Petitioners, Valley Stream Green Acres LLC (VSGA) and Green Acres

Adjacent LLC (GAA) (together the Owners), submit this Memorandum of Law in

support of their petition seeking, among other things, an order pursuant to NY

CPLR 7801, et seq. declaring the respondent, Town of Hempstead Industrial

Development Agency (the IDA) acted in an arbitrary, capricious, and unlawful

manner when it voted in favor of revoking the PILOT agreements with the Owners,

and the order to show cause seeking an order pursuant to CPLR 6301 and 7805

preliminarily enjoining and restraining respondent IDA from (i) terminating all

agreements related to Valley Stream Green Acres and Green Acres Adjacent, (ii)

implementing the revocation of the PILOT agreement and all related agreements

between the IDA and VSGA in accordance with the resolution dated April 27, 2017,

(iii) implementing the revocation of the PILOT agreement and all related

agreements between the IDA and GAA in accordance with the resolution dated

April 27, 2017, and for such other and further relief as this Court deems just,

proper, and equitable.

PRELIMINARY STATEMENT

Solely in response to public and political pressure, the respondent IDA has

announced its intention to imminently implement the arbitrary and unlawful

termination of two payment-in-lieu of tax (PILOT) agreements previously

awarded to VSGA and GAA as inducement for the redevelopment of the rundown

Green Acres Mall and new development of the adjacent property after the Owners

invested over $120 million to comply with their obligations under the PILOT
agreements. The IDA must be stopped. The Owners seek a preliminary injunction

and temporary restraining order to maintain the status quo pending the resolution

of the propriety of the IDAs conduct.

The facts underlying this case were covered extensively in the local

newspapers. In 2014 and 2015, the IDA approved the award of tax-incentive PILOT

agreements to VSGA and GAA, respectively, for the renovation and development of

the Green Acres Mall and adjacent property. Pursuant to the PILOT agreements,

these properties were removed from the tax rolls and instead, the Owners were

required to make predetermined payments to various taxing authorities. In

exchange, the Owners committed to make drastic improvements to the Green Acres

Mall, one that would transfer the property from a run-down, high-crime area to a

destination shopping center with new expanded retail, outdoor shopping, and

improved facilities and generate employment opportunities in the area.

The Owners fully satisfied all of their obligations to date pursuant to the

PILOTs, including making all required payments. Together, they spent in excess of

$120 million to renovate the Green Acres Mall and construct the Green Acres

Commons and created a first-class shopping center that attracted national, blue-

chip brands such as Amazon, BestBuy, Century 21, Dicks Sporting Goods, and

Home Goods to name a few. These retailers benefited from the tax savings of the

PILOTs that helped to keep their rental costs down and in keeping with market

conditions. Today, the Green Acres Mall and Green Acres Commons together is a

thriving economic center.

2
 Now, the IDA is attempting to revoke the very benefits which made that

possible because residents in the Town of Hempstead, with support from certain

elected officials, have complained that their taxes have increased. To support its

action, the IDA Board claimed that the Owners misrepresented and failed to meet

the minimum job creation requirements. The pre-textual nature of this claim,

however, is evident from a reading of the PILOT agreements themselves as well as

the IDAs own findings. Those agreements give GAA and VSGA until December 31,

2017, and December 31, 2018, respectively, to meet the minimum job requirements.

Thus, while the IDA claims that the Owners have not met the job requirements of

the PILOT agreements, the deadline for the Owners to meet those requirements has

not yet arrived. Moreover, in its 2016 Compliance Review, less than one month

before the purported revocation, the IDA concluded that the Owners were in full

compliance with the PILOT programs.

There is simply no legal or factual basis to justify the IDAs revocation of the

PILOTs. The Owners are being cast as the scapegoat for what has become a

politically unpopular agreement.

A preliminary injunction and temporary restraining order are required to

maintain the status quo while the parties litigate the legality of the IDAs conduct.

