Skip to main content

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.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…