Lawsuit Status: More details

Hi all --This is just a quick report to let you all know what happened in Court this morning, based on my understanding of what the judge and our attorney said. The upshot is that there will be a full-blown hearing on evidence starting next Thursday, that Patio is applying to Parks to continue beyond June 30 on a temporary basis, and that no injunction is being issued against Milkshake's moving in on July 1 because the Comptroller's office has yet to approve the contract and as such it couldn't move in anyway.

The judge's threshold issue was whether to issue an injunction, with or without a bond being posted, against Milkshake's assuming the lease on July 1. He said he had no power to allow Patio to continue after June 30 because that was up to Parks. However, because the Comptroller's office has yet to approve Milkshake's contract, it could not take over on July 1 anyway. After the attorneys made some points, the judge decided not to issue an injunction at this time, and Patio is to apply today for permission to stay on past June 30 (I think they'll be making the application for a year, because the litigation may take that long). (Our attorney noted to us that if the best interests of the Plaza and the City is to have an occupied, rent-paying concession, then Parks' refusal to grant Patio's application to stay on temporarily may be seen as bad faith.)

The Court noted that the petitioners (that's us) made new arguments in their reply papers, which Parks and Milkshake did not have a chance to respond to, but that was because Parks, in its response to our initial petition last Friday, only turned over, for the first time, the scoring sheets from the bid process that we believe show some improprieties. Our attorney plans to send copies of these today to the Comptroller's office to suggest they go over them, and also to apprise them of the status of our action.

An issue raised by Parks at last Friday's court appearance was whether Friends had standing to bring the petition in the first place. Our attorney cited some case law supporting our right to bring the action, and Parks' attorneys didn't bring up the matter again, so we're in (and rightly so).

The next step is the presentation of factual evidence before the Court in support of our request to void Parks' awarding the license to Milkshake. This will take place at an evidentiary hearing (I believe that's what it's called) to be held next Thursday, July 6, at 10:15 a.m. before Justice Lewis Stone, 111 Centre Street, Rm. 687.

Anyone who wants to attend the hearing is free to do so.

Lawsuit Status: An issue of "standing"

The judge raised the questions of "Standing" . Parks says community groups have no standing as they are not an injured party and "quality of life" doesn't count. Our lawyer cited a case, but the judge said it was special (environmental). Also, he tossed out the assertion that Milkshake Co. was late in submitting info, since that particular item is negotiated with city who requested more info.

The judge stressed that Parks has alot of descretionary power and the case rests on the MUSTS -- not the MAYs.

The Friends' lawyer got a continuence until today when it gets decided.

Fact Sheet: Concession Reform

The Department of Parks and Recreation (DPR) awards concessions on city parkland which consistently net significant amounts of money that are directed into the city’s general fund. Since 1993, Parks concession revenues have doubled: from $31 million to $62 million. Park concessions range from Yankee stadium to hot dog carts.

While this revenue stream has increased, the city has consistently cut park maintenance and operations budget. Staffing levels have dropped to all-time lows.

New Yorkers for Parks (NY4P), a parks advocacy group, blames years of chronic disinvestment for deteriorating maintenance and the absence of park staff: gardeners, plumbers, recreation staff, as well as compromised infrastructure: public bathrooms, water fountains, swimming pools. The condition of NYC parks will NOT improve without additional resources for the DPR.
New York City boasts the nation’s largest municipal park system, over 28,700 park acres, yet per capita spending on parks ranks far below other major cities.

Legislation put before City Council by NY4P calls for a dedicated fund for park maintenance and operations. The concession revenue generated by parks is the logical source.
NYC can look to other park systems throughout the country for models of dedicated park concession revenue. In New York City, the Central Park Conservancy, Randall’s Island Sports Foundation, Hudson River Park Fund & Battery Park Conservancy are all able to retain at least a portion of the revenues generated by concessions within the parks that they manage.

Important Checks and Balances
Concession reform, while important, will only help the DPR if implemented appropriately. To be successful, any concession legislation must include the following checks:
· Revenues must augment and not substitute public funding.
· Concession revenue must be dedicated towards park maintenance.
· Checks must be put in place to safeguard parks against possible over-commercialization as well as to ensure appropriate public input on local concessions.

NY Times coverage of our lawsuit

Choice for New Restaurant Prompts Park Group's Suit
By JAMES BARRON
Published: June 22, 2006


The to-do list for the Friends of Dag Hammarskjold Plaza, a neighborhood group that helps look after a small city park across from the United Nations, usually includes things like planting new flowers, checking the irrigation system that is supposed to water them and raising money for the 1.59-acre park.

And coordinating its work with the Parks Department.

But now the Friends is suing the Parks Department.

