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Glens Falls, NY  – On Thursday, July 3, 2014 the State of New York Supreme Court, Appellate Division, Third Judicial Department unanimously upheld Adirondack Park Agency (APA) approval of the Adirondack Club and Resort (AC&R) project proposed just outside the Village of Tupper Lake in Franklin County.

The project was first conceived approximately 12 years ago by a group of businessmen, led by Michael Foxman of the Philadelphia area. The group formed Preserve Associates, Inc. which became the applicant/project sponsor. They retained 6 consulting firms of various disciplines to compile the project application and see it through the regulatory review processes. From the outset, the Resort was targeted for all 4 Adirondack seasons. Thomas A. Ulasewicz of the law firm of FitzGerald Morris Baker Firth, P.C. was lead counsel for Preserve Associates throughout the nearly 7 years that this project endured regulatory scrutiny. It is the largest development proposal approved by the APA since the Agency’s creation by the NYS Legislature over 40 years ago.

The project site consists of 6,235 acres with development centered on the revitalization of the 445-acre Big Tupper ski area, which has been closed for the past 14 years. For more than 75 years, the vast majority of the remainder of the site, some 5,800 acres, has been logged extensively by the Oval Wood Dish Corporation. The residential component of the project includes 651 homes to be developed in a variety of single- and multiple-family dwellings. The Project also includes a clubhouse, spa, gym, recreation center, artist’s cabins, a 60 room hotel, and restaurants. The Project also calls for the redevelopment of the long-closed McDonald’s Marina on Tupper Lake.

Regulatory Scrutiny

The AC&R project went through an unprecedented regulatory review process both in thoroughness and duration. Review by the APA included exacting scrutiny of every conceivable issue and potential impact, including topography and slopes, geology and groundwater, surface water resources, wetlands, soils, terrestrial and aquatic ecology, climate and air resources, land use and community character, visual resources, cultural resources, transportation and traffic, public services, public and private sector economic impacts, employment, wildlife habitat, visual impact, stormwater management and more.

Following a successful Conceptual review of the initial proposal by the APA, a permit application was submitted in 2005. After numerous incompletion notices and supplementary submissions, the application was deemed complete in 2007. Over the course of approximately 4 years, 40 parties qualified to participate in the adjudicatory hearing and 6 mediation sessions were conducted prior to that hearing. 19 days of adjudicatory hearing sessions were conducted over 4 months in 2011 covering 12 issues. 22 expert witnesses testified; 12 of those on behalf of the applicant. The APA dedicated 3 consecutive monthly meetings, an unprecedented 7 days (over 30 hours) of public deliberations, to careful and thorough analysis and evaluation on this project and the governing law (taking 97 days to render its decision after receipt of the complete record). The hearing transcript is 4,486 pages long & the 22,000± page hearing record includes 258 exhibits, 236 drawings, 17 closing statements and 12 reply briefs. An Administrative Law Judge from the NYS Department of Environmental Conservation presided over the hearing.

APA Decision

In its January 31, 2012 order, the Agency made 100 detailed findings of fact, drew conclusions of law, and authorized development of the AC&R project subject to a host of terms and conditions set out in 14 separate draft permits.

Through a process of mediation and compromise during the lengthy approval process, the final design of the Project is extraordinarily sensitive to its unique environmental setting in the Adirondack mountains. Of the 6,235 gross acre site (including lands under water), 86% will remain undisturbed by development. The 522 acres of developed area includes 350 acres of previous development, leaving the Project’s new development footprint limited to 172 acres. With the consent of the Project Sponsor, deed restrictions prohibiting future development were imposed on 3,885 acres of undeveloped land classified as “Resource Management”, the most restrictive under the APA Act with an overall intensity guideline of 1 principal building for every 42.7 acres. In addition, in response to expressed environmental concerns, the project sponsor agreed to eliminate the highest elevation residential development proposed for the project, a wastewater treatment plant, a shooting school and sporting clays course, and a canoe launch on Simond Pond. Development on even the largest single family home lots (one being 1,211 acres) is limited to a three acre envelope. All single family home lots are deed restricted to one principal building and no further subdivision.

Careful site design has also avoided environmental impacts by utilizing existing transportation corridors on the site. The majority of on-site roads will be confined to existing logging roads used for decades by the Oval Wood Dish Corporation or are existing municipal roads that already traverse the site. Through careful design, only 1.47 acres of the hundreds of acres of wetlands on the site are affected, mainly the result of unavoidable road crossings of stream corridors. 2.69 acres of wetlands will be created as mitigation for this impact.

In addition to environmental protection and preservation, the following economic benefits are recognized by the APA in its final Project Findings and Order:

• Over the 15 years of project construction to build-out, a total of $142,470,000 of direct construction wages will be paid to an average annual work force of 307;
• At full operation, the AC&R is projected to employ 236 full time workers,
• Usage of the project’s seasonal residences is projected to induce $4,632,000 of spending in the local economy per year;
• By the build-out year:
  • net revenue to the town, after deducting the projected cost of services provided, is projected to total over $2.2 million annually,
  • net revenue to the school district is projected to total over $6.4 million annually, and
  • net revenue to the county is projected to total over $2.4 million annually.