FACTS

A. VSGA and GAA Purchase the Green Acres Mall and Adjacent Property

In January 2013, VSGA acquired the Green Acres Mall, a regional shopping

center located in Valley Stream, New York. (See Verified Petition, annexed hereto

as Exhibit 1). At the time of the purchase, the Mall was not generally considered an

3
attractive destination for shoppers. It did not consist of competitive, high-end

vendors or the most updated facilities. In addition, the adjacent movie theatre,

Sunrise Multiplex Cinemas, popularly dubbed the Murderplex, was known more

for the crime occurring on site than its featured offerings. (See Newsday Article

dated January 22, 2015, annexed to the Verified Petition as Exhibit A). The

Murderplex was considered a threat to public safety and deemed a blight on the

community as well as the adjacent Green Acres Mall. VSGA sought to improve the

profile of the Mall by constructing a new faade and renovating and expanding the

retail portions with the goal of drawing popular brands and department stores to

revitalize and enhance visitor experience at the Mall. As part of that plan to

improve the overall offering of the Green Acres Mall, in April 2013, GAA (an

affiliate of VSGA) acquired 19-acres of land adjacent to Green Acres Mall, including

the Murderplex, with the plan of demolishing the cinema and replacing it with an

outdoor shopping destination that would bring even more retail attractions to the

community and Green Acres Mall. (See Verified Petition, Exhibit 1). This shopping

destination was later named the Green Acres Commons.

B. The IDA Awards PILOTs to the Owners

The respondent IDA is a non-profit public benefit agency formed to help

qualified businesses relocate, expand, and build in the Town of Hempstead.

According to its website, the IDAs programs reflect the business-friendly policies of

the Town and the enthusiastic involvement of leaders in government, business,

finance, education and other institutions.

4
(http://www.tohida.org/about/about_tohida (last visited June 22, 2017). Its

initiatives are designed to help businesses cut financing costs, taxes and red tape.

(Id.) Through financing incentives, the IDA offers to assist business in cutting the

costs of acquiring, equipping, and constructing projects. (Id.) In August 2014, the

Owners applied to the IDA for such benefits in connection with the redevelopment

of Green Acres Mall and the construction of Green Acres Commons.1 (See VSGA

Application, annexed to the Verified Petition as Exhibit B; see GAA Application,

annexed to the Verified Petition as Exhibit C).

After a duly noticed public hearing, on December 17, 2014, the IDA

unanimously approved the award of a PILOT agreement to VSGA for Green Acres

Mall. (See VSGA Notice of Public Hearing, Public Hearing Transcript, and

Resolution, collectively annexed to the Verified Petition as Exhibit D). Similarly, a

few months later, after a duly noticed public hearing, on April 22, 2015, the IDA

unanimously approved the award of another PILOT agreement to GAA for the

Green Acres Commons development.2 (See GAA Notice of Public Hearing, Public

Hearing Transcript, and Resolution, collectively annexed to the Verified Petition as

Exhibit E).

1 Prior to these Applications with the IDA, the Owners commenced tax certiorari proceedings in
Nassau County, contesting the real estate tax assessments for both Green Acres Mall and Green
Acres Commons. These tax certiorari proceedings are still pending as of June 2017.
2 At the time of these awards, the IDA Board consisted of the following members: Theodore P. Sasso,

Jr. (Chairman); Ari Brown (Secretary); Jonathan P. Kohan (Treasurer); Dan Grodotzke (Member);
Richard Bianculli (Member); Raymond Maguire (Member); and, Ann DeMichael (Member).
Meanwhile, the IDA Staff consisted of Frederick E. Parola (Executive Director and Chief Executive
Officer) and Edie Longo (Deputy Executive Director and Chief Financial Officer).

5
 PILOT agreements, which are shorthand for payments-in-lieu-of-taxes

agreements, are a way for industrial development agencies to incentivize companies

to make capital investments in the development or redevelopment of property in

ways that would benefit the local community by allowing those companies to pay a

fixed amount of property taxes. In the case of the PILOT agreements awarded to

VSGA and GAA, the Owners were able to invest a greater amount of money in the

renovation and construction of the Mall and Commons due to the certainty of

expenses afforded to them from paying a fixed amount of property taxes in an

amount equal to the estimated amount of property taxes due after the successful

resolution of pending certiorari petitions for the property in question.

On May 1, 2015, the Owners separately entered into several related

agreements, including PILOT, Recapture, and Lease agreements, with the IDA

(collectively, the PILOT Agreements). (See VSGA PILOT Agreement, annexed to

the Verified Petition as Exhibit F; VSGA Recapture Agreement, annexed to the

Verified Petition as Exhibit G; VSGA Lease Agreement, annexed to the Verified

Petition as Exhibit H; GAA PILOT Agreement, annexed to the Verified Petition as

Exhibit I; GAA Recapture Agreement, annexed to the Verified Petition as Exhibit J;

GAA Lease Agreement, annexed to the Verified Petition as Exhibit K). These

Agreements set forth the amount of PILOT payments that each company is

required to make for their respective properties over the ensuing ten years (with

five-year options to extend). The amount of payments the Owners are required to

make gradually increase each year of the term.

