Monday, July 30, 2018

VIDEO: de Blasio Administration Must Take Back Two Acres from Queens Development Group

A new video released by Willets Point United demands that the de Blasio administration act before a December 2018 contractual deadline, to protect taxpayers’ interests by reclaiming two acres of Willets Point property which the Bloomberg administration gave to Queens Development Group.

In the video (below), Willets Point property owner Irene Prestigiacomo explains the give-away of the two acres to Queens Development Group; the comprehensive development project which the property was supposed to facilitate; the court decision that effectively prevents that project from proceeding; the contractual provision that allows the City to take back the property under present circumstances; the lack of action by the de Blasio administration thus far to reclaim the property; and City officials’ fiduciary responsibility to taxpayers to do so before the deadline lapses.

Ms. Prestigiacomo asks (06:38): "As corrupt as this City sometimes can be, have we really reached the point where a developer can keep public property worth tens of millions, without delivering any of the project that was the basis for it to receive the property in the first place?"

The Basic Premise

A developer that receives public property worth tens of millions of dollars to facilitate a project, should not be allowed to keep that property when the developer is unable to proceed with its project. That is especially so, when the City’s contract with the developer allows the City to take back the property under the circumstances.

And yet, that is exactly what is occurring right now at Willets Point. As of this writing, Queens Development Group is keeping approximately two acres (90,500 square feet) of what used to be taxpayers’ property, even though Queens Development Group cannot implement the project that was the basis for it to be awarded that property.

To stop this, City officials must act before a contractual deadline of December 20, 2018 – presuming that the de Blasio administration hasn’t already somehow squandered the opportunity.

Below are supplemental details, not mentioned in the video.

Significant Taxpayer Costs to Originally Obtain the Two Acres

Before the two acres were given to Queens Development Group, they were City property – and before that, they were owned by a private party who operated a business on the site.

To acquire the two acres from the previous private owner, the City paid taxpayer funds of nearly $14 million, plus sweetened the deal by giving the prior owner other City-owned College Point Corporate Park property estimated to be worth between approximately $1.8 and $7.2 million, meaning that it cost the City as much as $21 million dollars to acquire the two acres of Willets Point land. Viewed differently, other Willets Point properties in the vicinity of the two acres have sold for a typical price of $400 per square foot – which if applied to the two acres, means they are worth $36,200,000.

Rather than recouping the cost of acquiring the property as it had said it would, the Bloomberg administration gave the two acres to Queens Development Group for $1 (one dollar).

Willets Point "Iron Triangle," with the two acres owned
by Queens Development Group shown in red, and the
Bloomberg-era "Phase One" portions shown in white.

The City is able to rescind that sale during a limited timeframe, under special circumstances such as those in the aftermath of the NYS Court of Appeals decision in Avella v. City of New York, which effectively prevents Queens Development Group's comprehensive development project from proceeding.

No Overlap Between the Two Acres and the New Six Acre Willets Point Project

Recently, the de Blasio administration announced a new plan to lease six acres of Willets Point Phase One property to Queens Development Group, to become an affordable housing development with a school. Those six acres to be leased to Queens Development Group are physically separate from the two acres previously sold to Queens Development Group by the Bloomberg administration.

Revoking the sale of the two acres to Queens Development Group does not prevent the separate, new, six acre affordable housing project from proceeding.

Deadline to Act

Unless the de Blasio administration has somehow squandered it, there is a window of opportunity to reclaim the two acres from Queens Development Group: The City must act before December 20, 2018, which is five years after the original date of sale.

Per the First Amendment to Amended and Restated Purchase and Sale Agreement between the New York City Economic Development Corporation and Queens Development Group dated December 20, 2013:

“§ 17.3  Terms of Options.
In order to exercise the … Call Option …, the party or parties entitled to exercise the Option shall deliver a notice to the other party or parties prior to the … Call Option Outside Date”.

The “Call Option Outside Date” is defined as five years after the date of the original sale, which in this case will be December 20, 2018.

(Disclaimer: Willets Point United shall not be responsible if a different deadline date applies for any reason, and encourages the accountable City attorneys to independently calculate the correct Call Option deadline date pursuant to all applicable contract provisions.)

Tuesday, February 6, 2018

“New Plan,” “New Deal” – But No New Competitive Bid?

From the outset of the proposed Willet Point development, it has been understood that a developer would be selected via a competitive sealed proposal process.

