Defendants' Memorandum of Law in Support of Motion to Consolidate and for Summary Judgment

    SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 
  

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 
- QUEENS COALITION, an unincorporated 

association, et al., Index No. 10763/96 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 
  X 

DEFENDANTS’ MEMORANDUM OF LAW 

IN SUPPORT OF MOTION TO 

CONSOLIDATE AND FOR SUMMARY JUDGMENT 

  

  

  

PAUL A. CROTTY 

Corporation Counsel 
of the City of New York 

Attorney for Defendants 

100 Church Street 

New York, New York 10007 

(212) 788-0412 

DANIEL TURBOW, 

DAVID KARNOVSKY, 

ROBERT CARVER 

Of Counsel.



® ® 

  

SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 
  

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 

- QUEENS COALITION, an unincorporated 

association, et al., Index No. 10763/96 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 
Defendants. 

  

DEFENDANTS’ MEMORANDUM OF LAW 

IN SUPPORT OF MOTION TO 

CONSOLIDATE AND FOR SUMMARY JUDGMENT 

  

  

  

PRELIMINARY STATEMENT 
  

In the language of its enabling legislation, the New York City Health and 

Hospitals Corporation ("HHC") was created in 1969 to operate the municipal hospital system 

free from the "myriad of complex and often deleterious constraints and restrictions "! to which 

  

U.L. § 7382. 

 



  

the City government, as operator of the system, had been subject. To effect that goal, the State 

legislature created HHC as an independent "body corporate and politic constituting a public 

benefit corporation," and gave it broad powers, designed to provide the "legal, financial and 

managerial"® flexibility essential to the fulfillment of its purpose. By these suits, plaintiffs, 

among other things, ask the Court to eliminate that flexibility by subjecting HHC to processes 

which are inconsistent with the very purposes of the Act. 

Pursuant to an agreement thorn by the HHC Act, HHC leased the municipal 

hospitals from the City. At issue in these actions is the plan of HHC to sub-lease certain of 

those hospitals to a private entity -- i.e., to "privatize" those facilities. The HHC Act expressly 

authorizes such a dispostiion. U.L. §8 7385(6), 7387(4). However, plaintiffs -- the City Council 

in one suit and community members in the other -- assert that the plan cannot go forward 

because defendants do not intend to subject it to a variety of disclosure, review, and approval 

procedures, including the Uniform Land Use Review Procedure ("ULURP," codified at New 

York City Charter § 197-c), and approval of the transaction by the City Council. Plaintiffs are 

wrong on both the facts and the law. 

Contrary to plaintiffs’ characterizations, the privatization plan has, in fact, already 

‘been disclosed to appropriate public bodies and officials -- indeed, a prior lawsuit foreshadowing 

plaintiffs’ overwrought claims of secrecy and non-disclosure was already dismissed by the 

  

2U.L. § 7384. 

LL. § 7382. 

 



  

Supreme Court, New York County, in a decision affirmed by the Anpeltite Division.* Put 

simply, HHC will not implement any transfer of a hospital's operation until it complies with 

numerous approval processes prescribed by State law, including the holding of a public hearing 

pursuant to the express mandate of the HHC Act, U.L.§ 7385(6), and the receipt of approval 

by the State Department. of Health and State Public Health Council. However, the ULURP 

review and City Council approval plaintiffs seek are not required and, in fact, would undermine 

the appropriately prescribed process. 

Try as they might, plaintiffs cannot obscure the simple fact that ULURP is not 

applicable to HHC and that at issue in these litigations is HHC's decision to dispose of its 
  

leasehold interest in certain hospitals. Plaintiffs’ ULURP claim is predicated upon the assertion 

that the nature of the relationship between the City and HHC is close enough that their distinct 

identities should be ignored. Accordingly, they continue, the ULURP process applicable to 

comparable transactions by the City should be invoked here. Of course, the relationship between 

the City and HHC is governed by the HHC Act itself. And, the Courts have uniformly 

recognized that, consistent with the Act, the City and HHC are to be treated as distinct entities. 

Stated differently, superimposing ULURP’s requirements onto the procedures which expressly 

govern HHC’s actions would be at odds with the very purposes of the HHC Act. 

It will also be seen that the City Council’s approval of the transaction is not 

required. The premise of the Council’s claim is that the HHC Act conditioned the dispositions 

of HHC real property upon approval by the Board of Estimate. Characterizing that approval 

  

“Queens Hospital Center Community Advisory Board v. HHC, Index No. 12374/95 (Sup. 

