Statement of Town of New Castle on the Settlement Agreement with Summit Greenfield

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1 Statement of Town of New Castle on the Settlement Agreement with Summit Greenfield On December 11, 2012, the Town Board authorized the Town Supervisor to sign an agreement settling litigation with Summit Greenfield, the owner of the former Reader s Digest property, now known as Chappaqua Crossing. This statement summarizes key elements of the Settlement Agreement which include a settlement of the Town s claim for past review fees and an agreement to suspend Summit Greenfield s litigation against the Town pending the Town s review of the current proposed rezoning of part of Chappaqua Crossing for retail development. The Town will continue to go through the normal review process, and the litigation will not be prosecuted during that time. The Settlement Agreement itself will be posted on the Town s web site and made available to the public once it is fully executed. Background On April 11, 2011, after a thorough review, the Town Board approved Summit Greenfield s prior rezoning petition for Chappaqua Crossing, lifting a commercial tenancy restriction that had been imposed several years earlier at Summit Greenfield s request and approving the construction of 91 market-rate and 20 affordable housing units in the designated East Village area of the property. At the same time, the Town Board, to preserve the Town s commercial tax base and for other reasons specified, rejected Summit Greenfield s request that additional market-rate housing units be constructed elsewhere on the property. The approval process and Summit Greenfield s dissatisfaction with its outcome resulted in state and federal court litigations filed by Summit Greenfield against the Town, and a counterclaim filed by the Town against Summit Greenfield for the payment of unpaid review fees. While these litigations have been pending, Summit Greenfield has not proceeded with its approved East Village development proposal, and a substantial portion of the approximately 660,000 square feet of office space at the property remains vacant in the wake of the Reader s Digest bankruptcy and its decision to vacate its office space at the site. Principally as a result of the high office vacancy at the site, Summit Greenfield has also filed tax certiorari proceedings against the Town, asserting that the property is overvalued on the tax rolls. 1

2 In March of 2012, the Town Board, in an effort to promote a public dialogue, issued a press release putting forward a proposal to allow retail use in an area of the site currently zoned for office use, to be anchored by a full-service grocery store, based on the perceived need for a full-service grocery store in the area, the support that ancillary retail would provide for a grocery store, and the desire to bolster the Town s commercial tax base. In July of 2012, the Town Board released, for public comment, a draft of a potential amendment to the Town Code that would permit retail development of no more than 25 percent of the aggregate floor area in the portion of Chappaqua Crossing currently zoned for office use, anchored by a full-service grocery store and supported by ancillary retail uses. Under the Town s proposal, the proposed retail use could therefore displace up to a quarter of the existing office use at the site, leaving the site with a still substantial area for office use, as well as the East Village residential development, should Summit Greenfield proceed with that approved development. The Town Board held a public hearing on the proposed retail zoning in September. The rezoning proposal also was referred to the Town s Planning Board and to the Westchester County Department of Planning. In October, Summit Greenfield submitted a petition which, among other things, asks that a modified form of the Town s rezoning proposal be adopted. In its petition, Summit Greenfield proposes a Preliminary Development Concept Plan for 120,000 square feet of retail development in a proposed retail overlay district in the south end of the property, currently zoned for office use, that would include a full-service grocery store as an anchor. The petition contains illustrations of the proposed layout of the retail space, which includes adaptive reuse of the historic rotunda building for the full-service grocery store. Also with its petition, Summit Greenfield submitted a proposed Draft Supplemental Environmental Impact Statement (or DSEIS ). The proposed DSEIS assesses the potential impacts of the proposed retail development across many areas of environmental concern, including but not limited to: traffic, parking, tax revenues, land use, community character, air, noise, trees, wetlands, visual resources and historic resources. A further public hearing, on both the Town s proposed rezoning and the Summit Greenfield petition, was held on November 27. The Town will hold one or more additional public hearings to continue to seek public comment on the proposed rezoning and Summit Greenfield s petition, and more specifically to seek public comment on the DSEIS, after it has been certified as complete and sufficient to begin the public review of the potential environmental impacts of the retail 2

3 proposal. The Town continues to review the proposed DSEIS for adequacy and completeness, as well as the proposal as a whole. The Litigation Settlement Over the last six months, the Town and Summit Greenfield, through their respective attorneys and with the active participation at different times of various Town Board members and Summit Greenfield principals, have devoted considerable time discussing a potential settlement of the lawsuits that Summit Greenfield filed against the Town, and of the Town s counterclaim for approximately $1.5 million in unpaid review fees arising from Summit Greenfield s earlier rezoning petition for the site. These discussions resulted in the Settlement Agreement approved by the Town Board on December 11, 2012, the principal terms of which are outlined below. The Settlement Agreement concludes the Town s claim against Summit Greenfield for past due review fees for the sum of $905,000 to be paid to the Town on or before December 21, 2012, and suspends Summit Greenfield s litigation of its claims against the Town during the period that the Town Board considers the retail rezoning petition discussed above and the Planning Board considers the associated land use applications. Summit Greenfield s claims against the Town will be dismissed with prejudice, with no payment by the Town, unless Summit Greenfield withdraws from the Settlement Agreement based on circumstances specified in the Settlement Agreement. If litigation resumes, the Town will defend the lawsuits vigorously. If Summit Greenfield were to resume its litigation against the Town, its resumption of litigation of those claims would not affect the definitive settlement of the Town s counterclaim against Summit Greenfield for past due review fees. It is important to note that the Settlement Agreement does not commit the Town Board or the Planning Board to approving Summit Greenfield s retail rezoning petition or associated land use applications. The Town Board and Planning Board will make decisions in the future about the petition and applications before them based on their assessment of what is best for the Town from a planning perspective, in light of the information provided in the petition, the DSEIS and the final Supplemental Environmental Impact Statement, and information presented to the Town Board and the Planning Board by Summit Greenfield and members of the public at the public hearings. 3

