Marino v. Town of Ramapo

• Decision Date: 06 July 1971
• Citation: 326 N.Y.S.2d 162,68 Misc.2d 44
• Parties: Application of Arline MARINO, et al., Petitioners, For a Judgment Pursuant to Article 78 of CPLR v. TOWN OF RAMAPO et al., Respondents, and Charles Mulligan et al., Respondents-Intervenors.
• Court: New York Supreme Court

Page 162

326 N.Y.S.2d 162

68 Misc.2d 44

Application of Arline MARINO, et al., Petitioners, For a

Judgment Pursuant to Article 78 of CPLR v. TOWN OF RAMAPO et al., Respondents, and Charles Mulligan et

al., Respondents-Intervenors.

Supreme Court, Rockland County.

July 6, 1971.

Brent, Phillips & Dranoff, Nanuet, for petitioners.

J. Martin Cornell, New City, for respondents Town of Ramapo and Town of Ramapo Housing Authority.

Kent, Hazzard, Wilson, Freeman & Greer, White Plains, for respondents National Modular Systems, Inc.

Anne L. Glickman, New City, for respondents-intervenors.

MORTON B. SILBERMAN, Justice.

This is an article 78 proceeding to review the award of a construction contract granted by the respondent Town of Ramapo Housing Authority (hereinafter 'Housing Authority') to respondent National Modular Systems, Inc. (hereinafter 'Modular'). The case presents several interesting and vexatious questions. The primary question of law is whether the competitive bid statutes of New York which require the award of public contracts to the lowest responsible bidder are applicable to federally financed 'turnkey' housing projects.

FACTS

On September 9, 1968 the respondent Town Board of the Town of Ramapo (hereinafter 'Town Board') authorized an application on behalf of the town for financial assistance under the United States Housing Act of 1937, as amended (42 U.S.C. § 1401 Et seq.), to enable On January 19, 1970 the Housing Authority advertised for bids for the proposed 300-unit development. The legal notice indicated that 225 units were to be designed for elderly persons and 75 units for nonelderly persons; and, further, that bids had to comply with the 'turnkey' program of the Federal Department of Housing and Urban Development (hereinafter 'HUD'). (At this point it is sufficient for our purposes to observe that the 'turnkey' program means, in essence, that a private developer agrees to build the project on land he owns or will acquire and to sell the development to the Housing Authority upon completion. Hence, the appellation 'turnkey'.) Additionally, the notice for bids required that all proposals contain a certificate providing for compliance with the prevailing wage rate schedules in this State.

the local Housing Authority to contract for the development of low-income housing of approximately 300 units. On September 16, 1968 the Town Board entered into a co-operation agreement with the Housing Authority approving the latter's application for financial assistance. The resolution certified that a need exists in the town for low-rent housing for low-income families and for the elderly. The Town Board appointed a 'Citizen's Advisory Committee on Public Housing' which submitted a report in May 1969 confirming the need for law-rent housing in the town. ¹

On February 26, 1970, respondent Modular submitted its proposal for the construction of 120 modular units (90 of which are allocated to elderly persons) in the form of two-story, detached garden apartments on approximately six to seven acres of land. The proposal indicated that Modular had an option to purchase the land to be developed. Subsequently, Modular did purchase the site in question. Six other bids were similarly submitted for board consideration. ² On March 12, 1970 the Housing Authority selected four of the proposals, including Modular's bid, and forwarded them to HUD for Federal evaluation. On April 17, 1970 the Housing Authority tentatively approved the Modular proposed. On June 1, 1970 the Town Zoning Ordinance was amended to permit low-income housing, provided that a special permit be granted by the Town Board.

On July 2, 1970 HUD tentatively approved the Modular proposal and the Town Planning Board granted Modular's request for certain variances. On July 6, 1970 the Town Board approved the issuance of On July 29, 1970, residents in the vicinity of both projects commenced a class action in the United States District Court against HUD, the town, and the Housing Authority (Fletcher v. Romney, 323 F.Supp. 189). Before judicial resolution in any of the proceedings, both the Planning Board (on November 11, 1970) and the Town Board (on December 1, 1970) officially approved the Modular project.

a special permit to Modular. Immediately thereafter residents in the vicinity of the proposed project commenced an article 78 CPLR proceeding to review the determinations of the Planning Board and the Town Board. Parenthetically, it should be noted that a second low-income development (the 'Hillcrest' site) had been awarded to Fairway Park, Inc. and a separate article 78 CPLR proceeding was brought in regard thereto.