Ct. N.Y. Co), aff'd __A.D.2d _, 642 N.Y.S.2d 236 (1st Dept. 1996). 

~3- 

 



  

authority as "legislative," the Council asserts that with the demise of the Board that legislative 

power devolved upon the Council. Once again, plaintiffs misconstrue the nature of the City’s 

relationship with HHC. The consent authority of the Board was not predicated upon a need to 

place some type of "legislative" check upon HHC. Rather, it was premised upon the executive 

or administrative power granted the Board under the then-extant Charter § 384 to approve real 

property transactions involving City property / And, under Charter § 384 as amended in 1989, 

that same power was expressly granted to the Mayor. * Accordingly, by operation of that 

provision of the Charter which controls the devolution of the Board's powers, the authority to 

approve the HHC disposition devolved upon the Mayor. 

Finally, we will address a claim the community plaintiffs raise under Charter § 

197-b. That section requires the conveyance of certain information concerning the private use 

of City-owned land to the affected community boards and borough presidents. The disclosure 

obligations of that provision are either entirely inapplicable to HHC transactions or, if applicable, 

have in fact have already been substantially satisfied. Certainly, there is no basis to siggest that 

any technical failure of compliance with the particular Charter provisions plaintiffs cite cannot 

be cured or that it caused any prejudice -- let alone prejudice sufficient to warrant invalidation 

of the privatization process. 

In sum, on the undisputable factual record HHC is acting within its authority and 

adhering properly to all applicable procedures. Plaintiffs’ disappointment at not being given 

inch voice in the disposition process cannot justify their effort at engrafting additional 

requirements onto that process. Given the common questions of law and fact which these suits 

raise, defendants now move for an order consolidating these actions and granting summary 

 



judgment in their favor. 

STATEMENT OF FACTS 
  

The facts underlying these proceedings and the instant motion are set out in the 

accompanying affidavit of Luis Marcos, M.D., the President and Chief Executive Officer of 

HHC. They are summarized here for the convenience of the Court. 

A. HHC 

HHC was created as a public benefit corporation in 1969 pursuant to the New 

York City Health Hospitals Corporation Act (Laws of 1969, ch. 1016, Unconsolidated Laws 

§§ 7381 et seq. (the "HHC Act")). Thereafter, by Lease Agreement dated June 16, 1970, the 

City transferred operation of the municipal hospitals to HHC. 

As noted at the outset, the HHC Act’s "Declaration of Policy and Statement of 

Purpose" makes clear that HHC’s creation was intended to overcome the "myriad of complex 

and often deleterious constraints" which then regulated the City government’s operation of the 

municipal hospital system. UL. § 7382. And, to effect the purposes of the Act, HHC was given 

exceptionally broad powers. 

| Among these specifically granted powers was that "[tJo make and execute 

contracts and leases and all other agreements or instruments necessary or convenient for the 
  

exercise of its powers and the fulfillment of its corporate purposes;" U.L. § 7385(5) (emphasis 

added). And, significantly, contemplating the use of the private sector to further its mission, 

HHC was expressly authorized "[t]o provide health and medical services for the public directly 

  or by agreement or lease with any person, firm or private or public corporation or association, 

through and in the health facilities of the corporation . . ." Id. § 7385(8)(emphasis added). 

5:  



In addition, HHC was given wide authority to manage its property as it deemed 

appropriate. Thus, subject to certain conditions discussed below, HHC was authorized to 

"dispose of by sale, lease or sublease, real or personal property, including but not limited to a 

health facility, or any interest therein . . . ." U.L. § 7385(6)(emphasis added). Similarly, 
  

subject to certain conditions, with respect to real property acquired at the cost and expense of 

the City, such as the municipal hospitals, HHC was given the express "power to sell, lease or 

otherwise dispose of said real property at public or private sale or as part of a contract, lease or 

other agreement entered into under the terms of [the] [Alct." Id. § 7387 (4) (emphasis added). 

B. THE PRIVATIZATION INITIATIVE 

  

  

In 1994, in response to the rapidly changing health care environment and the 

burgeoning cost of operating the municipal health care system, HHC and the City began to 

explore the possibility of transferring the operation of certain HHC hospitals to private entities. 

Several analyses of these and related initiatives were thereafter conducted, leading to the 

conclusion that privatization of Coney Island Hospital, Elmhurst Hospital Center, and Queens 

Hospital Center (the "Subject Hospitals") might be appropriate. Marcos Aff. 11 11, 12. 

