Case 1:06-cv-02860-DLC Document 552 Filed 01/22/16 Page 1 of 28

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
................................................................................ x
UNITED STATES OF AMERICA ex rel.
ANTI-DISCRIMINATION CENTER OF
METRO NEW YORK, INC.,
Plaintiff,

06 Civ. 2860 (DLC) (GWG)

v.
WESTCHESTER COUNTY, NEW YORK,
Defendant.
.................................................................................x

OBJECTIONS TO REPORT AND RECOMMENDATION

PREET BHARARA
United States Attorney for the
Southern District of New York
Attorney for Plaintiff

DAVID J. KENNEDY
Assistant United States Attorney
86 Chambers Street
New York, New York 10007
Telephone: (212) 637-2733
Fax: (212) 637-0033
E-mail: david.kennedy2@usdoj.gov
- Of Counsel -

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TABLE OF CONTENTS

PRELIMINARY STATEMENT ..................................................................................................1
STATEMENT OF FACTS ............................................................................................................1
A.

Provisions of the Consent Decree Applicable to the Current Dispute ..................2

B. The Conifer Development and the County’s Role....................................................3
1. The Monitor Approves the Conifer Development, and the
Town Board Approves a Special Permit for the Conifer Development
Subject to Variances .............................................................................................3
2. Local Opposition Arises to the Conifer Development, and the County
Denies Funding, but the Variances Are Ultimately Approved ........................4
3. The County Conditionally Approves Funding for the Conifer Development
in 2014, Subject to Conifer’s Obtaining the Necessary Variances...................5
4. Litigation Over the Special Permit for the Conifer Development ...................6
C.

The Monitor’s Report and Recommendation .........................................................7

D.

The Magistrate Judge’s Report and Recommendation, and
Related Developments ..............................................................................................8

ARGUMENT ...............................................................................................................................11
POINT I

THE R&R INCORRECTLY CONCLUDED THAT THE
COUNTY MET THE BENCHMARK OF THE CONSENT DECREE .........12
A. The County Breached the Consent Decree Because There
Was No “Financing in Place” for Chappaqua Station by the
Benchmark Date of December 31, 2014 .....................................................12
1. Ignoring New York Law in Favor of a Dictionary Was Error ..........14
2. Disregarding the Plain Language of the County’s Legislation
Was Error ...............................................................................................15
3. Misinterpreting the Purpose of the Consent Decree Was Error .......18

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B. Because the County Appears to Have Met the 2015 Benchmark Even
Without the Chappaqua Station Units, the Government’s Contempt
Application on this Point Appears Moot, but the County Must Still
Pay a Penalty for the 2014 Breach ..............................................................18
POINT II

THE R&R INCORRECTLY DETERMINED THAT THE COUNTY
“USE[D] ALL AVAILABLE MEANS AS APPROPRIATE”
TO EFFECTUATE THE CONSENT DECREE ..............................................19
A. The County Breached Its Obligations Under the Consent Decree ...........19
1. The R&R Failed to Rule on the Monitor’s Finding of the
County’s Breach .....................................................................................19
2. The County Breached the Consent Decree ..........................................21
B. The County Is In Contempt of Paragraph 7 of the Consent Decree,
and Should Be Required to Pay a Penalty Unless It Purges
Itself of Contempt .........................................................................................23

CONCLUSION ............................................................................................................................25

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Plaintiff the United States of America (the “Government”) respectfully submits these
Objections to the Report and Recommendation issued on November 19, 2015 (the “R&R”).
PRELIMINARY STATEMENT
A report issued by the Monitor in this case on May 8, 2015 (the “Report”) correctly
determined that the County of Westchester (the “County”) was in breach of two separate
provisions of the Consent Decree entered on August 10, 2009 (attached as Exhibit A to the
Declaration of David J. Kennedy, Jan. 22, 2016 (“Kennedy Decl.”)). These breaches stem from a
common cause: the resistance of the Town of New Castle to an affordable housing development.
The Report accurately and properly observed that, first, because there was not financing in place
for the development, the County missed an important compliance benchmark under the Consent
Decree; and second, that the County had failed to use all available means as appropriate to
address New Castle’s resistance to the development.
The R&R incorrectly sustained the County’s objections to the Monitor’s evaluation by
failing to consider applicable New York and federal law, the plain language of relevant County
legislation, and the overall purpose of the Consent Decree to timely construct affordable housing
units. The R&R also failed to consider whether the County breached provisions of the Consent
Decree as a separate issue from whether the County was in contempt of the Consent Decree. As
a result, the development of New Castle remains stalled. While the Government’s contempt
application may now have been partially mooted by events occurring after the date of the R&R,
the dispute over the County’s breach remains ripe, and these Objections should be sustained.
STATEMENT OF FACTS
The Government respectfully assumes the Court’s familiarity with the background facts
of this case, as set forth in County of Westchester v. Dep’t of Housing & Urban Dev., 802 F.3d
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413 (2d Cir. 2015) (“Westchester IV”); County of Westchester v. Dep’t of Housing & Urban
Dev., 778 F.3d 412 (2d Cir. 2015) (“Westchester III”); United States ex rel. ADC v. Westchester
County, 712 F.3d 761 (2d Cir. 2013) (“Westchester II”); and this Court’s opinions in County of
Westchester v. Dep’t of Housing & Urban Dev., 06 Civ. 2860 (DLC), 2015 WL 4388294
(S.D.N.Y. July 17, 2015); and United States ex rel. ADC v. Westchester County, 495 F. Supp. 2d
375 (S.D.N.Y. 2007); 668 F. Supp. 2d 548 (S.D.N.Y. 2009) (together, “Westchester I”).
A.

