Jo & Wo Realty Corp. v. City of New York

• Decision Date: 08 May 1990
• Citation: 555 N.Y.S.2d 271,157 A.D.2d 205
• Parties: JO & WO REALTY CORPORATION, Plaintiff-Appellant-Respondent, v. The CITY OF NEW YORK, Edward I. Koch in his capacity as Mayor of the City of New York, Defendants-Respondents, and Boston Properties, Metropolitan Transit Authority and Triborough Bridge and Tunnel Authority, Defendants-Respondents-Appellants, and Phibro-Salomon, Inc., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 271

555 N.Y.S.2d 271

157 A.D.2d 205

JO & WO REALTY CORPORATION, Plaintiff-Appellant-Respondent, v. The CITY OF NEW YORK, Edward I. Koch in his capacity as

Mayor of the City of New York, Defendants-Respondents,

and

Boston Properties, Metropolitan Transit Authority and

Triborough Bridge and Tunnel Authority,

Defendants-Respondents-Appellants,

and

Phibro-Salomon, Inc., Defendant.

Supreme Court, Appellate Division,

First Department.

May 8, 1990.

Kenneth G. Schwarz, of counsel (Richard S. Fischbein and Deborah J. Locitzer, with him on the brief; Fischbein Badillo Schwarz Barer Wiener Gruskin & Lederman, New York City, attorneys), for plaintiff-appellant-respondent.

Elizabeth Dvorkin, of counsel (Alexandra Altman, with her on the brief; Peter L. Zimroth, New York City, attorney), for defendants-respondents

Robert P. LoBue, of counsel (Paterson, Belknap, Webb & Tyler, New York City, attorneys), for defendants-respondents-appellants, Metropolitan Transit and Triborough Bridge and Tunnel Authority.

Steven E. Landers, of counsel (Robert A. Atkins and Beth Herstein, with him on the brief; Paul, Weiss, Rifkind, Wharton & Garrison, New York City, attorneys), for defendant-respondent-appellant, Boston Properties.

Before MURPHY, P.J., and KUPFERMAN, SULLIVAN, CARRO and ROSENBERGER, JJ.

SULLIVAN, Justice.

This appeal presents the question of whether the municipal defendants, the City of New York and its Mayor, are prohibited from selling the site of the obsolete New York Coliseum without competitive bidding. At issue is a plan, seemingly consistent with both the current economic needs of the City and State and the historical origins of the site area, to redevelop the Coliseum site.

The City of New York originally acquired the Coliseum site in 1952 pursuant to the Columbus Circle Redevelopment Plan (Redevelopment Plan) drafted by the Committee on Slum Clearance Plans. When the Redevelopment Plan was formally adopted by the City's Board of Estimate on December 18, 1952, the site area, consisting of two city blocks on the west side of Columbus Circle between Broadway and Ninth Avenue from 58th to 60th Streets, was, on the basis of express findings made in accordance with the urban renewal law then in effect (General Municipal Law sec. 72-k), found to be "substandard and insanitary." Despite numerous challenges to the City's findings, the designation of the site area as "substandard and insanitary" within the meaning of the urban renewal law was expressly upheld by the Court of Appeals. (Kaskel v. Impellitteri, 306 N.Y. 73, 115 N.E.2d 659, cert. denied, 347 U.S. 934, 74 S.Ct. 629, 98 L.Ed. 1085.)

Even before the Coliseum site was condemned, the Triborough Bridge and TunnelAuthority Today, however, the Coliseum has lost its business to the new Javits Convention Center and stands vacant and virtually unused. In 1984, the TBTA and the City, having jointly determined that the Coliseum is obsolete and the site no longer necessary for their respective purposes, decided to sell the property for redevelopment. In 1985, they selected Boston Properties as the developer from among numerous applicants responding to a Request for Proposals (RFP). The TBTA, on behalf of itself and the City, thereafter entered into a purchase and sale agreement to sell the property to Boston Properties for $455,100,000. Although the latter offered the second highest bid, its redevelopment plan, in the judgment of the Board of Estimate and the TBTA, promised the highest economic benefit for the City overall and best advanced the goals of urban renewal. That determination, apart from the narrow question of competitive bidding, was not challenged and it is not at issue on this appeal.