While the wisdom of the privatization initiative is not before the Court, it warrants 

note that these analyses support a conclusion that privatization is an option which could improve 

the quality of health care provided to the Hospitals’ patients, and yet save HHC and the City 

substantial sums. Among other things, the studies determined that there was an uneconomical 

oversupply of inpatient care in New York City compared to other areas; that the financial and 

operating performance of the Subject Hospitals were inferior to that of surrounding voluntary 

hospitals; that HHC’s patient base was declining due to competition from private providers and  



  

managed care programs; and that a transfer of the Subject Hospitals would improve the quality 

of patient care and potentially save the City huge sums, estimated at over $1.7 billion over the 

next 10 years. Moreover, the ongoing transformation of the health care industry in New York 

City, with its shift to managed care, made the Subject Hospitals potentially attractive to private 

operators. Marcos Aff. 1 13. 

Accordingly, J.P. Morgan was thereafter retained by defendant New York City 

Economic Development Corporation (“EDC”) as financial advisor to prepare Offering 

Memoranda to engender interest and preliminary proposals with respect to possible dispositions 

of the Queens Hospital Center and Elmhurst Hospital Center (collectively, the "Queens Health 

Network") and Coney Island Hospital ("CIH"). The Offering Memoranda were issued in 

October 1995. As will be discussed in greater detail below, they contemplated that privatizing 

operation of the facilities would be implemented through a sub-lease of the interest HHC 

acquired through its lease agreement with the City. 

Two particular points concerning the Offering Memoranda are worthy of mention 

given plaintiff’s allegations. First, although not relevant to their legal claims, plaintiffs repeatedly 

raise the specter that privatization will result in a loss of health care services for the indigent. 

The Offering Memoranda absolutely give lie to those suggestions: 

The City and HHC are committed to preserving and 

improving the ability of all New Yorkers to access 

quality care, including those who may not have the 

financial resources to pay and who are not covered 

by third party reimbursement (Medicare, Medicaid, 

Blue Cross, private insurance, or a managed care 

plan). The City and HHC expect any prospective 

purchaser of CIH will develop and maintain clinics, 

community-based programs, and other means of 

primary care access to care for all residents, 

fy 

 



  

including the indigent, at levels at least equal to the 

care already being received. The City and HHC will 

work in conjunction with the selected purchaser to 

develop a system of performance standards to public 

ensure quality and access of care to the indigent. . 

  

  

  

  

Marcos Aff. (Exh. E) (emphasis added). 

The other particularly relevant point about the Offering Memoranda relates to 

plaintiffs’ claims that the disposition process is being conducted in secret and their related 

assertion that defendants failed to provide the disclosure required by Charter § 197-b. 

* As discussed in detail in the Marcos Affidavit (11 17-20), affected community and 

public officials and each affected hospital's Community Advisory Board ("CAB") were regularly 

briefed by senior HHC personnel both before the Offering Memoranda were being prepared and 

thereafter.’ 

Indeed, while the Offering Memoranda were being prepared, the Queens Hospital 

Center's CAB (“QHCCAB”), foreshadowing plaintiffs’ claims here, brought a suit charging that 

HHC was affording it insufficient participation in the privatization process. Queens Hospital 

  
Center Community Advisory Board v. HHC, Index No. 12374/95 (Sup. Ct. N.Y. Co.), aff'd 

___AD.2d __, 642 N.Y.S.2d 236 (1st Dept. 1996). After reviewing the submissions by 

defendants which detailed the numerous meetings and discussions had with the QHCCAB, the 

Appellate Division affirmed the Supreme Court’s dismissal of the suit, finding, among other 

  

5CABs are created pursuant to HHC Act § 7384(11), which directs HHC to "establish a 

community advisory board for each of its hospitals to consider and advise the corporation and 

the hospital upon matters concerning the development of any plans or programs of the 

corporation . . . ." The statute goes on to require that "the members of such advisory boards 

shall be representatives of the community served by the haspital." 

3 

 



  

things, that "HHC had, to date, undertaken reasonable, appropriate efforts to inform QHCCAB 

of the status of the privatization planning efforts." 642 N.Y.S.2d at 238. 

Finally in this regard, it is important to note that members of the affected 

Community Boards were also members of the affected CABs. Marcos Aff. 1 22. Accordingly, 

as will be ditenssed below, defendants, as a matter of fact, did effectively satisfy any 

requirement imposed by Charter § 197-b that the Offering Memoranda be provided to the 

affected Community Boards. 