6
 As part of the PILOT Agreements, the Owners were required to provide a

certain number of full-time equivalent (FTE) jobs at their respective properties. To

satisfy those requirements, VSGA was required to maintain at [Green Acres Mall]

two thousand seven hundred and seventy-four (2,774) full-time equivalent

employees as of December 31, 2018 (emphasis added), and GAA was required to to

maintain at the [Green Acres Commons] three hundred and fifty-five (355) full-time

equivalent employees as of December 31, 2017 and five hundred and seventy (570)

full-time equivalent employees as of December 31, 2018 (emphasis added). (See

e.g. Exhibits H and K, 8.13). The Lease Agreements further required the Owners

to file annual statements with the New York State Department of Taxation and

Finance with the IDA setting forth its employment statistics. (See Exhibits H and

K, 8.6) The Owners are also required to provide the IDA with such information

necessary for the Agency to comply with Section 874(9) of the GML [and] to provide

and certify or cause to be provided and certified such information concerning the

Company and/or sublessees, their finances, operations, employment and affairs

necessary to enable the Agency to make any report required by law, governmental

regulation including, without limitation, any reports required by the Act or the

Public Authorities Accountability Act of 2005, or the Public Authorities Reform Act

of 2009, each as amended from time to time, or any of the Agency Documents or

Company Documents, or any other reports required by the New York State

Authority Budget Office or the Office of the State Comptroller. (See id. 8.6).

7
 There appears to be no other reporting requirement for the Owners either in

the PILOT Agreements or in the IDA policies.

In the event that either of the Owners fails to comply with any provision of

the Agreements, including the reporting requirements, the IDA is required under

Section 11 of the PILOT Agreements to notify the Owners in writing of such

noncompliance and allow the Owners the opportunity to cure any such event of

default within thirty (30) days. (See Exhibits F and I, 11).

By their terms, the PILOTs for both Owners went into effect on July 1, 2016.

Since this date, both Owners have timely tendered PILOT payments pursuant to

the terms of their respective Agreements with the IDA.

C. The Owners Rely on the PILOTs to Construct and

Renovate Green Acres Mall and Green Acres
Commons

In reliance on the PILOTs, the Owners invested over $120 million in capital

improvements at the properties, which included the refurbishment of Green Acres

Mall and the construction of Green Acres Commons. The Green Acres Mall

refurbishments included upgrading surface lot paving, replacing sections of an

aging roof, purchasing new security equipment, replacing exterior and interior

lighting, enhancing elevators and escalators, and redesigning facades and mall

entrances to make the site more welcoming for shoppers. This work enabled the

Green Acres Mall to attract more upscale anchor tenants such as Century 21,

Pandora, and Aerie.

8
 As for Green Acres Commons, what was once an unwelcoming movie theater,

has now become home to over a dozen popular brands including Home Goods, Five

Below, Ashley Furniture Homestore, Burlington Coat Factory, Buffalo Wild Wings,

and Dicks Sporting Goods.

Together, the Green Acres Mall and Green Acres Commons offer over 150

stores and new or newly improved or renovated facilities to attract shoppers from a

far more diverse geographic area than before. These investments revitalized the

area and resulted in the creation of 20 new stores with the renovation and

expansion of 16 others. The renovated and upgraded mall is now a tourist

destination for shoppers spread throughout the region.

D. The IDAs Independent Examiner Concludes that

the Owners Will Contribute Jobs, Earnings, and
Sales to the Town of Hempstead

In October 2016, the IDA hired independent contractor Camoin Associates to

conduct an economic and fiscal impact analysis (Camoin Report) of Green Acres

Mall and Green Acres Commons. (See IDA Resolution dated October 26, 2017,

annexed to the Verified Petition as Exhibit L). Camoins report, issued on

November 14, 2016, and available on the IDAs website, concluded that the Green

Acres Project would contribute additional jobs, earnings, and sales in the Town of

Hempstead. (See Camoin Report, annexed to the Verified Petition as Exhibit M).

Specifically, based upon information reported by the IDA in the Public

Authorities Reporting Information System, the Camoin Report found that the

renovation and construction of the Mall and Commons resulted in approximately

9
177 new direct construction jobs generating nearly $17.4 million in direct new

earnings on-site and an additional $3.2 million in indirect earnings to 69 indirect

jobs. (See Exhibit M, page 4). The Report also found that there will be 1,003 new

jobs created in the Town following the completion of the Project, including the 820

net new on-site jobs, above and beyond what would have existed at the Green Acres

Mall and Commons if the Project did not occur. (See Exhibit M, page 5).

