Providing affordable housing and protecting the environment are important considerations in many New York City real estate projects that (at first blush) seem to be incompatible with one another - how can a developer balance the two?
This is a challenging question that the New York State Supreme Court in Brooklyn recently tackled in Matter of Brooklyn Heights Association, Inc. v. New York State Development Corp., et al., Sup Ct NY County February 6, 2018, St. George, J., index No. 155641/2016. In Matter of Brooklyn Heights Association Inc., Justice St. George dismissed a challenge to the development of two residential buildings upland from Pier 6 in Brooklyn Bridge Park (the "Pier 6 Development"), allowing the Brooklyn Bridge Park Corporation's ("BBP") development to continue with its planned construction.
First a bit of background on the park: in 2002, Governor George Pataki and then-NYC Mayor Michael Bloomberg agreed that Brooklyn Bridge Park would be a self-sufficient park that could engage in development projects so long as 80% of the Park remains "open space" - that is, undeveloped land intended for the public use. While this plan was being executed, a General Project Plan ("GPP") was prepared to handle future leasing issues; the GPP underwent an environmental impact analysis pursuant to the State Environmental Quality Review Act ("SEQRA"). The area of the park at issue in this case, the Pier 6 Development, consists of the last of five parcels that were set aside for residential and commercial development in the Park's GPP.
In June 2016, the BBP Board approved development leases for two residential buildings projected to generate necessary revenues for the Park's operations and maintenance, as well as provide 100 units of affordable housing. Immediately after the BPP Board's approval, the Brooklyn Heights Association ("BHA") filed suit challenging the leases. In Matter of Brooklyn Hghts. Assn. Inc., BHA made numerous claims against the legality of the BPP Board's approval, including that BBP violated SEQRA by failing to prepare a Supplemental Environmental Impact Statement ("SEIS").
In New York, any construction project that requires state "action," including approval from a "state agency" (in this case, the BBP), that may have a "significant effect on the environment," must go through a SEQRA assessment to assess if the proposed project "may" have an adverse environmental impact and, if so, to ensure that the project is undertaken in a way that minimizes damage to the environment and public health. While the GPP reviewed the issue when the EIS was initially prepared, BHA argued that an SEIS should have been conducted to evaluate feasible alternatives that were not available when the Final EIS was issued ten years earlier. Under applicable SEQRA regulations, a lead agency "may require a supplemental EIS, limited to the specific adverse environmental impacts not adequately addressed or inadequately addressed in the EIS" due to changes to the project, new information, or a change in circumstances impacting the project (emphasis added).
In denying BHA's SEQRA-based challenge, the Court in Matter of Brooklyn Hghts. Assn. Inc. found that BBP did evaluate project changes, new information, and changed circumstances since the Park's 2006 Final EIS, and agreed with BPP that it came to a reasonable determination that the Pier 6 Development did not require the preparation of an SEIS. BHA argued that the changes in the financial circumstances of the neighborhood, such as the thriving Brooklyn Heights economy and the improved real estate values in the community, required BBP to conduct an SEIS to reconsider the financial need for the project to include such a tall building and the impact of such a building on overcrowded elementary schools in the community. The Court did not agree, explaining that BBP was not required to reevaluate project alternatives in light of changes to community's financial condition, as "finances are not within the scope of a SEQRA review" since they do not result in significant adverse environmental impacts. The Court also upheld BBP's use of the City Environmental Quality Review ("CEQR") Technical Manual to guide the project's SEQRA review, something we've seen other New York courts agree on (we discussed this very issue in a previous blog post concerning Matter of Friends of P.S. 163, Inc. v. Jewish Home Lifecare).
This decision should serve as an important reminder to real estate developers: when it comes to environmental reviews, lead agency determinations that are rational and reasonable will be upheld because courts are not looking for the best plan, just one that is not arbitrary or contrary to their findings.
Read the Matter of Brooklyn Hghts. Assn. Inc decision here.
Call the attorneys of Periconi, LLC at (212) 213-5500 if you are a real estate developer that might be or is facing a SEQRA challenge to your project.