C. RECENT DEVELOPMENTS 
  

In the Spring of 1996, HHC began to receive proposals for the operation of 

Queens Hospital Network and CIH. Preliminary discussions arising from proposals concerning 

QHC are still ongoing. Marcos Aff. 1 23. More definite is a possible transaction concerning 

CIH. 

Specifically, on June 26, 1996, HHC and PHS New York, Inc. ("PHS-NY") 

executed a letter of intent ("LOI") which, by its terms, "sets forth [the] understanding of the 

framework and present baseline assumptions” pursuant to wich HHC. would sublease CIH to 

PHS-NY." Marcos Aff., Ex. G. In broad terms, the LOI calls for the parties to begin 

negotiations toward achieving, within 120 days, a contract, pursuant to which, upon closing, a 

sublease for CIH would be delivered. 

A few central points concerning the LOI are particularly germane. First, the 

HAY transaction will be implemented through a sub-lease of HHC’s interest in CIH. 

Second, the document reflects HHC’s continuing concern in providing health care to all persons 

whom it currently serves: 

 



  

PHS-NY will commit to operate CIH as a 

community based, acute care inpatient hospital 

during the term of the Sublease, such that the 

hospital will provide a range of in-patient and out- 

patient and emergency health care services to the 

CIH community. 

And specifically with respect to PHS-NY’s indigent care obligations, it provides, among other 

things: 

In connection with the negotiation of the Contract, 

PHS-NY and HHC will negotiate provisions 
requiring PHS-NY to continue to provide indigent 

persons with the same level of access to health care 
as currently provided by CIH. "Access to health 

care" shall be defined as access to services 
regardless of ability to pay. and PHS-NY will effect 

no change to CIH’s admitting policies. 

  

Finally, it should be emphasized that the nsdn will be subject o further 

debate and review. Thus, following its Sasi the LOI was publicly disseminated and copies 

were sent to, among others, the Brooklyn Borough President's Office and the Chair of 

Community Board 13. Marcos Aff. 1 25. Moreover, the closing of the contract will be subject 

to a series of conditions which contemplate a thorough approval processes. Marcos Aff. Ex. G, 

pp. 4-5. Perticuladly pertinent to the instant proceeding is the approval of the transaction by the 

HHC Board and a public hearing before HHC, upon 20 days notice, as required by the HHC 

Act. U.L § 7385(6). In addition, the transaction will also require the approval of State Public 

Health Council and State Department of Health. In sum, plaintiffs’ voiced fears that the 

transaction will be implemented in secret and without public discussion are completely without 

basis. 

-10- 

 



THE PLEADINGS 
  

The complaint in The Council of the City of New York v. Giuliani, was served 
  

on or about March 6, 1996. (A copy of the complaint is annexed as Exhibit A to the Marcos 

Affidavit). Although prefaced by a lengthy factual recitation which unfairly characterizes the 

history of the privatization effort, only two legal claims are raised, neither of which, we believe, 

involves any disputed issue of fact. In the First Cause of Action, Council Plaintiffs correctly 

note that, by its terms, U.L. § 7385(6) conditions a transaction of the type at issue here upon 

the approval of the Board of Estimate. Council Plaintiffs assert that, upon dissolution of the 

Board, that power devolved upon the City Council. In their Second Cause of Action, Council 

plaintiffs allege that the contemplated transaction is subject to review under ULURP. 

The complaint in Campaign to Save Our Public Hospitals v. Giuliani, was served 

on or about May 15, 1996. (A copy of that complaint is annexed as Exhibit C to the Marcos 

Affidavit). The Campaign Plaintiffs also recount their understanding of the privatization 

initiative, and then also raise two claims which do not hinge upon any disputed issue of fact. 

First, they assert that defendants were required to distribute certain information concerning the 

privatization initiative to various bodies pursuant to Charter § 197-b. Second, as did the 

Council Plaintiffs, they claim that any proposed transaction was subject to ULURP. 

Defendants served their answer to the Council and Campaign complaints on June 

28, 1996 and July 1, 1996 respectively. (Copies of the answers are annexed as Exhibits B and 

D to the Marcos Aff.) In the answers defendants raised those defenses which are the subject of 

the instant motion and which will thus be discussed in detail below.  



ARGUMENT 
  

POINT I 

THE INSTANT ACTIONS SHOULD BE 

CONSOLIDATED 
  

The merits of defendants’ application to consolidate these proceedings are so self- 

evident that only the briefest comment is necessary. 