The IDA Board never contested the findings delineated in the Camoin

Report.

E. The IDA Board Responds to Public Pressure

Despite the vast improvements to the Green Acres Mall and Commons, in

late 2016, after the Owners had invested over $120 million into the site, local

residents in the Town of Hempstead began complaining about the PILOT

Agreements because their property taxes increased. In response to those

complaints, in November 2016, six of the seven IDA Board members who approved

the PILOT Agreements resigned from their positions and new members were

appointed to the Board.3 (See Newsday Article dated November 15, 2016, annexed

to the Verified Petition as Exhibit N).

On January 19, 2017, the new IDA Board held an Informational Hearing to

gather testimony from the community and other interested parties to consider the

status of the Green Acres Mall and Commons project. (See IDA Notice for

3The new IDA Board consisted of the following members: Arthur Nastre (Chairman), William
Hendrick (Vice Chairman), Florestino Girardi (Treasurer), Eric Malette (Secretary), John Ferretti,
Jr. (Member), and Steven Raiser (Member). However, IDA staff members Frederick Parola and Edie
Longo have remained.

10
Informational Hearing, annexed to the Verified Petition as Exhibit O). Neither of

the Owners received any written notice of this hearing directed to them.

Nevertheless, the Owners voluntarily appeared at the hearing to testify at

length in support of their compliance with the underlying Agreements, including

their provisions of FTE jobs, and the positive impacts of their redevelopment and

construction on the community. (See Minutes of January 19, 2017 Hearing,

annexed to the Verified Petition as Exhibit P, pages 163 - 171).

This testimony was neither contested nor disputed by the IDA at the

Hearing.

Following the hearing and in compliance with the Agreements, the Owners

provided the IDA with their respective 2016 data sheets for Green Acres Commons

and Green Acres Mall on January 26, 2017. (See GAA 2016 Data Sheet, annexed to

the Verified Petition as Exhibit Q; See VSGA 2016 Data Sheet, annexed to the

Verified Petition as Exhibit R). The Green Acres Commons data sheet for 2016

states that GAA created 622 FTE jobs in 2016, which included 248 FTE

construction jobs (see Exhibit Q), and the Green Acres Mall 2016 data sheet states

that VSGA had 2,616 FTE employees in 2016 (see Exhibit R). This is an increase of

over 300 jobs that did not exist at the time VSGA applied for the PILOT benefits.

(See Exhibit R). The Green Acres Mall Data Sheet goes on to clarify:

* The original IDA PILOT agreement includes a mall

employee count totaling 2774 (total full and part time
employees). In 2016, total mall employee count (full time
and part time employees) using the same methodology in
the original agreement totals 3152.

11
 ** The original IDA PILOT agreement mall employee jobs
totaled 2774 and were not required to be calculated on the
basis of Full Time Equivalent (FTE). If they were, the
original agreements equivalent FTE count would be 2302
(assuming 1FTE equals 35 hours as legally defined). Using
the same methodology, the 2016 total mall employee FTE
is 2616.

(See Exhibit R).

Despite having already been provided with these employment statistics,

members of the new IDA Board began to demand additional employment

information from the Owners. IDA staff sent a letter dated February 2, 2017, to

VSGA requesting certified payrolls for all occupants and tenants of Green Acres

Mall. (See IDA Staff Letter dated February 2, 2017, annexed to the Verified Petition

as Exhibit S). Later, on February 7, 2017, Steve Raiser, one of the new IDA Board

members, sent a request for certified payroll records for jobs created and retained

by the Green Acres project. This email permitted the Owners to provide such

certification in the form of an affidavit. (See IDA Board Member Email dated

February 7, 2017, annexed to the Verified Petition as Exhibit T). Neither of these

requests were authorized by the PILOT Agreements both because the Owners are

not required to satisfy the FTE job requirements until late 2017 and 2018, and the

Owners are not required to provide certified payroll records to the IDA unless

required by the IDA to assist it in making a report required by law. Nevertheless,

the Owners responded to these requests in good faith.

The Owners made good faith efforts to provide the IDA with as much

documentation as possible, including revised 2016 data sheets and affidavits to

12
address the IDAs employment concerns at the Green Acres Project. (See Revised

Data Sheets and affidavits, collectively attached to the Verified Petition as Exhibit

U). Indeed, the Owners corresponded with the IDA to alert the Board and staff that

there are only a total of seven tenants at the Mall with whom the Owners have the

ability to contractually request certified payroll records from based on the terms of

the Owners underlying lease agreements with their tenants. (See Owners letters

dated March 23, 2017 and March 28, 2017, annexed to the Verified Petition as

Exhibit V). Even with these contractual limitations in mind, the Owners still

provided as much information as possible to the IDA relating to certified payroll

and employment records.