Provisions of the Consent Decree Applicable to the Current Dispute
This new dispute addressed by the R&R concerns a particularly important provision of

the Consent Decree. Paragraph 7 of the Consent Decree requires that the County “ensure the
development of at least 750 new affordable housing units” (Consent Decree ¶ 7), and paragraph
23 sets forth the timeline, with interim benchmarks, for the development of such units:
By end of
calendar year
2010
2011
2012
2013
2014
2015
2016

Sites with financing
in place
(number of units)
100
200
300
450
600
750

Units with
building permits

50
125
225
350
525
750

(Consent Decree ¶ 23.) Paragraphs 7(i) and (j) of the Consent Decree further provide that:
(i)
The County shall use all available means as appropriate to
achieve the objectives set forth in this paragraph, including, but not
limited to, developing financial or other incentives for other entities to
take steps to promote the objectives of this paragraph, and conditioning
or withholding the provision of County funds on actions that promote
the objectives of this paragraph. . . .
( j ) In the event that a municipality does not take actions needed to
promote the objectives of this paragraph, or undertakes actions that
hinder the objectives of this paragraph, the County shall use all available
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means as appropriate to address such action or inaction, including, but
not limited to, pursuing legal action. The County shall initiate such legal
action as appropriate to accomplish the purpose of this Stipulation and
Order to AFFH.
B.

The Conifer Development and the County’s Role
1.

The Monitor Approves the Conifer Development, and the Town Board
Approves a Special Permit for the Conifer Development Subject to Variances

In 2010, Conifer Realty LLC (“Conifer”) proposed a 28-unit affordable housing
development to be located at 54 Hunts Place, in the Village of Chappaqua, Town of New Castle,
known as Chappaqua Station (“Chappaqua Station”). Chappaqua Station would be east of the
Saw Mill River Parkway, west of downtown Chappaqua, and immediately north of the MetroNorth Rail station at Chappaqua, providing access into New York City. Families in Chappaqua
Station would be able to send their children to the Chappaqua public school system. (Kennedy
Decl. Exh. C (Excerpts of Monitor 2014 Report, at 10 (filed Apr. 1, 2015)).) The location would
be eligible to be counted under the Consent Decree, as the project would create affordable
housing in Chappaqua, which is located in the overwhelmingly white Town of New Castle.
According to the 2010 Census, New Castle is 4% Hispanic and 1.6% black, well below the
Westchester County averages of 21.8% Hispanic and 14.6% black. (Kennedy Decl. Exh. D.)
The Monitor and the Town Board raised concerns about the location and design of
Chappaqua Station, and Conifer made “significant changes” in response. (Kennedy Decl. Exh. B,
at 11.) By letter dated September 7, 2012, the Monitor advised that in his view Chappaqua
Station “furthers the goals of the consent decree” and praised Conifer for its willingness to make
appropriate changes. (Id.) The Monitor further stated that Chappaqua Station would be eligible
to be counted toward the benchmarks of the Consent Decree. (Id.)

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On September 10, 2013, the Town Board granted Conifer a special permit for Chappaqua
Station. (Kennedy Decl. Exh. E.) That permit, however, identified variances that Chappaqua
Station would have to obtain from the New York State Hudson Valley Regional Board of
Review (“Regional Board”) before the Town Building Inspector could issue a building permit
(id. § 2.8.6), and further provided that “[o]ther variances may be required upon further review,
upon receipt of a complete Building Permit application, and/or upon final design.” (Id. § 2.8.6.1.)
2.

Local Opposition Arises to the Conifer Development, and the County Denies
Funding, but the Variances Are Ultimately Approved

Once the special permit was granted in September 2013, the prospect of Chappaqua
Station aroused local opposition. One slate of candidates running for the New Castle Town
Board, including Robert J. Greenstein for Town Supervisor, made Chappaqua Station the subject
of a campaign flyer, titled “Welcome to the neighborhood!” depicting the empty field along the
Metro-North rails upon which Chappaqua Station would be located, and stating:
The Town Board voted to approve the affordable housing project on Hunts
Lane. The property is situated between a highway, railroad, and a busy bridge.
There will be no yard. Is this a suitable location for 28 families to live?
Our guest speakers will discuss how we can stop this travesty, and adhere to
a policy of responsible affordable housing with locations that are worthy of
human habitation.
(Kennedy Decl. Exh. F.) Among the guest speakers at the community meetings advertised in the
flyer are a “founding member of Chappaqua for Responsible Affordable Housing,” and County
Executive Robert Astorino. (Id.) The slate of candidates opposed to Chappaqua Station won the
November 2013 town election. Incoming Town Supervisor Greenstein spoke at a December 10,
2013, meeting of the Regional Board in opposition to Chappaqua Station:
[B]y the way, when I ran for Supervisor one of the things I ran on is against this
proposal. And the elephant in the room not mentioned yet is this affordable
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housing project and there are people here, advocates for affordable housing. This
whole side of the room are people either for the developer, other affordable
housing proponents, the people that work for companies to build as much as is
possible. This side of the room is people from New Castle.
(Kennedy Decl. Exh. G, at 83.)
On December 16, 2013, the Westchester County Board of Legislators rejected a bill that
would have provided funding for Chappaqua Station. See Elizabeth Ganga, Westchester
legislators vote down financing for Chappaqua affordable housing, Lohud Westchester Blog,
Dec. 17, 2013 (Kennedy Decl. Exh. H). Legislators cited the concerns about the project from the
newly elected Town Supervisor, and agreed to reconsider the funding proposal later. (Id.)
During this period, in which local opposition threatened to thwart the project, the County
did little to encourage the development of Chappaqua Station. Deputy County Commissioner
Norma Drummond, for example, spoke at a single Regional Board meeting, on December 10,
2013, and her remarks take up less than a page and a half. (Kennedy Decl. Exh. G, at 127-29.)
3.