The City’s selection in 2012 of Queens Development Group (QDG) to develop phase one of Willets Point – to the exclusion of all other firms that submitted proposals – was predicated on QDG’s unique proposal that expanded the project to include a mega-mall on public parkland (leveraging a lease already held for said parkland by the Mets’ owners, who comprise half of QDG).

In the aftermath of the Court of Appeals decision which prevents QDG from implementing its proposal, Mayor de Blasio should have immediately availed himself of the opportunity afforded by the contract between QDG and the Economic Development Corporation (EDC), to rescind the sale of Willets Point property to QDG and cancel the contract award. Then, the City would have been free to issue a new request for proposals (RFP) to the entire present-day development community, for the “new” six-acre project which apparently is now the priority.

Instead, there has never been a competitive sealed proposal process for development of six acres of Willets Point property stemming from the intersection of Willets Point Boulevard and Roosevelt Avenue. Think of it: A reasonably-sized, six-acre project would likely attract a larger pool of developer proposals than did the 2012 RFP which encompassed the enormity of the Willet Point phase one site. There is absolutely no basis to think that QDG is the “best” developer for this six-acre site and configuration, because the de Blasio administration did not implement any competitive sealed proposal process (although it should have done so).

In its article published on February 6, 2018, the New York Times repeatedly refers to the six-acre project as a “new plan” and “new deal.” We agree, but wonder why there was also not a “new” RFP and “new” competitive sealed proposal process to determine it.

Beyond the 2012 selection of QDG as developer, the subsequent decisions by the Deputy Mayor, EDC, the New York City Land Development Corporation and the Queens Borough Board to dispose of hundreds of millions’ worth of City-owned property to QDG, were all predicated upon QDG’s prior, now-defunct proposal which expanded the project to include a mega-mall on public parkland.

We encourage investigations by the public, the press, the Comptroller and enforcement agencies, regarding whether or not it is consistent with City policies and procedures for the City to designate QDG to implement a “new plan” without issuing any new RFP, and for the City to dispose of valuable public property to QDG pursuant to decisions that were wholly based upon a different, defunct plan.

We also recommend that the press ask these questions:

•   What price is the de Blasio administration establishing, for the sale of Willets Point property to QDG? $1 (one dollar) per the Bloomberg administration, or a legitimate price that recoups the taxpayers’ cost of acquiring the property?

•   The New York Times mentions that QDG will remediate Willets Point property by a certain date. Does that remediation refer to the six-acre section of Phase One, or to the entire 23 acres of Phase One? If the latter, why would QDG remediate that land, prior to any decision about what will be built there?

•   Given that the Queens Borough Board is to evaluate and vote on the “business terms” of an award of development rights for the Willets Point project, and thus far the Borough Board has only voted on QDG’s prior development proposal which featured the mega-mall (which has been eliminated from the “new plan”), will the City seek a new approval of the Queens Borough Board for the changed iteration of the project?

•   During the January update meeting between Queens Community Board 7 (CB7), QDG, EDC and Mayor’s Office representatives, CB7 repeatedly lamented being excluded from ongoing discussions between the QDG, QDG and the Mayor’s Office about new plans for Willets Point. Thereafter, was CB7 involved in any such discussions, prior to the New York Times publishing the new Willets Point plan on February 6, 2018? Or, was CB7 still excluded by QDG, EDC and the Mayor’s Office?

•   Where is there an Environmental Impact Statement (EIS) document that analyzes impacts of a six-acre development stemming from the intersection of Willets Point Boulevard and Roosevelt Avenue, with no new Van Wyck access ramps present? The 2013 Supplemental EIS analyzed a project configuration that included the mega-mall, with no new Van Wyck access ramps present during the initial phase.

Thursday, December 28, 2017

De Blasio Admin. Finalizing QDG Land Steal

Through the Willets Point grapevine, we hear that the City is about to transfer ownership of 23 acres comprising the “Phase One” area of Willets Point, to Queens Development Group (“QDG”) – the joint venture of Sterling Equities (whose owners also own the New York Mets) and The Related Companies that the Bloomberg administration designated as the developer. This is the infamous give-away of 23 acres of valuable taxpayer property, which cost hundreds of millions of public dollars to acquire, to developers for the unjustified price of $1 (one dollar).

For the de Blasio administration to proceed with this sale at this time is outrageous and potentially illegal, for reasons summarized below.

First, Bill de Blasio is squandering a golden opportunity to cancel the Bloomberg administration’s planned, unjustified give-away of hundreds of millions of dollars worth of taxpayer property to QDG for the price of $1 (one dollar), and instead to establish a legitimate price that is truly in the taxpayers’ interest.

