bloombergvliu decision 3-2014

8/11/2019 BloombergvLiu Decision 3-2014

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laintiff

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- against

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THE ClTY

OF MEW

YORK:

MICHELE OVESEY,

CommisdDner for the New York City epartment

of Homeless Services; JOHN

C. LIU Comptrol ler

of the City of Ne w York , and AGUILA, INC.

Defendants.

In the Article 78 proceeding under Index number 401122/2013, the petitioner is Mayor

Michael Bloomberg

nd

the New York City Department of Homeless Services DHS); he

respondent

is

Comptroller John

Liu.

By order to show cause, Mayor Bloomberg sought a

preliminary injunction to compel the respondent to register two contracts between the DHS

nd

AgUila, Inc., which operates shelters for homeless f d l i e s . The two contracts at issue concern



Facts

shelters located at 162 5- 163

1

Fulton Street (Fulton Residence) in the borough of Bron x, and 3

16

and 330 West

9Sh

Street (Freedom Hou se), in the borough of Manha ttan. Com ptroller John Liu

cross-moved for consolidation o f the instant proceeding with a related case, Neighborhood in the

Nineties, Inc. v The City of New York ohn

C.

Liu Comptroller of the

City of

New York et.

al.

under Index Number 156382/2013.

The plaintiff in the related case is Neighborhoo d in the

Nineties, Inc. (Neig hbo rhoo d), a not-for-profit corporation representing block associatio ns, residents,

retailers and property owners b etween W est 90th nd W est 97‘h Streets between Riverside Drive and

Amsterdam Avenue. Neighborho od moved to enjoin the Com ptroller from registering the contract

for Freedom House. As the facts relevant to Neighborhood ’s case are fairly mu ch the sam e as those

to

the proceeding brought by M ayor Bloomberg, the two cases are consolidated for only the purposes

of the decisions on these motions.

Briefly, DHS is a mayoral agency of the City that is tasked with providing transitional

housing and services, short-term em ergency housing and re-housing sup port to the City’s home less

families and individuals. Under section 328 of the New York City Charter (the Charter), the

Comptroller is mandated to register contracts between DHS and service providers s uch as Aguila,

within

30

days of receipt. Com ptroller John Liu did not do

so.

One contract is for 1625-163

1

Fulton

Residence’; the second contract

is

for Freed om House’. Faced with an urgent need to hou se the

unprecedented number of homeless people, these shelters had started operation pursuant to an

emergency declaration. The Comptroller had app roved and registered the em ergency contracts in

early 2012. On June 5, 2013, petitioner submitted executed contracts for both shelters to the

Comptroller’s office (Ex h A - Fulton Residence; Exh

B

- Freedom H ouse). At the end of the 30-day

period on July 3,2 01 3, the Co mptroller informed

DHS

by e-mail that both con tracts were rejected

and raised issues relating to re-inspection of cured building violations and Administrative Code

section 21-3 12(2)(b) limiting the num ber of adults for e ach shelter at

200.

By letter dated July 9,

20

13,

DHS

responded to the Comptroller’s rejection informing him that the statute was inapplicable

to

the subject shelters as it applies only to “shelters for hom eless ‘adults’” rather than “sh elters for

homeless families - either families with children, or ad ult families” (Cross-Motion, Spo lzino Aff.,

p

3),

and that since the allotted 30-day period for registering the co ntracts had elapsed, the contracts

were deeme d registered. The reafter, on or about July

19, 20

13, petitioner comm enced the instant

proceeding to compel th e Com ptroller to register th e co ntracts.

Neighborhood commenced a plenary action, which is more properly an Article 78

proceeding, in September 20 13 to enjoin the Com ptroller from registering the contract between the

City and Aguila for Freedom H ouse. Neighborhood claims that its district, covered by Comm unity

Board 7 (CB7), is over-saturated with support housing. Wh en the shelter on West

9 S h

Street started

operations on August

6,

2012, it was under an emergenc y short-term contract of six months. As

such, there was no op portunity for public review preceding the opening. Indeed, there was no

opportunity even to attend a public hearing as neither DHS nor Agu ila notified any C B7 officers

of

the hearing date; and the notice by e-m ails purportedly sent to elected officials were not sent to their

Fulton Residence

is

a residence for

10

homeless families with children.