For the purpose of assuring “no undue adverse impact” on municipal service providers,  the Project will fund and construct all of its infrastructure requirements.

Article 78 Petition

The Petitioners consisted of a regional environmental group called Protect the Adirondacks! Inc., the Sierra Club – who was not a party to the administrative proceeding, an adjoining landowner to the project site, and a husband and wife who owned an island with residence near the site. (It is reported that shortly after this action was commenced, this couple sold their island and left the area.)

Petitioners commenced a C.P.L.R. article 78 proceeding on March 20, 2012 seeking annulment of the APA’s approval of the AC&R project. Filed on June 18, 2012, the amended petition was 153 pages long and contained 29 causes of action alleging various substantive and procedural violations of the APA Act, the Freshwater Act, APA regulations and the State Administrative Procedures Act. The critical issues raised by the petitioners were:

1. The APA and applicant illegally applied the legislative intent behind the purposes, policies and objectives of lands classified Resource Management to this project;

2. The APA’s overriding mandate is the protection of the environment of the Adirondack Park and this cannot be compromised by balancing economic benefits associated with the project;

3. The applicant failed to meet its burden of proving the allegations of the application both with regard to resource protection and achievable economic benefits to both the community and the region;

4. The wildlife impact assessment studies and reports were inadequate in that they failed to include actual field inventories of both flora (habitat) and fauna and take into consideration the fragmentation of large portions of back country;

5. The use of Cranberry Pond for snowmaking purposes would have an undue adverse impact on wildlife and wetlands and the collection of data for the first three years of actual withdrawal for snowmaking was an illegal, after-the-fact permit condition; and

6. The use of the State boat launch on Tupper Lake for a valet service operated by the AC&R for its residents and guests would exhaust all launching capacity at the facility to the detriment of other users and was an illegal commercial activity on State forest preserve lands in violation of Article XIV of the State Constitution.

Appellate Division Decision and Order and Judgment

In a unanimous 15-page document, all 5 justices systemically disagreed with the petitioners’ arguments and validated each of the steps taken by the APA in approving the AC&R project. In a press release issued by the APA, Chairwoman Leilani Ulrich stated: “Today’s ruling validates the Agency’s thorough and extensive review process which ensures responsible development with strong environmental protections.”

The Court identified, enumerated and addressed the following “Substantive Challenges”:

Cranberry Pond

Although petitioners argue that the determination is not supported by substantial evidence because the permit requires an “after-the-fact” study to assess the impact of drawing water from Cranberry Pond, the Court reacted: “we are not persuaded.” After stating that petitioners did not dispute the 5 fold increase in costs if the applicant was required to draw water from Tupper Lake the Court went on to recognize: (i) “making the reopening of the ski area financially unfeasible”, (ii) that the pond is currently used by the Town to irrigate its municipal golf course, and (iii) the pond was previously used as a snowmaking source for this same ski area, the Court concluded  “In the absence of an operating ski area and the actual use of the pond for snowmaking, any impact on the water volume of the pond during the ski season – and its consequences –  cannot be known. Until empirical data can be gleaned, the strict conditions imposed in the permit provide the APA with continuing oversight.” The Court went further in saying: “Despite testimony that, due to the shallowness of Cranberry Pond, water withdrawals could have negative impacts on wildlife, there is substantial evidence in this 80 – volume record to support the APA’s determination to permit the temporary use of Cranberry Pond, conditional upon the monitoring of water levels and a continuing assessment of potential impacts.”

Wildlife and Wildlife Habitats

After acknowledging that site investigations revealed no known rare plant communities, no rare, threatened or endangered species, and that no development would occur anywhere near the only identified deer wintering yard, the Court concluded: “… in the absence of any evidence of protected species on the project site, we find that it was rational for the APA to approve the permit application without requiring the developers to conduct a comprehensive wildlife survey.” Finally, the Court concluded that although amphibian habitats were identified in some proposed development areas: “the APA appropriately imposed protective measures as a condition of the permit for these areas. In addition, the APA required a comprehensive amphibian survey to determine whether any additional measures were required prior to construction. These conditions reflect the APA’s consideration of the appropriate criteria in approving the project.”

Residential Development

The Court initially recognized that the majority of the project site, over 4,700 acres, consists of resource management lands and then spent some time discussing the basic purposes and objectives of these classified lands noting not only the protection of delicate physical and biological resources but also encouraging proper and economic management of forest and recreational resources and the preservation of open space. The Court went on to note that single family dwellings fall under the category of compatible secondary uses on resource management lands. After identifying that this project approval with regard to the 80 great camp lots on over 4700 acres of resource management lands including building construction confined to a 3-acre envelope, a 2,500-square-foot footprint, site plans designed to be “environmentally sound” with regard to building locations, minimized visual impacts, use of existing logging roads and skidder paths, no development within ¼ mile of the Raquette River, no development within 100 feet of any body of water or wetlands and deed restrictions maintaining approximately 86% of the total project site (5400± acres) as open space, the Court concluded: “Accordingly, there is substantial evidence in this extensive record to support the APA’s finding that the residential development is consistent with statutory requirements.”