At a typical cost of $400 per square foot, we estimate that the City spent roughly $400 million taxpayer dollars to acquire the one million square feet (23 acres) of Willets Point Phase One property, which the Bloomberg administration intended to gift to QDG for $1 (one dollar). However, the de Blasio administration is entitled to cancel the City’s contract with QDG, and to rescind the sale of two acres of Willets Point property already transferred to QDG for $1, due to the recent decision of the New York State Court of Appeals which found that QDG’s proposed “Willets West” mega-mall on parkland located west of Citi Field stadium cannot proceed as it lacks legislative approval. Per the project contract: “EDC has the option to require Developers to convey to EDC all Willets Point Development I site parcels which have been conveyed to Developers (the “Call Option”) if … there is a final determination in a Legal Proceeding which would prevent the Project from being developed” (First Amendment to Amended and Restated Purchase and Sale Agreement, § 17.2(i)).

The give-away of valuable City property to QDG is no less outrageous now than it was when the Bloomberg administration arranged it back in 2012. We had hoped that Mayor Bill de Blasio would have taken the opportunity presented by the recent Court of Appeals decision to rescind the sale, instead of going through with it.

Second, recall that the key reason that QDG was chosen to develop the Willets Point Phase One site, to the exclusion of several other developers that had submitted proposals, was that only QDG claimed to be able to expand the project by constructing its proposed “Willets West” mega-mall on public parkland located west of Citi Field stadium. If QDG is now unable to deliver that mega-mall on parkland, then the basis for choosing QDG as the developer in the first place no longer applies. Allowing QDG to develop the Willets Point Phase One property despite QDG being unable to deliver the Willets West mega-mall is to allow a “bait-and-switch” on the grandest of scales.

If QDG can’t build its Willets West mega-mall and must limit any development to the Willets Point Phase One land, then QDG is in the same category as the other developers that had originally proposed to develop only the Phase One land. In response to the City’s 2011 Request for Proposals to develop the Willets Point Phase One site, QDG never submitted a proposal that was limited to the boundaries of the Phase One site, and never competed against the other developers on that basis. So, there is no reason whatsoever to presume now that QDG is the best choice to develop only the Willets Point Phase One property.

If the initial phase of development is going to be limited to the Willets Point Phase One property, without expanding the project onto public parkland as QDG had proposed, then the City should issue a new, legitimate Request for Proposals for the Phase One site, and re-start the developer selection process, with no unwarranted special status given to QDG, Sterling Equities or The Related Companies.

Third, it appears that the de Blasio administration is on the verge of transferring ownership of all lots that comprise the 23-acre Willets Point Phase One site to QDG for $1 (one dollar), on the basis of authorizations granted by then-Mayor Bloomberg and the Queens Borough Board during December 2013, pursuant to City Charter § 384(b)(4).

However, as Willets Point United has written to Mayor de Blasio and his legal counsel more than once, not all of the lots within the Willets Point Phase One area were City-owned as of December 2013. City Charter § 384(b)(4) only entitles the Mayor and Borough Board to transact on property that is City-owned. Therefore, any authorizations of sale granted by then-Mayor Bloomberg and the Queens Borough Board during December 2013 obviously only pertain to the lots that were already City-owned as of the dates of those authorizations.

Since the City acquired additional lots within the Willets Point Phase One area after December 2013, whose sale could not have been authorized pursuant to City Charter § 384(b)(4) during December 2013, new authorizations of Mayor de Blasio and the Queens Borough Board are necessary before all of the lots within the Phase One area may legally be transferred to QDG.

City Charter § 384(b)(4), which the City acknowledges pertains to its sales of Willets Point property, provides that the Mayor, with the approval of the local Borough Board, may sell property of the City “without competitive bidding” and “for such price as may be determined by the mayor to be in the public interest”.

Only Mayor Bill de Blasio, or his successors, can determine a price that is “in the public interest” for Willets Point lots acquired by the City after December 2013. Although the former Bloomberg administration established an outrageous price of $1 (one dollar), present Mayor de Blasio is obligated to set his own price that is truly “in the public interest” – and we will be watching to see what price he sets. We hope that Mayor (and former Public Advocate) de Blasio will recognize his fiduciary responsibility to City taxpayers, and determine a sale price for valuable Willets Point Phase One land that at least recoups all of the public funds spent to acquire it.

Fourth, Francisco Moya, who has been elected the new City Council representative of Willets Point and nearby neighborhoods, previously announced his own plan concerning Willets Point development. Among other aspects, Moya intends to form an advisory council of neighborhood stakeholders, to evaluate and help to guide development decisions.

