Leila Zubi
International Client Coordinator
Herrick, Feinstein LLP

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This paper is copyright (1996) by Herrick, Feinstein LLP

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As we converge at Habitat II to address the serious challenges that will be faced by increased urbanization, and to consider viable solutions to achieve the sustainable development of our cities, it is essential to focus on the relationship between law and development.

In developing business strategies and activities that insure economic viability and profitability and at the same time promote respect for and protection of the environment and the populace, we must consider relevant statutory and regulatory frameworks that at times appear to be incomprehensible, unworkable and inconsistent with efficient and profitable urban development projects. This is why law firms such as Herrick, Feinstein play a key role in sustainable development by formulating creative legal solutions to complex development issues in a variety of contexts so that the regulations intended to protect the environment and our cities do not deter economic development and related business strategies.

Herrick, Feinstein, which has offices in New York City and Princeton, New Jersey, has been significantly involved in the various legal disciplines that relate to urban development, including real estate, banking, transportation, corporate, environmental and international law.

Through its extensive experience in these fields, our firm is in a unique position to gather the resources and expertise necessary to explore the wide range of issues involved in balancing the interests of development, economic profitability and the protection of our cities and their resources.

One area implicated when devising strategies for the sustainable development of our cities is the potential conflict between the rapid pace of urbanization and statutory and regulatory schemes for the protection and preservation of cultural property. In short, urban developers in the private sector must have available expert counsel when development unexpectedly threatens cultural heritage. Recent incidents throughout the world underscore the potential conflict. By way of example: in Israel, archaeological finds were uncovered during the construction of the Mamilla commercial and residential complex; in New York City, while constructing a multi-million dollar office building, workers came across a burial ground containing vital information about African-American life during the colonial period; in Portugal, primitive rock carvings dating to the Ice Age were discovered after work had begun on a hydroelectric dam that would have destroyed the valley where the caves were found; and in Greece, a major ancient find was unearthed during construction of a subway system.

Resolving these situations resulted in a variety of concessions, ranging from suspending construction to building a viewing bridge over the archeological finds. But one thing is clear; in addressing these problems, urban developers, working in art-rich venues, must be sensitive to, consult and comply with the relevant laws regulating the protection and preservation of cultural property and natural resources. For many years, we have been representing governments, including the Republic of Turkey, in connection with the enforcement of cultural property legislation. Urban developers must be knowledgeable about the various statutes and regulations and consult with the governmental authorities vested with the responsibility to implement and enforce this framework to avoid the risk of delay or suspension of construction in the event that archeological finds are uncovered during development.

Most art-rich jurisdictions already have laws in place that establish rules for reporting unexpected archeological finds and the means to police that system (either through rewards or penalties); and such rules must be developed where they do not already exist.

Developers will have to work with the governments involved to implement appropriate protection and preservation procedures for both inadvertent finds and protected sites, and take whatever steps are necessary to conform their construction plans to comply with the applicable regulations.

Where sites are not slated for permanent preservation, a system will have to be developed for comprehensive study, recording and removal of artifacts prior to destruction of the site.

Another area in which innovative legal concepts will be critical to the sustainable development of our cities is the creation of joint ventures between the public and the private sectors for the development of real property. In this field, Herrick, Feinstein has represented numerous local, national and foreign developers, been a key player in the area of "mega" projects developed as public/private joint ventures, and counseled both the public and private sides in these ventures. The firm's insights into the objectives of both sides have enabled it to effectively counsel developers in response strategies to Requests for Proposals so as to obtain designation and to counsel the public sector in negotiating feasible, fast-track privatization ventures.

Among the major public/private development projects in which Herrick, Feinstein has been involved are a $1.5 billion mixed-use project involving New York City and a group of major private developers; a complex mixed-use hotel development on a downtown urban site, sponsored by national, state and local government authorities and a consortium of private developers; a $270 million high-tech research and office park development, in which the firm served as counsel to a consortium of national developers, wrote state enabling legislation, coordinated land use/urban planning work and drafted and negotiated a sophisticated, long-term development ground lease; and an $8 billion public/private development program involving a major urban rapid transit system with 92 station sites located in seven different municipal jurisdictions. The firm has also been instrumental in generating zoning, planning and legislative techniques so as to permit fast-track implementation of multiple use and special use programs.

In addition to fostering development through public/private joint ventures, lawyers can accelerate sustainable development through the imaginative uses of existing laws to fashion novel solutions to maximize the potential of certain properties (such as the first marina "dockominium" we created under New York's condominium law) and by dealing in an innovative manner with troubled properties in severely depressed markets. Our firm also has been a leader in creating innovative vehicles for raising debt and equity for real estate acquisition and financing transactions and for packaging and securitizing interests in mortgages, properties and cooperative/condominium units; and this kind of innovation is critical to the future sustainable development of our urban centers. Similarly, our tax department plays an integral role in the development of real estate equity and debt investment vehicles, including limited partnerships and securitization entities.

The firm has also applied this unique inter-disciplinary approach in providing the legal component to transportation projects so critical to urban development and progress. In this regard, we have represented and worked with public authorities and agencies, railroads, railcar and vehicle manufacturers, railcar and aircraft leasing and financing companies and banks, engineering firms, parking facility operators, real estate developers and property owners and other participants in transportation-related activities in a project-oriented team approach. Our work in this area underscores the wide range of transportation-related projects that will be confronted as cities deal with the need to modernize and increase available transportation facilities to accommodate the drastic growth in urban population. These include complex inter-governmental agency agreements, such as for privatization, build-operate-transfer, ownership, operation and capital improvement of transportation stations, facilities and railroads; understanding and complying with governmental regulatory programs; analyzing statutory powers of public authorities and agencies and government corporations to engage in capital improvements, public/private, enterprise, development and other operational activities and development of new legislation where required; public/private ventures and financing, including joint use/multiple use programs for transportation facilities; and technology transfer agreements.

Another area in which the law will play a key role in sustainable development is the environment. When devising strategies for urban growth, developers must comply with regulations intended to protect the environment, and this aptly demonstrates yet a further need for experienced and innovative legal counsel. In this regard, Herrick, Feinstein has been actively engaged in analyzing and negotiating the allocation of responsibility for environmental liabilities associated with corporate and real estate transactions and in assisting clients in complying with federal and state environmental regulations, often in connection with critical decisions such as whether to proceed with an acquisition, the disposal of toxic substances, the removal of underground storage tanks and the preparation of environmental impact reports. In addition, the firm is knowledgeable in all aspects of environmental legislation and has extensive expertise in environmentally related investigations, complex toxic tort litigations and litigation insurance coverage for environmental liability, all of which may arise in connection with urban development projects.

In sum, considering the legal implications of sustainable development is crucial to the successful implementation of urban development projects. In this regard, we hope that this brief paper demonstrates that the Private Sector Forum should benefit by focusing on the need to create and implement innovative financing vehicles to facilitate private sector development, the need to devise and apply novel structures to spur the growth of accessible housing and other essential urban construction and transportation projects, and the need to fully comprehend and comply with relevant statutory and regulatory frameworks intended to protect the environment and cultural and natural resources in a way that does not deter or impede needed urban development projects.

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