The County Conditionally Approves Funding for the Conifer Development in
2014, Subject to Conifer’s Obtaining the Necessary Variances

The process of approving Conifer’s variance applications before the Regional Board
lasted throughout 2014. Several sessions of the Regional Board in 2014 were devoted to hearing
and addressing concerns as to safety at Chappaqua Station. The County Board of Legislators
approved a conditional funding bill for Chappaqua Station, on November 24, 2014, to issue
bonds to finance the cost of Chappaqua Station’s development. The BOL’s approval of
financing, however, is expressly contingent upon the approval of state and local variance
requests: “The issuance of bonds or notes pursuant to this Act is subject to the approval of all
required State and Municipal variances.” (Kennedy Decl. Exhs. I (Westchester Cty. Act No.
2014-213, at § 1); J (Westchester Cty. Act No. 2014-214, at § 1).) The County Board of
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Legislators therefore expressly made the financing conditional upon the outcome of the variance
process that was still pending before the Regional Board, and potential further variances that
may subsequently be imposed by the Building Inspector.
Ultimately, on January 22, 2015, the Regional Board approved the variances, over the
opposition of Town Supervisor Greenstein and Town Building Inspector William J. Maskiell.
(Kennedy Decl. Exh. K.) The Regional Board did not memorialize its decision until April 27,
2015. (Kennedy Decl. Exh. L.) As of the December 31, 2014, deadline in paragraph 23 of the
Consent Decree, therefore, Chappaqua Station did not have the variances that the County placed
as conditions upon funding.
4.

Litigation Over the Special Permit for the Conifer Development

The decision by the Regional Board to grant Conifer’s application for variances,
however, does not permit Chappaqua Station to proceed, because Conifer still needs a building
permit. There are two complications to Conifer’s obtaining a building permit.
The first complication was resolved only after litigation and additional delay. The Town
took the position that the special permit granted to Conifer expired on or about March 20, 2015;
accordingly, unless the Regional Board had memorialized its decision by that date (which it had
not) and unless Conifer obtained a building permit by that date (which it had not, and still has
not), Chappaqua Station could not proceed unless it applied for an extension request. Counsel for
Conifer interpreted the provisions of the special permit differently, and filed suit in New York
State Supreme Court on February 19, 2015. See Conifer Realty, LLC v. Town of New Castle,
Index No.: 52286/2015 (Sup. Ct. Westchester Cty.) (Kennedy Decl. Exh. M.) After some
litigation, in which the County took no part, the Court granted the Town’s motion to dismiss the
complaint, by decision dated May 6, 2015. (Id.) The next day, Conifer requested a two-year
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extension of the duration of the special permit, and on May 26, 2015, the Town voted, with
Supervisor Greenstein abstaining, to extend the duration of the special permit for Chappaqua
Station for eighteen months from that date — until November 2016. (Kennedy Decl. Exh. N.)
The second complication remains unresolved, as of January 15, 2016. The building
permit must be issued by Town Building Inspector Maskiell, who opposed Chappaqua Station in
the past, and spoke out against it at several Regional Board meetings. According to Conifer,
Town officials met with Conifer on March 26, 2015, to discuss the building permit application,
and Maskiell advised that he would “not perform any work on [Conifer’s] permit application or
the drawings until the $152,000 permit fee was paid,” at which point “the drawings ‘would go all
the way to the bottom of the pile.’” (Kennedy Decl. Exh. B Report at 6 (quoting Report Exh. 12,
at 1).) Over two years since the project has been proposed, Maskiell has yet to approve the
building permit. Even if he does, however, it is not clear if the project could move forward,
because the special permit contains the additional condition that “[o]ther variances may be
required upon further review, upon receipt of a complete Building Permit application, and/or
upon final design.” (Kennedy Decl. Exh. E, § 2.8.6.1.) If other variances are required but not
approved, Conifer will not have met the requirements of the County’s funding, which is “subject
to the approval of all required State and Municipal variances.” (Kennedy Decl. Exhs. I, J.) Thus
there may be additional conditions upon funding for Chappaqua Station of which Conifer (and
everyone else, apart from the Building Inspector) is unaware.
C.

The Monitor’s Report and Recommendation
After reviewing the submissions of the County and the Government on the dispute, the

Monitor issued his report on May 8, 2015. The Monitor concluded that, first, Chappaqua Station
and its proposed 28 units should not be credited under the benchmark provisions of the Consent
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Decree requiring 450 units with financing in place by December 31, 2014; as a result, the County
failed to meet the December 31, 2014, benchmark by 24 units and is therefore in violation of
paragraph 23 of the Consent Decree. (Kennedy Decl. Exh. B, at 1.) Second, the Monitor
concluded that the County had failed to meet its obligations under paragraph 7(i) and (j) of the
Consent Decree to “use all available means as appropriate” to address New Castle’s opposition
to Chappaqua Station. (Id.)
D.

The Magistrate Judge’s Report and Recommendation, and Related Developments
The County filed objections to the Monitor’s Report, including a significant amount of

new material on reply. The Government supported the Monitor’s analysis, and sought contempt
sanctions against the County. With regard to the County’s failure to meet the benchmarks of
paragraph 23, the Government proposed that the County pay $1.6 million into escrow, which the
County would be entitled to recover if, by the arrival of what was then the next benchmark date
set in paragraph 28 of the Consent Decree (December 31, 2015), the County “caught up” to the
benchmarks. With regard to the County’s failure to use “all available means” to address local
resistance, the Government proposed that unless all necessary state and municipal variances as
well as the building permits were granted before December 31, 2015, the County pay a penalty
amount, and engage in certain efforts to move the project forward.
On November 19, 2015, the Magistrate Judge issued the R&R. After rejecting a
procedural objection raised by the County, the Magistrate Judge overruled the Monitor,
concluding that the County, first, had not violated paragraph 23 of the Consent Decree, reasoning
that the term “financing in place” included financing that was made expressly contingent upon
the granting of a permit that was not in place as of December 31, 2014, and is still not in place;
and, second, had used “all available means” to address municipal resistance, on the ground that
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the County had sent some letters supporting Chappaqua Station.
Because of the proximity in time between the 2015 benchmark date and the date of the
R&R, there was insufficient time to brief any objections, permit this Court time to rule upon the
objections, and give the County sufficient time to comply with this Court’s ruling, in the event
this Court agreed with the Government’s proposal that an incentive arrangement be put in place
to encourage compliance by December 31, 2015. Accordingly, the Government proposed that
the objection deadline be extended to January 22, 2016, to provide the County with an
opportunity to “catch up” with its obligations by December 31, 2015, and to provide the
Government with limited discovery.
The County appears to have “caught up,” if only to the December 31, 2015, benchmark.
Based on the discovery provided by the County, pursuant to this Court’s Order of December 1,
2015, the Department of Housing and Urban Development (“HUD”) does not now dispute that
the County has met the December 31, 2015, benchmark, even without the Chappaqua Station
units.1 But the Chappaqua Station units still lack building permits, a condition for obtaining
financing, and thus the County still did not comply with the December 31, 2014, benchmark.
It remains the case that the County has not used “all available means” to address New
Castle’s resistance to Chappaqua Station. The documents produced to the Government by the
County in connection with these Objections demonstrate that the County has done little to
promote the development of Chappaqua Station. In response to an Interrogatory asking the
County to detail what efforts were made to address municipal resistance to Chappaqua Station,
the County identified (see Kennedy Decl. Exh. O, at 3-4) the following efforts:
1