CPLR § 602(a) authorizes consolidation of actions "involving a common question 

of law or fact." There is no doubt that this standard is satisfied here. As discussed above, both 

complaints challenge the identical actions by defendants and, indeed, raise the identical legal 

claim under ULURP. Clearly it would serve the interests of the parties and the Court to hear 

the instant motion as against both complaints simultaneously. To do so would be in conformity 

with the authority contained in § 602 to "order the actions consolidated, and . . .make such other 

orders concerning proceedings . . . as may tend to avoid unnecessary costs or delay." 

 



  

POINT II 

THE PROPOSED TRANSACTION IS NOT 

SUBJECT TO ULURP 
  

Plaintiffs apparently concede that by its terms the Uniform Land Use Review 

Procedure ("ULURP") set out in Charter § 197-c does not apply to HHC. Rather, as articulated 

by the Council Plaintiffs, they contend that "HHC is an instrumentality of and under the 
  

dominion and control of the City," and that the proposed disposition is thus "in form and 

substance, a disposition of real property of the City which requires the application of ULURP." 

(Council Complaint 1 51). This effort to conflate HHC and the City can be dealt with 

summarily; it ignores the HHC Act as well as the true nature of the challenged transaction. 

As previously noted, in a "Declaration of Policy and Statement of Purposes" 

contained in the HHC Act, the State Legislature explained that a "myriad of complex and often 

deleterious constraints and restrictions" had shackled City operation of the municipal hospital 

system. Accordingly, it created HHC as a separate public benefit corporation which would have 

the "legal, financial and managerial flexibility" that the City could not enjoy. U.L. § 7382. 

To implement that purpose, HHC was granted those broad powers we have 

"outlined above, including the right to "privatize" certain of its functions. See U.L. 

§§ 7385(8) (Power granted HHC to "provide health and medical services for the public directly 

or by agreement or lease with any person, firm or private or public corporation or association 

..."); 7385(5) (Authorizes HHC to “make and execute contracts and leases and all other 

agreements or instruments necessary or convenient for the exercise of its power and the 

  fulfillment of its corporate purposes. ”); Hill v. Boufford, 141 Misc.2d 654, 657, 533 N.Y.S.2d 

2X3: 

 



  

843, 845 (Sup. Ct., N.Y. Co.) (Pursuant to §§ 7385(8) and (5) “it is within the Solis of HHC 

to . . . make arrangements with private entities to provide emergency supplementary [ambulance] 

service.”). As is particularly pertinent here, also among HHC’s powers is that to "acquire . 

. and to hold and own, and dispose of by sale, lease or sublease, real or personal property, 

including but not limited to a health facility, or any interest therein for its corporate purposes 

...."U.L. § 7385(6). See also U.L. § 7387(4) (With respect to real property acquired at 
  

the cost and expense of the city, HHC is given the power, subject to the provisions of § 7385(6), 

"to sell, lease or otherwise dispose of said real property at public or private sale or as part of 

a contract, lease or other agreement . . . ."). The exercise of that power granted by § 7385(6) 

is subject to certain conditions prescribed by the Act, including a public hearing by HHC and, 

as discussed in Point III, consent by the-Mayor. However, to suggest that this power should be 

subject to additional procedures applicable to the City, such as ULURP, ignores the very nature 

of HHC -- it is a State law entity possessing its own powers which are to be exercised in 

accordance with its own procedures. Indeed, any effort to subject HHC to additional processes 

prescribed by local law -- such as ULURP -- would be inconsistent with State law, and barred 

by Municipal Home Rule Law § 10(5). That section expressly prohibits a locality from enacting 

"local laws which impair the powers of any other public corporation," such as HHC. See 

General Construction Law § § 65, 66 (A "public corporation" includes a "public benefit 

corporation," such as HHC). And, there can be no doubt that imposition of ULURP’s 

requirements would indeed "impair" HHC’s powers as granted by the HHC Act 

Moreover, plaintiffs’ arguments are conclusively undermined by the fact that the 

  legislature could not have intended ULURP to apply to HHC dispositions, since ULURP was 

214 

 



  

  

not even adopted until 1977 -- eight years after the HHC Act's adoption. However, even if that 

critical evidence of legislative intent were entirely disregarded, plaintiffs’ very premise is both 

illogical and without any legal support. 

It is true, as plaintiffs point out, that the City and HHC have a close relationship. 

