Kessler v. Grand Central District Management Association, Inc.

The New York state legislature authorized municipalities to establish business-improvement districts (BIDs), in which the owners of nonexempt real property paid an assessment in addition to municipal taxes. The assessments were used to fund (1) capital improvements to land and (2) services that were intended to promote business activity. These services had to be in addition to and not in lieu of those provided by the municipality. After the establishment of a BID, the municipality retained its authority over the district, including the authority to make improvements to owned or leased BID property. Each BID had a district-management association that made recommendations to the municipal council regarding BID-related matters. Each BID’s management association was required to have a board of directors, the majority of whom had to represent property owners, not tenants, within the district. Robert Kessler and Vicki Cheikes (plaintiffs), residents of the Grand Central BID in midtown Manhattan, sued Grand Central District Management Association, Inc. (GCDMA) (defendant), arguing that GCDMA’s management of the Grand Central BID involved sufficient governmental power to require that GCDMA’s board elections comply with the one-person one-vote requirement. The United States District Court for the Southern District of New York granted summary judgment for GCDMA on the ground that the Grand Central BID was a special limited-purpose entity disproportionately affecting one class of constituents and therefore was not subject to the one-person one-vote requirement. The plaintiffs appealed.