By unnecessarily selling property to QDG now, and locking in the choice of QDG and its development plan, before Moya has even taken office or assembled his advisory council, Mayor de Blasio is continuing the same shameful disregard for community participation in decision-making that was exemplified by his predecessor, Michael Bloomberg.

No irreversible action, including property sale, should take place at Willets Point before Councilman-elect Moya’s advisory council is in full operation and has had ample opportunity to significantly participate in decision-making.

Tuesday, June 6, 2017

Vindication by the State's Highest Court

Willets Point United is pleased that by its decision in favor of plaintiffs, the Court of Appeals has recognized what we have known all along – the plan devised by Sterling Equities, Related Companies and the Bloomberg administration to construct a “Willets West” mega-mall on public parkland is illegal. They, plus the City Planning Commission, have always parroted that the proposed mega-mall on parkland is “authorized by statute,” which today’s court decision confirms is utterly false.

The contract between Queens Development Group (the joint venture of Sterling Equities and Related Companies) and the New York City Economic Development Corporation (NYCEDC) specifically provides that “if there is a final determination in a Legal Proceeding which would prevent the Project from being developed,” NYCEDC may exercise a “call option” to take back the two acres of Willets Point Phase One property already given to QDG for $1 under the Bloomberg administration. Willets Point United urges Mayor de Blasio to immediately exercise this contractual call option, to ensure that QDG has no undeserved foothold in Willets Point property, and to ensure a completely clean slate regarding decision-making about Willets Point Phase One property – without the City beholden in any way to QDG.

With QDG, Sterling Equities and Related Companies out of the picture, is Governor Cuomo now on deck to attempt to acquire Willets Point property to expand his LaGuardia Airport project? Airport expansion was never discussed when the City Council approved Willets Point development in 2008 – and it seems as though the affordable housing that was highly touted at that time as the linchpin of any Willets Point development is no longer decision-makers’ priority.

In any event, Willets Point United salutes lead plaintiff State Senator Tony Avella, Queens Civic Congress, lawsuit organizer City Club of New York, Geoffrey Croft of New York City Park Advocates, all other plaintiffs including long-time Willets Point supporter Ben Haber, and especially the tireless work of attorney John Low-Beer, who prevailed against QDG and the City.

Monday, April 24, 2017

De Blasio Admin. and AG Fight for Mega-Mall on Parkland

In 2015, when Queens Development Group (QDG) announced its intention to appeal to the NYS Court of Appeals from the unanimous decision of the Appellate Division declaring that QDG cannot construct a “Willets West” mega-mall on Flushing Meadows Corona Park property without obtaining state legislative approval, Mayor de Blasio declined to join QDG’s appeal. De Blasio reportedly said that the City dropped out of the legal battle because QDG’s plan does not focus on affordable housing, and that “We think we can do much better on that [Willets Point] site going forward.”

But de Blasio has done an about-face: At tomorrow’s oral argument at the NYS Court of Appeals, the City will be fighting tooth and nail in support of QDG’s plan to construct a 1.4 million foot commercial entertainment and retail center on the parkland property located west of Citi Field stadium, right at the doorstep of the Corona neighborhood. The City has submitted a full written legal brief supporting QDG, and will be sending attorney Michael Pastor to present arguments in open court in favor of the mega-mall on parkland.

This is the same mega-mall that Queens Community Board 3 opposed in 2013, declaring that it “would change the character of the surrounding neighborhoods and impact the livelihoods of 250,000 residents and many small mom-and-pop businesses."

The de Blasio administration’s support for QDG’s mega-mall on public parkland has barely been reported by the press.

Last Tuesday, former City Councilman Hiram Monserrate held a news conference on the steps of City Hall to highlight what he called the “tale of two de Blasio’s.” Monserrate called upon de Blasio to withdraw – again – from supporting QDG’s legal battle for the mega-mall on parkland.
Photo courtesy Eli Valentin; from TimesLedger.
QDG is a 50/50 joint venture of Sterling Equities, whose owners also own the New York Mets baseball team, and Related Companies, a developer.

For its part, the Office of New York State Attorney General Eric Schneiderman will also be arguing in court tomorrow in support of QDG’s mega-mall on parkland. What could motivate the AG’s Office to swoop in and support QDG in court? Interestingly, between 2014 (the year that the legal challenge of QDG’s mega-mall began) and 2016, Sterling Equities Associates, LLC and Sterling Mets, LP have contributed $70,000.00 to AG Schneiderman’s 2014 and 2018 election campaigns.

