Court Gives Go-Ahead to Pier Six Towers

Curbed reports that New York Supreme Court Justice Carmen Victoria St. George on Friday issued a ruling dismissing a lawsuit filed by the Brooklyn Heights Association in July of 2016 against the Brooklyn Bridge Park Corporation and two developers, seeeking to prevent the construction of two high rise residential towers on the uplands of Brooklyn Bridge Park’s Pier Six, near Atlantic Avenue and Furman Street.

The BHA’s suit was based on language in the Park’s General Project Plan providing that no more private development would be allowed in the park than is necessary to provide the Park with funds, in the form of payments in lieu of taxes (“PILOTS”), needed to provide for the Park’s ongoing maintenance and operations. The BHA engaged financial experts who compared the Park’s maintenance and operational needs with what they considered the likely amount of PILOT revenue to be generated by already completed or soon to be so commercial and residential projects. These projects, the experts concluded, would produce more than enough revenue to cover all reasonably expected maintenance and operational costs. The BBPC’s and developers’ experts disagreed.

The Curbed story quotes the judge’s ruling as follows: “[while the BHA’s experts] provided rational alternatives to the analyses of respondents’ experts … [i]t simply means that respondents had more than one acceptable path to take in their review of this complex and multi-part project”. This implies that “build” and “don’t build” were both acceptable results within the terms of the General Project Plan, which seems odd. Perhaps it reflects the court’s sense of frustration following repeated attempts to get the parties to reach a compromise and settle the suit.

Curbed reports that the BHA has issued a statement of its “disappointment” with the court’s ruling, noting that it still strongly believes the Pier Six towers “far exceed the Park’s fiscal needs.” It also notes that the BHA “is considering its next steps in its long-term effort to ensure that the BBPC complies with its legal obligations.”

Share this Story:

, , , ,

  • Jorale-man

    Disappointing, obviously, but not surprising. Perhaps the BHA should have challenged the park more on the height of the buildings than their actual placement in the park.

    I still go back to question: Do they really need to be that tall in order to generate revenue? If they were just the height of the existing building (One Brooklyn Bride Park) that would have seemed more reasonable, but these are way out of scale and will cast huge shadows on the park and the Heights alike.

  • Roberto Gautier

    We know that kings of old proclaimed their “divine right” to rule.
    Developers are motivated by monied, politically-connected forces to “develop.” If public outcry, legal precedent, aesthetics or common sense get in the way, developers know what their mission: develop. Thank you for the BHA for its opposition to this process.

  • KXrVrii1

    Once the court decided the “rational basis” standard applied generally, and that the “Guiding Principle 8″ (that “the site shall have only so much commercial development in a park-like setting as is necessary to enliven the area, to provide security and to finance ongoing operations”) was exactly that – a guiding principle, and not a contractual mandate – the case was largely over in my opinion.

    And the judge hinted strongly that was where she was leaning during an earlier hearing, BHA should have read the writing on the wall and cut whatever deal they could.

    As with the business judgment rule in corporate law, the “rational basis” standard gives broad discretion to the entity making the decision so long as it was not arbitrary and capricious (and also did not involve fraud or self-dealing).

    Here, Brooklyn Bridge Park had experts saying the pilings needed massively costly repairs, and the most cost effective way of doing so was near term, one time preventative maintenance. The two buildings were expected to fund that cost. They also had experts advising on how they should evaluate future real estate values and revenue projections, and took a conservative approach that factored in volatility in the real estate market and avoided debt financing.

    BHA argued those repairs could be made over time, near term cash shortfalls could be covered with bonds, and that longer term revenue and real estate values should take into account recent growth trends.

    They also argued that based on the “Guiding Principles”, BBP had one goal – to maximize all revenue, so could not take into account broader city needs like affordable housing if that reduced the revenue that would be generated.

    Court said the Guiding Principles were exactly that – general principles not contractual mandates without discretoin. Therefore, both approaches were rational, and their job is not to second guess business decisions.

    Leaving aside the legal standard, the more I’ve read the court documents, I find the BHA arguments about deferring repairs, issuing debt and making aggressive future valuation assumptions really aren’t that fiscally prudent.

    And I honestly find it a bit hypocritical that they endorse those aggressive financial approaches while simultaneously saying not a dollar can be spend on anything that isn’t revenue maximizing (like affordable housing)

  • Jeff Smith

    All this is going to go on until:
    A) Several Major RE figures goes to Jail or
    B) The dopes in areas being destroyed or seriously
    disrupted target the Banks and other sources, (now
    Foreign and domestic), who are supplying the financing
    which enables the traumatization of the neighborhoods

    Unless really both of things happen, the destructive behavior will continue till, well, Google the term Tulip Craze and read what happened….

  • James Morgan

    Your last criticism of the BHA contradicts itself. It would have been hypocritical for BHA to argue for affordable units while arguing no new building was necessary to meet the guidelines. Their stances on both issies are perfectly aligned, rational and justified by the park’s Guiding Principals.
    And on what basis/expertise do you dismiss all of the BHA’s arguemenys as not “fiscally prudent”?
    Also you seem to be really well versed in the court proceedings Mr./Ms. KXrVrii…or may I call you KXr?

  • KXrVrii1

    I’ve read a fair amount of the briefs out of general curiousity, but I don’t pretend to be an expert on this area of the law.

    I think the three key areas where I think BHA was taking “aggressive” budgeting approaches are:

    1 – Using higher property and rent values and growth assumptions. Yes, property values have done phenomenally in the recent past, and may keep growing. But they are not guaranteed. In fact, if I was on the board, I would probably ask for scenarios showing cash flow in various downside scenarios.

    2 – Incurring debt. This just adds leverage to the above concerns. If things go well, the debt is not a concern. If property values go through a downturn, and you have debt, what do you do? Selling off more development space in a depressed market is not good for the park, and going to the taxpayers for more funding isn’t good for taxpayers. So for a project that is intended to be self sufficient for life, I think incurring debt should be the last resort.

    3 – Repair approach. I recall reading the BBP proposal on the piling repairs some time ago, and there was a strong argument for overall cost savings if the remediation was done in one fell swoop. And, it seems better to me do deal with all the disruption in one go, rather than have years of ongoing more minor disruption. Here is an article with a link to the report:

    Re. the “hypocrisy” argument on affordable housing, that may not be the right word. But it sort of troubles me that they are encouraging the park to take what I consider aggressive budgeting approaches on many fronts, but then also saying the BBP can’t spend a dime on affordable housing because it isn’t fiscally conservative.

    So all in all, I’d prefer to have buildings that weren’t as high, But I’m reasonably happy with the overall project, glad it was done in a self-sufficient manner, and glad the Board is being fiscally prudent with regard to the future.

    As for the username, it is randomly generated, so feel free to call me whatever you want!