Regardless, at no point in time did the Owners ever receive any written

notice, pursuant to their Agreements with the IDA or pursuant to the IDAs own

internal policies, that the Owners failed to comply with any FTE job requirements

or would be subject to termination for noncompliance at an upcoming IDA Board

meeting or hearing.

F. The IDAs 2016 Compliance Review Concludes that

the Owners Are in Compliance with the PILOTs

At its March 30, 2017 meeting, the IDA Board passed its 2016 compliance

review. (See IDA Agenda and Minutes dated March 30, 2017, annexed to the

Verified Petition as Exhibit W). This included the adoption of the 2016 Annual

Financial Report to the Office of the State Comptroller, prepared by IDA staff and

audited by Sheehan and Company in March 2017, and the 2016 Financial Report

dated March 20, 2017 and prepared by Sheehan and Company on behalf of the IDA.

13
(See 2016 Annual Financial Report and 2016 Financial Report, collectively annexed

to the Verified Petition as Exhibit X).

Both the 2016 Financial Report and the 2016 Compliance Review concluded

that the Owners were in full compliance with the terms of their PILOT agreements.

Indeed, the 2016 Financial Report incorporated the same employment information

provided by the Owners pursuant to their original and revised 2016 Data Sheets.

Specifically, the Financial Report states that GAA has an original estimate of 570

jobs to be created at Green Acres Commons, an original estimate of 622 current

FTE employees, and 248 FTE construction jobs created during the fiscal year of

2016. (See Exhibit X, page 1). Additionally, the 2016 Annual Financial Report states

Green Acres Adjacent, PILOT will not begin until 2017. (See id.) As for Green

Acres Mall, the Report states that VSGA has 2,774 FTE employees at Green Acres

Mall, an original estimate of 670 jobs to be created, an original estimate of 2,774

jobs to be retained, and 3,152 current FTE employees. (See id.)

In contrast to the Owners and the Green Acres mall projects, at the March 30

meeting, the IDA Board terminated three unrelated PILOT agreements previously

awarded to LPF Realty, Gabrielli Inwood, and Openlink Financial for lack of

compliance. (See Exhibit W). Notably, prior to their termination, these three

projects were noted to be in noncompliance in the 2016 Financial Report prepared

by IDA staff.

14
 G. The IDA Improperly Revokes the PILOTs in
Response to Public Pressure

In April 2017, the IDA posted on its website an agenda for its monthly

meeting on April 27, which included the Decision of Board on Green Acres PILOT

Revocation. (See IDA Notice and Agenda for April 27, 2017 Meeting, annexed to

the Verified Petition as Exhibit Y). Although neither of the Owners received formal

written notice of the possible revocation of their PILOTs, both the Owners attended

the IDA meeting on April 27.

At the meeting, the Decision was apparently already made. Neither of the

Owners were given an opportunity to speak before the IDA. Rather, the IDA Board

bowed to political pressure and revoked the PILOTs for both Green Acres Mall and

Green Acres Commons without any discussion, debate, or input from the Owners.

(See Transcript dated April 27, 2017, annexed to the Verified Petition as Exhibit Z).

Before conducting the vote, Board Chairman Arthur Nastre read the following

statement explaining the reasoning for the revocations:

[T]his Board has researched the Companys employment

figures and has determined that the public was right. The
[Company] has grossly misstated the number of both
temporary construction jobs and permanent, full-time jobs
it alleged would be created in its applications for the
PILOTs and at the meeting, and even during testimony at
the [January] 19 hearing . . .

To date, no other information has been received, no actual

certified payrolls have been received, only the letters that
I just mentioned. No proof has been submitted as [to] the
actual number of construction jobs that were generated by
the new mall project. No information has been received as
to whether the existing mall has retained its 2,774 full-
time jobs and no information as to average annual salaries

15
 of any of the employees, including construction workers has
been supplied. No proof has been submitted that the jobs
have been created or actually, no proof has been submitted
for jobs that have actually been created were actually in
the Town of Hempstead. The Board knows that the new
mall has far more than seven tenants and although
allegedly, [the Company] cannot contractually force them
to submit employment numbers, they could have at least
in a spirit of cooperation with the IDA asked their tenants
and their contractors to submit proof of the number of jobs
that they have created . . .