The County has not yet filed, and the Monitor has not reviewed, its final reports for
2015. The Government’s preliminary determination that the County met the December 31, 2015
benchmark has been made solely for purposes of filing these Objections in a timely manner.
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(i) A meeting between County Executive Astorino and New Castle Town Supervisor
Robert Greenstein. This meeting, however, lasted only fifteen minutes (Kennedy Decl. Exh. P),
and there is no written agenda or evidence as to the substance of the meeting.
(ii) Phone conversations once monthly with County representatives Plunkett, Oros, and
Mahon. The County produced no written agendas, reports, descriptions, letters, or other evidence
as to the substance of these conversations.
(iii) Multiple calls and emails between Conifer and County representatives, including
with County representatives Drummond, Holland, Zaino, Robertson, and Vutera. As the
County’s document production illustrates, however, these individuals did not address New
Castle’s continuing delays in reviewing and approving Chappaqua Station; instead, the subject
matter of these discussions was the leasing of land near Hunts Place from the New York State
Department of Transportation (“NYSDOT”), summarized in Kennedy Decl. Exh. Q.
Despite the fact that Conifer still does not have a building permit for Chappaqua Station,
the County issued a press release on December 30, 2015, stating that:
The county met the benchmarks for units with financing in November. It went
over the top for units with building permits this week when the City of Rye issued
permits for 41 units on Theodore Fremd Ave. and the Town of New Castle issued
permits for 28 units on Hunts Place.
(Kennedy Decl. Exh. R.) The County’s statement is inaccurate. New Castle did not issue
building permits for Chappaqua Station; rather, New Castle issued a grading and site remediation
permit, which does not permit Conifer to “build” anything. (Id. Exh. S.) Indeed, the County’s
internal communications regarding the permit first refer to it as a grading permit (id. Exh. T),
then as a “building permit” in quotation marks (id. Exh. U, at 1, id. Exh. V, at 2), as if to
underscore the liberties being taken with the term.
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As these developments reveal, the R&R made the incorrect factual assumption that a
building permit would soon be granted. The R&R relied upon the reply declaration by counsel to
New Castle that the review process for the Conifer development will conclude by “the end of
September 2015.” (R&R, at 8 (citing Declaration of Edward J. Phillips, Aug. 11, 2015, ¶ 88).)
As is now evident, this estimate was wrong. It is not clear why the R&R relied upon a
declaration filed for the first time on reply. See U.S. ex rel. Karlin v. Noble Jewelry Holdings
Ltd., 08 Civ. 7826 (JGK) (KNF), 2012 WL 1228199, at *5 (S.D.N.Y. Apr. 9, 2012)
(“Considering [one party’s] contemporaneous records—submitted for the first time in reply—
would be fundamentally unfair to the [other party], because it would deprive them of an
opportunity to respond.”). Nor is it clear why the R&R assumed this prediction was accurate,
instead of providing an opportunity to be heard on the prediction,2 but in any event, this same
counsel for New Castle told the news media that, as of December 30, 2015, the review process is
not complete: “There are a number of additional permits and approvals that Conifer must still
provide before a building permit for construction could be issued.” (Kennedy Decl. Exh. W.)3
ARGUMENT
On appeal from an R&R, this Court conducts a de novo review of those portions of the
R&R to which objections are filed. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3).
The Consent Decree is “an agreement that the parties desire and expect will be reflected
in, and be enforceable as, a judicial decree that is subject to the rules generally applicable to
2

The R&R states that the end of September 2015 estimate “has not been updated since
the briefing of the Objection” (R&R, at 8), but it is not clear how or why the Government should
have been expected to “update” the Court on something that had still not happened.
3
By letter dated January 21, 2016, the Monitor requested the views of the parties as to
whether the site remediation permit issued to Conifer constitutes a “building permit.” (Kennedy
Decl. Exh. X.) For the reasons set forth above, the Government will contend that it is not.
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other judgments and decrees.” Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 378 (1992).
Consent decrees “ ‘reflect a contract between the parties (as well as a judicial pronouncement),
and ordinary rules of contract interpretation are generally applicable.’ ” Westchester II, 712 F.3d
at 767 (quoting Doe v. Pataki, 481 F.3d 69, 75 (2d Cir. 2007)).
Where the County is in breach of its obligations under the Consent Decree, the Court
should order the County to comply. “Until parties to such an instrument have fulfilled their
express obligations, the court has continuing authority and discretion — pursuant to its
independent, juridical interests — to ensure compliance.” EEOC v. Local 580, International
Ass’n of Bridge, Structural & Ornamental Ironworkers, 925 F.2d 588, 593 (2d Cir. 1991);
Barcia v. Sitkin, 79 Civ. 5831 (RLC), 79 Civ. 5899 (RLC), 2007 WL 222003, at*3 (S.D.N.Y.
Jan. 25, 2007) (“[c]ourts have an affirmative duty to protect the integrity of a court decree where
the performance of one party threatens to frustrate the purpose of the decree”) (citing Berger v.
Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985)).
POINT I
THE R&R INCORRECTLY CONCLUDED THAT THE COUNTY
MET THE BENCHMARK OF THE CONSENT DECREE
The Monitor’s determination that the County breached the Consent Decree was correct
and should have been sustained in the R&R. Paragraph 23 of the Consent Decree requires that
the County ensure that there is “financing in place” for 450 affordable housing units by
December 31, 2014; without the Chappaqua Station units, the County missed that benchmark.
A.

