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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.

 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 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.

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.

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.

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.

For a PDF document of this article please click here.

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