As-of-right development approved without plans.

Everyone knows that building in New York City is no piece of cake. Any developer in New York City can testify that to get the necessary building permits to start construction requires endless paper work and hearings. To be approved, proposed construction plans must be in compliance with city and state environmental and zoning laws. Moreover, if the proposed site requires rezoning approval, the procedure becomes a bureaucratic nightmare. Recently, the New York Court of Appeals approved a procedure which encourages development yet is still cognizant of local and state environmental laws.

In Neville v. Koch. (May 1992), the Court of Appeals approved "as-of-right" development prior to the determination by the developer of what he actually was going to build on the site. "As-of-right" describes a development which complies with the local zoning requirement, and for which the Building Department may issue a permit without having to refer to the Planning Commission or the Board of Standards and Appeals or other agencies approval.

The relevant facts in Neville are as follows: In 1988, a developer purchased property which was zoned for a medium manufacturing facility with floor area ratio (FAR) of two, known as M2-3 zoning. The developer, (even though there were no definitive construction plans for the site) applied for C6-4 zoning, which allows for high-density commercial and residential and allows mixed-use development. Four years prior to the developer's application to change the zoning, the Department of City Planning (DCP) issued a study recommending that the area be rezoned to C6-4. The developer worked with the City Department of Environmental Protection (DEP) and DCP and prepared a voluminous Draft Environmental Impact Statement (DEIS) which proposed four "worst case" scenarios analyzing the environmental impact of four proposed projects. Two basic designs were considered: a two-tower office plan and four-tower residential plan.

The DEIS addressed virtually every conceivable aspect of the projects, i.e., the impact the projects would have on land use, zoning and neighborhood characteristics; urban design; demographics, economics and secondary displacement; community resources; open space and recreational facilities; waterfront revitalization; transportation; air quality; noise, utilities; and energy resources. In addition to the four "worst case" proposals, DCP and DEP included five alternatives showing particular impacts as well as "no build" alternative. Finally, the DEIS included recommended mitigation measures, and discussed irretrievable commitments of resources.

In November 1988, DCP and DEP issued a Notice of Completion of the DEIS and made copies available to the public. Community resistance to the proposed rezoning was voiced at public hearings held in January and February of 1989. The DEIS was then expanded to respond to public comments, particularly with respect to off site displacement. A Notice of Completion of the Final Environmental Impact Statement followed several months later. The Environmental Impact Statement (EIS) concluded that no project allowed in the C6-4 zone would have impacts greater than those discussed in the EIS for the worst case developments.

In May 1989, rezoning was approved by the Board of Estimate, subject to certain design restrictions, even though at the time of the rezoning there was no actual project proposed for the site. The approval was premised on the four "worst case" proposals for the use of the property.

Thereafter, local residents and the owner of a small area business challenged the Board of Estimate's decision in court, taking the position that the Board had not taken the required "hard look" at the potential impact of the rezoning as required by the State Environmental Quality Review Act (SEQRA).

The State Supreme Court upheld the Board of Estimates approval, subject to the restriction that no future construction could take place on the site that was in any way different from the four "worst case" scenarios set forth in the EIS. This court held that similar projects smaller in size were allowed, but not until the agency examined the changes between the proposed construction and the considered in the four "worst case" scenarios. The Court also directed that a "hard look" be determine whether the changes resulted in possible adverse consequences that may have a significant impact on the environment, and if so, that a Supplemental Environmental Impact Statement (SEIS) be filed. Agreeing that the requisite hard look was taken, the Appellate Division held that Supreme Court erred in requiring the lead agency to take another hard look at zoning changes once actual plans for the Site were formulated. The Court concluded that "the ten possibilities considered by the City were designed to represent the full panoply of possible uses to which the developer could put the site, thus covering the full range of environmental impacts, including the most environmentally destructive uses to which the property could be put."

The issue presented to the Court of Appeals was if at the time rezoning was approved there were no actual projects yet proposed for the Site and SEQRA review were premised on hypothetical uses, was it proper to approve the rezoning unconditionally, or should it have been subject to further review based on later specific projects? The Court of Appeals affirmed the Appellate Division's order approving rezoning. The Court held that as long as the use ultimately proposed is considered as-of-right, a developer is considered as-of-right, a developer should be allowed to begin construction after filing plans that satisfy the building code with the building department and obtaining a building permit.

Owners and developers should avail themselves to the as-of-right development procedure, as it allows approval for construction even though determination is made on a conceptual basis only and construction might not take place for years. As the Court pointed out, "The advantage of as-of-right development is predictability. This type of approach should help encourage the development market in New York."

Peter Goetz is a senior member of the New York and New Jersey based law firm of Goetz, Fitzpatrick & Flynn, which concentrates its practice in construction and real estate law and related field.