4 As noted above, Summit Greenfield can resume litigation of its claims against the Town only in specified circumstances and only within a specified time frame. For example, although the Town Board is not obligated to approve Summit Greenfield s retail rezoning petition, Summit Greenfield can resume litigation of its claims if the Town Board decides not to approve it. Similarly, the Town Board and Planning Board retain their plenary authority to impose any appropriate conditions on their land use approvals, but Summit Greenfield can resume litigation of its claims if the conditions would render the retail development uneconomic to build. The Settlement Agreement does not modify the procedures for Town Board and Planning Board consideration of Summit Greenfield s rezoning petition and the associated applications to the Planning Board. These procedures are specified in the New York State General Municipal Law, Town Law, and Environmental Conservation Law, the Westchester County Administrative Code, and the Town Code. The Town Board and Planning Board will consider the rezoning petition and associated applications pursuant to the procedures that they ordinarily follow and that are required by law. The Town Board and Planning Board retain plenary authority to accept, modify, deny and/or impose conditions and mitigation measures with respect to the matters before them. The Settlement Agreement describes elements of a retail overlay district preliminary development concept plan that embody the principal elements of the Town s retail zoning proposal and contains certain other elements that Summit Greenfield asserts are necessary for the successful development of the property. The Town will not be in breach of the Settlement Agreement if the Town Board does not adopt a preliminary development concept plan that conforms to this description, but Summit Greenfield may have grounds for resuming litigation of its claims if the Town Board adopts a plan that departs from this description, if certain other criteria specified in the Settlement Agreement are satisfied. Similarly, the Settlement Agreement outlines minor changes to the Town Board s prior approvals for the East Village, but the number of market-rate and affordable housing units and their general layout remain the same. Again, the Town Board is not required to make these changes, but if it decides not to do so, Summit Greenfield may have grounds for resuming litigation of its claims, if certain other criteria specified in the Settlement Agreement are satisfied. 4

5 The Settlement Agreement also identifies non-binding milestones for the Town Board s consideration of Summit Greenfield s retail rezoning petition and proposed preliminary development concept plan for retail uses, and for the Planning Board s consideration of related applications for subdivision and site plan approvals. The Town will not be in breach of the Settlement Agreement if the Town Board and/or Planning Board fail to meet these milestones, but Summit Greenfield can resume litigation of its claims if the Town Board and/or Planning Board miss the milestones. As noted above, under the Settlement Agreement, Summit Greenfield will pay the Town $905,000 this year to settle the Town s claim for approximately $1.5 million in past due review fees. In the opinion of the Town s attorneys, this settlement amount is adequate and in the best interest of the Town in the context of the settlement as a whole. It would cost the Town a substantial amount to litigate this claim. The Town would bear these litigation costs because the Town s insurance does not cover attorneys fees for claims that the Town asserts, and the costs would not be recoverable against Summit Greenfield. Another advantage of the settlement is that the Town would receive payment this year, rather than at some uncertain date years from now, after trial. Likewise, suspension of Summit Greenfield s claims for tens of millions of dollars against the Town, in contemplation that they may ultimately be dismissed, will result in an immediate and substantial reduction in the costs that the Town would otherwise incur in defense of the claims. Although, the Town s insurance company has been providing defense counsel, the Town has borne the cost of its other attorneys and staff who have been working with the Town s defense counsel, and that cost would increase if the cases move into depositions and further discovery and possibly trial preparation. The Settlement Agreement establishes a fee schedule for specified aspects of Summit Greenfield s development. In general, the fee schedule simply follows the Town s Master Fee Schedule and therefore does not constitute a compromise on the part of either the Town or Summit Greenfield; the specification of the applicable fees is intended merely to reduce the potential for disputes about the fees. Notably, however, the Settlement Agreement requires Summit Greenfield to pay a recreation fee of $100,000 for the East Village development, which again eliminates a potential future controversy given the recreational amenities that are included in the East Village proposal. 5

6 Finally, the Settlement Agreement does not settle Summit Greenfield s tax certiorari claims, which will be litigated (or settled) separately. Because these claims have been de-linked from the matters addressed in the Settlement Agreement, the Town and the Chappaqua Central School District will continue their joint efforts to resolve them. Of course, if a rezoning is approved, it will be with the expectation that the value of the Chappaqua Crossing property will be stabilized and that we will avoid these sorts of serial tax certiorari claims in the future. With the Town s review fees claim resolved, and with the prior litigations suspended and subject to dismissal, all parties, including the Town, Summit Greenfield and the citizens of New Castle, will be able to focus on the current retail proposal for the site. The Town Board will hold one or more public hearings on the retail proposal and all aspects of Summit Greenfield s petition after a DSEIS is determined to be complete. 6