City Parkland: Invalid Lease or Permissible License?

When may a New York municipality authorize commercial use of parkland without express authorization of the state legislature? That question recently reached the Court of Appeals in Union Square Park Community Coalition v. New York City Department of Parks and Recreation (NYLJ 2/21/14), in which the court upheld an agreement between the city and a private party authorizing the latter to operate a seasonal restaurant in Union Square Park. In upholding the agreement, the court had to grapple with two limitations on municipal control of public parkland: the public trust doctrine and the prohibition on alienation of parkland without the permission of the state legislature.

The Public Trust Doctrine

Suppose a municipality itself decides to operate a restaurant in a public park. Although the municipality has not made any transfer of parkland, the mere use of parkland for a non-park purpose can constitute a violation of the public trust doctrine. Friends of Van Cortlandt Park v. City of New York, 95 N.Y.2d 623, is illustrative. Pressed by the federal Environmental Protection Agency (EPA), New York City set out to design and build a water filtration plant. The city's preferred location was the Mosholu Golf Course in Van Cortlandt Park. The design would restore the golf course and other park uses once the city completed the underground plant, but construction would close 29 acres of parkland, including the golf course, for more than five years. The State of New York, concerned citizens, and community groups sought to enjoin development of the plant on the ground that the public trust doctrine would prohibit construction without approval from the state legislature. The Court of Appeals agreed, holding that because park area are impressed with a public trust, use of parkland for other than park purposes, either for a period of years or permanently, requires state legislative approval.

What constitutes a park purpose within the meaning of the public trust doctrine? A water treatment plant is not, by any stretch of the imagination, a park purpose. But when the city proposes to devote parkland to a use sometimes found in a park, courts are more likely to defer to the city's determination. Thus, in 796 Fifth Avenue Corp. v. City of New York, 15 N.Y.2d 221, the Court of Appeals upheld New York City proposed construction of a caf' and restaurant in a corner of Central Park. Taxpayers had challenged the construction as illegal, and introduced testimony suggesting that the proposed pavision would be inappropriate to the park. The court conceded that “[i]f restaurants and cafes were never put in public parks it might reasonably be suggested that a Park Commissioner who approved such a facility was neither improving the park nor servicing a lawful recreational purpose.” But, because restaurants are commonly found in parks, the court deferred to the determination of city officials.

Alienation of Parkland

When a municipality authorizes a private entity to use parkland, even for a park purpose, a different issue arises: Does the authorization include an “alienaton” of parkland that requires legislative authorization? Miller v. City of New York, 15 N.Y.2d 34, suggests that the answer depends on whether the city's agreement with the private entity constitutes a lease or a license. In Miller, a divided Court of Appeals invalidated the city's agreement granting a private business the right to build a driving range on a 30-acre site in a public park. The court held that the agreement was an impermissible lease of parkland even though the agreement itself was denominated a “license.” While acknowledging that the agreement, like a license, gave the city a right to revoke, the court emphasized that the agreement was not revocable at the city's pleasure. Instead, the city had to make a showing that the premises were needed “for a paramount park or other purpose.” This clause, the court concluded, resembled “a revocation clause of a kind common in ordinary commercial leases.”

The Union Square Case

Against this background, a community group challenged an agreement by the New York City Department of Parks and Recreation to permit a private entity, Chef Driven Market, LLC (CDM), to operate a seasonal restaurant in Union Square Park. The agreement, like the agreement in Miller, was denominated a “License Agreement.” The terms of the agreement gave the Department the right to approve plans, schedules, hours of operation, menus and prices, and also gave the Department termination rights. The agreement also provided that the license was “terminable at will upon written notice by the Commissioner at any time;” that provision was undoubtedly included to avoid the court's conclusion in Miller that because the agreement was not revocable at the city's pleasure, it was a lease and not a license. But the agreement did not really give the Commission the right to terminate at will. Instead, it provided explicitly that the termination “shall not be arbitrary and capricious.”

The community group challenged the agreement on both grounds ' that the agreement violated the public trust doctrine, and that it constituted an improper alienation of parkland. With respect to the public trust argument, the Court of Appeals, in an opinion by Judge Victoria Graffeo, concluded that 795 Fifth Avenue was controlling. The court left open the possibility that a particular restaurant might not serve a park purpose in a future case, but emphasized the Park Commissioner's broad discretion to choose among valid park purposes.

The court then turned to, and rejected, the argument that the city's agreement with CDM constituted an illegal alienation of parkland. The court adhered to the lease/license distinction developed in Miller, and also agreed that the language used in the agreement was not dispositive. But the court held that the agreement in this case was not a lease because CDM's right to use the premises was not exclusive; CDM's right to use was only seasonal, and was not even exclusive during the season because the agreement required CDM to make seating available to the general public. Moreover, the court focused on “the broad termination clause” reserving to the city a right to cancel, which, the court indicated “is strongly indicative of a license as opposed to a lease.”

Conclusion

Although the court's opinion in the Union Square case took a deferential approach to the Parks Commissioner's authorization of a commercial use in a city park, the court was unwilling to lay down hard and fast rules either about the scope of the public trust doctrine or about what constitutes an illegal alienation of parkland. As a result, the court left the door open for future litigation on these issues.

Stewart E. Sterk, Mack Professor of Law at Benjamin N. Cardozo School of Law, is Editor-in-Chief of this newsletter.

