Respondents' Brief

    To be argued by: 
EpwARrD L.. SADOWSKY 

TiME FOR ARGUMENT: 20 MINUTES 
  

  

NEW YORK SUPREME COURT 
APPELLATE DIVISION—SECOND DEPARTMENT 

  

THE CounciL oF THE City oF NEw York, PETER F. 

VALLONE, SPEAKER OF THE CounciL, and EnocH H. 

WiLLiaMms, CHAIR OF THE CounciL HEALTH COMMITTEE, 

Plaintiffs-Respondents, 

against 97-01337 

RuporpH W. GiuLiaNI, THE MAYOR OF THE CITY OF NEW 

YorK, NEw YORK City HEALTH AND HospiTALS CORPORA- 

TION, and NEw York City EcoNoMiCc DEVELOPMENT 

CORPORATION, 
Defendants-Appellants. 

  

  

RESPONDENTS’ BRIEF 
  

  

TENZER GREENBLATT LLP 
Counsel for Plaintiffs-Respondents 
The Chrysler Building 
405 Lexington Avenue 
New York, New York 10174 

(212) 885-5000 

and 

RicHARD M. WEINBERG, EsQ. 

General Counsel 

The Council of the City of New York 
75 Park Place, 5th Floor 

New York, New York 10007 

(212) 788-7000 

Of Counsel: 

EpwARD L. SADOWSKY 

IRA A. FINKELSTEIN 

GAIL R. ZwEic 

  

   



TABLE OF CONTENTS 

QUESTIONS PRESENTED 

PRELIMINARY STATEMENT 

FACTUAL AND LEGISLATIVE BACKGROUND 

POINT 1 

HHC MAY NOT DIVEST ITSELF OF 

HOSPITALS REQUIRED FOR HOSPITAL PURPOSES 

POINT II 

ASSUMING THAT THE HHC COULD ENTER INTO 

THE SUBLEASE, THE APPROVAL OF THE 

CITY COUNCIL IS REQUIRED 

POINT 111 

THE PROPOSED SUBLEASE IS SUBJECT TO NEW 

YORK CITY'S UNIFORM LAND USE REVIEW PROCEDURE (ULURP) 

CONCLUSION 

 



SUPREME COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION: SECOND DEPARTMENT 

  

THE COUNCIL OF THE CITY OF NEW YORK, PETER F. 

VALLONE, SPEAKER OF THE COUNCIL, and ENOCH H. 

WILLIAMS, CHAIR OF THE COUNCIL HEALTH 

COMMITTEE, 

Plaintiffs-Respondents, 

-against- 

RUDOLPH W. GIULIANI, THE MAYOR OF THE CITY OF 

NEW YORK, NEW YORK CITY HEALTH AND HOSPITALS 

CORPORATION, and NEW YORK CITY ECONOMIC 

DEVELOPMENT CORPORATION, 

Defendants-Appellants. 

  

RESPONDENTS’ BRIEF 

  

QUESTIONS PRESENTED 

The primary issue in this action for a declaratory 

judgment is whether New York City’s municipal hospital system, 

which has been in existence for over 250 years,! may be 

dismantled and privatized upon the initiative and fiat of a 

  

The municipal hospitals have their origins as far back as 1736 when the 
City wards, that later became Bellevue, provided health care to 
approximately six indigent persons. Thereafter, the municipal hospital 
"system" was comprised of Bellevue which was formally established as 
such in 1816. For decades, it was the lone municipal hospital. By the 
late 1800's, the expanded municipal hospital system existed under three 
separate jurisdictions; (a) the Department of Public Welfare; (b) the 
City Health Department; and (c) the Board of Trustees of Bellevue and 
Allied Hospitals. On February 1, 1929, the system was centralized under 
the Department of Hospitals which ran the municipal hospitals until the 
creation of the Health and Hospitals Corporation in 1970.  



single person -- the Mayor of the City of New York. The Court 

below answered this question in the negative. 

The specific questions presented are as follows: 

First, may the Mayor transfer the City hospitals to 

third parties where the declarations of purpose, other terms and 

conditions and the legislative history of the Health and Hospital 

Corporation Act, McKinney’s Unconsolidated Laws of N.Y. §7382 et 

seq. (the "HHC Act") demonstrate conclusively that the proposed 

disposition of the City’s hospital system is contrary to the 

stated purposes of the HHC Act? The IAS court held that the 

Mayor may not. 

