Nonprofits Say They’ve Felt a Legal Squeeze from the De Blasio Administration

Parks groups and BIDs believe the city has tried to offload legal liability onto small organizations that are built to rally volunteers and sweep plazas, not battle lawsuits.

At around 7:30 on the evening of May 20, 2019, a woman and her son, both visiting from Virginia, were sitting on a bench in Washington Square Park when a limb from a London Plane Tree fell, hitting the mom in her head, leaving her with “a traumatic brain injury, fractures to her skull, face, and neck, cognitive deficits, and psychic and emotional injuries,” according to a lawsuit her family filed against the city last May. 

The incident was terrible, but the lawsuit was not unusual. Nearly 7,500 claims were filed against the city during the fiscal year that ended last June 30, and the city paid out $623 million in settlements and judgments that year. In this case, the plaintiffs also went after the Washington Square Park Conservancy, a nonprofit that organizes events and volunteer clean-ups in the park. Nothing unusual there: Injury suits often target multiple parties, so as to increase the odds of a decent pay out. 

What happened next, however, was weird: In July 2020, New York City threw the Washington Square Park Conservancy—which has a budget of about $750,000 a year and two full-time employees—under the bus. “Any damages sustained by the plaintiffs were caused in whole or in part by the acts or omissions of defendant, Washington Square Park Conservancy,” an attorney at the city’s Law Department wrote in a cross-claim, adding that the organization might either owe a share of the damages or even be responsible for indemnifying the city.

In October, the Law Department withdrew that claim. The lawsuit continues. The Washington Square Park Conservancy declined to talk about its relationship with the city. The Law Department doesn’t comment on ongoing litigation, but says the fact that the cross-claim was withdrawn suggests it was just an error.

But advocates and nonprofit leaders say the brief legal flare-up is part of a pattern that has affected two classes of nonprofits working with the city: partner groups that do projects in parks and businesses improvement districts (BIDs) that help manage pedestrian plazas. In both cases, New York City has tried to offload legal liability onto small nonprofits, who say they do not deserve and cannot handle the burden.

Adam Ganser, the executive director of New Yorkers for Parks, an advocacy group, says 10 to 15 groups are either involved in negotiations over such a deal or are “putting off discussions with parks in hopes of getting a more favorable relationship under a new administration.” Leaders of three parks groups confirmed to City Limits that they are or have been involved in that wrangling. None agreed to be named, citing fears that going public could harm their relationship with the city.

Separately, the leaders of three BIDs tell City Limits the indemnification issue has been a headache for years. The good news, they say, is that the city has recently scaled back its demands for legal cover. While not all BIDs are satisfied, most agree that there’s been progress.

Deeper worries for nonprofits

The concerns over indemnification join a list of complaints nonprofits have about their dealings with the city. There are long standing gripes about low wages and delays in contract payments, and new points of contention have arisen during the pandemic.

Some advocates believe the push to have nonprofits shoulder more legal risk reflects misgivings the de Blasio administration has expressed about the role private philanthropy plays in managing public assets in the city, especially parks. To critics, the partner organizations represent a way of privatizing public space and introduce inequities. As a candidate, Bill de Blasio embraced a proposal to essentially tax wealthier conservancies to pay for work in parks in low-income neighborhoods. That idea fell by the wayside early in de Blasio’s mayoralty, but some believe the antipathy to the nonprofits remain.

Others who have been involved in negotiating with the city do not see an ideological motive behind the push to offload legal liability. Rather, they detect an effort to reduce the city’s legal payouts—which, after rising for six straight years, have fallen the past three.

For its part, the Law Department says each agreement with a nonprofit is unique. It also says there’s been no change in policy toward nonprofits, and no broad effort to reduce the city’s liability in arrangements with nonprofit partners. However, the agency does say that, when it’s time to renew its contracts with nonprofit partners, it scrutinizes past language to make sure that the city didn’t expose itself to excessive risks. If a past deal left the door for lawsuits too wide open, it might be nudged closed in the new agreement.

“The Law Department works with city agencies and the city’s non-profit partners to ensure the right level of indemnification to protect the public fisc, improve the delivery of services, and make the city a safer place for everyone,” says agency spokesman Nick Paolucci.