’

reedom House houses

up to 200

homeless adult families in

two

adjoining buildings.

Bloomberg v Liu

-

Index 40 1122/20 13, Neighborhood v City - Index 156382/2013

Page 2 of 8



regular e-mail addresses

(see

Aff. of Aaron Biller, Exh 6, p

2 .

Neighborh ood also argues that

DHS

misrepresented the fair share review to the comm unity and the Mayor. Th e

DHS’

fair share review

did

not

include the follow ing facilities:

2643

Broadway

-

Volunteers

of

Am erica; 3 16 West

97th

Street (The Yale)

- HRA

and HPD; 306 West

9Sh

Street (Camden)

-

HRA; 2508 Broadway

(Naragansett) - Housing and Services; 336 West

8Sh

Street (Brandon House) - Volunteers of

America; and scatter site housing in

SROs

for

HRA

and

DHS

clients througho ut c omm unity district

7 (see

id.

15).

On September 4,201

2,

CB 7 adopted a resolution opp osing operation o f the Shelter

on West

9Sh

Street

(see id.

xh

7).

Neighborhood adds that the mann er in which Freedom House is operated causes a nuisance

to area residents. Exam ples of the Shelter’s negative impact included an in crease in felony and

misdemeanor assaults, petit larcenies and rapes reported in the 24*h olice Precinct

(see id.

. 20;

Exh 14); an increase in trash strewn in the streets around the shelter; unreasonable loud noises; and

loitering. The residents have also seen an increase in panhandling; pub lic drinking; drug u se; people

sleeping in streets; and altercatio ns (see Aff. of Dennis M cGath, p

2).

Finally, N eighborhoo d asserts

that the cost per unit constitutes a waste under the General Municipal Law, and that the

Com ptroller’s Audit of

DHS’

control of payments and expenditures with A guila sho ws an abysmal

operation.

The City and

DHS

argue that Neighborhoo d

is

time-barred from its action because it is more

properly an Article

78

proceeding that would be subject to a four month statute of limitations.

Neighborhood’s action was brought thirteen months since the Shelter open ed, and six m onths since

DHS submitted its Fair Share docum ent for Freedom House. Aside from the statute of limitations

defense, they argue that Neighborhoo d’s claim also fails because the Adm inistrative C ode § 2 1-312

(2)(b) regarding the 2 00 person limit on ad ult shelters is inapplicable to adult family shelters, which

is defined as adult families without ch ildren. Freedom House provides shelter for up to 200 adult

families where each family is given a sep arate unit. Further it is pre-empted by state law.

Analysis

New

York

City Charter Section 328

Section 32 8 of th e Ch arter directs the Comptroller to register the contract w ithin thirty (30)

“(i) there remains no unexpended and unapplied balance of the app ropriation or fund

thereto, sufficient to pay the estimated expense of executing such contract, as

certified by the officer making the same;

(ii) that a certification required by se ction three hundred tw enty-se ven of this chapter

has not been made; or

(iii) the proposed vendor has been debarred by the city in accordance with the

provisions

of

section three hundred thirty-five.”

days of filing of the c ontrac t unless

-

(NYC Charter 328 (b)).

The reason cited by the Comptroller for declining to register the contracts was his

determination that the contracts facially violated New York C ity Adm inistrative Cod e Section

21

-

3

12(2)(b) for housing above the limited number

of

200 adults. How ever, this reason is not one of

Bloomberg

v

Liu - Index

401 12212013,

Neighborhood v

City -

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15638212013

Page

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the exception s in the section 328 mandate to the C omp troller

(see

Comptroller of City ofN ew York

Mayor

o f c i t y

o f N e w

York, 7 NY3d 256 [2006]). Further, when the Mayor responded to the

Comp troller’s concerns that gave rise to his refusal to register the con tracts

(see

Petition by Mayor

Bloomberg, Exh F), the Ma yor essentially overrode the Com ptroller’s concern s, where upon, it was

incumbent on the Co mptroller to carry out the mandate in section 328 seeNYC Charter t j 3289 (c);

see e.g., Giuliani

v

Hevesi,

276 AD2d 398

[ l s t

Dept 20001 “Under normal circumstances, the

Com ptroller need not register a contract where he suspects corruption , but once the May or chooses

to override those objections, the Com ptroller must carry out the m andatory function. Th e legislative

history of this provision o f the Charter confirms that conclusion” [internal citation omitted]). Thu s,

whether the two contracts fall under Adm inistrative C ode f j 2 1-312 (2)(b) is not o ne of the reasons

for which the C omp troller may refuse to register the contracts.