Valet Service

The Court rejected arguments by petitioners regarding use of the State-owned boat launch on Tupper Lake. “Although it is undisputed that the project’s residents and guests will rely on the availability of the nearby DEC operated boat launch,” said the Court, “we cannot agree with petitioners’ claim that the project will have an undue adverse impact on this facility. Record evidence established that the Tupper Lake boat launch has not, in recent years, been regularly used to its full capacity, and petitioners’ claim … is unsupported in the records.”

The Court also rejected as “meritless” petitioners’ contention that the valet service constitutes a commercial use of the boat launch by a private entity on Forest Preserve land. The Court concluded: “Rather, the launching and boarding of boats by the valet service will permit the project’s residents and guests to use the boat launch in the same manner as any other member of the public.”

Fiscal Impact

Petitioners also argued that the developer’s real estate sales would not actually occur and that the developers did not prove that the funding from the Franklin County Industrial Development Agency was a legal source of revenue. The Court’s reaction to these allegations was swift: “Again, we are not persuaded.”

While petitioners’ witnesses testified that the developers’ market research study was inadequate, the project was not competitive within its market and it had a lower probability of success than most competitor resorts, the Court rebuked this testimony and stated: “there was also evidence that the project is viable, it will be an economic engine for the region and, despite the recent down turn in the real estate market, the developers’ projected real estate sales numbers were achievable if the vacation home real estate market continues its current recovery. Thus substantial evidence supports the APA’s conclusion that sufficient revenue would flow from the project to the local municipalities and significantly, that such revenues would exceed the costs incurred by municipalities as a result of the project at the conclusion of each year of development.”

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The Court also spent time in its decision to methodically reject all of petitioners’ arguments regarding procedural irregularities. “This decision is unprecedented in its comprehensive approach to analyzing both the substantive and procedural requirements of the APA Act,” said lead counsel for the developers Tom Ulasewicz when queried by the media. Under the hearing “Procedural Challenges”, the Court discussed the following:

Findings of Fact

Petitioners argued that the APA failed to make detailed findings of fact, supported by specific references to the record, as to how the project complied with the statutory criteria. The Court rejected this argument and responded: “The order approving the project contains over 100 findings of fact, followed by the APA’s conclusion of law. Within these findings is support for each of the enumerated criteria of Executive Law §809(10) and the APA’s ultimate conclusion that, upon compliance with the terms and conditions of the order and permits, the project “complies with the applicable approval criteria.”

Hearing Record

Petitioners argued to the Court that APA aid and advice staff improperly provided the APA members with summaries of the hearing record without giving the parties an opportunity to comment. The Court’s rejection of this argument was unequivocal when it responded: “Petitioners were fully aware of the presentation of these summaries, yet they failed to make any written comment with respect to their completeness and cannot argue that they were refused the opportunity to do so.”

“In Existence” Status

Here, petitioners argued the APA’s extension of the statutory two year period of time for a project to be in existence, or the approval expires, was illegal. The court first noted that this two year period of time could be extended under the statute upon consideration of “the potential of the land … to remain suitable for the use allowed by the permit and to the economic considerations attending the project.” The Court concluded: “APA extended the project’s `in existence´ time period  to 10 years from the date of issuance of the final order and determined that it will consider this project to be in existence upon conveyance of the first residential building lot authorized by a permit. Inasmuch as the APA explained that the developers must complete a substantial amount of work and expend a significant amount of resources before any lot can be conveyed on the project site, and the statute permits an extension of the two-year period, we cannot agree with petitioners’ claim that the APA committed an error of law.”

Ex Parte Communications

Petitioners attempted to establish that improper ex parte communications occurred between the APA members and the developers during the deliberative process. The Court readily dismissed this assertion and said: “Given the speculative nature of petitioners’ claims, the sworn denials by respondents of any improper conduct and the absence of any affirmative proof of ex parte communication, we decline to annul the APA’s determination on this basis.”

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Lead developer Michael Foxman, in speaking to the press, stated that he never doubted the outcome and then concluded: “…and I don’t think anyone else involved did, either. The environment never was an issue or at risk. We planned and will deliver an environmentally–friendly resort.” Within hours of the Court’s release of its decision, Governor Cuomo, in a very unusual move for him, issued a press release touting the decision as a “sound judgment” and went on to say: “This ruling confirms the Agency’s approval based on substantial evidence developed carefully and in strict accordance with mandated State statues and environmental regulations. I applaud the Agency’s board and their staff for their dedication and commitment to the Adirondack Park. The Adirondack Club and Resort Project will bring significant economic activity, jobs, and new opportunities to Tupper Lake and the Adirondack Park. I applaud the Court for today’s decision and I look forward to working with the community of Tupper Lake to successfully build this project.”