Second, assuming that the privatization of the City 

hospitals is not ultra vires, may the Mayor unilaterally approve, 
  

pursuant to Section 7385(6) of the Act, a sale or lease of the 

City hospitals without the approval of the City Council in its 

capacity as the successor to the Board of Estimate under the HHC 

Act? The IAS court answered this question in the negative. 

Third, assuming that the dismantling of the City 

hospital system is not ultra vires, may the Mayor unilaterally 
  

approve the sale or lease of the City hospitals without 

compliance with the Uniform Land Use Review Procedure ("ULURP") 

of Section 197-c of the City Charter? The IAS court answered 

this question in the negative.  



PRELIMINARY STATEMENT 
  

The issue before this Court is not, as the appellants 

urge at length, whether privatization is good or bad public 

policy, or whether the Mayor’s prediction that privatization will 

promote efficiencies and economies is supportable. Indeed, the 

City Council, as a legislative body whose members may take 

varying positions with respect to these issues, has not prejudged 

-- and will not prejudge -- the public policy issues discussed in 

the Mayor’s brief. 

The sole issue before this Court is whether the Mayor 

may unilaterally take the City of New York out of the hospital 

business under the existing provisions of State and City law. In 

urging the passage of the HHC Act in 1969, the then Mayor wrote a 

letter to the Governor, which is included in the Bill Jacket as 

the express legislative intent for adoption of the HHC Act and 

the creation of the New York City Health and Hospitals 

Corporation ("HHC"): 

"In establishing a public benefit 

corporation, the City is not getting out of 

the hospital business. Rather it is 

establishing a mechanism to aid it in better 

managing that business for the benefit not 

only of the public served by the hospitals 

but the entire City health service system. 

The municipal and health care system will 

continue to be the City’s responsibility 

governed by policies determined by the City 
Council, the Board of Estimate, the Mayor, 

  

  

  

  

   



and the Health Services Administration on 

behalf of and in consultation with the 

citizens of New York City. 

This bill is part of the City’s 1969 

Legislative Program, and I urge that you 

approve it." (emphasis supplied) 

(R.131). The legislature accomplished these goals by giving the 

City comprehensive control over the HHC’s operations, and, in 

particular, any dispositions of hospital properties. 

The HHC is thus not, as the appellants suggest, an 

"independent" public benefit corporation such as the Urban 

Development Corporation or the Metropolitan Transportation 

Authority, because the HHC Act and its legislative history 

establish the contrary. 

The Mayor’s retention of J.P. Morgan Securities Co. 

("J.P. Morgan") to put the first three City hospitals on the 

block was merely the first step in totally dismantling the 

hospital system. The Mayor has stated publicly: 

Twenty years from now the mayor of New York 

City will not be standing here with New York 

City owning 11 acute-care hospitals. That 

will not be the case. (National Public Radio, 
Interview with Mayor Giuliani, Morning Edition September 5, 
1995.) (R. 638) 

The appellants concede, as they must, that 

privatization of the hospitals is the Mayor’s initiative, that 

the marketing of the hospitals through elaborate private offering  



memoranda by J.P. Morgan was undertaken at the Mayor's 

initiative, that the proposed transaction and sublease were the 

Mayor's creations, and that members of the Mayor’s cabinet and 

his other appointees on the HHC Board had the sufficient votes to 

override any dissent. 

Notwithstanding the Mayor’s initiative and intimate 

involvement with the Coney Island Hospital transaction and 

sublease, the appellants assert that he will "review the sublease 

and make an independent determination pursuant to Unconsolidated 

Laws §7385(6) regarding whether to approve its terms." 

(Appellants’ Brief, p. 34) The Mayor contends, therefore, that 

he alone may propose, review and approve this transaction. 

Whether or not "the State Legislature gave the Mayor the 

responsibility to take the lead in setting hospital health care 

policy" or "recognize[d] the primacy of the Mayor in the 

oversight of HHC [through] Mayoral appointees" (Appellants’ 

Brief, p. 33), the State Legislature could not have intended to 

give the responsibility for review and approval of the Mayor's 

actions to the Mayor himself. 

Whether or not it is now time for the City to get out 

of the hospital business, the law requires, and sound public 

policy demands, that such a decision be subject to truly 

independent review and approval by the City’s legislative body.  



