Wednesday, March 25, 2015

Tenants Quietly Settle Lawsuit

Willets Point United Inc. (“WPU”) congratulates the Sunrise Cooperative group of Willets Point tenant businesses, as they settled their lawsuit against Queens Development Group (“QDG”), the City, NYCEDC and NYCIDA two days ago. However, we find it odd that despite settling this lawsuit after a year of negotiating to do so, with the goal of Sunrise Cooperative to relocate its members to new workspace in the Bronx, no announcement of the settlement has been made by Sunrise, by its attorneys at the Urban Justice Center, by Council member Julissa Ferreras, by QDG, the City, or even the spin doctors at NYCEDC.

Before the Lawsuit

In the waning days of the Bloomberg mayoral administration, NYCEDC offered each tenant business operating on City-owned Willets Point Phase One property a payout equal to 12 months of its rent, if the business would vacate the premises by November 30, 2013. If the business remained until January 31, 2014, the offered payout dropped to 6 months rent. Most of the tenant businesses accepted one or the other of the paltry payouts, and vacated the premises. Businesses who didn’t were evicted, regardless of relocation. That is why, with some exceptions, City-owned property within the Willets Point Phase One area has been substantially vacant since early 2014.

Many of the businesses that vacated the area in 2013-2014 are members of the Sunrise Cooperative.


Event organized by the Sunrise Cooperative, August 2, 2013. 

NYCEDC never missed an opportunity to publicly promote that it had retained the Cornerstone Group as a business relocation consultant, but Cornerstone failed to relocate the overwhelming majority of Willets Point businesses despite being paid $700,000 or more for its services (which is a different story for another time).

NYCEDC also announced another financial assistance program in 2013: A “Co-Relocation Fund” available only to groups of five of more eligible tenant businesses that operated on City-owned Willets Point Phase One property within a certain time period – provided that the five or more applicant businesses would relocate together to a common site. Under this program, the Co-Relocation Fund would pay up to $60,000 per business directly to the landlord of a relocation site, or to a seller of property to become a relocation site.

The Sunrise Cooperative presented itself as a group of businesses desiring to relocate together to a common site, such that each Sunrise member qualified for up to $60,000 of Co-Relocation Fund dollars. Sunrise submitted approximately 32 applications for Co-Relocation Fund dollars that were deemed eligible by NYCEDC – equating to approximately $1,920,000 available to pay costs of Sunrise members’ relocation.

Urban Justice Center

Urban Justice Center and its attorney Harvey Epstein had long advocated for Willets Point tenant businesses. By 2013, Sunrise Cooperative had identified a vacant building in the Bronx, consisting of 80,000 square feet of ground floor space and an open yard of the building, as a possible relocation site for its members. However, the building interior would require costly renovation, infrastructure installation and subdivision of its space to become a suitable location where scores of automotive service businesses could operate.

Apparently, NYCEDC and Urban Justice Center recognized that if the Bronx space was to become viable, someone would have to manage the creation of architectural renovation plans and a budget for significant construction work, among many other tasks necessary to relocate the Sunrise Cooperative businesses to that space. So, on November 1, 2013, NYCEDC and Urban Justice Center entered into a contract, by which NYCEDC “agreed to provide Funding Recipient [Urban Justice Center], on a reimbursement basis, with up to seventy-five thousand Dollars ($75,000) for costs and expenses associated with co-relocation due diligence.” The funding amount was later increased to $150,000.

Urban Justice Center used those funds to pay itself, as well as an architect firm and a contractor firm that developed plans and estimates to upgrade the Bronx building as necessary for “use as an automotive repair garage for 50 shops.”

Floor plans were produced that subdivide the interior space into 45 distinct work bays suitable for various types of automotive service businesses, with circulation space for customer automobiles and separate administration offices and restrooms.

Detail portion of Sunrise Cooperative's floor plan for
Bronx site, showing automotive work bays arrayed in aisles.