At issue is a cafe that occupies a greenhouse-like structure at one end of the park, on 47th Street between First and Second Avenues.

The Parks Department is moving to replace the concessionaire who runs it, and the Friends maintains that the agency broke its own rules in choosing a new restaurateur.
The city's deal with the current operator, Mark Grossich, expires at the end of the month. After reviewing bids from Mr. Grossich and three other interested concessionaires, the city chose the New York Milkshake Company to replace Mr. Grossich's Patio Cafe.

"The community feels betrayed," said Anne Saxon-Hersh, who founded the Friends in 1999.
So the group, along with Mr. Grossich, filed suit in State Supreme Court in Manhattan. In court papers, they argued that the Parks Department's choice of New York Milkshake was "arbitrary and capricious" and broke the department's rules for awarding concessions. Justice Lewis Stone has scheduled a hearing on the case for tomorrow.

Warner Johnston, a Parks Department spokesman, said the agency does not comment on pending lawsuits. But department officials said that they had followed their procurement procedures — the rules the Friends says the department violated — to the letter.
A spokeswoman for the city comptroller, William C. Thompson Jr., said the deal with New York Milkshake was under review. A deputy comptroller, John Graham, wrote to the parks commissioner, Adrian Benepe, last week, seeking Parks Department documents concerning the deal.

For the Friends, which claims credit for helping to revitalize what it says was once "a shamefully neglected public park," the cafe has become an important element of the park. The Friends says that until it was rebuilt in the late 1990's, the park was "a barren stretch of pavement with a homeless encampment."

Ms. Saxon-Hersh, who remembers those days only too well because she lived in an apartment building across from the park, said she started the Friends "because all along, we knew that the city didn't have the wherewithal to take care of the park."

"It was clear to us," she said, "that you've got to have a mechanism to take care of the park."
Other parks have their private, nonprofit champions — notably Central Park, with the Central Park Conservancy, which manages the 843 acres that were laid out by Calvert Vaux and Frederick Law Olmsted.

And when it came to Dag Hammarskjold Plaza, the Friends became a champion of the Patio Cafe, writing to elected officials like Assemblyman Jonathan L. Bing, Representative Carolyn B. Maloney and the Manhattan borough president, Scott M. Stringer. They, in turn, wrote to other elected officials, including Mayor Michael R. Bloomberg and Mr. Thompson, challenging the way the winning concession was chosen.

New York Milkshake's bid called for the city to receive substantially more in license fees. New York Milkshake offered $48,000 a year, $18,000 more than the Patio Cafe offered.
But the Friends' supporters question whether New York Milkshake could generate the revenue to pay such a fee.

The Friends says that the New York Milkshake Company is inexperienced and that its only other operation, on St. Marks Place, failed. New York Milkshake's owner, Scott Marcus, denied that. "I could have stayed longer," he said. But after a rent increase, he decided to close that operation and open several others, including one in Battery Park and two on New York Waterways ferryboats.

"All I want to do is sell milkshakes and grilled cheese," he said. "What this has turned into blows me away." Referring to Mr. Grossich, he said, "This guy doesn't want to lose his license. He didn't want to pay for it, he came in third in the bidding, not even second, and he's trying to knock my credentials, which I think is very rude."

New York Sun coverage

Group Sues As Milkshake Co. Plans Move to Park
By RUSSELL BERMAN - Staff Reporter of the Sun
June 22, 2006

Apparently, Friends of Dag Hammarskjold Plaza is no fan of milkshakes.
The community group is suing the city's Department of Parks and Recreation in an effort to block the Original New York Milkshake Co. from operating a cafe in the park across from the United Nations.

Charging that the parks department acted in an "arbitrary and capricious manner," the residents contend in the lawsuit that city officials were duped by unrealistic revenue projections from the Milkshake Co. and did not consider its lack of experience as a concession vendor. The eatery closed its only location in the East Village earlier this year.

The group had been hoping that Hospitality Holdings, the current operator of the Patio cafe in the plaza, would be able to keep its license which expires at the end of the month. The suit, filed last week in State Supreme Court, seeks an injunction against the concession awarded to the Milkshake Co.

The Milkshake Co. didn't respond to requests for comment last night.

"We were shocked. We were absolutely shocked when we heard that an operator that we had never heard of would be operating the site," the founder of Friends of Dag Hammarskjold Plaza, Anne Saxon-Hersh, said. Ms. Saxon-Hersh said the cafe is crucial to the success of the park, which is located across from the U.N. on East 47th Street between First and Second avenues.
"When this property is delinquent, it adds to the delinquency of the park," she said, pointing to a period in the 1990s when the area was dilapidated. The plaza was renovated late in the decade, and Ms. Saxon-Hersh said the Patio cafe had been operating successfully for the last three years.

