Wednesday, March 28, 2007

Relief at the ballot box? Housing expert says ESDC justification seems hollow

Is voting the rascals out sufficient redress for those who want courts to examine what they believe to be eminent domain abuse, as a lawyer representing the Empire State Development Corporation (ESDC) has suggested?

Not at all, says David A. Smith, an affordable housing expert in Boston who supports the targeted use of eminent domain and has been watching Atlantic Yards from afar. (He wrote 3/15/07 that he has "no past, current, or contemplated engagement or professional interest in Atlantic Yards.")

Insider deal?

That issue came up during the 2/7/07 oral argument in the Atlantic Yards eminent domain hearing, when U.S. Magistrate Judge Robert M. Levy posed a hypothetical question to Douglas Kraus, representing the defendant Empire State Development Corporation (ESDC).

Levy wondered that if a constitutional violation would occur in a case involving eminent domain that led to a clear public use--a result that historically justifies condemnations--but also benefited an insider, the governor's brother-in-law.

(The 13 plaintiffs challenging eminent domain in the Atlantic Yards case claim that developer Bruce Ratner got a sweetheart deal, which might violate the guidelines suggested in the U.S. Supreme Court's 2005 Kelo vs. New London decision.)

Kraus responded, "It might violate some state ethics rule or some other law that was indeded to deal with the public performance by the Public Officers Law that regulates our officers in New York State to perform their duty."

He continued, "That might be an issue for the prosecutor; it also might be an issue for the electorate, right. [Plaintiffs' attorney] Mr. [Matthew] Brinckerhoff told us they're all politicians and they're all elected. If his clients or if other members of the community think this was really a terrible project, they can express themselves in the next election when they vote for their City Council representatives, their State Senators, their State Assembly members, their Congresspersons, and their federal Senators."

Is that relief?

Smith, who has supported use of eminent domain for economic development but thinks it must be done with safeguards, was perturbed by Kraus's formulation. (Smith recently commented on the recent release of Atlantic Yards cash flow documents.)

He told me, "In my view, Mr. Kraus's flip comment ["terrible project"] tacitly concedes he has no legal case for his client. For if the project is terrible, and the sole remedy is electoral relief, then there is no check in law to a development agency run amok, and no limit on the powers agencies claiming eminent domain (for removal of blight, economic development, or otherwise) can wield."

Atlantic Yards is considered by the defense not to be an example of eminent domain for economic development, as in Kelo, but instead for other public purposes, including blight removal, below-market housing, open space, and transit improvements. Still, the defense has forcefully argued that the case in Brooklyn does not appear to be a sweetheart deal as outlined in Kelo.

Eminent domain and blight

Smith observed how the use of eminent domain has evolved: "As a general matter, eminent domain is a 'last resort' government action. It is to be used when literally nothing else will suffice; the classical case is a highway that must go straight (yet even Robert Moses's highways and Chicago's Kennedy expressway found ways to curve!)."

Now, however, its use has expanded. Smith said, "Blight, as defined in the landmark post-World War II cases, was a condition of urban economic death--neighborhoods that were entirely gone. In the 70s and 80s the definition of blight kept expanding and the criteria being diluted, so that the 'blight' finding morphed, at least in the minds of some local officials, into 'declining neighborhood that could be revitalized.' When that slippery-slope standard is coupled with an immediate transfer to a private developer, the potential for abuse is vast."

Rules for eminent domain

Smith in November 2005 summarized what he calls [urban planning professor] "Jerold Kayden's 8 Simple Rules For Taking My Urban Property." They are:
1. Be comprehensive. Make your redevelopment authority program comprehensive.
2. Follow due and open process. Adopt it deliberately, transparently, with thorough consideration that you carefully document.
3. Emphasize public-use benefits. Parks and waterfronts trump jobs, and jobs trump new revenues.
4. Compete the bid. Use an RFP (Request For Proposal) or other competitive process to select the plan and developer and to eliminate the presumption of a hard-wired sweetheart deal.
5. Get what you pay for. Use performance benchmarks -- cash flow participations, clawbacks, rescission, right of final refusal -- to make developer perform.
6. Give back what you reap. Earmark incremental benefits like real estate taxes for public-use projects.
7. Embrace public oversight. Have a special public oversight mechanism on the developer.
8. Use 'public-private' partnerships. Use new forms of public-private partnerships that "muddy the private waters." Long-term ground leases are not good enough.

[Emphasis added]

As applied to Atlantic Yards

In the Atlantic Yards eminent domain lawsuit organized by Develop Don't Destroy Brooklyn, the first four are at issue; notably, the Metropolitan Transportation Authority did not issue an RFP for the agency's Vanderbilt Yard--the key public property within the project site--until 18 months after the city and state publicly endorsed Forest City Ratner's project.

That case will be back in federal court on Friday, as lawyers for both sides argue whether U.S. District Judge Nicholas Garaufis should accept the recommendation from U.S. Magistrate Judge Robert M. Levy that the case be dismissed on procedural grounds and refiled in state court. Tomorrow, I'll preview the arguments in the hearing.

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