-and-switch."

As to the public's complaints about encroaching onto parkland: The developer characterizes this parkland as merely a paved-over asphalt parking lot. There's nothing lost, they say, by building a shopping mall there.

However, far from being just a parking lot, that parkland is routinely used to hold events — the sort of events that may even benefit from being held on paved asphalt.

o Men's Health Urbanathlon starts and finishes on the parkland west of Citi Field, and integrates with the entire park to the south.

o Living Social's Glow-In-The-Dark 5K Dance Party.

o Wheelchair Softball Tournament held annually by the Mets.

o Electric Daisy Carnival, which was held again this year on that parkland.

o Cirque du Soleil.

o Just held on October 1 and 2, The Meadows — Music and Art Festival.

Ironically, the New York Mets themselves promote this parkland on their web site as "perfect for big events," and make it available for such events.

All of these events would be permanently supplanted, by building a shopping mall on the site.

Two Lawsuits

The plan to build a shopping mall on the parkland triggered two lawsuits, brought by petitioners with a variety of motives. Some want to protect the parkland; some do not want a mega-mall at that location; some want to prevent or forestall development of Willets Point; and some wanted to bring the City to the bargaining table.

The first lawsuit was filed by Sunrise Cooperative, a group of Willets Point automotive tenant businesses. They were represented by lawyers at the Urban Justice Center, which serves vulnerable New Yorkers by providing legal services, advocacy and political organizing.

Conventional wisdom is that Sunrise Cooperative filed its lawsuit as a basis to bargain with the City for additional relocation funds. They had found an empty relocation space in the Bronx, but needed millions to pay for subdividing and renovating it for their needs. Ultimately, they settled their lawsuit after cutting a deal to receive a total of $5.8 million from the City and Queens Development Group — which they could use to pay rent at the Bronx location and to renovate the space.

To keep a chronology here, I will get to what eventually happened with that group, after I explain the second lawsuit — which is going the distance, all the way to the Court of Appeals.

The second lawsuit — Avella versus City of New York — was organized by City Club of New York, whose mission is to "promote thoughtful urban land use policy." The lead petitioner is state senator Tony Avella, joined by New York City Park Advocates, the Queens Civic Congress, numerous local civic organizations, Willets Point property and business owners, and residents and business owners of the surrounding area.

Respondents are the developers, the City of New York, and involved agencies. To argue their case in court, the developers hired Judith Kaye, the former Chief Judge of the Court of Appeals.

I'll give you an executive summary of some of the key legal arguments that were made, back and forth.

Petitioners sued on the basis that there is a common law public trust doctrine applicable to parkland; that "once land has been dedicated to use as a park, it cannot be diverted for uses other than recreation, in whole or in part, temporarily or permanently, even for another public purpose, without legislative approval." Moreover, "the authorization in the act must be plainly conferred, specific, direct or explicit."

Petitioners say the state legislature never considered or approved any Willets West mall on the parkland at issue. And, the lease of parkland for a shopping mall has not been approved through the City's land use review procedure.

Respondents say they have all of the authorization they need for the shopping mall: the law enacted in 1961 authorizing the rental of Shea Stadium, which was about to be built back then. That 1961 law authorizes the City to enter into lease agreements that grant "the right, for any purpose or purposes referred to in subdivision b of this section, to use, occupy or carry on activities in, the whole or any part of a stadium, with appurtenant grounds, parking areas and other facilities, to be constructed by the City on certain tracts of land …"

The purposes set forth in subdivision b happen to include "improvement of trade and commerce."

As a shopping mall on the parking areas will "improve trade and commerce," say respondents, it falls under what is permitted by the 1961 law.

Petitioners' retorts are many.

First of all, the reason that the 1961 law was enacted, was to ensure that the lease of the stadium would comply with the state constitution's gifts and loans provision, which prohibits the City from directly financing or appropriating money for private commercial purposes. The 1961 law allows uses of the stadium and its facilities for purposes that are deemed to be public. Reading that law as authorizing construction of a private shopping mall is the diametric opposite of what the Legislature intended —

"A private commercial mall constructed on parkland cannot be said to serve a governmental or public purpose, and therefore is not authorized by § 18-118." [Petitioners' brief to Court of Appeals, p. 48.]

Second, the 1961 law allows certain "uses" of the stadium and facilities related to the stadium — not the demolition of any of those facilities, or replacing them with a shopping mall that's unrelated to the stadium.

Third, the 1961 law allows certain uses of the stadium and its facilities "to be constructed by the City." The shopping mall would not be constructed by the City, but by a private entity.

Fourth, the uses of the stadium that are authorized by the 1961 law are all temporally-limited events, not structures that may be built around the stadium. (Examples)

Fifth, although the phrase "improvement of trade and commerce" does appear in the 1961 law, it is a term of art that does not mean the same thing as actual trade and commerce. It is one thing to hold a trade show in a tent in the parking lot to "improve trade and commerce," and something else altogether to construct a shopping mall to conduct trade and commerce.

Sixth, the 1961 law does not provide any specific authorization for a shopping mall, as the public trust doctrine requires.

Respondents add another interesting point — If the court dis-allows the shopping mall in the park, then it will also effectively prevent a project that will remediate a century of contamination and blight at Willets Point. In other words, they are leveraging the prospect of a blighted area staying as-is, to justify reading the law to allow the shopping mall.