FACTUAL AND LEGISLATIVE BACKGROUND 
  

Statutory Statements of the 

Legislative Purpose of the HHC 
  

The HHC is a public benefit corporation charged by law 

with the duty to operate, manage, superintend and control the 

City’s public hospitals, and to provide such services for the 

benefit of all of the people of the State and City of New York. 

Unconsolidated Laws ("U.L.") §7382[2], [5], 7385([7]; New York City 

Health and Hospitals Corp. Goldwater Mem. Hosp. v. Gorman, 113 Misc.2d 33, 448 

N.Y.8.24 623 (Sup. Ct. N.Y. Co. 1983). 

In creating the HHC the legislature stated: 

"It is further found, declared and 

determined that hospitals and other health 

facilities of the City are of vital and 

paramount concern and essential in providing 

comprehensive care and treatment for the ill 

and infirm, both physical and mental, and are 

thus vital for the protection of the 

promotion of the health, welfare and safety 

of the people of the state of New York and 

the city of New York." 

{(U.1...87382.) 

The HHC's express corporate purpose is to provide 

health and medical services in its health and hospital facilities 

(U.L. §7385(8)). This purpose is declared to be "the performance 

of an essential public and governmental function" (U.L. §7382).  



The HHC was formed to create a system "permitting 

legal, financial and managerial flexibility" (U.L. §7382) but, 

unlike some other public benefit corporations, it may not operate 

independently of the City. The HHC must exercise its powers to 

provide and deliver health and medical services "in accordance 

with policies and plans formulated by the city" (U.L. §7386(7)). 

The HHC Act authorized the City, acting by the Board of 

Estimate, to lease the City’s hospital facilities to the HHC for 

so long as the HHC remains in existence (U.L. §7387(1)), but the 

HHC'’s disposition of the leasehold interest acquired by it 

thereby is strictly controlled. The HHC is authorized to 

sublease its property to the City, and the City is empowered to 

sublease any health facility from the HHC, but in either case the 

sublease must be for the purpose of operating or constructing a 

health facility (U.L. 88 7386(2) (a), 7386(2)(b), 7386(3)). On 

the other hand, the HHC may not make a disposition (i.e., a sale 

or lease) of any of its property to third parties unless it makes 

the determination that the use and occupancy of the property is 

no longer required for its corporate purposes and powers (U.L. 

§7387(4)). Any such disposition, whether to the City itself or 

to third parties, is explicitly made subject to "the consent of 

the board of estimate of the city" (U.L. §7385(6)). Upon  



termination of the existence of the HHC, all of its leased 

properties revert to the City (U.L. §7387). 

The City is required to subsidize the HHC for medical 

services rendered to the indigent. The amount of the subsidy is 

adjusted annually to take account of increases in the cost of 

health care. The amount of such subsidy and the use thereof is 

part of the City’s expense budget (U.L. §7386(1) (a)) and is, 

therefore, subject to adoption by the City Council, which is 

vested under the City Charter with the exclusive power to adopt 

the City’s budget. 

The City’s control of the hospitals is assured by the 

composition of the HHC’s board. The Chair is designated by the 

Mayor. Four other members serving ex officio are heads of City 

agencies appointed by the Mayor. Five additional members are 

appointed by the Mayor and five are designated by the City 

Council. The remaining director is the chief executive officer 

of the HHC chosen by the other 15 directors (U.L. §7384). In 

effect, eleven of sixteen members of the Board are appointees of 

the Mayor. 

Following the adoption of the HHC Act, the City leased 

to the HHC all of the City’s hospital facilities (R.133 et. 

seq.), to expire at the end of the life of the HHC. The total 

annual rent is $1 (R.135). The lease contains an acknowledgment  



by the corporation that "the services that it will render are 

particularly for those who can least afford such services" 

(R.140) .? Consistent with the HHC Act and its legislative 

purpose, the HHC may, therefore, not sublease any of the real 

estate unless it is no longer required for a health facility. It 

is undisputed that Coney Island Hospital continues to be required 

as a health facility. 

B. The Mayor’s Proposal 

To Dispose of the Hospitals 
  

In the first round of privatization the Mayor proposes 

to dispose of three municipal hospitals, including Coney Island 

Hospital (R. 97-98). To begin this process in 1994 the incumbent 

Mayor used the New York City Economic Development Corporation 

(the "EDC") which he controls through appointment of EDC's 

President and the majority of EDC’s Board, to engage the 

investment banking firm of J.P. Morgan Securities Inc. ("J.P. 