We cannot dispute, for example, that the Mayor has significant authority in connection with the 

appointment of HHC’s Board of Directors. Nor can we dispute that HHC receives financial 

support from the City. However, as plaintiffs themselves acknowledge, see, e.g., Council 

Complaint 1 1 12, 13, each of these aspects of the relationship and the others to which they 

point is prescribed by the HHC Act itself. See, e.g,, U.L. § 7386. Plaintiffs’ contention thus 

appears to be that the close relationship between the City and HHC contemplated by the Act is 

evidence that HHC should be stripped of its freedom from City processes expressly granted by 

the Act. The absurdity of this argument, we trust, is self-evident. 

In any event, dispositive of plaintiffs’ contention is that the courts have repeatedly 

held that, notwithstanding the acknowledged close relationship between the City and HHC, their 

separate identities must be honored. As the Court of Appeals has ruled: 

The New York City Health and Hospitals 
Corporation . . . is a public benefit corporation, 
independent of the City of New York . . . . That it 
is denominated an "agency" of the city for purposes 

of section 50-k of the General Municipal Law, thus 
entitling its officers and employees to legal 

representation and indemnification at the expense of 

the corporation for acts performed within the scope 

of duty, does not change the status of NYCHHC. To 

the contrary, that provision reinforces the conclusion 

that for purposes other than representation and 

indemnification NYCHHC is not an agency of the 

city. 

-15- 

 



  

Brennan v. City, 59 N.Y.2d 791, 792 (1983) (emphasis in original). See also Haynes v. Giuliani, 
  

  

Index No. 110564/95 (Sup. Ct. N.Y. Co.)("Inasmuch as HHC is not a City agency, it is not 

bound by the requirements of Local Law 35" governing displacement of City employees.). 

Finally, notwithstanding plaintiffs’ characterizations, the contemplated transaction 

does not involve any real property interest the City has in the Subject Hospitals. As a matter of 

real property law, HHC’s interest is, one which may be alienated. See, e.g. 74 N.Y. Jur 2d, 

Landlord and Tenant, § 706; Restatement, Second, Property 2d (Landlord and Tenant) § 15. 1. 

And, when it sub-leases that interest the City’s interest, as prime lessor, is simply not implicated. 

In sum, the challenged transaction involves HHC'’s decision to dispose of its real 

property in accordance with the procedures applicable to such dispositions. There is no legal 

basis upon which to ignore HHC’s legal independence so as to subject the transaction to the 

ULURP procedures applicable to dispositions by the City. Plaintiffs’ ULURP claims should thus 

be dismissed. 

-16- 

 



POINT III 

THE PROPOSED TRANSACTION IS NOT 

SUBJECT TO APPROVAL BY THE CITY 

COUNCIL 
  

As noted above, the HHC Act, U.L.§ 7385(6), expressly authorizes the 

Corporation to engage in transactions such as that contemplated here, by granting it the power 

to "dispose of by sale, lease or sublease, real or personal property, including but not limited to 

a health facility, or any interest therein for its corporate purposes.” (emphasis added). The 

provision goes on to condition that power as follows: 

provided, however, that no health facility or other 

real property . . . shall be sold, leased or otherwise 

transferred by the corporation without public hearing 

by the corporation after twenty days public notice 

and without the consent of the board of estimate of 

the city; 

(emphasis added). 

| In its complaint, the Council conjectures that the Mayor can control HHC'’s 

decision-making power through his power to appoint to the HHC Board and that, through this 

provision, "the State Legislature imposed a local legislative check to restrain the Mayor." 

(Complaint 1 44) (emphasis added). With the demise of the Board of Estimate, the Complaint 

continues, that legislative power to approve HHC’s contemplated transactions devolved upon the 

Council. Plaintiff is incorrect in both premise and conclusion. The power previously exercised 

by the Board of Estimate in this regard was not legislative -- it was executive. And, pursuant 

to operation of the current Charter, that power has clearly devolved upon the Mayor, not the 

Council.  



Thus, under the former City Charter § 384(a), in effect at the adoption of the HHC 

Act, the Board of Estimate was the body empowered to approve the sale of City property: 

Disposal of property of the city. a. No property of 
the city may be sold, leased, exchanged or otherwise 

disposed of except with the approval of the board of 

estimate and as may be provided by law unless such 
power is expressly vested by law in another agency. 

Accordingly, by granting approval authority to the Board in the HHC Act, the 

legislature was not, in any way, seeking to place a legislative “check” on the Mayor. Rather, 

it was doing nothing more than acknowledging the fact that, at that time, under the Charter, the 

comparable approval powers with respect to City property rested with the Board. In fact, the 

subject section was just one of a number of provisions of State law which granted parallel 

authority to the Board to approve or consent to the terms of lease or sale transactions. See, e.g., 

UDC Act § 3(14), codified at U.L. § 6253(14); Not-for-Profit Corporation Law § 1411; 

Racing, Pari-Mutuel Wagering and Breeding Law §§ 607 (1), (3). 