The oral argument will take place on Tuesday, April 25, 2017 in a session beginning at 12:00 noon, in the courthouse located at 111 Dr. Martin Luther King Jr. Boulevard, White Plains, New York. The case is Avella v. City of New York.

Monday, November 23, 2015

Court of Appeals Accommodates Former Chief Judge

Willets Point United Inc. is disappointed, but not surprised, that today the Court of Appeals has decided to grant the developers' motion for leave to appeal the "Willets West" case to the Court of Appeals – especially in light of the fact that the developers are represented by attorney Judith Kaye, who is none other than the former Chief Judge of the Court of Appeals. She also happens to head the search committee for the new incoming Chief Judge of the Court of Appeals, who will ultimately participate in deciding this case.

We expect Judith Kaye to recuse herself from personally arguing this case at the Court of Appeals. In any event, we are confident that the Court of Appeals will uphold the July, 2015 unanimous decision of all four Judges of the Appellate Division – which went as far as to state that "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."

Thursday, August 20, 2015

Mayor de Blasio: Think Beyond Sterling and Related

The New York Times and Crain's New York Business are reporting that the de Blasio administration has refused to join the court appeal of developer QDG (a joint venture of Sterling Equities and Related) concerning the "Willets West" mega-mall on parkland west of Citi Field, which the Appellate Division First Department unanimously ruled illegal on July 2, 2015.

While Willets Point United is pleased that the City did not join QDG’s appeal, we find it disturbing that the de Blasio administration is still attempting to salvage any deal with Sterling and Related for affordable housing. Everyone should recall that when Sterling and Related first responded to the City's 2011 Request for Proposals for Willets Point, their plan included NO housing whatsoever. In fact, of all the developers that responded to that RFP, Sterling and Related displayed the least interest in constructing any housing.

By contrast, two other developers that responded would have constructed the housing – in one case, 100 percent of it affordable. Another developer featured a convention center.

Silverstein Properties, Inc. and Taubman Centers, Inc.
(proposal dated September 9, 2011)
100 percent affordable housing (400 units)
“A Model Sustainable Community”
Restaurant Row
“Entertainment Corridor & Urban Room”
126th Street Retail
Neighborhood Retail Street

(proposal dated September 9, 2011)
“A Model Green Community”
Public Open Space
Food & Beverage
“A True Retail Destination”

TDC Development and Construction Corp.
(proposal dated September 9, 2011)
“World Trade Center Queens”
Trade Mart
Convention Center
Retail Complex
Entertainment District
Office Building
Neighborhood Park

We think the de Blasio administration must not consider itself beholden in any way to the prior selection of QDG, Sterling and Related as developers here – especially when, unlike other developers, affordable housing was not a priority at all for them. If Mayor de Blasio insists on pursuing affordable housing at WIllets Point, then his administration should issue a new Request for Proposals, for exactly that. Let's see what all of the developers in the world are capable of proposing, now in the year 2015. There should be no presumption in favor of QDG, Sterling and Related.

But as Willets Point United sees it, there is no financially viable way to construct the affordable housing that was touted as the centerpiece of this project. Setting aside all of the cheerleading that took place in 2008, when it came time to actually present financially viable plans to develop Willets Point within the boundaries envisioned in 2008 featuring affordable housing, no developer could do so. The City has admitted this. That being the case, we recommend that the City:

(1)  Rescind the deal with QDG, Sterling and Related, and 'claw back' the 2 acres of Willets Point property already sold to QDG, as the city’s contract with QDG allows. There is no valid reason for QDG to own a tiny area within the Willets Point Phase One property, and QDG doing so only obstructs making the property available to others.

(2)  Use the $99 million that has already been allocated as a grant to QDG to cover the cost of remediating Willets Point property, for the City to instead directly hire a firm to remediate Willets Point Phase One property, thereby accomplishing a major objective of the project and increasing the value of that property.

(3)  Complete the installation of sewer lines throughout Willets Point, and begin providing the municipal services that have been denied to Willets Point for decades but which are routinely available everywhere else.

(4)  Sell the Willets Point Phase One property – valued at more than $400 million – on the open market for commercial and industrial use, which was the original intent for the Willets Point area. Restore the zoning for those purposes. This would fully recoup the taxpayer funds already unwisely spent, and even provide a profit for the City.

It is time to recognize the past 8 or so years as a very unproductive detour – a grand failed attempt to steer Willets Point away from the commercial and industrial use that it has always supported.