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

140 Misc. 2d 154, 530 N.Y.S.2d 479, 1988 N.Y. Misc. LEXIS 346
CourtNew York Supreme Court
DecidedJune 16, 1988
StatusPublished
Cited by5 cases

This text of 140 Misc. 2d 154 (Jo & Wo Realty Corp. v. City of New York) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jo & Wo Realty Corp. v. City of New York, 140 Misc. 2d 154, 530 N.Y.S.2d 479, 1988 N.Y. Misc. LEXIS 346 (N.Y. Super. Ct. 1988).

Opinion

OPINION OF THE COURT

David B. Saxe, J.

The issue that I am asked to decide, raised by defendants’ [156]*156challenge to this taxpayer action, is whether a site designated, condemned, and reconstructed pursuant to an urban renewal program retains its status as urban renewal property after the completion of construction under the original urban renewal plan.

In this taxpayer action under General Municipal Law § 51, it is alleged that the sale of the Coliseum site at Columbus Circle (the site) constituted a waste of taxpayers’ funds because competitive bidding was not used. The complaint requests a permanent injunction stopping the sale of the site, as well as the city’s planned contribution of its share of the sale proceeds to the defendant Metropolitan Transit Authority (MTA) and the proposed payment to the New York City Transit Authority (NYCTA) of the difference between the highest bid received and that of the bid accepted from Boston Properties. If the sale has already taken place, the complaint alternatively seeks rescission and a declaration that the transfer is void and a waste of funds. The defendants request an order pursuant to CPLR 3212 granting them summary judgment dismissing the complaint as a matter of law. This is a renewal of the motion which was denied by this court in November 1987 with leave to renew after two related proceedings were consolidated with this action.

The site was acquired by the city in 1953 under the Columbus Circle Slum Clearance Plan, pursuant to then prevailing General Municipal Law § 72-k, and use and occupancy was conveyed to the Triborough Bridge and Tunnel Authority (TBTA) for construction of the Coliseum in consideration of approximately $2 million paid by the TBTA. Construction of the Coliseum was completed in 1956.

The construction of the Jacob Javits Convention Center in the early 1980’s led the city and the TBTA to realize that the Coliseum would become obsolete, and its eventual sale was contemplated. In February 1985 the TBTA, for itself and on the city’s behalf, issued a request for proposals (RFP) for the purchase and development of the site. Fifteen proposals were received, and that of Boston Properties was ultimately chosen. Although Boston Properties’ proposal was approximately $22 million lower than the highest purchase price offered, the city determined that the difference would be recouped as a result of the revenue generated by the Boston Properties’ proposal. However, because the NYCTA would stand to lose the cash difference in the immediate sale prices, the city agreed to pay [157]*157the difference between the proposals to the NYCTA out of the city’s capital budget, for capital transit improvements.

Subject to obtaining the necessary environmental and zoning approvals, the TBTA, for itself and on behalf of the city, entered into a purchase and sale agreement with Boston Properties in September 1985.

In 1986 the city’s Department of Housing Preservation and Development developed a second amendment to the 1952 urban renewal plan which, referring to the Coliseum site, proposed construction of a new structure on the site, "to prevent deterioration of the area and to provide for redevelopment of the Site, after termination of the Coliseum use, in accordance with the City’s current objectives. The Revised Project retains the office building, the parking garage and portions of the Coliseum structure and integrates them into a mixed-use development consisting of a new office complex a retail center, a hotel and apartments.” This proposal was approved by the City Planning Commission in 1986, and by the City Board of Estimate in February 1987. The proposed sale to Boston Properties was approved by resolution of the Board of Estimate and by the TBTA in February 1987.

In two separate proceedings in the Supreme Court, other aspects of the sale to Boston Properties were challenged. The court there held illegal a provision of the contract which in essence provided for payment to the city of an additional $57 million if the developer succeeded in obtaining City Planning Commission approval for a maximum floor area bonus in exchange for subway improvements. That provision, and resolutions by the city and the TBTA approving the contract, were held to be void (see, Matter of Municipal Art Socy. v City of New York, 137 Misc 2d 832 [NY County 1987]). That decision does not render moot the issue of law framed by this summary judgment motion, namely, whether the RFP process was appropriately employed here as a lawful alternative to competitive bidding. I will address that question in this decision.

Certain issues raised by defendants must be addressed at the outset. First, as plaintiff concedes, General Municipal Law § 51 applies only to defendants Koch and the City of New York, and does not permit taxpayer actions against the TBTA or MTA (see, Matter of New York Post Corp. v Moses, 10 NY2d 199, 203-204). However, the remaining defendants are necessary parties, since they might be inequitably affected by a judgment, and they are therefore properly joined here (see, CPLR 1001 [a]).

[158]*158Secondly, in order to determine which statutes control the sale of the site, it is necessary to clarify the nature of ownership of the site. The city retains legal title to the site and a reversionary interest in it while the TBTA has the right to use and occupy it for the duration of its corporate existence (see, Public Authorities Law § 553 [4]; § 557-a [2]). Although the TBTA is empowered by statute with authority to sell, on behalf of the city, real property which was acquired by the city at the "expense” of the Authority (see, Public Authorities Law § 553 [4-a] [b]), it is apparent that the city has retained some ownership interest in the property. This is evident by the fact that the city is contractually one of the sellers, expects to receive a substantial portion of the proceeds, and has retained substantial control over the entire sale process. To some extent the sale appears to be by the city, and to that extent it must be governed by the New York City Charter.

New York City Charter § 384 provides that sale of any interest in real property held by the city must be for the highest marketable price, at public auction or by sealed bids, "[e]xcept as otherwise specifically provided by law” (NY City Charter § 384 [b]). The defendants rely upon General Municipal Law § 507 (2) for such an exception. It provides that under certain circumstances the sale of a municipality’s real property may be otherwise than by public auction or sealed bids; one such circumstance is where the property is being sold to a "qualified and eligible sponsor”, "for the effectuation of any of the purposes of the urban renewal program in accordance with the urban renewal plan” where specific detailed procedures are followed (see, General Municipal Law § 507 [2] [d]).

Plaintiff contends that this exception to the prohibition in New York City Charter § 384 against selling municipal real property other than to the highest bidder is inapplicable to this sale arguing that since the Urban Renewal Law (General Municipal Law § 500 et seq. [eff Apr. 11, 1961]) was enacted after the Coliseum project was completed, its provisions, including the exception at issue, have no application to the site; plaintiff asserts that the sale is governed by former General Municipal Law § 72-k, which lacks such a specific exception.

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38 A.D.3d 1087 (Appellate Division of the Supreme Court of New York, 2007)
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Bluebook (online)
140 Misc. 2d 154, 530 N.Y.S.2d 479, 1988 N.Y. Misc. LEXIS 346, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jo-wo-realty-corp-v-city-of-new-york-nysupct-1988.