Development

AppDiv, First Dept

(Opinion by Catterson, J.)

In an article 78 proceeding brought by an unsuccessful bidder for a lease on a parcel of land in the Bronx, the Economic Development Corporation (EDC) appealed from a Supreme Court order annulling EDC's lease to another bidder. The Appellate Division reversed and dismissed the petition, holding that the bidder lacked standing to bring the proceeding.

EDC is a not-for-profit development corporation that leases property on the city's behalf. When EDC had the opportunity to lease property in the Bronx directly across the street from the New York City Terminal Market, EDC solicited offers from companies that had previously expressed interest in the premises, and also published Request for Proposals (RFP) in several newspapers. Six bidders submitted proposals, but the proposals differed on material terms. EDC accepted one proposal, on a number of grounds, including its belief that the accepted proposal would allow relocation of displaced commercial tenants and the number of jobs to be retained and created. EDC then entered into a lease with the successful bidder, and one of the unsuccessful bidders brought this proceeding challenging the award on the ground that EDC had 'conducted a sham, bad faith bidding process.' The Supreme Court granted the petition, annulled the designation of the successful bidder, and enjoined EDC and the city from entering into a new lease before implementing a new procedure for selection of tenants. The EDC and the City appealed.

In reversing, the Appellate Division held that as a not-for-profit development corporation formed pursuant to section 1141 of the Not-for Profit Corporation Law, EDC was not subject to the same constraints as public agencies with respect to competitive bidding. In particular, the court held that EDC was not required to conduct competitive bidding at all, and was not subject to an obligation to treat bidders fairly. As a result, an unsuccessful bidder lacked standing to bring an article 78 proceeding, because the EDC breached no duty to the bidder different from its duties to the public at large. The court also concluded that the unsuccessful bidder lacked standing for failure to demonstrate injury in fact, because its response to the RFP introduced factors not contemplated by the RFP, assuring that the bidder could not have succeeded with its lease proposal. Finally, the court concluded that the same factors which established that the unsuccessful bidder lacked standing would also have been fatal to its proceeding on the merits: its response to the RFP created issues that made it impossible to conclude that EDC's rejection of the proposal was arbitrary and capricious.

ZBA Entitled to Depart from Mistaken Precedent

Matter of Nozzleman 60, LLC v. Village of Cold Spring Zoning Board of Appeals

NYLJ 11/27/06, p. 29, col. 6

AppDiv, Second Dept

(memorandum opinion)

In an article 78 proceeding by landowner to annul a determination by the Zoning Board of Appeals (ZBA) confirming the building inspector's denial of a building permit, the ZBA appealed from the Supreme Court's grant of the petition. The Appellate Division reversed and dismissed the petition, holding that the ZBA was entitled to depart from its past interpretation of the zoning ordinance.

Landowner owned land within an 'I-1' district, and applied for a building permit for construction of a single-family house. The building inspector denied the permit, and landowner sought review before the ZBA. In the past, the ZBA had applied the dimensional requirement applicable in 'R-1' districts to single-family homes in 'I-1' districts. In this case, however, the ZBA determined that past practice was inconsistent with the terms of the zoning ordinance, and upheld the building inspector's determination. Land-owner brought this article 78 proceeding, and Supreme Court granted the petition.

In reversing, the Appellate Division conceded that if the ZBA departs from prior precedent on identical facts, the ZBA's determination would be arbitrary and capricious unless the ZBA sets forth reasons for reaching a different result. Here, however, the court noted that the ZBA concluded that its earlier interpretation of the ordinance was mistaken, and the court concluded that the ZBA is entitled to 'refuse to duplicate' the mistake, and was not bound to perpetuate an erroneous interpretation of the ordinance.

DEC Entitled to Deny Application to Participate in Brownfield Cleanup Program

337 Greenwich LLC v. New York State Department of Environmental Conservation

(DEC)

NYLJ 11/27/06, p. 22, col. 1

Supreme Ct., N.Y. Cty

(Gische, J.)

Landowner brought an article 78 proceeding to challenge a determination by DEC denying its application to participate in the Brownfield Cleanup Program. The court denied the petition and dismissed the proceeding, holding that DEC had not abused its discretion in denying the application.

Landowner is building an 80-room hotel and 100-seat restaurant on the premises. An environmental consultant hired by the prior owner had discovered two 550-gallon unregistered storage tanks under the property, and one ground soil sample had registered concentrations of mercury and semi-volatile organic compounds exceeding recommended soil cleanup objectives listed in a DEC manual. The area of concern was a small part of the 10,080 square feet to be developed as part of the hotel project. Nevertheless, landowner applied to DEC to participate in the Brownfield Cleanup Program (see Environmental Conservation Law, ” 27-1401 – 27-1431). The program would permit tax credits for cleanup of brownfields and a release from future liability if the cleanup is satisfactory. The statute defines a brownfield site as 'any real property, the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant.' DEC denied landowner's application, noting that the levels of contamination were relatively low and that the increase in development costs attributable to environmental concerns was small in relation to the total cost of development. As a result, DEC concluded that reuse was not complicated by the presence of contamination. Landowner brought this article 78 proceeding.

In denying the petition, the court noted that because the statute limited participation to sites in which reuse or redevelopment might be 'complicated' by contamination, the statute did not give landowners who could show contamination an absolute right to participation in the brownfields program. Rather, the statute gave discretion to the agency to determine whether redevelopment would be 'complicated.' The court concluded that deference to the agency's expertise was appropriate, and held that the agency's decision was not arbitrary or capricious.

Unsuccessful Bidder Lacks Standing to Challenge EDC's Award of Lease

Hunts Point Terminal Products Cooperative Association Inc. v. New York City Economic Development Corp.