The contractor has estimated the total cost of the necessary renovation work for the Bronx site to be $7,427,987.28.

The available Co-Relocation Fund dollars do not come close to covering that cost.

Lawsuit

On February 4, 2014, petitioners Sunrise Cooperative and 33 of its members filed a lawsuit against developer QDG, Sterling Equities, Inc., The Related Companies, Inc., NYCEDC, NYCIDA and the City. Urban Justice Center provided all legal services representing petitioners in the case – while Urban Justice Center also remained under contract to NYCEDC and invoiced NYCEDC for, among other things, Urban Justice Center’s “project management of development” of the Bronx site.

Upon filing the lawsuit, as far as we are aware, Sunrise Cooperative and Urban Justice Center published no press release and essentially told no one – just as they are now doing with the settlement.

The lawsuit alleged that “the Developers and EDC’s relocation plan is in violation of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”),” that “there was no lawful relocation plan for current commercial tenants, as is required by federal law,” that “the relocation assistance has been ineffective” and that “only ten out of the approximately 110 businesses in Willets Point [Phase One], or only 9 percent, had been successfully relocated;” that the parkland where QDG intends to construct the “Willets West” mega-mall “cannot be redeveloped for non-parkland use without the express consent of the New York State Legislature” (a key argument also made in the separate lawsuit, Avella v. City of New York, which remains pending); that the 2013 City Council approval pertaining to the proposed Willets Point development is fatally flawed as it was made without knowledge that QDG “would receive over forty million dollars in tax abatements;” and that NYCIDA granted tax abatements of $42.6 million “without following its Uniform Tax Exemption Policy as it is required to do by law.”

Conventional wisdom has been that Sunrise Cooperative and Urban Justice Center filed the lawsuit not out of any actual desire to defend parkland, halt QDG’s development project or rescind NYCIDA’s $42.6 million tax credits to QDG – but instead, to provide leverage in negotiations with NYCEDC and QDG so that Sunrise could obtain the additional millions of dollars necessary to pay the estimated $7,427,987.28 cost to renovate the Bronx space, and facilitate the relocation of Sunrise members there.

Shortly after the lawsuit was filed, Sunrise Cooperative executed a lease agreement with the landlord of the Bronx site on February 15, 2014. The term of the lease is ten years (until January 31, 2024), with one five-year option to extend (until January 31, 2029).

The monthly rent for the entire Bronx space, which increases annually, begins at $73,333.33 per month.

NYCEDC has paid this rent on behalf of Sunrise Cooperative – $73,333.33 per month for the better part of the past year. NYCEDC is drawing from the Co-Relocation Fund to make these rent payments, and has likely already spent more than $800,000 to pay rent for the Bronx site through the present time.

NYCEDC also paid “Sunrise Cooperative’s, Inc.’s security deposit” in the amount of $439,999.98 on March 6, 2014.

Totaling the rent and the security deposit, it seems that NYCEDC has already spent roughly $1,240,000 on payments relating to the Bronx site – the lion’s share of the $1,920,000 in Co-Relocation Fund dollars for which Sunrise Cooperative businesses were eligible.

Meanwhile, as NYCEDC continued to pay rent of $73,333.33 to the Bronx site landlord month after month during the past year, renovation work did not begin and the Sunrise Cooperative lawsuit was repeatedly adjourned. All that has been accomplished by NYCEDC’s expenditure of taxpayer dollars totaling roughly $1,240,000 (and counting) is to take the Bronx site property off the market and keep it open for use by Sunrise Cooperative members if they can renovate it and relocate there.

Aftermath

As quietly as they commenced their lawsuit, Sunrise Cooperative and Urban Justice Center settled it two days ago. Given the substantial commitment of taxpayer dollars to hold the Bronx relocation site until the lawsuit was resolved, the fact that Sunrise now requires many more millions of dollars to renovate the Bronx space for use, and that the lawsuit may have been settled in exchange for NYCEDC providing additional taxpayer money to further Sunrise Cooperative’s relocation to the Bronx site, the parties to the lawsuit should come clean and fully disclose to the public whatever agreement they may have reached.