While Ganser says all conservancies in the city are worried about the changes, one such group told City Limits it had not yet seen any proposed changes, and several others did not respond to requests for comment on the matter.

Big impacts on small groups

Whether the changes in the deals described to City Limits were one-offs or part of some broader strategy, they can mean real trouble for small organizations.

“One incident and resulting lawsuit could wipe out our nonprofit after [decades of work] for the residents of New York City,” the executive director of one organization says.

To critics, the shift seems absurd: New York City with its $92 billion budget is insisting it be indemnified by organizations with 50 or fewer employees. The imbalance is out of step with the role the parties each play in the park, the executive director adds. “How can they claim ownership in this instance, and not have any responsibility should someone get hurt due to their negligence within the park grounds?” the director says. “We are not allowed to do [maintenance] work without their permission, but they can deny claims should someone be injured? It does not make sense.”

The biggest—and, for critics of the conservancy model, the most problematic—partner organization is the Central Park Conservancy. Although it is arguably the partner that could most easily shoulder the burden of greater liability, given its $77 million annual budget and $360 million in assets, a spokesperson for the CPC says that the city indemnifies it fully.

Ganser says the problem isn’t that CPC gets a sweetheart deal. Rather, it’s that CPC gets a reasonable deal that other organizations are being denied.

“Most people don’t realize it, but private and philanthropic dollars are a huge part of our parks system and have been for decades. Those dollars should be invested as efficiently as possible into the public spaces stewarded by those not-for-profit groups that are committed to their open spaces. This is particularly true in the boroughs,” Ganser says. “The onerous terms by the city make it nearly impossible for these smaller groups to do their work, and without them, these parks will suffer.”

The leader of another parks nonprofit says the increased liability facing that organization could affect virtually every aspect of its operation. Not only could a legal claim prove costly to settle, it would likely raise insurance costs. Staff time would be diverted to dealing with the suit. Board members and donors might be less willing to fund the organization if they think their gifts will merely flow out to pay plaintiffs and lawyers. The ultimate impact could be on programming, as organizations avoid any activities that carry significant risks of a lawsuit, like rope climbing or activities on the water.

“When someone is injured in a park they will always sue the city. The not-for-profit stewards are small fish but often get sued as well and they do not have the resources to survive. Without indemnification from the city, the very existence of these citizen advocate groups is put into question,” Ganser says. “They cannot afford the risk.”

The Parks Department told City Limits that it cannot comment generally about the relationship between partner organizations and the department, because it is different for each organization.

A learning curve

The Bloomberg administration began building new pedestrian plazas in 2008, and at last count, the plaza program included 73 spaces, from Delancey Plaza in Manhattan to Bliss Plaza in Queens. Some are brand new and others are older plazas that have been brought into the program. Fourteen of the plazas are managed by BIDs, which are responsible for maintenance and events in the spaces.

“From the start, this issue of liability was a really big issue,” says Tim Tompkins, who served as president of the Times Square Alliance from 2002 through the end of 2020. At the outset, he says, BIDs and other partner organizations accepted a higher level of liability than they wanted in the hope that a more reasonable approach would evolve. “It’s just become incredibly challenging for the partners.”

Part of the problem stemmed from the newness of the program, and the lack of a legal template to apply to it. Tompkins says the city’s instinct was to treat the partners as concessionaires, because they might be able to generate some revenue to defray the costs of upkeep for each site. “The problem,” he says, “is that model is designed for someone who is making a profit.” BIDs, as nonprofits, do not.

Alexandria Sica, the executive director of the DUMBO BID, says BID partners have been named as defendants in several lawsuits arising from the plaza. In recent months, BIDs and the Law Department have resolved some of the issues, dividing up liability according to their respective responsibilities for the sites.

However, Sica says concerns remain. Keeping a public site safe from the range of risks that exist in New York City—vehicular, mechanical, weather-related, criminal—is a tall order. “There are a million unknowns.” And even if risks are never realized, their mere presence can create financial pressures, if insurance costs rise.

A key question now is how the potential liability issues around Open Streets, a popular program likely to be made permanent even after the pandemic eases, will be addressed. “We are hopeful that the next administration, I think, would kind of return to the emphasis on the streets, on public space,” Sica says, “and can help us rewrite this relationship again.”