NYLJ 11/16/06, p. 22, col. 1

AppDiv, First Dept

(Opinion by Catterson, J.)

In an article 78 proceeding brought by an unsuccessful bidder for a lease on a parcel of land in the Bronx, the Economic Development Corporation (EDC) appealed from a Supreme Court order annulling EDC's lease to another bidder. The Appellate Division reversed and dismissed the petition, holding that the bidder lacked standing to bring the proceeding.

EDC is a not-for-profit development corporation that leases property on the city's behalf. When EDC had the opportunity to lease property in the Bronx directly across the street from the New York City Terminal Market, EDC solicited offers from companies that had previously expressed interest in the premises, and also published Request for Proposals (RFP) in several newspapers. Six bidders submitted proposals, but the proposals differed on material terms. EDC accepted one proposal, on a number of grounds, including its belief that the accepted proposal would allow relocation of displaced commercial tenants and the number of jobs to be retained and created. EDC then entered into a lease with the successful bidder, and one of the unsuccessful bidders brought this proceeding challenging the award on the ground that EDC had 'conducted a sham, bad faith bidding process.' The Supreme Court granted the petition, annulled the designation of the successful bidder, and enjoined EDC and the city from entering into a new lease before implementing a new procedure for selection of tenants. The EDC and the City appealed.

In reversing, the Appellate Division held that as a not-for-profit development corporation formed pursuant to section 1141 of the Not-for Profit Corporation Law, EDC was not subject to the same constraints as public agencies with respect to competitive bidding. In particular, the court held that EDC was not required to conduct competitive bidding at all, and was not subject to an obligation to treat bidders fairly. As a result, an unsuccessful bidder lacked standing to bring an article 78 proceeding, because the EDC breached no duty to the bidder different from its duties to the public at large. The court also concluded that the unsuccessful bidder lacked standing for failure to demonstrate injury in fact, because its response to the RFP introduced factors not contemplated by the RFP, assuring that the bidder could not have succeeded with its lease proposal. Finally, the court concluded that the same factors which established that the unsuccessful bidder lacked standing would also have been fatal to its proceeding on the merits: its response to the RFP created issues that made it impossible to conclude that EDC's rejection of the proposal was arbitrary and capricious.

ZBA Entitled to Depart from Mistaken Precedent

Matter of Nozzleman 60, LLC v. Village of Cold Spring Zoning Board of Appeals

NYLJ 11/27/06, p. 29, col. 6

AppDiv, Second Dept

(memorandum opinion)

In an article 78 proceeding by landowner to annul a determination by the Zoning Board of Appeals (ZBA) confirming the building inspector's denial of a building permit, the ZBA appealed from the Supreme Court's grant of the petition. The Appellate Division reversed and dismissed the petition, holding that the ZBA was entitled to depart from its past interpretation of the zoning ordinance.

Landowner owned land within an 'I-1' district, and applied for a building permit for construction of a single-family house. The building inspector denied the permit, and landowner sought review before the ZBA. In the past, the ZBA had applied the dimensional requirement applicable in 'R-1' districts to single-family homes in 'I-1' districts. In this case, however, the ZBA determined that past practice was inconsistent with the terms of the zoning ordinance, and upheld the building inspector's determination. Land-owner brought this article 78 proceeding, and Supreme Court granted the petition.

In reversing, the Appellate Division conceded that if the ZBA departs from prior precedent on identical facts, the ZBA's determination would be arbitrary and capricious unless the ZBA sets forth reasons for reaching a different result. Here, however, the court noted that the ZBA concluded that its earlier interpretation of the ordinance was mistaken, and the court concluded that the ZBA is entitled to 'refuse to duplicate' the mistake, and was not bound to perpetuate an erroneous interpretation of the ordinance.

DEC Entitled to Deny Application to Participate in Brownfield Cleanup Program

337 Greenwich LLC v. New York State Department of Environmental Conservation

(DEC)

NYLJ 11/27/06, p. 22, col. 1

Supreme Ct., N.Y. Cty

(Gische, J.)

Landowner brought an article 78 proceeding to challenge a determination by DEC denying its application to participate in the Brownfield Cleanup Program. The court denied the petition and dismissed the proceeding, holding that DEC had not abused its discretion in denying the application.

Landowner is building an 80-room hotel and 100-seat restaurant on the premises. An environmental consultant hired by the prior owner had discovered two 550-gallon unregistered storage tanks under the property, and one ground soil sample had registered concentrations of mercury and semi-volatile organic compounds exceeding recommended soil cleanup objectives listed in a DEC manual. The area of concern was a small part of the 10,080 square feet to be developed as part of the hotel project. Nevertheless, landowner applied to DEC to participate in the Brownfield Cleanup Program (see Environmental Conservation Law, ” 27-1401 – 27-1431). The program would permit tax credits for cleanup of brownfields and a release from future liability if the cleanup is satisfactory. The statute defines a brownfield site as 'any real property, the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant.' DEC denied landowner's application, noting that the levels of contamination were relatively low and that the increase in development costs attributable to environmental concerns was small in relation to the total cost of development. As a result, DEC concluded that reuse was not complicated by the presence of contamination. Landowner brought this article 78 proceeding.

In denying the petition, the court noted that because the statute limited participation to sites in which reuse or redevelopment might be 'complicated' by contamination, the statute did not give landowners who could show contamination an absolute right to participation in the brownfields program. Rather, the statute gave discretion to the agency to determine whether redevelopment would be 'complicated.' The court concluded that deference to the agency's expertise was appropriate, and held that the agency's decision was not arbitrary or capricious.