The Com ptroller posits that the Co urt of Appeals in Comptroller v. Mayor (supra)only held

that the Comptroller may not withho ld registration based on procedural grounds. Th e distinguishing

factor between Comptroller

v.

Mayor and the instant case is the illegality of the Mayo r’s direction

rather than the procedural omission by the Comptroller in Comptroller v. Mayor. The Com ptroller

did not explain how his legal reasoning and findings are superior to that

of

the Mayor’s in

determining the size of the shelter violated Administrative Code

tj

21-312(2)(b). Nor did the

Comp troller distinguish

or

contradict the City’s argument that Admin istrative Code fj 2 1-312(2)(b)

is inapplicable to the subject shelters. However, the Comp troller is not com pelled to do

so

as he is

not mandated to analyze a statute - procedurally or substantively

-

under section 328 of the City

Charter; rather, the Comp troller is mandated to register the co ntracts for Freedom H ouse and F ulton

Residence. Nevertheless, the City responds to this challenge and points out that the local law

pertaining to adult shelters has been preempted by state law (see inJFa .

Preemption by State Law

The City argues that state law preempted Adm inistrative Code section 21 -3 12(2)(b), which

puts a cap on the num ber o f beds in adult shelters at 200. Citing Social Service s Law

tj

460, the

Appellate Division in the Second Department has held that regulation of adult-care facilities has

been preempted by the S tate

(see

Adkins v Board ofAppea ls, 199 AD 2d 261 [2d Dept 19931). With

this field preemption by state law, local laws such as Administrative Code section 21-312(2)(b)

placing control on the operation of an adult shelter is illegal

see

DeStafuno

v Emergency Housing

Group, Inc.,

28 1AD2d 449,45

1

[2d Dept 20011). Accordingly, petitioner’s claim that the ope ration

of Freedom House vio lated the bed lim it of Adm inistrative Co de section 2 1-3 12(2)(b) cannot be

sustained.

Statute o f L imitations

The City raises the defense of the four-month statute of limitations as a bar to

Neighborhood’s action that was comm enced more than thirteen month s after Freedom House opened

on August 6, 20 12. And as to Neighborhood’s claims relating to the Fair Share Analysis, the clock

started to run from F ebruary 4, 20 13, and therefore, the Fair S hare Analysis claims are also time-

barred. The dates pertinent to this issue are as follows: In January 20 13,

DHS

sought a six-month

extension of the emergency declaration from the Com ptroller, which was refused. Thereafter, DHS

prepared to finalize a long-term contract for Freedom House. A public hearing was held Decem ber

I 3 , 2 0 12;

the Fair Share review was issued on February 4, 2 0 13.

The

long-term contract was then

presented to the Com ptroller for registration on June 5, 20 13. T he Com ptroller rejected the contract

Bloomberg v

Liu

-

Index

401 122/2013, Neighborhood v City - Index 15638212013

Page 4 of 8



on July 3,2013 . Neighborhood commenced the instant proceeding on o r about July 1 7,2 013.

Neighborhood’s argument is reasonable considering that absent a final determination, a challenge

to the report would be academic. Hence, the statute of limitations on the fair share report is a non-

issue.

In an Article 78 proceeding, there are two requirements in calculating the statute of

limitations: “the agency mu st have arrived at a definite position on the issu e inflicting actual injury,

and the injury may not be significantly amelio rated either by further admin istrative a ction or steps

taken by the complaining party”

(Comptroller

v

Mayor,

7 NY3d at 262,

quo ting Matter

o

Best

Payphones, Inc. v Depar tment

o

Info. Tech. Telecom. of City

of N Y . ,

5 NY3d 30, 34 1720051).

Here, Neighborhood argues that the actual injury occurred on June 6, 2013, when the long-term

contract was submitted to the Com ptroller; and not A ugust

6 , 2 0

12, as that was un der an emergency

short-term plan. As to the Fair Share review , Neighborhood op ines that it need no t be challenged

independently as it is not a final agency action.