Judith Kaye personally argued the case for developers at state Supreme Court before Justice Manuel Mendez. He dismissed petitioners' case, holding that:

"The public trust doctrine does not apply. … The improvement of trade and commerce resulting from leasing the parkland including the 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."

Think what you will of that decision, but the "removal of urban blight from Willets Point" was not among the purposes for the parkland authorized by the legislature in 1961.

Petitioners appealed to the Appellate Division First Department. A panel of four judges issued a unanimous decision, reversing Justice Mendez:

"No reasonable reading of Administrative Code section 18-118 allows for the conclusion that the legislature in 1961 contemplated, much less gave permission for, a shopping mall, unrelated to the anticipated stadium, to be constructed in the Park."

The court enjoined construction of the shopping mall. The developers were aggrieved by that decision. But with a unanimous decision against them, appealing to the Court of Appeals is not as of right. You have to seek leave of the court, to appeal.

The developers announced that they would seek leave to appeal. But Mayor Bill de Blasio, who succeeded Michael Bloomberg, decided that the City would not join the developers in seeking leave to appeal. His office told the press that the developers had refused to accelerate the construction of housing units — and moreover, the City law department "didn't believe they'd win" the case.

So the developers, alone, sought leave to appeal. Perhaps that's why they wanted Judith Kaye, the former Chief Judge of the Court of Appeals, handling their case. Last November, the Court of Appeals announced that it would hear the case.

The following month, the New York City Council — apparently not satisfied with the Mayor's decision to let the developer go it alone to the Court of Appeals — adopted a resolution authorizing the Speaker to file or join an Amicus brief supporting the developers.

The month after that, Judith Kaye, counsel to the developers, died. January 7, 2016. A memorial service was held at Lincoln Center.

She has been replaced as developers' counsel by Caitlin J. Halligan (Gibson, Dunn and Crutcher), former General Counsel to the New York County District Attorney's Office, and former Solicitor General for the State of New York.

Meanwhile, it seems that Mayor Bill de Blasio flipped-flopped on his decision not to join the developers in appealing, as all of the municipal respondents filed a brief with the Court of Appeals on September 16, 2016.

Remember, the Appellate Division said that the shopping mall is "unrelated to the stadium," in holding that the mall is not authorized by the 1961 law. The City's brief to the Court of Appeals attacks that point.

Nowadays, they say, shopping malls are routinely constructed adjacent to sports stadiums — it's a relatively new phenomenon. As examples, the City cites Camden Yards in Baltimore, with its adjacent Eutaw Street shopping district; Gillete Stadium in Foxborough, Massachusetts, with its adjacent Patriots Place; and Busch Stadium in St. Louis, with its adjacent Ballpark Village. Consistent with that modern trend, we can have Citi Field stadium, with its adjacent Willets West built in the park.

The argument goes, that even though the New York legislature in 1961 may not have foreseen that shopping malls would someday complement sports stadiums, the 1961 law must be interpreted flexibly, to allow for how sports venues are implemented today — namely, that they are associated with shopping malls.

This case will be argued at Court of Appeals during 2017.

We've been notified that just yesterday, the office of the New York State Attorney General submitted an Amicus brief, supporting the developers and the City. What interest the AG has in ensuring that a commercial mall can be built on public parkland, we don't know — but I did find campaign finance disclosures showing that Sterling Equities and Sterling Mets contributed a total of $60,000 to AG Schneiderman, between 2014 (when the lawsuits started) and now.

Finally, what of the Sunrise Cooperative, the group of tenant businesses that settled its lawsuit for $5.8 million, and sought to relocate to a site in the Bronx? Their legal team was the Urban Justice Center.

It so happens that at the same time that Urban Justice Center was suing the City on behalf of Sunrise Cooperative, Urban Justice Center was also under contract to the City agency responsible for the Willets Point development, so that Urban Justice Center would provide services — including "permitting and financial analysis" — to enable the relocation to the Bronx site.

But as of summer of 2015, months after their court settlement, Sunrise Cooperative lacked permits to begin construction in the Bronx.

Meanwhile, as part of their court settlement, the Sunrise businesses agreed to vacate the Willets Point Phase One property by June 1, 2015.

The City evicted them from Willets Point on June 5, 2015, despite them not having any relocation space ready.

I visited the Bronx site earlier this year, to see whether it was true that Sunrise Cooperative had started to construct anything there. Indeed, they had. You can see the individual work bays being constructed.

However, the New York Times just reported that Sunrise Cooperative filed for bankruptcy protection on September 23. They would need at least another $3 million, to pay their creditors and complete the renovation of the Bronx space. No business is able to move in there.

Considering that Urban Justice Center was contracted to perform a "financial analysis" to support the Bronx relocation, and that Sunrise Cooperative ended up $3 million short and filing for bankruptcy protection, I have to wonder about the adequacy of the "financial analysis" done by Urban Justice Center.

Meanwhile, back at Willets Point, the City has demolished some structures in the Phase One area.

To end on a more upbeat note, beyond the Phase One area — in the 39 acres that are the majority of the Willets Point site — it is more or less business as usual. There is not likely to be much impact there, unless and until the City can demonstrate some progress in developing Phase One.

So what will become of this area? Will the Court of Appeals uphold the public trust doctrine as it applies to that parkland? We'll see what happens.

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