The County Breached the Consent Decree Because There Was No “Financing in
Place” for Chappaqua Station by the Benchmark Date of December 31, 2014
There is no “financing in place” for Chappaqua Station because the County’s legislation

to authorize the issuance of bonds to finance Chappaqua Station was made expressly contingent;
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that is, “subject to the approval of all required State and Municipal variances.” (Kennedy Decl.
Exhs. I, J.) These approvals were not obtained as of December 31, 2014; the required State
variances were not in place until April 2015, and the conditions of the special permit granted to
New Castle are open-ended, and permit the Building Inspector to require additional municipal
variances in the course of his review, which as of January 15, 2016, is still not complete.
Although the Consent Decree does not expressly define “financing in place,” the term is
not uncommon in the law, wherein “financing” is generally used to mean that a borrower or
developer has secured a loan. See, e.g., Jung Jae Lee v. Federal Street LA LLC, No. 2:14-cv06264-CAS-SS, 2015 WL 179787, at *4 (C.D. Cal. Jan. 12, 2015) (permitting claim for fraud to
proceed based upon defendants’ misrepresentation that they had “financing in place”); Madison
Financial, LLC v. Hunts Point Co-op. Market, Inc., Civ. No. 01-3830 (WHW), 2008 WL
724362, at *6 (D.N.J. Mar. 17, 2008) (equating “financing in place” with the securing of a loan);
European American Bank v. Klein, No. 89 CV 2162, 1990 WL 39871, at *1 (E.D.N.Y. Mar. 30,
1990) (describing how plaintiff was asked to keep “financing in place” by maintaining
defendant’s access to a line of credit). The R&R agreed with the Government that “the term
‘financing in place’ would ordinarily be understood to mean that a party has ‘secur[ed] the funds
necessary to meet the obligation.’” (R&R at 15.)
However, the R&R then disagreed with the analysis of the Monitor and the Government
that “financing in place” means an absence of contingencies or preconditions. (R&R at 15-20.)
The R&R rejected a range of cases across several contexts establishing that to be “in place,” the
financing should be unreserved, binding, or firm. See, e.g., Irving Capital Corp. v. Serologicals
Acquisition, Inc., No. 85 Civ. 6383 (WCC), 1986 WL 2763, at *2 (S.D.N.Y. Feb. 27, 1986)
(describing contract in which “binding written commitments” are required for financing to be
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considered in place) (emphasis added); see also Internet Homes, Inc. v. Vitulli, 887 N.Y.S.2d
534, 535 (N.Y. App. Div. 2004) (“The plaintiff’s unsubstantiated assertions that a line of credit
could be secured or that a closely-related corporation would supply the funds and the conclusory
allegation that it was ready, willing, and able to perform were insufficient to satisfy its burden.”);
In re Ralph C. Tyler, P.E., P.S., Inc., 156 B.R. 995, 997 (N.D. Ohio 1993) (rejecting bankruptcy
plan because the plan “[did] not indicate that there is firm financing in place” and further noting
that the “source of funding must be shown to be firm . . . [in order to] meet the feasibility
requirement”) (emphases added). The R&R did not cite any cases that interpreted “financing in
place” differently, but departed from the caselaw for three reasons. Each was error.
1.

Ignoring New York Law in Favor of a Dictionary Was Error

First, the R&R never addressed applicable principles of New York law. In explaining the
meaning of “financing in place,” the Government and the Monitor cited the basic principle of
New York law that a “‘conditional variance does not become effective until the conditions are
fulfilled.’” (US Br. (dkt. no. 529) at 20 (citing Kennedy Decl. Exh. B (Report) at 14 (quoting
Tracy Bateman Farrell et al., New York Jurisprudence: Buildings, Zoning, and Land Controls §
401); see also id. at 14-15 (citing La Sala v. Garcia, 70 N.Y.S.2d 833, 834 (N.Y. Sup. Ct.), aff’d,
75 N.Y.S.2d 295 (App. Div. 1947))). Conditional statutes, such as the legislation passed by the
County, “sleep until the contingency contemplated sets them in motion.” State v. Strong Oil Co.,
Inc., 433 N.Y.S.2d 345, 348 (N.Y. Sup. Ct. 1980).
The R&R simply ignored these authorities, preferring instead to rely on the ordinary
definition of “in place” found in the dictionary. (R&R at 16 & n.5.) The R&R’s decision to
ignore these legal principles in favor of a general dictionary definition was error. While the R&R
quotes CBS Corp. v. Eaton Corp., 2009 WL 4756436, at *4 (S.D.N.Y. Dec. 7, 2009), to support
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the claim that dictionaries may be consulted for plain meaning, the term in question in CBS
Corp. was “generation,” in the context of technological advances in industrial equipment, see id.
at **1,4, not a legal concept already defined in New York caselaw and treatises. Similarly, the
R&R asserted that “the cases the Government cites do not say . . . directly” that there must be an
absence of contingencies or preconditions.” (R&R at 15.) But on the same page as this quoted
language, the R&R cites the Internet Homes case, cited by the Government, which explains that
for financing to be in place, it was not enough that a line of credit would or could be made
available. See Internet Homes, 887 N.Y.S.2d at 535.
The consequences of this error are significant. The R&R ignored the fact that under New
York law, the financing made available by the County “sleep[s] until the contingency
contemplated sets them in motion.” Strong Oil Co., 433 N.Y.S.2d at 348 (“A statute may be
enacted in such a form that it shall have no effect until the happening of some future event,
certain or uncertain.”). The County’s bond act expressly made the financing contingent, “subject
to the approval of all required State and Municipal variances.” (Kennedy Decl. Exhs. I, J.) These
approvals were not obtained by December 31, 2014, and have still not been obtained;
consequently, the financing is not available to Conifer at present, and therefore not in place.
2.