The key question from these two arguments is when the actual injury occurred. Based on all

accounts, Freedom H ouse started on an emergency basis on a short-term contract. As it was a short-

term contract, wheth er it was a 200 bed shelter for adults or a 400 b ed shelter for adu lt families, is

not

so

consequential since there is a not-so-distant end to the shelter operation at that particular site.

How ever, with a long -term facility, the type of shelter Freedom H ouse is of sign ificant consequence

as there is no end in sigh t to the effects to the neighborhood. Therefore, the actual injury is the

agency’s presentation of a long-term con tract to the Co mptroller for registration, wh ich wa s on June

6, 20 13. Thus, Neighborhoo d is within the four-month time period w hen it com men ced the instant

action on or about July 17, 20 13.

Fair Share Criteria

Neighborhood’s fair share report claim is that the City did not follow the Fair Share Criteria

when it did its siting review because it did not c onsider similar housing facilities in the district. The

Fair Share Criteria has been view ed as a guideline for siting city facilities, and no t a s regulations

(see

Community Planning

Bd.

No. 4

v

Homes

f o r

the Hom eless, 158 Misc.2d

184,

191 [Sup.Ct. NY Cty,

19931; see also, Tribeca Community Ass ’nv New York City Dept, O Sanitation [2010 WL 151534

[Sup.Ct., NY Cty,

20101,

a f ’ d

83 AD3d 513 [ lstDept 20111). While a flagrant disregard

of

the

Criteria could give rise to a ca use of action (see Com munity Planning

Bd.

at 192), there is nothing

alleged here that rises to that level.

Section 203

of

the New York City Charter requires the City Planning C omm ission to adopt

rules establishing criteria for the location, expansio n, reduction, or closing of City Facilities. The

goal of the criteria is to “further the fair distribution among com mu nities of the burdens and benefits

associated with city facilities, consistent with co mm unity needs for service s and efficien t and cost

effective delivery of services and w ith due regard for social and econo mic imp acts o f such facilities

Bloomberg

v

Liu

-

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Neighborhood

v

City -

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Page of 8



upon the areas surrounding the sites”

(NY

City Charter 203).

Article 6 .53 [a] of the Fair Share Criteria requires th e C ity to consider “[wlhether the facility,

in combination w ith other similar city and non-city facilities within

a

defined area surrounding the

site (approximately a half-mile radius, adjusted for significant physical boundaries), would have a

significant cumulative negative im pact on neighborhood character.” (62 RC .NY

§

Appx . A to Title

62 Article 6.53[a]).

Article 6.53[c] of the Fair Share Criteria requires the City to consider “[wlhether any

alternative sites actively considered by the sponsoring agency o r identified pursuant to section 204(f)

of the Charter which are in com munity districts with low er ratios of residential facility beds to

population than the citywide average wo uld a dd significantly to the cos t of constructing or operating

the facility or would impair service delivery.” (62 RC.NY Ap px. A to Title 62 Article 6.53[c]).

The Fair Share Report (the Report) at hand claims to have met the Fair Share Criteria. It

reported that there are a total of seven shelters in CD7, including Freedom House. Those six shelters

are not located within a

400

foot radius of Freedom Ho use. Tw o of those shelters services house

families with children and are within a half-mile o f Freedom H ouse, w hile the other four, three of

which are for single adults and one for families with children, are outside the half-mile radius. The

Report also informed that A guila had notified CB7 o f its proposal to operate a family shelter at

Freedom House. On Augu st 3 and 6, DH S met with Manhattan Borough President Scott Stringer,

Council Member Gail Brewer, Assembly Member Linda Rosenthal (collectively, the elected

officials), and C B7 Chair, Mark Diller, to discuss the shelter proposal. Subsequently, by letter dated

November 30, 2012, DHS informed all five Borough Presidents, the City Council, and the City

Comptroller of its intention to enter into a long-term contract with A guila to operate Freedom House

and the public hearing date on Decemb er 1 3, 20 12. The public hearing with date, time and place was

advertised in the City Record. The Report stated that no opposition to the proposal was given. On

January 30,2 013 , CB7 convened a two-hour town hall meeting at which

DHS

and Aguila attended,

and the elected officials addressed community concerns and answered questions regarding the

shelter. The Report added that due to the unprecedented need for homeless shelters, a dema nd that

increased 2 1 percent since Novem ber 20 1 1, the City was mandated by law to open new shelters to

meet the need.