As much as we’d like to see the successful relocation of Willets Point Phase One tenant businesses, we are skeptical about the appropriateness of the Bronx site leased by Sunrise Cooperative. Queens-based workers will incur a daily bridge toll of $15.00 to be at the Bronx site – roughly $360.00 per month. That’s an additional business cost beyond what they now have at Willets Point, and will increase their prices charged to customers. The proposed layout and configuration of the Bronx site – an indoor automotive marketplace with scores of businesses in separate bays along labyrinthine aisles – raises questions regarding whether customers will visit all of the shops, or mostly stick with the ones located near the entrance.

We look forward to the answers to these and other questions. We also note that settlement of the Sunrise Cooperative lawsuit does not aid the Willets Point automotive business that are not members of the Sunrise Cooperative because they could not afford to pay the dues, were excluded from Sunrise Cooperative, or for any other reason. What will happen to the non-Sunrise businesses remains to be seen.

Meanwhile, although the Sunrise Cooperative lawsuit has settled, the separate lawsuit challenging the QDG project – filed by State Senator Tony Avella, City Club of New York, Queens Civic Congress, New York City Park Advocates, residents, business owners and WPU members – remains pending, with oral argument scheduled for April 15, 2015 at the Appellate Division, First Department.

Monday, November 10, 2014

SENATOR AVELLA CALLS ON DEC TO DENY WASTEFUL DEVELOPER APPLICATION FOR TAX CREDITS

FOR IMMEDIATE RELEASE
MONDAY, November 10, 2014
CONTACT: Heather K. Sager

SENATOR AVELLA CALLS ON DEC TO
DENY WASTEFUL DEVELOPER APPLICATION FOR TAX CREDITS

(QUEENS, NY) Today, State Senator Tony Avella is calling on the New York State Department of Environmental Conservation (DEC) to deny the Queens Development Group’s (QDG) application for Brownfield Cleanup Program (BCP) tax credits on its Willets Point Phase One property.

Approximately a year ago, QDG entered a contract with the NYC Economic Development Corporation which requires the QDG to clean up the property. As part of this agreement, the QDG received a capital grant commitment of taxpayer funds for $99 million, of which $40 million is intended to pay these cleanup costs. 

However, it was not long after QDG applied to the Brownfield Program, to try to obtain additional tax credits to clean up the property.

The Brownfield Cleanup Program (BCP) provides substantial tax credits to land developers to encourage the remediation and clean up of Brownfield sites. It was developed by the State in order to offset the costs of clean-up of the sites. An example of the amount of previous awards under the BCP is the $44 million awarded to the developers of the East River Plaza in Manhattan. 

After learning of QDG’s application, Senator Avella, along with advocacy group Willets Point United, immediately contacted the DEC to intervene. In a recent response letter, the DEC stated that the agency believes that, "The public interest is served by allowing these properties to participate in the BCP." The DEC also wrote in its response, "The fact that a property may be redeveloped without the incentives of the BCP does not preclude it from being eligible for the program."

“The Queens Development Group has already been promised $40 million in taxpayer funds to offset the costs of cleaning up Willets Point Phase One. Now, the QDG is attempting to take advantage of the BCP tax credit program by trying to apply for millions in tax credits for costs that will already be paid from the taxpayer’s pocket. It’s absolutely disgraceful,” said Senator Avella. “The DEC’s response is alarming, as it completely disregards the fact that the QDG is already required to clean up the site, and will already be receiving taxpayer funds to do so. Wasting taxpayer money by giving funds to developers who are already receiving clean-up related capital grants is not the intention of the Brownfield Credit Program.”


Friday, October 31, 2014

Meeting at Department of State

Albany, New York:  Members of Willets Point United Inc. (“WPU”) held a meeting with the New York State Committee on Open Government’s Executive Director, attorney Robert Freeman, and its Assistant Director, attorney Camille Jobin-Davis, at the Committee’s office.

