NRP Holdings LLC v. City of Casey
| Decision Date | 27 February 2017 |
| Docket Number | 11-CV-472S |
| Parties | NRP HOLDINGS LLC and NRP PROPERTIES LLC, Plaintiffs, v. CITY OF BUFFALO, BYRON W. BROWN, STEVEN M. CASEY, DEMONE A. SMITH, CITY OF BUFFALO URBAN RENEWAL AGENCY, Defendants. |
| Court | U.S. District Court — Western District of New York |
On June 6, 2011, Plaintiffs NRP Holdings LLC and NRP Properties LLC commenced this action against Defendants the City of Buffalo (the "City"), Mayor Byron W. Brown, and Common Council Member Demone A. Smith (together, the "City Defendants"), Former Deputy Mayor Steven M. Casey, and the City of Buffalo Urban Renewal Agency ("BURA"). Currently pending before this Court are motions for summary judgment by the City Defendants and BURA seeking dismissal of the claims against them. (Docket Nos. 152, 165.) Also pending are motions by Plaintiffs seeking additional discovery and leave to file a sur-reply. For the following reasons, the motions for summary judgment are granted and all pending claims are dismissed; Plaintiffs' motions are denied.
Plaintiffs NRP Holdings LLC and NRP Properties LLC (collectively, "NRP") are affiliates of the NRP Group LLC, an Ohio limited liability company that develops, builds and manages apartments and housing across the United States. In November 2007, NRP, together with developer Belmont Shelter Corporation ("Belmont"),2 began working with the City of Buffalo and BURA3 on a project to build and manage 50 affordable single-family homes in the Masten and Cold Springs neighborhoods on the East Side of the City of Buffalo ("East Side Housing II"). The City had previously worked on a similar project ("East Side Housing I") with Belmont in which NRP was not involved. East Side Housing II was intended to revitalize the Masten Park and Cold Springs neighborhoods and bring revenue into the local community through the use of local subcontractors and locally sourced materials.
East Side Housing II was a complex real estate development project, which required, among other things: (1) the transfer of 51 City-owned lots to the developers; (2) a payment in lieu of taxes ("PILOT") agreement between the developers, the City, and the County of Erie; (3) a release of federal HOME Investment Partnerships Program ("HOME") funds; (4) a Low-Income Housing Tax Credits Regulatory Agreement; and (5) a final HOME funds agreement. These agreements and transfers required approvals from the federal Department of Housing and Urban Development ("HUD"), the City Planning Board, the County of Erie, the Buffalo Fiscal Stability Authority, BURA, and the Buffalo Common Council.
The project involved an investment by the City, as the cost to the City to build the 50 units would be an average of $32,000 per house in HOME funds. (See Docket No. 177-1, Lane Decl. Exh. D.) This cost, though not insignificant, was substantially less than similar projects, which had averaged over $220,000 per unit in HOME funds. (Id.) Part of the City's investment came in the form of a tax forfeiture on the property involved in the development through the PILOT agreement. The PILOT agreement was effectively a tax incentive program, to be negotiated between the City, the County, and the developers, to defer or limit taxes paid on the properties associated with the project. Typically, the City and County enter into an agreement to forfeit tax revenue so as to encourage development in their jurisdiction. Here, it would have allowed NRP to receive a property tax exemption on the land to be developed and, in exchange, submit payments to the City and the County according to an agreed-upon schedule.4 Because the PILOT agreement was a municipal contract that impacted the City and Countybudgets, their legislative bodies were required to individually and separately approve the agreement before it came into effect. The City was also required to approve any transfer of City-owned property. Pursuant to the City Charter, the approval of any sale, lease, or transfer of City-owned real property must be made by formally adopted resolution by the Common Council. (See City Charter, § 27-13 Sale or Lease of Property for Development or Redevelopment ("Real property or any interest therein and appurtenances thereto belonging to or in the control of the city, necessary for . . . development or redevelopment, . . . or for urban renewal, may be sold . . . to any person, firm or corporation . . . when authorized by resolution of the council . . . .").) Accordingly, the sale of the 51 City-owned lots also required Common Council approval.