The Report informed that the City’s selection of sites is affected by the size and type of

buildings offered for shelter purposes. In selecting the West 9S h site, the Report found the tw o

adjoining seven-story buildings, w hich can accommodate 400 adults in 200 units, could meld with

the multifamily residential, and mixed-use commercial and residential neighborhood with

community facilities and would not cause traffic congestion because of available public

transportation nearby. The Report noted that DHS did a field survey of the neighborhood and

reviewed relevant literature to determine whether Freedom H ouse would create or contribute to a

concentration of facilities. It listed the various facilities, progra ms, institutions and open sp aces that

are within a half-mile radius of Freedom Ho use. It also spo ke to the cost-effectiveness of the

services

to

the homeless adult families such as case management, employment, and rehousing

assistance. Because o f the size of the facility, these service s can be provided o n site.

Further,

because the site is fully equipped w ith comm unal kitchens, o n-site laundry facility, and individual

mini-refrigerators n eve ry room, it is more self-contained and less burde nsom e on the neighborh ood .

Bloomberg

v Liu -

Index 40 122/20 13, Neighborhood v

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Index 156382/20 13

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As

to alternative sites, the Report indicated nine a lternate sites

-

five in M anhattan, three in

Bronx, and one in Queens - were considered. Two sites in Bronx had co ntracts either in procurement

or awaiting registration at the Com ptroller’s office. The other seven sites were not viable or suitable

as one landlord decided against use as a shelter, and the costliness of another site as th e building

would have to be converted, or they w ere too close to other shelters.

Therefore, contrary to Neighborhood’s claims that the

DHS

did not abid e by the Fair Share

Criteria in creating the Repo rt, it appears tha t

DHS

addressed the issues of other shelters in the area

and the impact to the neighborhood o f addin g Freedom Ho use. In fact, the Rep ort had a diagram

depicting and identifying the sup port housing, service centers, schools, clinics and such facilities

within both 400 feet and a half-mile radius of Freedom Hou se. Accordingly, Neighborhood ’s claim

that

DHS

did not abide by the F air Share Criteria contradicted by the Fair Share Rep ort, which show s

substantial compliance w ith the Fair Share Criteria (see Turtle Bay Ass ’n

v

Dinkins, 207 AD2d 670,

670

[

1

t

Dept 19941).

Nuisance

Neighborhood claimed that the operation of a shelter in the area created a nu isance for the

neighboring residents. A pub lic nuisance “is an offense against the State and is subject to abatement

or prosecution on application of the proper governmental agency” (Copart Indus. v Con Ed

Co., 4 1

NY2d 564, 568 [1977]).

To

make ou t a cause of action for public nuisance, Neighborhood “must

establish by clear and con vincing ev idence that the conduct am ounts to “a sub stantial interference

with the exercise of a co mm on right of the public, thereby offending public m orals, interfering with

the use by the public of a public place or endangering or injuring the property, health, safety or

comfort of a considerable num ber of persons’’ (532

Madison Ave. Gourmet

Foods

v Finlandia

Ctr.,

96 NY2d 280,29 2 [2001];

see

DeStefano v Emergency Housing G roup, Inc. 281 AD 2d449 ,45 1 [2d

Dept 20011 [internal citations om itted];

lv to appeal denied,

96 NY2 d 715 [2001]). Further, as a

private party, petitioner h as to show that it suffered som e special damage, separate and apart from

that suffered by the public at large

(see

532 Madison Ave. Gourmet Foods, 96 NY2d at 292).

Neighborhood alleged that the community at large was affected by the conduct

-

loud noises,

loitering, littering, panha ndling , and an increas e in crime. As the injury to petitioner a lso affects the

comm unity at large, it is not sp ecial within the mean ing of a public nuisance. As such, petitioner has

no standing to bring this public nuisance c laim

(see

id. ).