Joseph Ardizzone (WPU), Robert Freeman, Esq. (Committee Executive Director),
Camille Jobin-Davis, Esq. (Committee Assistant Director) and Irene Prestigiacomo
(WPU) at the office of the NYS Committee on Open Government.

The Committee on Open Government is a unit of the Department of State that oversees and advises the government, public, and news media on the Freedom of Information Law (“FOIL”), Open Meetings Law and Personal Privacy Protection Law.

WPU routinely files FOIL requests with agencies involved in the proposed Willets Point development, seeking project records that would not otherwise be publicly disclosed – and has filed scores of such requests within the past several years. In pursuing our requests and associated appeals when access to records is denied, WPU has benefitted from the Committee’s advice and its written legal opinions regarding agencies’ obligations pursuant to FOIL, which records are available under FOIL, and many other crucial factors.

The recent meeting between WPU and Committee members allowed a face-to-face exchange of ideas concerning certain pending FOIL requests. Moreover, the meeting provided an opportunity to discuss ways in which FOIL could be strengthened to benefit the public – all while acknowledging that this year marks the 40th Anniversary of FOIL’s enactment into law. We were also very pleased to summarize for the Committee how WPU has leveraged FOIL over the years, obtaining records that have become the bases of many news reports and that have exposed corruption, among other results.

FOIL resulted in the disclosure of contracts, financial documents and communications showing (among many other things) that NYCEDC funneled $450,000.00 to Claire Shulman’s local development corporation, and instructed it to lobby for legislation authorizing the proposed Willets Point development – in direct violation of state law, as ultimately found by NYS Attorney General Eric Schneiderman. That resulted in the dissolution and restructuring of NYCEDC to ensure that it stops violating the law – but no person has been held to account for any of the prior illegal activity. To the contrary, at least one NYCEDC official who – according to a city Law Department attorney – the Attorney General’s office was “trying to set up for a criminal prosecution” has not actually been prosecuted.

Article accessible online here.

In response to a FOIL request, NYCEDC refused to even disclose just the names of the developer firms that had responded to the Request For Proposals pertaining to Phase One of Willets Point. At the time, the Committee’s Robert Freeman told the press: “I don’t see any conceivable basis for withholding these names.” (See our prior blog article.)

FOIL unearthed records showing that Sterling Equities and Related Companies originally wanted to construct a gambling casino on the parkland where they now say they will construct a mega-mall – even going as far as enlisting the Shinnecock Indian Nation to operate the casino. For all the public knows, Sterling and Related may still be pursuing their original, preferred intent to construct a gambling casino on the parkland. That would hardly be the first bait-and-switch in this development.

Article accessible online here.

FOIL obtained the contracts between NYCEDC and developers Sterling/Related, showing (among other things) that the Bloomberg administration reneged on its assurance to recoup the cost of acquiring Willets Point Phase One property – $400+ million taxpayer dollars – and instead arranged to gift the property to Sterling/Related for the price of $1 (one dollar). The same contracts show that housing at Willets Point – originally the most highly-touted component – is delayed until at least the year 2025, and that Sterling/Related may opt out of constructing housing by paying $35 million (a mere cost of doing business); and that if the city does not first construct expensive new access ramps to and from the Van Wyck Expressway, Sterling/Related will neither construct any housing nor pay any penalty.

Article accessible online here.

FOIL disclosed the approved schematic plans for the entire Willets Point Phase One / Willets West mega-mall – plans which developers Sterling/Related still have not presented during any meeting with Queens Community Board 7, although they are required to do so, according to the board’s District Manager.