The Board is not at all convinced that they have met, or

have even come close to meeting any of their employment
representations and we firmly believe that [the Company]
has treated this Boards request for hard proof of job
creation in a very cavalier manner and has offered no
plausible excuse as to why [it] has not complied with our
rather simple request . . .

(See Exhibit Z, pages 3 - 8).

Chairman Nastres comments are blatantly incorrect and inconsistent with

the terms of the PILOT Agreements as well as the IDAs own 2016 Annual

Financial Report and 2016 Compliance Review finding that the Owners were in

compliance with their Agreements.

Following the April meeting, the IDA Board adopted resolutions revoking

both the Green Acres Mall and Green Acres Commons PILOT Agreements. (See

IDA Resolution Revoking VSGA Agreements, annexed to the Verified Petition as

Exhibit AA; see IDA Resolution Revoking GAA Agreements, annexed to the Verified

Petition as Exhibit BB). The resolutions further highlight why the Boards action

revoking the PILOTs was arbitrary and capricious and not based on facts or

applicable law. In essence, the IDA Board demanded information it had no right to

16
request and then determined that the Owners were in breach of the Agreements for

failing to comply to the Boards satisfaction even though the Owners had complied

with their contractual requirements as reflected in the 2016 data reports that were

part of the IDA Boards own records. Nonetheless, the IDA Board purportedly

revoked the PILOTs in order for the IDA Board to garner political favor with the

community and local officials.

H. The Owners Exhaust Their Administrative Remedies

By letter dated May 1, the Owners responding to the purported revocation

demanded that the IDA Board reconvene on an emergency basis, set aside the

action taken on April 27, 2017, and re-instate the PILOT Agreements. (See Owners

Letter dated May 1, 2017, annexed to the Verified Petition as Exhibit CC). Within

this letter, the Owners outlined the procedural and substantive deficiencies of the

IDAs revocation of the PILOTs. Specifically, the IDA Board (i) disregarded the

language of the underlying Agreements with the Owners, which do not require the

Owners to maintain a certain number of FTE jobs prior to December 31, 2017 and

December 31, 2018; (ii) failed to comply with the unambiguous, express terms of the

underlying Agreements by failing to provide the Owners with written notice of any

alleged default and a thirty day opportunity to cure; (iii) failed to comply with its

own internal policies by not providing the Owners with written notice of the April

27, 2017 hearing regarding revocation and by failing to provide the Owners with an

opportunity to proffer evidence in their defense; and, (iv) misrepresented that the

Owners were uncooperative in responding to IDA requests.

17
 The IDA never responded in writing to that letter, nor did the IDA take any

action to rescind its improper revocation of the Owners PILOT agreements. At all

times, the Owners continued to honor their Agreements with the IDA by making all

PILOT payments, including a payment representing the Village of Valley Streams

portion of the PILOT as recently as June 6, 2017. (See Owners Letter dated June 6,

2017, annexed to the Verified Petition as Exhibit DD).

In June 2017, the IDA Board set a special meeting for June 29, 2017 with a

single agenda item, Consideration of the Termination of all Agreements related to

Valley Stream Green Acres and Green Acres Adjacent. (See IDA Notice and

Agenda for June 29, 2017 Meeting, annexed to the Verified Petition as Exhibit EE).

The IDA appears to now be ready to terminate the PILOT Agreements based

upon the unlawful revocation action taken on April 27, 2017 and presumably seek

recapture of the PILOT benefits, which would irreparably harm the Owners by

risking the loss of tenants, stores, and jobs at the Green Acres properties through

the revocation of the PILOT Agreements.

Therefore, the Owners have no choice but to initiate the instant proceeding.

ARGUMENT

CPLR 7805 confers upon the Supreme Court the power to stay further

proceedings or the enforcement of any determination under review. NY CPLR 7805

(McKinneys 2017); see also NY CPLR 6301 ( A temporary restraining order may be

granted pending a hearing for a preliminary injunction where it appears that

immediate and irreparable injury, loss or damage will result unless the defendant is

18
restrained before the hearing can be had.); Id. 6313 ([i]f, on a motion, for a

preliminary injunction, the plaintiff shall show that immediate and irreparable

injury, loss or damage will result unless the defendant is restrained before a

hearing can be had, a temporary restraining order may be granted without notice.)