An owner of the Patio, Mark Grossich, said he was "flabbergasted" by the loss of the bid, saying it "doesn't hold up to business scrutiny."

The parks department said its policy is not to comment on pending litigation, but officials said the agency followed city regulations in awarding the bid.

The food is another issue.

The Milkshake Co.'s menu of $5 milkshakes and grilled cheese sandwiches is not appropriate for the "gateway to the United Nations," Ms. Saxon-Hersh said, adding that she was looking for a restaurant with more continental fare.

The lawsuit has the support of local elected officials, including Assemblyman Jonathan Bing. The city comptroller's office confirmed yesterday that it was investigating the residents' claims after receiving complaints about the bid process.

Lawsuit Factsheet

FACT SHEET: LAWSUIT

An “Article 78” proceeding permits a court to review a proceeding to determine whether a decision was affected by an error of law or was arbitrary and capricious or an abuse of discretion.

The New York Court of Appeals has defined an arbitrary and capricious action as one without sound basis in reason and generally taken without regard to the facts. The courts’ standard of review is whether an administrative determination has a rational basis.

The Parks Department acted in an arbitrary and capricious manner
by failing to adhere to its own rules and regulations.

Under the law, when an administrative agency fails to conform to its own rules and regulations, it acts arbitrarily and capriciously.

In its Request for Proposals (RFP), the Parks Department laid out the rules that proposals must meet and the guidelines that proposals should follow in order to be considered, as well as the rules and guidelines upon which the Parks Department would select the winning bid. In selecting the Milkshake Co. as the winning bid, the Parks Department failed to follow its own rules.

The RFP states that the deadline for proposals is Tuesday, December 20, 2005 at 3:00 PM, after which no proposals will be accepted and that failure to comply results in the automatic disqualification of a submission from further consideration.

The Milkshake Co. violated the RFP submission requirements by submitting additional materials after December 20, 2005, and according to the Parks Department’s own rules should have been automatically disqualified from further consideration.

A comparison of the four proposals in response to the RFP shows that the Milkshake Co.
has little operating experience,
no experience as a city concessionaire,
a proposed capital investment lacking detail and support,
unprofessional submitted designs,
inadequate financial capability to meet its own stated capital needs.

The only apparent justification for selecting Milkshake Co. is its significantly larger and unsupported fee offer. (continued on page 2)

The Parks Department violated its own rules and guidelines laid down in the RFP by awarding the concession license to Milkshake Co. based solely on its fee offer.

The Parks Department acted in an arbitrary and capricious manner, amounting to an abuse of its discretion, by failing to follow its own rules in accepting Milkshake Co.’s submission and in selecting Milkshake Co. as the winning bid.

The Parks Department acted in an arbitrary and capricious manner
based upon a review of the factual record

The Parks Department’s award of the concession license to Milkshake Co. appears arbitrary and capricious because the factual record does not provide a rational basis for its selection of Milkshake Co. as the winning bid.

Milkshake Co.’s proposal failed to adequately meet the RFP’s criteria:
its owners and operators have limited experience in the concession business,
no prior working relationship with City agencies,
its previous and sole other location failed,
its design proposal lacks detail with regard to timing and dimensions,
it estimates costs for improvements and renovations at $75,000 while its financials show it only has $40,000 cash on hand,
it failed to provide a detailed pro-forma income and expense projection for each year of operation.

Milkshake Co.’s proposed license fee was significantly higher than the other three applicants, but this fee is based on sales vague and unrealistic estimates. Its first and only other location did $200,000 in gross revenues while its bid reflects an estimated $600,000 in sales its first year of operation – a 300% increase.

Based upon Milkshake Co.’s inexperience, poor track record, vague statements regarding revenue and its overall proposal, Friends believes Milkshake Co. will be unable to meet its sales projections and become a sustainable business in the Plaza concession.

Friends requests the Court: annul the award of the concession license to Milkshake Co.; award the concession to Dag Park, or alternatively remit the matter to the Parks Department to reconsider the remaining three proposals for the concession license; order the Parks Department to enforce and utilize its own guidelines outlined in the RFP, consider the desires of the community and make the decision process transparent; maintain the status quo allowing the The Patio Café to continue operating its license during the pendency of this proceeding; and stay enforcement of the Parks Department’s award of the concession to Milkshake Co. pending the outcome of this proceeding.

Lawsuit Status: Friends on the Docket

Regarding the status of our suit, we're on the docket for Friday morning for a ruling on our TRO (temporary restraining order) request. Favorably, a city attorney has already contacted our counsel to request an extension. Also, for what it's worth, "Milkshakes'" website, which was up as of yesterday, seems to have been removed.