On December 7, 1970 the Appellate Division unanimously dismissed the petitions which had attacked the zoning changes (Mtr. of Farrelly v. Town of Ramapo, 35 A.D.2d 957, 317 N.Y.S.2d 837; Mtr. of Greenwald v. Town of Ramapo, 35 A.D.2d 958, 317 N.Y.S. 839). Specifically, as to the Modular site the court found that the amended ordinance was necessary to provide for low-income housing, the latter fact having been established as a need of the community, and that the site conformed to the town's master zoning plan. More significant is the court's observation that 'the Town Board's determination furthers the public policy of the State as expressed in Article XVIII of the New York State Constitution and section 2 of the Public Housing Law'. A motion for leave to appeal to the Court of Appeals was denied (28 N.Y.2d 484, 320 N.Y.S.2d 1028, 269 N.E.2d 208).

On December 21, 1970 the Housing Authority and HUD executed a 'Consolidated Annual Contributions Contract' relating to the financing of the Modular project. On December 28, 1970 the within action was commenced. Process was served on the Town Clerk on December 29, 1970. On the same day the Housing Authority and Modular executed a 'turnkey' contract whereby the Authority agreed to purchase the completed project for the sum of $2,623,120. The 'turnkey' contract was approved by HUD the following day.

On January 12, 1970 this court rendered a decision on Modular's motion to vacate the stay embodied in the order to show cause. Petitioners failed to offer any evidence with respect to their claim to damages, and, consequently, the motion to vacate the stay was granted. The housing project is presently under construction. On February 5, 1970 this court granted a motion by a class of low-income and elderly residents of the town to intervene in the proceeding. Subsequently, on March 1, 1971, the United States District Court, in the class action, denied an application for a preliminary injunction (Fletcher v. Romney, 323 F.Supp. 189, Supra).

STANDING TO SUE

Respondents' contention that petitioners lack capacity to sue is without merit. It has been consistently held that taxpayer-residents of the community involved have sufficient legal status to seek court review of nonfiscal judgments by public officials of a municipality (Bon-Air Est. v. Bldg. Inspector, Ramapo, 31 A.D.2d 502, 298 N.Y.S.2d 763 (2d Dept.); Matter of Werfel v. Fitzgerald, 23 A.D.2d 306, 260 N.Y.S.2d 791 (2d Dept.); Mtr. of Policemen's Benev. Assn. v. Board of Trustees, 21 A.D.2d 693, 250 N.Y.S.2d 523 (2d Dept.); see Com. of Massachusetts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078; Matter of Andresen v. Rice, 277 N.Y. 271, 281, 14 N.E.2d 65, 69; Mtr. of Procaccino v. Stewart, 60 Misc.2d 551, 303 N.Y.S.2d 593). This rule has been applied in cases involving alleged violations of the competitive bid statutes (Matter of Dictaphone Corp. v. O'Leary, 287 N.Y. 491, 41 N.E.2d 68; Mtr. of Gen. Bldg. Contrs. v. County of Oneida, 54 Misc.2d 260, 282 N.Y.S.2d 385). Additionally, recent Federal decisions have accorded standing to homeowners in the affected neighborhood, where the complaints concerned some aspect of HUD financing (which is present here), upon the ground that such persons are within the zone of protection of the National Housing Act of 1937 (Northwest Residents Assn. v. HUD, 325 F.Supp. 65 (D.C., Wis.), (dec. 4/20/71); Shannon v. HUD, 305 F.Supp. 205 (D.C., Pa.)). It would be incongruous to hold that standing is lacking in the State court but exists in the Federal arena.

STATUTE OF LIMITATIONS

Respondents urge that the four months' Statute of Limitations (CPLR 217) bars the proceeding insofar as petitioners challenge the validity of the project award to Modular. The argument is without merit. The proceeding was commenced one day after respondent Housing Authority executed the contract of sale with Modular and any legal action prior thereto would have been premature.

APPLICABILITY OF THE COMPETITIVE BID REQUIREMENTS

Before analyzing the diverse legislation allegedly violated by respondents, an understanding of the 'turnkey' concept in general terms in required so as to fully appreciate the primary thrust of petitioners' contention: that this State's competitive bid legislation must be deemed to apply to the award granted Modular.

(a) The 'turnkey' contract

In the usual situation involving the construction of a public project the local housing authority requests competitive bids for the construction of buildings on property it owns. An award is made to the lowest 'Turnkey' permits a developer to submit proposals regarding property he owns or will own at the time of construction. The developer uses his own architects and presents an original design. This flexibility in design, and such entrepreneur participation are factors often absent from usual public housing construction. Upon approval of the site, design and cost estimate, the local housing authority executes a contract of sale with the developer to purchase the completed project. This contract is backed by the financial commitment of the Federal government.

responsible bidder. The local authority performs part of the work where feasible, uses its own architects and contractors where possible, fixes the design of the project and obtains interim financing...