Morgan") to act as financial advisor for the express purpose of 

disposing of the hospitals currently operated by the HHC (R. 167- 

171). 

  

This group today consists primarily of the "working poor." Those 
persons not covered by Medicare, Medicaid or similar programs, or by 
employer-sponsored third party medical expense coverage (R. 470e).  



The two Queens hospitals are the only City hospitals 

in the Borough of Queens, and Coney Island Hospital is the only 

City hospital in South Brooklyn. 

On October 26, 1995 J.P. Morgan issued an offering 

memorandum to "parties who have expressed an interest in 

submitting proposals to acquire Coney Island Hospital" (R.188) 

(emphasis supplied). 

On June 26, 1996, the Mayor announced that the "City 

will enter into final negotiations for the lease of Coney Island 

Hospital" (R.254). The Mayor also stated that the City had 

selected PHS-NY, a private, for-profit, hospital management 

corporation, as the proposed lessee for Coney Island Hospital 

{R.258). 

The record, therefore, establishes that the disposal of 

the City’s hospitals was an initiative originated, planned and 

developed by the Mayor, and would have been implemented at his 

direction without City legislative approval, were it not for the 

judgment below, which is the subject of this appeal. 

 



The judgment declares that: 

(1) The sublease constitutes an ultra vires act 
  

and violates the HHC Act; 

(2) Pursuant to the provisions of the HHC Act, 

the sublease requires the approval of the Mayor and the City 

Council; and 

(3) The sublease requires the application of 

ARGUMENT 
  

POINT I 

HHC MAY NOT DIVEST ITSELF OF 

HOSPITALS REQUIRED FOR HOSPITAL PURPOSES 
  

Nothing in the HHC Act remotely suggests that it may be 

used as a vehicle to get the City out of the hospital business. 

On the contrary, its avowed legislative purpose is to keep the 

City in the hospital business, to deliver medical and health 

services to the public. The lower court correctly so held. 

The HHC's power to dispose of hospital properties it 

leases from the City is far more restricted than the appellants 

argue. The HHC may return a leased property to the City when it 

no longer wishes to operate it as a public hospital. U.L. 

§7387(4) . See, eg, Matter of Greenpoint Renaissance Enterprise Corp. v. City of New  



© 

York, 137 A.D.2d 597, 524 N.Y.S.2d 488 (2d Dep’t 1988) 

(Greenpoint Hospital returned to the City after the hospital was 

closed). The HHC may sublease to the City for the purpose of the 
  

operation or construction of a health facility, U.L.§ 7386 (3). 

Section 7387 (4) provides that if the HHC determines that the use 

and occupancy of any real property is no longer required for its 

corporate purposes and powers, it may sell or lease it to third 

parties, but only with the consent of the Board of Estimate under 

§7385(6) . 

Against this background, the appellants rely upon 

§7385(8) which authorizes the HHC to provide health and medical 

services directly or "by agreement or lease" with any other 

entity. The only conceivable construction of this section, when 

read with the sections described above, is that the HHC may 

fulfill its powers by providing health and medical services 

directly or indirectly, but it does not authorize the HHC to get 

out of the hospital business altogether, as the Mayor proposes. 

A plain reading of Subsection 7385(8), as well as the 

context in which it was enacted, shows that it deals with 

agreements and leases merely incidental to the HHC'’s own 
  

operation of the health facilities, e.g., the provision of 

certain health and medical services by affiliated institutions or 

specific service providers. Indeed, when HHC took over the City  



hospitals in 1970, it did so with several third party leases 

already in existence (R. 137-138, Secs. 1.2 and 1.3). 

The legislative intent with regard to leasing of the 

City hospitals could not be more clear. The HHC provides health 

and medical services to the public on behalf of the City in 

hospitals owned by the City. It can give back a hospital to the 

City when it is no longer required for hospital use (which it has 

done in the past), but it may lease a hospital facility to third 

persons only if it is no longer required as a hospital (U.L. 

§7387(4)). If the HHC could simply divest itself of all its 

operating hospitals (either by an outright sale or by 198-year 

"subleases"), the legislative declaration that the municipal 

hospitals perform an essential public function would be 

eviscerated, as would the City’s commitment to the Governor and 

the State Legislature that the City would not get out of the 

hospital business. 