Yonkers Racing Corp. v. Catskill Regional Off-Track Betting Corp., 143 A.D.2d 345,

346 (2d Dept. 1988), recognized that a temporary restraining order is premised on

a demonstration that immediate and irreparably injury, loss or damage will result

unless the [other party] is restrained before the hearing can be held.

To be entitled to injunctive relief pursuant to CPLR 7805, the moving party

must demonstrate (i) that it will suffer irreparable injury, (ii) a likelihood of success

on the merits, and (iii) a balance of the equities tips in favor of granting the

injunction. See Melvin v. Union College, 195 A.D.2d 447, 448 (2d Dept. 1993); see

also Walsh v. Design Concepts, Ltd., 221 A.D.2d 454, 455 (2d Dept. 1995); Klein,

Wagner & Morris v. Lawrence A. Klein, P.C., 186 A.D.2d 631, 633 (2d Dept. 1992).

I. THE OWNERS WOULD SUFFER IRREPARABLE HARM ABSENT

INJUNCTIVE RELIEF

Here, the Owners would be irreparably harmed in two ways. First, the

revocation of the PILOTs would compromise the leases that the Owners have with

their tenants and subtenants. Second, the Owners would suffer damage to their

business reputation and credibility.

A. The Owners Leases with Tenants Would Be Compromised

The Owners have written leases with all of their tenants, which leases are

approved by the IDA. Many of those leases are triple net, meaning that all tax

19
liability is contractually passed to the tenants in the form of additional rent. The

rental obligations set forth in the leases entered into since 2015 between the

Owners and their tenants are calculated based upon the existence of the PILOT

agreements. The retail tenants agreed to long-term leases that brought jobs to the

area based upon their expectation that their rental obligations would be calculated

in accordance with the required PILOT payments.

The cancellation of the Owners PILOT Agreements would thrust the Green

Acres Mall and Commons into economic chaos given the fundamentally altered

economic environment that would exist. Retail tenants could not compete with

other retail establishments in the area, such as Roosevelt Field, and create the

possibility of mass defaults on leases and store closures. If such were allowed to

occur, many of the jobs that have been created through the PILOTs would

potentially disappear. Failing to issue the TRO will likely create a self-fulfilling

prophecy that the Owners will not meet the goals of the PILOTs.

Thus, injunctive relief must be granted to prevent the Owners, and local

community, from suffering irreparable harm by losing the tenants, stores, and jobs

at the Green Acres properties.

B. The Owners Would Suffer Irreparable Harm to Their Business

Reputations

Damage to business reputation is precisely the type of irreparable harm

contemplated where a temporary restraining order and preliminary injunction is

sought. See Destiny U.S.A. Holding, 69 A.D.3d 212 (4th Dept. 2009) (harm to

business reputation is harm for which money damages are insufficient and for

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which injunctive relief may be appropriate); Konishi v. Lin, 88 A.D.2d 905 (2d Dept.

1982) (Plaintiff has established that if defendant is not enjoined from interfering

with plaintiffs use of the College Point office, he will suffer irreparable injury by the

loss of patients and damage to his reputation.) The revocation of the PILOTs

would severely damage the Owners business reputations and credibility with their

current and future tenants, which could not be prevented absent injunctive relief.

The Owners have entered into long-term relationships with their tenants.

The success of those relationships is built upon honesty and trust. Currently, the

Owners bill the tenants for their share of the tax payments as calculated under the

PILOTs. If those agreements are revoked now, the Owners would have to

immediately bill their tenants at much higher levels than over the past year. Doing

so would raise questions about the efficacy and integrity of the Owners ability to

properly manage their leases. With such a dark cloud hovering above the Green

Acres Mall and Green Acres Commons, new, high-quality tenants may be reluctant

to lease space from the Owners.

As such, Petitioners would be irreparably harmed absent injunctive relief.

II. THE IDA LACKED A RATIONAL BASIS TO REVOKE THE PILOTS

An Article 78 proceeding is the appropriate mechanism by which an

aggrieved individual can seek judicial review as to whether a[n agencys]

determination was made in violation of lawful procedure, was affected by an error of

law or was arbitrary and capricious or an abuse of discretion, including abuse of

discretion as to the measure or mode of penalty or discipline imposed. See NY

CPLR 7803. When reviewing an agencys determination, courts examine whether

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the action taken was without sound basis in reason or without regard to the

facts. Matter of Halperin v. City of New Rochelle, 24 A.D.3d 768, 770 (2d Dept.

2005). The April 27 resolutions were issued in utter disregard for the facts.

