Appellate Division Dismisses SEQRA Challenge to Capital Region Multi-Use Development, Unanimously Reversing Lower Court

In a unanimous reversal of a decision that stalled a multi-family residential development and proposed Costco outlet in Guilderland, New York, on the border of Albany, the Appellate Division, Third Department reversed in all respects the Albany County Supreme Court’s holding that the Town of Guilderland Planning Board’s Environmental Impact Statement (“EIS”) was deficient. Peter Barber, the Guilderland Town Supervisor, argued for the Town. David Paget argued for the developer respondents, Pyramid Management Group and subsidiaries, which were also represented in the briefing by Whiteman, Osterman and Hanna LLP and Elizabeth Knauer. Because of the number of issues decided by the lower court and appealed, this case resulted in an unusually detailed appellate exposition of State Environmental Quality Review Act (“SEQRA”) practice.

The dispute started with Pyramid’s application to the Guilderland Planning Board for site plan approval to construct a multi-family residential development on property near Crossgates Mall, a 1.7 million square foot shopping center that is the centerpiece of a Transit-Oriented Development (“TOD”) zoning district the Town had established to encourage the concentration of higher-density housing and commercial development within an existing commercial corridor with transit access. After submitting an Environmental Assessment Form (“EAF”) to the Planning Board for the residential development pursuant to SEQRA, Pyramid informed the Planning Board of the potential for a large retail development and gas station on other property it owned within the TOD district. The Planning Board, having declared its intent to act as the SEQRA lead agency for the residential project, then proceeded to issue a positive declaration, requiring preparation of an EIS to study the combined impacts of that project (called Site 1), the proposed retail outlet (Site 2), and development that could occur in the future on other nearby property controlled by Pyramid (Site 3).

The EIS examined many potential impacts, including on the Pine Bush Preserve; traffic (nine alternative traffic configurations were analyzed to reduce congestion bypassing the Rapp Road Historic District); visual impacts from Site 1 development on the historic district and another adjacent neighborhood; and consistency of the developments with the goals of the TOD. As SEQRA review progressed, the developer included a number of project elements designed to address the projects’ potential environmental impacts, including dedication of high-value pine bush property to preservation; visual buffers; a new traffic roundabout; and a new transit station. With these elements, the Planning Board determined that the projects cumulatively would not have any significant adverse environmental impacts.

Residents of two homes within the residential neighborhood adjacent to Site 1, as well as the owner of a gas station in the area, brought an Article 78 proceeding to challenge the Planning Board’s SEQRA findings and the site plan approval for Site 1. They argued that the entire SEQRA process should have started anew when the Site 2 development became part of the actions under review, because the retail outlet would have required a special use permit from the Town’s Zoning Board of Appeals (“ZBA”); the ZBA had not been listed as an involved agency on the EAF or notified of the Planning Board’s intent to act as lead agency, although it was notified of the positive declaration and had the opportunity to comment throughout the substantive portion of the SEQRA review. The petitioners further argued that the Planning Board erroneously deemed the Site 2 project (a Costco outlet) to be consistent with TOD goals, given that it included a gas station component; that the Site 1 development would affect their privacy because the uppermost units of the proposed apartments would have viewsheds including the petitioners’ back yards; that the Planning Board was required to consider a lower height alternative to the Site 1 project than the two- to five-story buildings proposed; and that a smaller alternative for Site 2 that did not include a gas station should have been considered. They also included some ancillary claims that were not taken up by the lower court.

In a lengthy decision, Albany County Supreme Court granted the petition, finding the EIS deficient in several respects, including some not raised by the petitioners. These included a purported failure to analyze potential impacts on avian species from striking the Site 1 buildings (characterized as “high rise” by the court) and the failure to sufficiently consider potential visual impacts from Site 1 on the Rapp Road Historic District. The court agreed with the petitioners that the failure to include the ZBA in the initial lead agency notification was consequential, requiring a restart of the SEQRA review process, and that the Costco was not consistent with TOD goals given the size of its proposed parking lot and its gas station element. The court also agreed that more alternatives should have been considered, specifically a lower height Site 1 development and a smaller retail development on Site 2.

The Town and Pyramid sought and received an expedited appeal given the gravity of the decision for the projects. Following its first in-person oral argument since courts were closed due to pandemic risks, the Third Department panel unanimously reversed all aspects of the lower court’s decision. First, it held that the petitioners lacked standing to raise the claim concerning ZBA involvement; even if standing existed, the ZBA’s omission from the lead agency notification was inconsequential given its opportunity to involve itself during the remainder of the SEQRA review process and the Planning Board’s consideration of the Costco project in the EIS. Second, the EIS took a hard look at impacts on avian species by including surveys that found no evidence of species of special concern on the project sites, a finding in which the Albany Pine Bush Preserve Commission concurred. Third, the EIS adequately considered the potential for visual impacts on the Rapp Road Historic District and reasonably determined they would not be significant given the large distance between the closest proposed Site 1 building and the closest home in the Historic District, as well as Pyramid’s commitment to maintain an existing 200-foot-wide wooded buffer between the two communities. Fourth, the court reaffirmed its holdings in earlier cases that the designation of a permitted use, even one requiring a special use permit, is tantamount to a determination that the use is consistent with land use goals. It further recognized that the Planning Board also considered the specific elements of the Costco project, as well as its inclusion in a larger suite of non-auto elements such as bicycle and pedestrian linkages and a transit station, in finding the projects to be overall consistent with the TOD goals. The court held that each use need not fulfill every goal of a zoning district that intentionally permits a multiplicity of uses in order to be compatible with community character.

Finally, the court held that the Planning Board was not required to analyze the alternatives advanced by the petitioners and the lower court. Because the height of the proposed Site 1 buildings complied with zoning, consideration of a lower height alternative was not required. The court also recognized that where a project is proposed by a private developer, the lead agency is not required to consider alternatives inconsistent with the developer’s business objectives.  In this case, the Planning Board reasonably rejected alternative uses for Site 2 given the developer’s and the Town’s objectives. The EIS stated that the Costco project was tenant-driven and had to meet Costco’s size specifications to occur; thus, a smaller scale alternative would not have been feasible. Moreover, as the project would have no significant adverse impacts, there was no need for the Planning Board to consider a smaller alternative to mitigate or avoid such impacts.