The HHC has not made a determination that Coney Island 

Hospital is no longer required as a health facility. It has in 

fact determined the contrary because the proposed sublease with 

respect to Coney Island Hospital (R. 402-470aa) states that it 

must be used by the potential subtenant for a hospital (R.67-68). 

Once Coney Island and the other hospitals are disposed 

of, either by sale or long-term lease, the HHC would become an  



empty shell, stripped of its legislative purposes and 

obligations. Such a frustration of the purposes of the HHC Act, 

and the obligations of the HHC to the people of the City is 

impermissible, and any such alteration of the statutory framework 

and purpose may only be accomplished by the State Legislature. 

"[A] legislative act of equal dignity and import" is required to 

modify a statute, and "nothing less than another statute will 

suffice." Matter of Gallagher v. Regan, 42 N.Y.2d 230, 234, 397 N.Y.S.2d 

714 1977. City officials cannot frustrate a legislative purpose 

by eviscerating an agency or office created by statute for a 

public purpose. Matter of NYPIRG v. Dinkins, 83 N.Y.2d 377, 610 

N.Y.8.24 932, 936 (1994). 

The Court of Appeals has recently held that a state 

statute may not be interpreted in such a way as to undermine its 

legislative purpose. In Giuliani v. Hevesi, 1997 N.Y. LEXIS 300 

(March 20, 1997), the Court of Appeals held that a general grant 

of power contained in the New York City Municipal Water Finance 

Act to issue bonds to pay for a "water project, water projects, 

or for any other corporate purposes" could not serve as a 

statutory authorization for the issuance of bonds to finance the 

purchase of the "entire [water] system" (Slip Opinion at 8-9). 

The Court of Appeals further held that the issuance of bonds for  



the finance of the transfer of the entire system was not among 

the "other corporate purposes" of the corporation. 

The Court of Appeals stated that it reached its 

determination 

"giving effect to the plain meaning of the words 

used in the statute, and thereby implementing the 

intent of the Legislative, as we are obliged to 

do." (Slip Opinion at p. 14) 

Similarly, here, the HHC'’s statutory power to enter 

into an agreement or lease "to provide health and medical 

services to the public" as set forth in U.L.§7385(8) ("General 

Powers of the Corporation") cannot be extended to permit the 

wholesale transfer of the entire City hospital system by the 

public benefit corporation created to operate it. This was never 

one of its corporate purposes. 

Indeed, the court below presaged the decision of the 

Court of Appeals in the Water Board case: 

The Legislature cannot possibly have intended or 

expected that by granting HHC the right to enter 

into agreements or leases, HHC would be put into a 

position where HHC’s Board of Directors 

essentially stripped the corporation of its 

control over the carrying out of its duties. 

(R. 638-39, Opinion pp. 23-24)  



The IAS Court held that the HHC'’s general powers to 

make contracts or leases 

"may not be construed to permit the incongruous 

result that HHC can delegate or shift all of its 

responsibilities to a non-public entity as a means 

of "furthering its corporate purposes." 

(McKinney's Uncons. Law §7385([8]. Moreover, that 

reading would frustrate the purposes and obliga- 

tions of the HHC to the people of the City 

* fo kk ok 

Put another way, HHC cannot put itself out of 

business by subleasing of its assets and 

transferring all of its duties, without the 

consent of the legislature. 

(Memorandum Decision, R. 616 et.seq. at R. 636-637) (citations 

omitted) . 

Whatever the merits of private ownership may be, for 

the HHC to implement the Mayor’s plan is in defiance of the 

purpose for which the HHC was formed, the statements of purpose 

found in the HHC Act, the City’s stated intent in proposing the 

HHC Act to remain in the hospital business, and the State’s 

declarations of legislative policy and purpose. 

POINT II 

ASSUMING THAT THE HHC COULD 

ENTER INTO THE SUBLEASE, THE 

APPROVAL OF THE CITY COUNCIL IS REQUIRED 
  

As the IAS Court held, even if the HHC had the power to 

make the sublease, its action would require the approval of the  



City Council which for the purpose of the HHC Act must be 
  

construed to be the successor of the Board of Estimate. The City 

Council is the successor to the Board of Estimate’s review and 

approval powers under § 7385(6) and § 7387 of the HHC Act, 

because the Act intended to subject any plan for the disposition 

of the City-owned hospitals -- a matter so vital to the public -- 

to local legislative review and consent. The clear purpose of 

the HHC Act was to ensure that, in certain key situations such as 

a fundamental change in the way health care is provided to the 

poor and indigent of the City (such as by sale, lease or other 

disposition of a City hospital), the legislative body having 

jurisdiction over the issues involved must consent. 