Disregarding the Plain Language of the County’s Legislation Was Error

The second error is that the R&R dismissed the problematic language of the County’s
bond acts as without practical significance, concluding that the language “subject to the approval
of all required State and Municipal variances” (Kennedy Decl. Exhs. I, J) may readily be ignored
due to “the practicalities of the situation.” (R&R at 17.) But statutory language cannot be
ignored so readily: “we must give effect to every word of a statute wherever possible.” Leocal v.
Ashcroft, 543 U.S. 1, 12 (2004); see also Collazos v. United States, 368 F.3d 190, 199 (2d Cir.
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2004) (“We are . . . obliged to give effect, if possible, to every clause and word of a statute, and
to render none superfluous.”) (internal quotations and citation omitted).
The County sought to overcome this statutory language through testimony from County
officials that that the contingency in the legislation could be ignored, and the R&R erred in
crediting that testimony. The R&R asserts that “uncontested testimony reflects that the provision
has no practical effect” (R&R at 17), but a party’s self-serving testimony cannot contravene
statutory language. The Second Circuit has instructed that “we must presume that the statute says
what it means.” Devine v. United States, 202 F.3d 547, 551 (2d Cir. 2000). Legislative history
cannot be relied upon to change the meaning of a statute, see, e.g., United States v. Holroyd, 732
F.2d 1122, 1125 (2d Cir. 1984); an agency cannot promulgate guidance to change the meaning of
a statute, see, e.g., Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43
(1984); thus it would be incongruous to hold, as the R&R did, that the testimony of individual
government employees could change the meaning and import of a statute and New York law.
One statement upon which the R&R relies particularly misses the point: “By operation of
law, Conifer has always had the legal obligation to fulfill the conditions attached to the Special
Permit, including but not limited to the issuance of all required building and fire code variances.”
(R&R at 17 (quoting Phillips Decl. ¶ 22).)4 If Conifer must meet all preconditions “[b]y
4

The R&R’s reliance upon the Phillips Declaration to support this point (R&R at 17) was
error upon error, as the Phillips Declaration, prepared by counsel to the Town of New Castle and
consisting of both factual assertions and legal arguments, was submitted for the first time on
reply. As this Court has explained, “A court need not consider arguments raised for the first time
in a reply brief. Any other rule would require the Court to grant the opposing parties an
opportunity for a sur-reply, causing unnecessary expense and delay.” In re Worldcom, Inc., 03
Civ. 2840 (DLC), 2003 WL 21961118, at *1 (S.D.N.Y. Aug. 14, 2003) (citation omitted); see
also Farey–Jones v. Buckingham, 132 F. Supp. 2d 92, 100 (E.D.N.Y. 2001) (“[I]t is procedurally
improper to raise an issue . . . for the first time in reply papers, thereby precluding the [other
party] from offering a meaningful response.”).
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operation of law” in any event, then the addition of the language “subject to the approval of all
required State and Municipal variances” (Kennedy Decl. Exhs. I, J), must impose an additional
hurdle (otherwise, the statutory language is superfluous) – namely, that the financing “sleep[s]
until the contingency contemplated sets them in motion.” Strong Oil Co., 433 N.Y.S.2d at 348.
The Government also noted that the paragraph authorizing the issuance of bonds for the
Chappaqua Station project includes the “subject to” language (Kennedy Decl. Exh. I, J, (Act. No.
212-2014, § 2)) while the comparable funding language in section 1 of the bond act legislation
for the Waterwheel project in Ardsley does not (Kennedy Decl. Exh. Y (Act No. 152-2012, § 1).
The R&R concluded that “the absence of the variance language in the bonds for that project has
not been shown to have had any bearing on the availability of its financing.” (R&R, at 19.) This
conclusion is illogical. The fact that financing for Waterwheel was available, where there was no
contingency, hardly means that financing for Conifer will be available, where there is a
contingency. Cf. BFP v. Resolution Trust Corp., 511 U.S. 531, 537 (1994) (“[I]t is generally
presumed that Congress acts intentionally and purposely when it includes particular language in
one section of a statute but omits it in another.”) (internal quotation marks omitted).
The R&R and the County have overlooked the practicalities of the situation: New Castle
has required Conifer to run a near-endless gauntlet of approvals and reviews, many of which are
made contingent upon each other, so that it is nearly impossible for Conifer to have all the
necessary permits, reviews, approvals, and financings in place so that the units can finally be
constructed. The County chose to insert the words “subject to the approval of all required State
and Municipal variances” (Kennedy Decl. Exhs. I, J) in its enactments, thus holding back
financing until a series of conditions are satisfied, and must be held responsible for its choice.

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3.

Misinterpreting the Purpose of the Consent Decree Was Error

As the Monitor explained, the purpose of setting benchmarks for “financing in place” is
to incentivize the County “to work with municipalities, developers, and other stakeholders to
ensure that legislative preconditions are satisfied as efficiently as possible.” (Kennedy Decl. B, at
12-13.); see also Westchester II, 712 F.3d at 767 (“The rules of contract interpretation, however,
do not contemplate considering any provision of the contract in isolation ‘but in the light of the
obligation as a whole and the intention of the parties as manifested thereby.’” (citation omitted).
Otherwise, the County may simply make empty financing promises.
The R&R’s interpretation of the purpose of the Consent Decree is inconsistent with its
conclusion. The R&R reasoned that because the “main purpose of the settlement was to construct
the 750 AFFH units,” the purpose of the benchmarks must be “to ensure that it would be timely
achieved.” Thus, the R&R reasoned, “the phrase must be construed to refer to units that have
‘financing in place’ as a practical matter.” (R&R at 16.) But this interpretation frustrates the
Decree. If the purpose of the Decree is to construct units, the phrase “financing in place” must be
construed to refer to units that have met the condition of having “financing in place,” not units
that might have “financing in place” upon the occurrence of a future contingency. Allowing units
that do not have “financing in place,” unless “as a practical matter” (which is to say, they do not,
either in fact or in law), to count toward the benchmark gives the County less incentive to
encourage the development of units, and thus delays the construction of the AFFH units.
B.