                (TBTA) contracted with the City to purchase it for $2,182,230 on acquisition, and to develop it in accordance with the Redevelopment Plan.   On January 15, 1953, pursuant to Public Authorities Law sec. 557-a(3), the Board of Estimate approved the sale, by the terms of which (TBTA Agreement) the City conveyed to the TBTA the use and occupancy of the tract for as long as the TBTA's corporate existence continues.   After the conveyance, the TBTA constructed the Coliseum on the site, and has been its sole operator ever since
                

The present ownership of the Coliseum site is defined not only by the public record but by statutory provision as well. The original total gross project cost of approximately $12,600,000 for the entire parcel, of which the Coliseum site is but a part, was financed by a federal grant of approximately $6,000,000, local grants-in-aid of approximately $3,000,000, a capital value of approximately $192,000 allocated to land retained by the City and the proceeds, $3,421,222, of sales of project land by the City. The latter figure included the $2,182,230 which the TBTA paid the City for that portion of the project that became the Coliseum site. When, as here, the TBTA acquires at its expense real property from or in the name of the City, it obtains the use and occupancy of that property for "so long as its corporate existence shall continue." (Public Authorities Law secs. 553(4), 557-a[2].) Moreover, in the two deeds which transferred the site, the TBTA was granted "the use and occupancy" of the Coliseum site "for so long as the [TBTA's] corporate existence ... shall continue." Thus, the property would revert to the City by operation of law only if the TBTA ceases to exist. (Public Authorities Law sec. 552(2).) Furthermore, when and if the TBTA determines that its interest in the property is no longer necessary for its corporate purposes, as has occurred here, the statute authorizes it to sell the property. (Public Authorities Law sec. 553(4-a(b).)

The Redevelopment Plan's urban renewal program for Columbus Circle was designed to remain in effect for 40 years after construction of the Coliseum. The Redevelopment Plan, as adopted by the Board of Estimate in 1952, itself provides, "No increase in density or change in land use shall be made for a period of 40 years except upon the approval of the Board of Estimate of The City of New York." In section 506 of the TBTA Agreement, and again in both deeds conveying the Coliseum site, the TBTA expressly convenanted "[t]o devote the land to the uses specified in the redevelopment plan ... as said plan may exist from time to time for a period of forty (40) years from the completion of the project ... (emphasis added)."

It should be noted that both the TBTA Agreement and the deeds draw a clear and significant distinction between the Redevelopment Plan and the project. In contrast to the 40-year plan, the "project" referred to is the construction of the Coliseum building itself which, according to section 304 of the TBTA Agreement, ¹ would be deemed In deciding to sell the Coliseum for redevelopment, the City and the TBTA concluded that it was obsolete and would, contrary to the Redevelopment Plan, adversely affect the site and surrounding area. In strict compliance with the urban renewal statute, General Municipal Law sec. 502(3), the Board of Estimate, after finding that the Coliseum site was again "in danger of becoming a substandard or insanitary area and tend[ed] to impair or arrest the sound growth and development of the municipality," amended the urban renewal plan. The materials and testimony submitted to the Board of Estimate--including the Environmental Impact Statement, the City Planning Commission report and the Second Amended Urban Renewal Plan prepared by the Department of Housing Preservation and Development--amply support the Board's determination that because of the opening of the Javits Convention Center in 1986, "the Coliseum is now obsolete and vacant." Moreover, the Board of Estimate determined that "an unutilized or underutilized Coliseum will have a detrimental effect on the surrounding area and will tend to impair or arrest the sound development of the City." Similarly, that determination was not challenged in the complaint herein.

                complete on the date when the certificates of occupancy were issued.   All parties agree that the construction project was complete in 1956.   In a clear manifestation of a contemporary understanding that the urban renewal plan was subject to amendment and the site subject to changes in use even after completion of the project, the Board of Estimate, within a year following completion of construction of the original Coliseum project, adopted the First Amendment to the Redevelopment Plan for the purpose of revising permitted uses of the site and approving a supplemental agreement between the City and TBTA authorizing such revisions.   The amending resolution indicated that the Coliseum is "now constructed."
                

Since, as will be demonstrated, the sale could proceed without competitive bidding, the TBTA and the City were not required to use any particular method to select a sponsor qualified under the Urban Renewal Law. (See, General Municipal Law sec. 507.) Of the many options available to them, they chose to employ the RFP method, a well-established alternative to competitive bidding (see, Matter of Citiwide News, Inc. v. New York City Transit Auth., 62 N.Y.2d 464, 478 N.Y.S.2d 593, 467 N.E.2d 241; Matter of Burroughs Corp. v. New York State Higher Educ. Servs. Corp., 91 A.D.2d 1078, 458 N.Y.S.2d 702, lv. to appeal denied, 58 N.Y.2d 609, 462 N.Y.S.2d 1025, 448 N.E.2d 1358), which affords the government the flexibility, in ways not possible with competitive public bidding, to achieve the greatest economic benefit in dealing with prospective contractors, developers and franchisees.

Jo & Wo Realty Corporation, plaintiff herein, commenced this taxpayer's action in 1987 pursuant to General Municipal Law sec. 51 to enjoin the proposed sale of the Coliseum site to Boston Properties on the ground that the City failed to comply with the competitive bidding requirements of section 384(b) of the New York City Charter. After joinder of issue, defendants moved for...