The HHC Act provides that 

No health facility or other real 

property acquired or constructed by the 

corporation shall be sold, leased or other- 

wise transferred by the corporation 

without the consent of the board of estimate 

of the city: 

(Unconsolidated Laws §7385(6)). 

The Board of Estimate at the time of the enactment of 

the HHC consisted of the Mayor, the Comptroller, the President of 

the City Council and five Borough Presidents. Each of the 

Borough Presidents had two votes and each of the citywide 

officials had four votes.  



In 1982 the voting in the Board of Estimate was 

challenged as unconstitutional for being in violation of the one 

person, one vote requirement in Morris v. Board of Estimate, 551 F.Supp. 

652 (E.D.N.Y. 1982). The District Court had initially held that 

the Board was a hybrid body having both administrative and 

legislative powers and, therefore, was not subject to the one 

person, one vote rule. The Court of Appeals reversed and 

remanded the case to the District Court to consider whether the 

voting patterns violated the one person, one vote rule. 707 F.2d 

686 (2d Cir. 1983). After remand, the District Court decided 

that the distribution of votes among members of the Board of 

Estimate was unconstitutional. 592 F.Supp. 1462 (E.D.N.Y. 1984). 

This ruling was affirmed by the Court of Appeals, 831 F.2d. 384 

(2d Cir. 1987), and by the Supreme Court in NYC Board of Estimate wv. 

Morris, 489 U.S. 688 (1989). 

As a result, the Board of Estimate was abolished by the 

people of the City of New York in a referendum creating a new 

City Charter. 

The City Charter now provides that the Council is the 

City’s sole legislative body: 

"In addition to the other powers vested 

in it by this charter and other law, the  



council shall be vested with the legislative 

power of the City." 

(City Charter §21). 

The City Charter also provides that 

"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 powers and 

responsibilities... ." 

(City Charter §1152(e)). 

The approval of a privatization plan, and the long-term 

disposition of City hospitals pursuant to such a plan, involves a 

major shift in public policy. Such approval is prototypical 

legislative action, formerly within the power of the Board of 

Estimate. Consent by the Board would have required twelve votes. 

A privatization plan could have been defeated by twelve votes-- 

two citywide officials and two borough presidents, for instance. 

While, as the Constitution mandates, such a vote would not 

necessarily have been proportionately representative of the 

electorate’s views, it would have at least provided review, which 

the Mayor here seeks to prevent entirely. 

Under the former City Charter, the Board of Estimate 

was vested with "final authority respecting the use, development 

and improvement of city land" including final approval authority  



under ULURP provisions of the City Charter, §197-c. Goodstein 

Construction Co. v. City of New York, 80 N.Y.2d 366 at 372, 590 N.Y.S.2d 

425 (1992). 

Therefore, the HHC Act requires City Council approval, 

and the power vested by the HHC Act in the Board of Estimate now 

rests, by devolution, with the City Council, the City’s sole 

legislative body. Any vestige of doubt on this issue is 

dispelled by §197-d of the City Charter which, when read with 

§1152(e), expressly confers on the City Council the final land 

use review powers formerly vested in the Board of Estimate. 

The appellants, nonetheless, argue that the consent 

power of the Board of Estimate is now vested in the Mayor, 

relying on §384 of the City Charter (Appellants’ Brief, pp. 27- 

29). That section, which provides that no real property of the 

City may be sold, leased or otherwise disposed of, except with 

the "approval" of the Mayor, also provides that the Mayor may 

authorize the sale or lease "only for the highest marketable 

price or rental, at public auction or by sealed bids after 

advertisement...." §384(b) (1). The one exception to competitive 

bidding is contained in §384 (b) (4) which permits a negotiated 

sale or lease to a local development corporation. Since the 

proposed sublease is a negotiated transaction and the proposed 

sublessee is not a local development corporation, §384 has no  



application to the transaction in issue. Both under the current 

City Charter and its predecessor, leases require competitive 

bidding. Section 384, therefore, cannot be the source of the 

Mayor’s alleged power to consent to a negotiated lease. 