First, while the IDA accused the Owners of not complying with the FTE

requirements of the PILOT Agreements, the Owners did not need to meet those

requirements until December 31, 2017 and December 31, 2018. Pursuant to Section

8.13 of its Lease Agreement with the IDA, VSGA is not required to provide 2,774

FTE jobs at Green Acres Mall until December 31, 2018. (See Exhibit H, 8.13).

According to Section 8.13 of its Lease Agreement with the IDA, GAA is not required

to provide a total of 355 FTE jobs at Green Acres Commons until December 31,

2017, or to provide a total of 570 FTE jobs at Green Acres Commons until December

31, 2018. (See Exhibit K, 8.13). Because neither company is required to satisfy

the FTE job requirements under their respective Lease Agreements until December

31, 2017 or December 31, 2018, the Owners are not in violation of the FTE job

requirements.

Nevertheless, the Owners actually satisfied the FTE requirements as

demonstrated by the IDAs 2016 Compliance Review.

Second, even if the Owners were required to meet the FTE requirements

prior to the issuance of the resolutions (which they were not) and actually failed to

meet them (which they did meet them), the IDA was required to first give the

Owners written notice of the default and provide the Owners an opportunity to cure

(just as the IDA did with LPF Realty, Gabrielli Inwood, and Openlink Financial).

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Specifically, Section 11 of both PILOT Agreements explicitly states that the IDA

was required to notify the Company in writing of any failure by the Company to

comply with any provision of this PILOT Agreement and shall provide the Company

with the opportunity to cure such failure within thirty (30) days after receipt by the

Company of such notice. (See Exhibits F and I, 11). The failure to comply with

the FTE job requirements pursuant to the deadlines set forth in the Lease

Agreements would be a violation of the Agreements, requiring the IDA to notify

both Owners in writing of any such failure and provide them with thirty days to

cure such failure.

Here, it is beyond dispute that the IDA never provided any written notice of

default to the Owners.

Third, the IDA failed to comply with the notice requirements pursuant to its

own internal policy. The IDAs Recapture Policy expressly states that the IDAs

decision to terminate and suspend financial assistance will be subject to the

agreements or project documents entered into by the IDA and a project applicant.

(See IDA Recapture Policy, annexed to the Verified Petition as Exhibit FF).

Specifically, [t]he decision of whether to terminate or suspend Financial Assistance

and the timing of such termination or suspension of Financial Assistance shall be

determined by the Agency, in its sole discretion, on a case-by-case basis, and shall

be subject to the notice and cure periods provided for in the Project Documents.

(See Exhibit FF).

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 The Recapture Policy requires that the termination of financial assistance be

subject to the notice and cure periods provided for in the project documents.

Because the PILOT Agreements specifically mandate that the IDA must provide the

Owners with written notice and an opportunity to cure any alleged defects, the IDA

lacked a rational basis in failing to provide the Owners with written notice of any

alleged default or noncompliance prior to revoking the PILOTs.

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III. A PRELIMINARY INJUNCTION WOULD MAINTAIN THE STATUS QUO

A balancing of the equities requires that the motion for injunctive relief be

granted if the irreparable injury to be sustained by plaintiff is more burdensome

than the harm caused to defendants through imposition of the injunction. See

Fischer v. Deitsch, 168 A.D.2d 599 (2d Dept. 1990); Nassau Roofing & Sheet Metal

Co. v. Facilities Development Corp., 70 A.D.2d 1021 (3d Dept. 1979).

Essentially, the purpose of a preliminary injunction is to maintain the status quo

pending ultimate determination. See Walker Memorial Baptist Church v.

Saunders, 285 N.Y 462, 474 (1941); Bachman v. Harrington, 184 N.Y. 458, 464

(1906). That is the basis of the instant motion.

Here, the Owners are simply seeking to maintain the status quo i.e., all

parties continue to operate as required by the terms of the PILOTs. Such an

injunction would merely require the IDA to continue with the previously approved

PILOT Agreements until a determination is made by this Court on whether the IDA

acted in an arbitrary and capricious manner.

If an injunction were not issued and the properties were placed back on the

tax rolls, then presumably the Owners would have to pay higher tax amounts while

the underlying Article 78 proceeding is litigated. If at the end of that proceeding

the Owners are successful in proving that the revocation of the PILOT Agreements

was arbitrary, capricious, and unlawful (as we anticipate), then the Owners would

be entitled to recoup their payments in excess of the amounts required by the

PILOT Agreements. It is unlikely that the IDA would have the funds necessary to

reimburse the Owners, raising the possibility that a financing would be required. It
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