Between November 2007 and February 2008, the City, BURA, and the developers had multiple meetings regarding East Side Housing II. NRP alleges that, during these meetings, the City and BURA unconditionally and repeatedly promised to enter into a PILOT agreement, provide $1,600,000 of HOME funds to assist in construction, and transfer 51 buildable City-owned vacant lots, among other things that would be needed to complete the project. On February 25, 2008, these promises were communicated by a letter from Timothy Wanamaker, the Executive Director of Buffalo's Office of Strategic Planning and Vice President of BURA, who wrote to Belmont:
This letter is to confirm that the Buffalo Urban Renewal Agency has earmarked $1,600,000 of the City's HOME funds for the [ ] project that consists of construction of fifty (50) units of single-family homes in the Masten Park and Cold Springs neighborhoods of the City of Buffalo.
(Docket No. 152-9, Battle Decl. Exh. 12 (the "Wanamaker Letter").) After describing the details of the plan—including the "lease-to-own" component, the City's promise to offer its "usual Low-Income Housing Pilot Agreement," and the City's commitment to provide51 City-owned vacant lots at a price of $2,000 per lot—Wanamaker noted, "This commitment letter is only valid if the developer is successful in securing a 2008 Low-Income Housing Tax Credit allocation to complete the project." (Id.) He concluded, "Of course, BURA is required to meet all applicable Federal, State, and local rules and regulations before issuance of HOME funds to eligible recipients." (Id.) On August 20, 2008, NRP obtained the requisite low-income-housing tax credits from the New York Division of Housing and Community Renewal ("NY DHCR"). This Court has previously found that, because issuance of HOME funds was explicitly conditional on meeting applicable rules and regulations, only the promises regarding the PILOT agreement and the transfer of City-owned property were unambiguous. (See Docket No. 132 at 11-12.)
On February 26, 2008, Mr. Wanamaker sent another letter to Belmont stating that the City had received Belmont's application and that the Project could be "eligible" for a PILOT Agreement. Mr. Wanamaker explained that a PILOT Agreement was contingent on certain future events, including Common Council approval:
The PILOT will be granted to the project upon submittal of satisfactory evidence of funding and evidence that the project will proceed as proposed, and is contingent upon the approval of the County of Erie, the Buffalo Common Council and the Buffalo Fiscal Stability Authority.
(Docket No. 152-9, Battle Decl. Exh. 13.) The transfer of City-owned property was also subject to Common Council approval under the City Charter, as noted above. NRP alleges that, to the extent that any promises were made contingent on such approvals, it understood, from prior experience, that those approvals were pro forma.
During his deposition in this case, Mayor Brown testified that the Wanamaker Letter created affirmative obligations on the part of both NRP and the City. (See Docket No. 177-1, Lane Decl. Exh. B at 228-29 ().) Mayor Brown further demonstrated support for the project in communications to Governor David Patterson's Office and to the Commissioner of the NY DHCR.
NRP alleges that, in reliance on the promises made by Defendants, it took numerous steps toward completion of the project. In addition to obtaining low-income-housing tax credits from the NY DHCR, NRP also incurred costs for appraisals, flood zone determinations, title searches, pre-construction loans including interest, architecture designs, landscape architecture designs, surveys and other engineering activities, environmental reports, market studies, legal services, development consulting, building permits, site plans, Planning Board compliance, BURA compliance, the federal HOME funding process, the New York State funding process, SEQR, insurance retention, tax credit consultations, request for proposal for professional outreach, project financing, and personnel hours. NRP estimates that its expenses and costs related to East Side Housing II exceed $489,000.
The City also took substantial preliminary steps. It selected location sites for the planned homes and executed a HUD Request for Release of Funds and Certification. The Buffalo Planning Board approved NRP's site plan, design, and elevations for the project. BURA passed a resolution authorizing allocation of the HOME funds on March 12, 2009. The City of Buffalo Department of Economic Development, Permit & Inspection Services approved all necessary building permits, subject only to thepayment of required fees. The project was also formally approved by the Buffalo Fiscal Stability Authority, which included Mayor Brown as its director.
The East Side Housing II project came to a halt in 2009 when Mayor Brown declined to submit resolutions on the PILOT agreement and the transfer of City-owned property to the Common Council. The reasons behind Mayor Brown's actions are strongly disputed. According to the City Defendants, Mayor...
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