Moreover, contrary to plaintiffs’ assertion, the Board's power to approve 

disposition of City property was not legislative in nature. Rather, as found by the District Court 

in Morris v. Board of Estimate, 551 F. Supp. 652 (E.D.N.Y. 1982), rev’d on other grounds, 

707 F.2d 686 (2d Cir. 1983), in matters involving the disposition of real property, the Board 

acted in an executive and administrative capacity: 

The Board performs a wide variety of executive and 

administrative functions in respect of, or for the 

City; the authorization and/or approval of public 

improvements; the disposal of City property . . . . 

None of these . . . is legislative in nature. 
  

Id. at 657 (emphasis added). See also Morris v. Board of Estimate, 489 U.S. 688, 692 
   



  

(1989)(The Board "is a unique body wielding non-legislative powers."). 

In any event, regardless of how it is characterized, there is no question that 

pursuant to the 1989 Charter amendments accepted by the electorate, the power to approve the 

business terms of real property transactions of the City, previously granted the Board in former 

section 384, was expressly given to the Mayor in the revised section 384: 

No real property of the city may be sold, leased, 

exchanged or otherwise disposed of except with the 

approval of the mayor and as may be provided by law 

unless such power is expressly vested by law in another 

agency. 

  

(emphasis added). 

Accordingly, consistent with the Charter and the legislative intent of the HHC Act, 

it is evident that the power to approve the disposition of HHC property pursuant to § 7385(6) 

now rests with the Mayor, upon whom the Board's power organic power in this regard -- 

Charter § 384 -- devolved.’ 

Indeed, the Charter itself expressly contemplates this result. Section 1152(e), 

adopted by the voters In 1989, provides that: 

2 the powers and responsibilities of the board of estimate, 

set forth in any state or local law, that are not otherwise 

devolved by the terms of such law, upon another body, 

agency or officer shall devolve upon the body, agency or 

officer of the city charged with comparable and related 

  

6 Further evidence that the Mayor succeeded to the power of the Board with respect to the 

disposition of real property is found in Charter section 1602(3), which grants the Commissioner 

of General Services authority to "sell, lease, exchange or otherwise dispose of real property of 

the city”, subject to the approval of the Mayor. Likewise, Charter section 1802(6) (j) provides 

that the Commissioner of Housing Preservation and Development may "sell, lease, exchange or 

otherwise dispose of residential real property of the city, provided that no such sale, lease 

exchange or other disposition shall be authorized without the approval of the mayor . . . . " 

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powers and responsibilities under this charter . . . . 
  

(emphasis added). 

Application of this provision here is straightforward. Section 7385(6) does not, 

by its own terms, devolve the "powers and responsibilities” of the Board upon another body, 

agency or officer. Accordingly, those powers and responsibilities devolved upon the "body, 

agency or officer of the city charged with comparable and related powers and responsibilities" 

under the new Charter. And, as noted above, under the new Charter, the "Body, agency or 

officer" which now exercises what was the Board’s comparable power with respect to approval 

of the terms and conditions of the sale of City-owned property is the Mayor -- not the Council. 

See Tribeca Community Assoc., Inc. v. UDC, Sup. Ct. N.Y. Co., Index No. 29355/92 (April 

1, 1993) at page 31 (" . . . the City Council does not have authority to approve the terms and 

conditions of sales, leases or other dispositions . . . ."), aff’d, 200 A.D.2d 536 (1st Dept. 1994), 

app. dism. 83 N.Y.2d 905 (1994), lv. to app. den. 84 N.Y.2d 805 (1994), 

In sum, there is simply no basis upon which to conclude that the authority to 

approve a sub-lease by HHC of a health facility pursuant to section 7385(6) now rests with the 

City Council. Rather, as has been demonstrated, it devolved from the Board of Estimate to the 

Mayor. Accordingly, the Council’s first claim for relief should be dismissed. 