Because the County Appears to Have Met the 2015 Benchmark Even Without the
Chappaqua Station Units, the Government’s Contempt Application on this Point
Appears Moot, but the County Must Still Pay a Penalty for the 2014 Breach
The Government recommended extending the time to object to the R&R to January 2016,

in part to incentivize the County to meet the December 31, 2015, benchmark. That incentive
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appears to have worked; HUD does not now contest that the County met the December 31, 2015,
benchmark, even without Chappaqua Station. Accordingly, the Government’s contempt
application on this point is moot. An appeal or objection becomes moot “when the issues
presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.”
Murphy v. Hunt, 455 U.S. 478, 481 (1982) (per curiam) (internal quotation marks omitted).
The dispute over whether Chappaqua Station may count toward the December 31, 2014,
benchmark is not moot, however, as the Court may still grant the Government relief. First, in
addition to contempt the Government sought the imposition of a penalty of $30,000, the amount
prescribed in Consent Decree ¶ 38 for noncompliance, and that penalty remains appropriate.
Second, the Chappaqua Station units are not currently eligible to be counted toward the
upcoming December 31, 2016, benchmark. A finding now that, under current circumstances,
Chappaqua Station would not count toward the upcoming December 31, 2016, benchmark would
help ensure that the remaining issues under the Consent Decree are resolved sooner than later.
POINT II
THE R&R INCORRECTLY DETERMINED THAT THE COUNTY
“USE[D] ALL AVAILABLE MEANS AS APPROPRIATE”
TO EFFECTUATE THE CONSENT DECREE
The R&R agreed with the Monitor and the Government that New Castle hindered the
development of units of affordable housing, and the County’s obligation to “use all available
means as appropriate” was triggered. (R&R at 21.) From that point, however, the R&R erred.
A.

The County Breached Its Obligations Under the Consent Decree
1.

The R&R Failed to Rule on the Monitor’s Finding of the County’s Breach

The Monitor found that the County violated paragraph 7 of the Consent Decree because it
failed to “use all available means,” and then referred the matter to the Government for contempt.
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(Kennedy Decl. Exh. B (Report), 19-21.) The County objected. The Government argued that the
Monitor correctly found that the County breached the Consent Decree (dkt. no. 529 (US Br.) at
23-28), and sought contempt as a remedy (id. at 28-34).
Addressing these submissions, the R&R failed to address the Monitor’s finding that the
County was in breach. Instead, the R&R proceeded immediately to the question of contempt,
then erroneously applied the legal standard applicable to contempt motions to the preliminary
question of whether the County was in breach. This was error.5 Whether the County breached the
Consent Decree is determined by “ordinary rules of contract interpretation,” Westchester II, 712
F.3d at 767, while the question of contempt requires “clear and unambiguous” obligations and
“clear and convincing” noncompliance. See Latino Officers Ass’n of the City of New York v. City
of New York, 558 F.3d 159, 164 (2d Cir. 2009). A court could conclude that while the County
was in breach, a contempt sanction was not warranted. But because the R&R incorrectly
conflated these two questions, it neglected to address the basic question of breach.
The error is also significant because the R&R employed the contempt standard to
incorrectly narrow, and thereby misconstrue, the broad language of the requirement to “use all
available means as appropriate.” (Consent Decree ¶ 7.) The R&R concluded that “the broad
language of this provision makes the identification of such violations a more difficult task than
would be the case if the Settlement identified specific actions required of the County.” (R&R at
23.) The import of this analysis is to deprive this broad provision of the Consent Decree of its
scope and force, which is error. See City of New York v. Permanent Mission of India to United
5

The error is in this sentence: “Importantly, the significance of this phrase [“all available
means as appropriate”] for purposes of the matter before the Court is whether the County should
be held in contempt based on its conduct.” (R&R at 22 (emphasis added).) The statement is
incorrect: “the matter[s] before the Court” are breach and contempt, not merely contempt.
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Nations, 618 F.3d 172, 184 (2d Cir. 2010) (“Adopting [this] argument would have precisely the
effect of imposing limitations on statutory language that is purposefully broad.”).
2.

The County Breached the Consent Decree

The County’s responsibilities under the Consent Decree constitute “affirmative dut[ies].”
Westchester II, 712 F.3d at 769-70. The Monitor’s Report correctly noted three ways in which
the County failed to take steps to overcome New Castle’s resistance to Chappaqua Station.
First, as the Monitor noted, the County failed to use its discretionary funding policy to
address New Castle’s opposition. Indeed, the County conceded that it “had not considered”
offering incentives to New Castle to encourage it to grant the necessary approvals to Conifer.
(Report at 18 (citing Feb. 27, 2015 letter from the County).) The R&R took the cramped view
that the County “could not properly offer direct financial incentives to overcome the most
obvious area in which the Town has frustrated or may frustrate the project — the failure to issue
any required variances or permits” (R&R at 23), as if the only possible use of discretionary
funding would be to dangle money as an inducement to approve a permit. But New Castle’s
extended delays are the result of the need to review and revise a wide array of architectural and
environmental plans. New Castle’s (and, previously, the Monitor’s) concerns with Chappaqua
Station have been addressed by having consultants, experts, architects, and engineers modify the
plans, all of which costs money. The County appears never to have even considered whether to
provide funding to assist in the preparation of these plans by Conifer and its consultants, or
review by New Castle, including by offering to pay a portion of the $152,862 building permit
application fee, which also held up the project. (R&R at 8 & n.2.) Paying more of these costs,
either to assist Conifer or New Castle, would have encouraged the more expeditious provision of
affordable housing, but the County failed to take these steps.
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Second, the County’s public statements on behalf of Chappaqua Station, including
testimony and letters, have been inconsistent and often self-defeating. The County initially
rejected the financing for Chappaqua Station on December 16, 2013 (Kennedy Decl. Exh. H),
then let the project twist in the wind before racing to make the December 31, 2014, deadline. The
County insisted that Deputy Commissioner Drummond appeared in support of Chappaqua
Station, but she testified only once, for a very brief statement, and it does not appear that she or
New Castle ever followed up on potentially helpful points that she made. (See, e.g., Kennedy
Decl. Exh. G, at 128) (“Multi-family residential development happens along train tracks, along
highways, all over Westchester County.”). Nor does it appear that the County ever offered to
provide any such information. Cf. Westchester II, 2012 WL 1574819, at *7-8 (upholding
Monitor’s suggestion that the County Executive be required to provide information regarding
proposed source-of-income legislation). In connection with these Objections, the County has
produced extensive discovery demonstrating that it has worked with Conifer and to a lesser
degree New Castle in obtaining a lease of land from the NYSDOT; while this work is laudable, it
does not address all of New Castle’s central demands regarding Chappaqua Station.
The County Executive has delivered mixed messages regarding Chappaqua Station. In
the past few months the County Executive met with the New Castle Town Supervisor only once,
for fifteen minutes, regarding the Chappaqua Station units, because, in the words of his Chief of
Staff, “[w]e need them for year end.” (Kennedy Decl. Exhs. P, Z.) The County has not produced
any agenda, any details of what happened at the meeting, and the meeting apparently produced
no concrete result. The fifteen minutes that the County Executive devoted to encouraging the
Town of New Castle to move the approval process along, moreover, was vitiated by a press
conference in Chappaqua, in which he inaccurately stated that New Castle has been accused of
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“discrimination.” (Kennedy Decl. Exh. AA.) While the County pointed (again, in reply) to a
long list of letters that it sent in connection with the project (R&R at 24), many of those letters
were merely pro forma or sent after the Monitor raised as an issue the County’s lack of diligence.
Third and finally, as the Monitor noted, the County chose to be a “spectator” to the
litigation between Conifer and New Castle; the County filed no amicus briefs, nor sought to
intervene in the case. ((Kennedy Decl. Exh. B (Report) at 19-20.) This failure was directly
contrary to paragraph 7(j) the Consent Decree, which requires “pursuing legal action.” (Consent
Decree ¶ 7(j).) The R&R concluded, at the County’s insistence, that it could not have
participated in the lawsuit, because the state court rejected Conifer’s contention — that the
special permit issued by New Castle had a duration of 25 years — as “absurd on its face.” (R&R
at 24.) Amicus briefs, of course, do not necessarily mimic the same arguments made by the
party on whose side they are submitted, and it was entirely possible for the County to file a brief
suggesting that Conifer should be entitled to a shorter extension, or to assist in negotiating the
dispute between Conifer and New Castle to obtain a reasonable extension, so that litigation
might be avoided. The County did none of these things.
B.