When may a New York municipality authorize commercial use of parkland without express authorization of the state legislature? That question recently reached the Court of Appeals in Union Square Park Community Coalition v. New York City Department of Parks and Recreation (NYLJ 2/21/14), in which the court upheld an agreement between the city and a private party authorizing the latter to operate a seasonal restaurant in Union Square Park. In upholding the agreement, the court had to grapple with two limitations on municipal control of public parkland: the public trust doctrine and the prohibition on alienation of parkland without the permission of the state legislature.

The Public Trust Doctrine

Suppose a municipality itself decides to operate a restaurant in a public park. Although the municipality has not made any transfer of parkland, the mere use of parkland for a non-park purpose can constitute a violation of the public trust doctrine. Friends of Van Cortlandt Park v. City of New York , 95 N.Y.2d 623, is illustrative. Pressed by the federal Environmental Protection Agency (EPA), New York City set out to design and build a water filtration plant. The city's preferred location was the Mosholu Golf Course in Van Cortlandt Park. The design would restore the golf course and other park uses once the city completed the underground plant, but construction would close 29 acres of parkland, including the golf course, for more than five years. The State of New York, concerned citizens, and community groups sought to enjoin development of the plant on the ground that the public trust doctrine would prohibit construction without approval from the state legislature. The Court of Appeals agreed, holding that because park area are impressed with a public trust, use of parkland for other than park purposes, either for a period of years or permanently, requires state legislative approval.

What constitutes a park purpose within the meaning of the public trust doctrine? A water treatment plant is not, by any stretch of the imagination, a park purpose. But when the city proposes to devote parkland to a use sometimes found in a park, courts are more likely to defer to the city's determination. Thus, in 796 Fifth Avenue Corp. v. City of New York , 15 N.Y.2d 221, the Court of Appeals upheld New York City proposed construction of a caf' and restaurant in a corner of Central Park. Taxpayers had challenged the construction as illegal, and introduced testimony suggesting that the proposed pavision would be inappropriate to the park. The court conceded that “[i]f restaurants and cafes were never put in public parks it might reasonably be suggested that a Park Commissioner who approved such a facility was neither improving the park nor servicing a lawful recreational purpose.” But, because restaurants are commonly found in parks, the court deferred to the determination of city officials.

Alienation of Parkland

When a municipality authorizes a private entity to use parkland, even for a park purpose, a different issue arises: Does the authorization include an “alienaton” of parkland that requires legislative authorization? Miller v. City of New York , 15 N.Y.2d 34, suggests that the answer depends on whether the city's agreement with the private entity constitutes a lease or a license. In Miller, a divided Court of Appeals invalidated the city's agreement granting a private business the right to build a driving range on a 30-acre site in a public park. The court held that the agreement was an impermissible lease of parkland even though the agreement itself was denominated a “license.” While acknowledging that the agreement, like a license, gave the city a right to revoke, the court emphasized that the agreement was not revocable at the city's pleasure. Instead, the city had to make a showing that the premises were needed “for a paramount park or other purpose.” This clause, the court concluded, resembled “a revocation clause of a kind common in ordinary commercial leases.”

The Union Square Case

Against this background, a community group challenged an agreement by the New York City Department of Parks and Recreation to permit a private entity, Chef Driven Market, LLC (CDM), to operate a seasonal restaurant in Union Square Park. The agreement, like the agreement in Miller, was denominated a “License Agreement.” The terms of the agreement gave the Department the right to approve plans, schedules, hours of operation, menus and prices, and also gave the Department termination rights. The agreement also provided that the license was “terminable at will upon written notice by the Commissioner at any time;” that provision was undoubtedly included to avoid the court's conclusion in Miller that because the agreement was not revocable at the city's pleasure, it was a lease and not a license. But the agreement did not really give the Commission the right to terminate at will. Instead, it provided explicitly that the termination “shall not be arbitrary and capricious.”

The community group challenged the agreement on both grounds ' that the agreement violated the public trust doctrine, and that it constituted an improper alienation of parkland. With respect to the public trust argument, the Court of Appeals, in an opinion by Judge Victoria Graffeo, concluded that 795 Fifth Avenue was controlling. The court left open the possibility that a particular restaurant might not serve a park purpose in a future case, but emphasized the Park Commissioner's broad discretion to choose among valid park purposes.

The court then turned to, and rejected, the argument that the city's agreement with CDM constituted an illegal alienation of parkland. The court adhered to the lease/license distinction developed in Miller, and also agreed that the language used in the agreement was not dispositive. But the court held that the agreement in this case was not a lease because CDM's right to use the premises was not exclusive; CDM's right to use was only seasonal, and was not even exclusive during the season because the agreement required CDM to make seating available to the general public. Moreover, the court focused on “the broad termination clause” reserving to the city a right to cancel, which, the court indicated “is strongly indicative of a license as opposed to a lease.”

Conclusion

Although the court's opinion in the Union Square case took a deferential approach to the Parks Commissioner's authorization of a commercial use in a city park, the court was unwilling to lay down hard and fast rules either about the scope of the public trust doctrine or about what constitutes an illegal alienation of parkland. As a result, the court left the door open for future litigation on these issues.

Stewart E. Sterk, Mack Professor of Law at Benjamin N. Cardozo School of Law, is Editor-in-Chief of this newsletter.