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POINT IV 

THERE HAS BEEN NO VIOLATION OF 

CHARTER § 197-b 
  

Charter § 197-b provides: 

Notification of plans and proposals. a. Advance 

notice of all preliminary and final plans of public 

agencies and public benefit corporations or of 

private agencies, entities or developers filed with the 
city that relate to the use, development or 
improvement of land subject to city regulation shall 

be given to the affected community board or boards 
and the office of the affected borough president, 

provided that exceptions may be made in matters of 

no appreciable public concern by agency rule. 

b. Copies of (1) all requests for proposals and other 
solicitations of proposals issued by or on behalf of 

the city, whether or not issued by an agency, a local 

development corporation or other entity, and (2) all 
letters of intent executed by or on behalf of the city, 
whether or not executed by an agency, a local 

development corporation or other entity, that relate 

to the private use or the disposition of city-owned 

land, shall be conveyed to the community boards 

where such land is located and the office of the 

\ borough president where such land is located 

promptly after issuance or execution. 

The Campaign Plaintiffs claim that defendants failed to comply with this provision, 

alleging generally that it governed defendants’ “plans for the ‘sale’ through long term lease of 

97 

the [Subject Hospitals] including their [Offering Memoranda] . ..”7 Campaign Complaint 1 30. 

  

’In their complaint, Plaintiffs incorrectly refer to the Offering Memoranda as “Requests for 

Proposal.” We take the liberty of correcting their terminology. 

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By its terms, section 197-b(a) encompasses distributions only of particular 

documents “filed with the city,” not any non-specific “plans”. At the time the Complaint was 

filed -- and indeed, as of today -- there were no such documents. Accordingly, section 197-b(a) 

is plainly inapplicable here. 

Section 197-b(b) likewise deals only with particular documents. At the time the 

Complaint was filed, the only extent documents which would even arguably be within its scope 

were the Offering Memoranda. However, it is questionable, given the nature of the transaction, 

whether they could be viewed as having been issued “by or on behalf of the City,” as required 

by subdivision (b). Rather, as discussed above, the challenged transaction involves a conveyance 

by HHC, not the City. 

Even assuming that § 197-b(b) is applicable, however, as the Marcos Affidavit 

makes clear, there has been compliance with the provision’s spirit and letter. The Offering 

Memoranda were issued in October 1995. Immediately thereafter, they were in fact distributed 

to the Queens and Brooklyn Borough Presidents. 

Similarly, the Offering Memoranda were conveyed to representatives of the 

Community Boards in which the Subject Hospitals are located. This was effected by their 

conveyance to the Community Advisory Board (“CAB”) established for each of the Subject 

Hospitals.® As set forth in the Marcos Affidavit, the membership of the CAB for each of the 

Subject Hospitals includes representatives of the Community Board in which the Hospital is 

  

These are bodies created pursuant to the HHC Act “to consider and advise [HHC] and the 

hospital upon matters concerning the development of any plans or programs of the corporation.” 

U.L. § 7384(11). 

22. 

 



  

located. And, pursuant to the HHC Policy Guidelines for Community Advisory Boards, as 

amended March 26, 1992 (“HHC Guidelines”), the responsibilities of those individuals who 

serve on both bodies, i.e., the CAB and the Community Board, include the duty: 

[t]o act as a liaison between the CAB and the [Community Board], 

assuring that both are informed about their respective concerns, 

interests and actions regarding community health planning and 

HHC facility needs. 

HHC Guidelines, § (ID(C)(1)(a). Accordingly, there can be no doubt that the affected 

Community Boards were effectively provided within the Offering Memoranda. In any event, 

there is certainly no basis to suggest that any technical failure of compliance with § 197-b(b) 

cannot be cured or that it caused any prejudice.’ 

The Campaign Plaintiffs’ cause of action alleging that defendants failed to comply 

with Charter § 197-b should be dismissed. 

  

This is especially true since the Letter of Intent (“LOI”), which was executed on June 26, 

1996, was widely disseminated and conveyed to the Brooklyn President’s Office and Brooklyn 

Community Board 13. Clearly, even if § 197-b is applicable to the transaction, this distribution 

of the LOI fully satisfied all of the statute’s requirements. 

23. 

 



  

CONCLUSION 
  

For the foregoing reasons, it is respectfully requested that defendants’ motion for 

an order consolidating these suits and upon consolidation, granting summary judgment in 

defendants’ favor, be granted in its entirety, together with such other and further relief as the 

court shall deem just and proper. 

Dated: New York, New York 

July 12, 1996 

Respectfully submitted, 

PAUL A. CROTTY 

Corporation Counsel 
of the City of New York 

Attorney for Defendants 
100 Church Street * 
New York, New York 10007 

(212) 788-0412 

DANIEL TURBOW, 

DAVID KARNOVSKY, 

ROBERT CARVER 
Of Counsel. 

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