The County Is In Contempt of Paragraph 7 of the Consent Decree, and Should Be
Required to Pay a Penalty Unless It Purges Itself of Contempt
District courts enjoy inherent authority and considerable discretion to enter reasonable

orders designed to ensure compliance with a consent decree. United States v. Local 359, United
Seafood Workers, 55 F.3d 64, 69 (2d Cir. 1995). “Until parties to such an instrument have
fulfilled their express obligations, the court has continuing authority and discretion — pursuant
to its independent, juridical interest — to ensure compliance.” EEOC v. Local 580, Int=l Ass=n of
Ironworkers, 925 F.2d 588, 593 (2d Cir. 1991); see Westchester II, 2012 WL 1574819, at *7.
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To establish contempt, the Government must show that “(1) the order the contemnor
failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and
convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable
manner.” Latino Officers Ass’n, 558 F.3d at 164. Because the Government now seeks civil
contempt to compel the County to comply with the Consent Decree, rather than impose criminal
punishment, the proposed remedial relief should permit the County “to purge the contempt and
obtain [ ] release by committing an affirmative act, and thus ‘carr[y] the keys of his prison in his
own pocket.’” See New York State Nat’l Org. for Women v. Terry, 159 F.3d 86, 93 (2d Cir. 1998)
(internal quotations and citations omitted); see also Spotnana Inc. v. Am. Talent Agency, Inc., 09
Civ. 3698 (LAP), 2014 WL 7191400, at *6 (S.D.N.Y. Dec. 3, 2014) (“Civil contempt is a
coercive measure that is intended to spur action, rather than penalize.”) (citation omitted).
The County is in contempt of paragraph 7(i) and (j) of the Consent Decree. The County’s
obligations under the Consent Decree are “clear and unambiguous,” particularly with respect to
the County’s obligation to pursue or initiate legal action, which it failed to do. The proof of the
County’s failure to act is also “clear and convincing”; the County discouraged the development
of Chappaqua Station by voting against funding in December 2013, thereby vitiating the minor
overtures in support of the project prior to that time; then did little to encourage the project in
2014 and 2015. Finally, the County has not “diligently attempted to comply in a reasonable
manner” with its obligation and instead chose to be, as the Monitor aptly put it, a “spectator.”
The Government proposes that the penalty for the County’s failure to pursue or initiate
litigation relating to Chappaqua Station is that, unless all necessary state and municipal variances
as well as the building permits are granted within sixty days of the Court’s Order addressing this
dispute, the County pay a second penalty amount of $30,000, consistent with the penalty
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structure of Consent Decree ¶ 38. To help ensure that the project does move forward, the Court
should further order the County to do the following: (i) meet with the Monitor every 60 days that
the approvals remain pending, and provide the Monitor all information in advance of such
meetings as the Monitor requests, in his discretion; (ii) within 30 days the County shall publish
its May 11, 2015, letter on its website, as well as pay for the printing of the letter in a Sunday
edition of the Journal News, to affirm its commitment to Chappaqua Station; (iii) to write
followup letters to New Castle once per month inquiring of the status of the approvals, ask why
the approvals have not been granted, and share these communications with the Monitor; (iv)
commit to providing any information useful to New Castle in making its determinations with
respect to Chappaqua Station; and (v) attend all public hearings, if any, in connection with the
approval process of Chappaqua Station. The proposed relief both increases the likelihood that the
provisions of the Consent Decree will be met, and provides with the County with an opportunity
and incentive to avoid paying the penalty amount.
CONCLUSION
These objections to the R&R should be sustained, and the Court should order the
requested relief.
Dated: New York, New York
January 22, 2016
Respectfully submitted,
PREET BHARARA
United States Attorney for the
Southern District of New York
By: /s/ David J. Kennedy
DAVID J. KENNEDY
Assistant United States Attorney
86 Chambers Street, 3rd Floor
New York, NY 10007
Telephone: (212) 637-2733
E-mail: david.kennedy2@usdoj.gov
25