General Municpal Law

4

51

Pursuant to General Mu nicipal Law 5 1, taxpayers may bring suit to prevent illegal acts by

officials or agents of a munic ipality or to prev ent waste or injury to,

. . .

any property, funds of such

county, town, village or municipal corporation

. .

.”

(GML

9

51).

How ever, a suit under GML

§

51 “lies only when the acts com plained of are fraudulent, or a waste of public pro perty in the sense

that they represent a use of public property o r fund s for entirely illegal purposes” (Godfrey

v

Spano,

13 NY3d 358,37 3 [2009], quotingMestiva ofForest Hills Inst v Ci ty ofN ew Y ork, 58 NY2d 1014,

1016

[

19831). There is no frau d alleged here. Therefore, for this claim to be viable, petitioner must

“state a claim an illegal dissipation of municipal funds” (Godfrey, 13 NY 3d at 373). Petitioner’s

allegations again focuses on Administrative Code section 2 1-3 12(2)(b) which limits a shelter for

adults to 200 beds. As discusse d

supra,

this section of the Administrative Cod e is preempted by

state law, which does not m ake the operation of a shelter for 200 adult families (400 beds) unlawful.

Bloomberg

v Liu - Index 40

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13, Neighborhood

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4 .

Petitioner also argu es that A guila’s performance of its obligation h as been po or and improper, and

the contract between Aguila and

DHS

should not be registered. Petitione r cites the audit report by

the Com ptroller on DH S’ control

of

payments to Aguila dated Novem ber 4,200 1 (see Aff. of Aaron

Biller, Exh

1 9 ,

which “recomm ended that the city recoup

900,000.00

in payments m ade to Aguila

and to further investigate additional A guila expend itures totaling

9.1

million” (Aff. ofA aron Biller,

T[

58). The affiant, howev er, did not cite to any place in the

50

or mo re pages of Exhibit

15

that

supports his allegation . In any event, the allegation remains void o f any fraud or illegal dissipation

of

municipal funds. As such, petitioner failed to state a cause of action under G M L

6

5

I

Conclusion

The conflict between ho using the homeless and maintaining a neighborhood’s status quo is

hardly ever easily resolved. Given the increasing number of hom eless people in Ne w Y ork City3,

and the duty incumbent upon the M ayor to provide them shelter, New York City is often rife with

such conflicts. Th e homelessness pro blem is not likely to go away soo n as the num bers continue to

rise4. Nonetheless, with regards to the case at hand, this court need only address whether the

Com ptroller has a duty to register the contracts, whether DH S com plied with the Fair Share Criteria

in creating its report, whether Neighborhood’s nuisance claim ma y be sustained , and whether DH S

and Aguila’s spending gives rise to

a

claim under GML 5

1.

Based on the foregoing, the complaint under Index Numb er 1563 82/201 3 by Neighborhood

of the Nineties to enjoin the Com ptroller from registering the contract between D H S and Aguila for

the operation of a homeless shelter for adult families located at 316

and

330 West 9 S h Street

(Freedom House) in Manhattan is dismissed. The petition under Index 401 122/2013 by M ayor

Michael Bloomberg is granted; the Comptroller shall register the contracts between the DHS and

Aguila for homeless shelters at 1625-1631 Fulton Street (Fulton Residence) in the borough of

Bronx, and

3 16

and 330 W est 9ShStreet (Freedom House) in Manh attan.

This constitutes the decision a nd order of the court.

The number o f homelessness grew in New York City by 1 3% at the start

of

2013, in contrast to the rest of

the country, with the excep tion of Los Angeles, California. “In New York, where the shelter population has reached

levels not seen since the Depression era, the count in January estimated 64 ,060 homeless people in shelters and on

the streets in January 2013 ” (Mireya N avarro, Homeless

Tally Taken

in

.January Found

13 Rise

in

New York NY

Times, NYiRegion N ov. 21, 2013 ).

3

Number

of Homeless in

City Hits

Record High, Report Find,

http:lwwwiny1 .comicontenthewsi205 1 16

(accessed March 12, 2014 ).

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