FOIL yielded records showing that NYSDOT officials were being pressured to approve inadequate plans to construct new Van Wyck access ramps – based upon traffic data that differed suspiciously from data previously proffered to the New York City Council. Michael Bergmann, a NYSDOT structural engineer on the team that reviewed the City’s ramp application, wrote to the NYSDOT regional director and colleagues: “Unless the preparers of this report start accepting the idea that it is seriously flawed, we are going nowhere.” Peter King, a NYSDOT project manager, wrote: “If I were a betting man, I’d start dropping the odds regarding success for E.D.C. on this project,” and that a mistaken completion date of the year 2107 instead of 2017 “may have been closer to the truth than anyone realizes.” After WPU obtained these email records and traffic data, and after WPU’s traffic expert Brian Ketcham and its environmental attorney Michael Gerrard of Arnold & Porter intervened with NYSDOT and FHWA, NYCEDC withdrew its ramp application, resulting in a long delay while NYCEDC’s consultant reconsidered its traffic data. Neither Mr. Ketcham nor Mr. Gerrard is satisfied that the ramps have been properly evaluated, and to this day, the ramps remain an open and contentious issue.

Without FOIL, it is unlikely that the public would have ever known any of the above-described facts.

WPU is a staunch supporter of FOIL, and we wholeheartedly salute the work of the Committee on Open Government and its two mainstays, Robert Freeman and Camille Jobin-Davis, in helping to ensure that FOIL is properly implemented by agencies. In all our dealings with so many city and state agencies, we have seen none other that is as genuinely helpful and responsive as the Committee on Open Government. This is one place where we are pleased to see our tax dollars at work and used well.

Emphasizing the importance of public records and open meetings, Mr. Freeman, the Committee’s Executive Director, is fond of quoting Supreme Court Justice Louis Brandeis: “Sunlight is said to be the best of disinfectants.” As our meeting concluded, Mr. Freeman reminded us of that quotation.

In the same spirit, WPU vows to continue to leverage FOIL and other laws, to discredit, incriminate and fight our opponents.

Joseph Ardizzone (WPU) and Irene Prestigiacomo (WPU),
outside of the NYS Committee on Open Government.


Thursday, September 18, 2014

Support letters and CB7 resolution

Letters Parkland Lawsuit


Ben Haber had a lengthy letter published in a Queens weekly, regarding the status of the lawsuit challenging the Willets West mall. The following week, another letter-writer agreed with Haber. Attached are both of the letters.

These were distributed at the Borough Board meeting this past Monday.

CB7 Parkland Resolution 140908


During its meeting on Sept. 8, Queens Community Board 7 adopted the attached resolution pertaining to parkland alienation, with minor
corrections (mostly typo fixes) made before the vote. Manhattan CB6 had previously adopted a similar resolution.

Wednesday, August 20, 2014

Willets West case dismissed; attorney issues official statement

Justice Manuel Mendez, NYS Supreme Court, NY District, has issued his decision to dismiss the lawsuit brought by plaintiffs Sen. Tony Avella, City Club of New York, Queens Civic Congress and others, challenging the plan of Queens Development Group LLC to construct a 1.4 million square foot mega-mall on 40+ acres of Queens parkland.
Justice Manuel Mendez, who has
decided that the Willets West mega-mall
can be built on 40+ acres of Queens
parkland. Photo by Rafael Fern├índez.
Source: http://www.impactony.com/
tag/nueva-york-2/page/2/#sthash.IgES8I9s.
4cDYLvlA.dpbs
Justice Mendez concludes that the 1961 authorization to construct Shea Stadium also allows construction of the mega-mall on parkland.

Below is the official statement of John Low-Beer, attorney for plaintiffs, concerning the decision of Justice Manuel Mendez to dismiss the case:

"Plaintiffs believe that the decision misunderstands the common law doctrine that prohibits any nonpark use of parkland without the specific and explicit approval of the State Legislature.  The State Legislature, when it passed the 1961 law permitting the construction of Shea Stadium, did not intend to allow construction of a shopping mall.  That law did not allow the construction of anything except a stadium and related facilities on the site.  Plaintiffs will appeal, and believe that this decision will be reversed on appeal."