Finally, §23(b) of the General City Law provides that 

the sale or lease of City property must be made by auction or 

sealed bid, although both the State Controller and the Attorney 

General have opined that a city by local law may authorize a 

negotiated sale or lease (1983 Op. [inf.] Atty Gen. 93; Op. State 

Controller 67-504). However, the only local law of the City 

authorizing a negotiated sale or lease is contained in City 

Charter §384 and is limited to local development corporations. 

Action by the City Council is, therefore, required 

because it is the successor of the legislative power previously 

vested in the Board of Estimate, or, in the alternative, because 

a local law is required to permit the negotiated lease of a City 

hospital. The finding of the Court below, that the City Council 

is the body to which the relevant powers of the Board of Estimate 

devolved, should be affirmed. 

 



POINT III 

THE PROPOSED SUBLEASE IS SUBJECT TO NEW YORK 

CITY'S UNIFORM LAND USE REVIEW PROCEDURE (ULURP) 
  

All dispositions of City property are subject to New 

York City’s Uniform Land Use Review Procedure ("ULURP"), which 

applies to "the use, development or improvement of real property 

subject to city regulation" and applies specifically to the lease 

or other disposition of any of the City’s real property (City 

Charter § 197-c[10]). 

ULURP ensures community, borough and, ultimately, City 

Council involvement in all land use decisions of land subject to 

city regulation. Thus, even if the Board of Estimate’s statutory 

power to consent under U.L. § 7385(6) did not devolve on the City 

Council, ULURP would nonetheless require such approval. 

Appellants argue, however, that while Coney Island 

Hospital "was once the real property of the City" (Appellants’ 

Brief p. 22), it no longer is because the City has leased it to 

the HHC. They assert that a "leasehold interest is real property 

in and of itself" (Appellants’ Brief p. 23). The appellants’ 

argument is both a bad reading of the law and inconsistent with 

the argument they make with respect to § 386 of the City Charter. 

In the first place, a leasehold is not real property, but only an 

interest in real property. 1 Rasch New York Landlord and Tenant, §1.2  



(1995). If the State Legislature were to abolish the HHC, the 

City’s lease to HHC would terminate (R. 135-136, §1.1) and the 

City hospitals, as they always have been, would continue to be 

the property of the City. 

The appellants’ assertion that there is a difference 

between disposition of a fee interest by the City and a leasehold 

interest by the HHC is unavailing. Nothing in Section 197-c of 

the City Charter limits the ambit of ULURP to dispositions by the 

City of its real property; rather, it is applicable to any 

dispositions of the real property of the City. 

Furthermore, the fallacy in appellants’ argument is 

revealed by the fact that on the one hand they argue that under 

the HHC Act the source of the Mayor’s power to consent to the 

proposed sublease is §386 of the City Charter, which relates only 

to the disposition of City property, and on the other hand, they 

argue that the property is not City property for the purposes of 

the ULURP sections of the very same City Charter. The appellants 

cannot have it both ways. 

Apparently appreciating the weakness of the argument, 

appellants therefore claim that " [elven if the literal terms of 

ULURP were applicable to the sublease," the State Legislature, by 

creating the HHC, indicated an "overriding State interest" 

requiring "ignoring its strictures." (Appellants’ Brief p. 25).  



In this connection, the appellants rely for this proposition upon 

Matter of Waybro Corp. v. Board of Estimate, 67 NY2d 349 (1986). That 

reliance is misplaced. As the IAS Court found, a reading of 

Waybro leads to a result directly contrary to the appellant’s 

argument, and in fact supports the respondents’ position. 

The issue in Waybro was the application of ULURP to a 

redevelopment project under the auspices of the Urban Development 

Corporation ("UDC"). The UDC, like the HHC, had been formed 

prior to the advent of ULURP. The Court of Appeals ruled that in 

order to determine whether ULURP applied, it was necessary to 

examine the legislative intent in forming the UDC. The Court 

found that despite the "salutary and important purpose" of ULURP, 

its provisions would not apply if the State Legislature expressly 

intended otherwise. The Court examined the UDC Act and noted 

that the UDC had been given specific authority to override any 

city policy or procedure, such as ULURP. The Court of Appeals 

concluded, therefore, that, because of this particular express 

statutory override language, ULURP did not apply to the UDC. 

