## Facts

- A developer sought a special permit to build a high-rise luxury condominium (Henry Street Tower) on a vacant lot in Manhattan’s Chinatown.
- The site was within the Special Manhattan Bridge District, a zoning district intended to preserve Chinatown’s residential character and scale and to encourage development requiring minimal relocation.
- City agencies acting under the City Environmental Quality Review (CEQR) process conducted an environmental review focused on physical effects and issued a conditional negative declaration, finding no significant environmental impacts if specified modifications were adopted.
- The developer accepted the conditions, and the City Board of Estimate approved the special permit without requiring an environmental impact statement (EIS).
- Community organizations and residents filed a CPLR article 78 proceeding, arguing the review was legally deficient because it failed to evaluate secondary impacts, including displacement of low-income residents and businesses and changes to community character.
- Supreme Court annulled the approval; the Appellate Division reversed; the Court of Appeals reviewed on leave granted.

## Issues

1. Whether SEQRA and CEQR require agencies, when deciding if an EIS is needed, to consider foreseeable secondary socioeconomic effects such as displacement and changes in community character.
2. Whether issuing a conditional negative declaration and approving the permit without analyzing those effects was arbitrary and capricious under SEQRA/CEQR.

## Decision

- The Court of Appeals reversed the Appellate Division and reinstated Supreme Court’s judgment annulling the City’s determination.
- The court held that SEQRA/CEQR require consideration of both primary and secondary effects, including impacts on population patterns and community character when reasonably related to the proposed physical development.
- The City’s review was inadequate because it did not take the required “hard look” at displacement and community-character effects or provide a reasoned basis for declining to require an EIS.

## Legal Principles

- Under SEQRA and CEQR, agencies must evaluate reasonably foreseeable short- and long-term, primary and secondary environmental effects when determining whether an action may have a significant effect on the environment.
- “Environment” is not limited to traditional physical impacts; secondary socioeconomic effects (e.g., displacement and changes in community character) must be considered when linked to physical development impacts and not merely speculative.
- A negative declaration (including a conditional negative declaration) must be supported by a hard look at relevant areas of environmental concern and a reasoned elaboration explaining why an EIS is unnecessary.
- Judicial review examines whether the agency complied with SEQRA’s procedural requirements; failure to consider required impacts renders the determination arbitrary and capricious.

## Conclusion

The court required the City to evaluate foreseeable displacement and community-character impacts as part of SEQRA/CEQR review and annulled the permit approval because the agencies failed to analyze those secondary effects before concluding an EIS was unnecessary.


Chinese Staff & Workers Ass’n v. City of New York, 68 N.Y.2d 359, 502 N.E.2d 176 (N.Y. 1986)