Friends of Dag Hammarskjold Plaza sues New York City Department of Parks & Recreation

FOR IMMEDIATE RELEASE

Community Demands a Fair Shake
Calls for Concession Reform


NEW YORK, June 2006– Friends of Dag Hammarskjold Plaza has filed suit against the New York City Department of Parks & Recreation, seeking an injunction to stop the Parks Department from issuing a concession license to the New York City Milkshake Company for use of Dag Hammarskjold Plaza, a city park located on 47th Street between First and Second avenues. The suit, an Article 78 proceeding, was filed in New York State Supreme Court, New York County.

Friends of Dag Hammarskjold Plaza, a nonprofit community organization and watchdog for the park, is outraged that the Parks Department selected the least qualified bidder, an inexperienced operator whose specialty is milkshakes and cheese sandwiches, to replace the popular Patio Café, whose management assumed the lease of a failed concessionaire and worked with the community to revitalize Dag Hammarskjöld Plaza, a historic gateway to the United Nations and once, a shamefully neglected public park.

“Our concern is that the Milkshake Company cannot deliver on its projections and that a failed café is detrimental to the park, creating a delinquent property in a high-risk public space,” said Sherrill Kazan, Friends president. “Having reviewed the proposals of all four bidders, the facts do not support the Parks Department determination that Milkshake Co’s bid was superior to all other applicants.” The Turtle Bay Association, Community Board 6, and local elected officials stand behind Friends of Dag Hammarskjöld Plaza. A petition containing over 1300 signatures of local residents has been submitted in support of the current café concessionaire, Dag Park, LLC

Even the NYC’s Comptroller’s Office is staying the performance of the awarded contract pending its investigation of the circumstances surrounding the bid selection process.

Assembly Member Jonathan Bing, Rep. Carolyn Maloney and Council Member Daniel Garodnick have all written to City Comptroller William Thompson, Jr., expressing their concerns and requesting his careful review of the Milkshake Company’s qualifications. “Changing the Dag Hammarskjold Plaza concession will have a major (MORE)
impact on the well-being of the park,” Assembly Member Bing said. “A rigorous assessment must be applied so that the surrounding community does not pay the price for a poor decision.”

The suit argues that the Parks Department operated in an arbitrary and capricious manner in awarding the contract, and that the bid selection process was tainted, suggesting cronyism or favoritism (see Fact Sheet).

“We were completely baffled by the Park Departments decision, and responded immediately, expressing our concerns,” Kazan noted. “The response of Parks Commissioner Adrian Benepe and Manhattan Parks Commissioner Bill Castro has been deeply disappointing as we have always considered ourselves a partner in making Dag Hammarskjöld Plaza the vibrant public park that it is today.”

Until Hammarskjöld Plaza was reconstructed in the late 1990s, the park was a barren stretch of pavement with a homeless encampment. After pressuring the city for more than a decade to rebuild the park, the community celebrated its reopening in 1999. The Friends group has been the primary agent for park revitalilization and upkeep. Integral to that mission, Patio Café management assisted with fundraising and lent support for events.

Anne Saxon-Hersh, founder and Director of Development, stated, “The community feels betrayed. Our organization provides the essential upkeep for Hammarskjöld Plaza, which the city fails to provide, and yet our concerns have been ignored. This is a deeply flawed system: neither the Parks Department nor Friends derive any direct benefit from concession revenues. The City pressures the Parks Department to raise more funds from concessions while the budget for parks is continually cut. Hopefully, our case will provide impetus for Concession Reform.

Proposed legislation before City Council Members calls for a portion of the $60 million in concession revenues collected by the City to go directly toward maintaining its park system, the nation’s largest.

“Concessionaire funds are siphoned off by the City while the Parks Department is starved,” said Saxon-Hersh. “At present, less than .5 percent (half of one percent) of the annual budget is allocated for park maintenance and operations. Staffing is at an all time low. Community groups like ours must raise funds to provide essential services or watch their park spiral into decay, taking the neighborhood down with it.”

Friends of Dag Hammarskjold Plaza is a nonprofit community organization whose sole mission is park beautification, preservation and vitality. Its volunteer activities include keeping Dag Hammarskjold Plaza clean and green, maintaining the Katharine Hepburn Garden and organizing events that foster community. As stewards of the Plaza, membership is open to all who share our commitment to public space.

Contact: Anne Saxon-Hersh 917-374-1440
Friends of Dag Hammarskjold Plaza

Welcome to the Dag Blog!

Welcome to the official "blog" of the Friends of Dag Hammarskjold Plaza. This is the place to keep up with the latest goings on at the plaza, interesting local information and relevent city political issues. It's also a way for you to share your thoughts with our memebers.