No such statutory override language appears in the HHC 

Act. Quite to the contrary, the HHC's actions are expressly made 

subject to the City’s policy and plans (U.L. §7386(7)). There is 

nothing in the HHC Act which even remotely suggests that the HHC  



is empowered to override any City policy. Accordingly, under 

Waybro, ULURP applies to the proposed transaction. 

Decisions relied upon by appellants involving 

dispositions of property by the UDC, eg., Tribeca Community Ass'n, Inc. v. 

N.Y.S. Urban Dev. Corp., 200 A.D.2d 536, 607 N.Y.S.2d 18 (lst Dep't), 

app. dism., 83 N.Y.2d 905, 614 N.Y.S.2d 387, lv. toapp. den., 84 N.Y.2d 

805, 618 N.Y.S.2d 7 (1994), are, therefore, sui generis and 
  

inapplicable to statutes such as the HHC Act that contain no 

similar override provisions. Connor v. Cuomo, 161 Misc.2d 889, 614 

N.Y.S.24 1011 (Sup. Ct. Kings Co. 1994). In Connor, the court 

rejected the City’s argument, based upon Waybro, supra, that the 

Facilities Development Corporation ("FDC") has the same power as 

the UDC to override ULURP. The Connor court rejected the City’s 

argument because the FDC Act is "different in scope and intent" 

(Id. at 895, 614 N.Y.S.2d at 1016) from the UDC Act, and that "no 

similar provisions authorizing the avoidance of complying with 

local laws and charters exist in the FDC Act." (Id. at 896, 614 

N.Y.S.2d at 1017). The Court held that Waybro was inapplicable, 

and thus that the disposition of property required ULURP (ld. at 

895-96, 614 N.Y.S.2d at 1016-1017). The same result obtains 

here. 

Finally, contrary to appellants’ assertion (Appellants’ 

Brief p. 23) that the proposed sublease implicates only the HHC  



leasehold interest and not the City’s fee interest, the proposed 

sublease would affect the City’s fee interest. With a definite 

term of at least 99 years ind porancially 198 years, it is no 

mere sublease because it involves a disposition by HHC of greater 

rights than it has under either its lease from the City or under 

the HHC Act, both of which authorize the lease of the hospitals 

by the City to the HHC for a term co-existent with the life of 

the HHC." (R. 1358) {U.%L. 8 7387(1)) It is ludicrous for 

appellants to argue that this 198 year conveyance disguised as an 

HHC sublease does not "affect the City’s fee interest in any 

way." (Appellants’ Brief, p. 23) Appellants’ assertion that this 

198 year sublease "does not raise land use concerns" (Appellants’ 

Brief, p. 32) is neither accurate nor pertinent. The final 

decision as to this issue is for the City Council to make 

pursuant to ULURP, not for the Mayor. 

It is hornbook law that a subtenant may not be granted 

any greater rights than those possessed by the tenant under his 

own lease, 1 Rasch New York Landlord and Tenant, §9.60 (1995). A 

sublease term greater than the term of the overlease clearly 

involves a significant encumbrance of the fee interest. The 

sublease provides that "the Mayor of the City of New York, 

pursuant to McKinney’s Consolidated Laws, Section 7385.6 has 

authorized Landlord to sublease the premises to Tenant on the  



terms and conditions of this sublease, pursuant to Mayoral 

Authorization ...." (R. 407, Sublease, p. 1). Such "mayoral 

authorization" of a hospital sublease expiring in the year 2195 

goes far beyond the HHC’s power to sublease, goes far beyond any 

realistic lease term for the operation of a hospital facility, 

goes far beyond any legitimate corporate purpose of the HHC, 

clearly affects the City’s fee interest, and thus constitutes a 

disposition of real property of and by the City subject to ULURP. 

CONCLUSION 
  

The judgment of the IAS Court should be affirmed. 

Dated: New York, New York 

April 10, 1997 

Respectfully submitted, 

TENZER GREENBLATT LLP 

Counsel for Plaintiffs-Respondents 

The Chrysler Building 

405 Lexington Avenue 

New York, New York 10174 

(212) 885-5000 

- and- 

RICHARD M. WEINBERG, ESQ. 

General Counsel 

The Council of the City of New York 

75 Park Place, 5th Floor 

New York, New York 10007 

(212) 788-7000 

Of Counsel: 

Edward L. Sadowsky, Esq. 

Ira A. Finkelstein, Esq. 

Gail R. Zweig, Esq.