Wednesday, September 12, 2007

ESDC, FCR fire back in fierce eminent domain defense

Plaintiffs in the eminent domain lawsuit challenging Atlantic Yards have already received a major setback in the case, after a federal court judge dismissed it for failure to state a claim, and as the appeal proceeds, a fierce set of response briefs from the defense ups the ante considerably.

The plaintiffs (a mix of 15 homeowners, commercial property owners, and residential and business tenants) and the defense (government agencies and officials) see controlling issues quite differently. The defense, drawing on U.S. District Judge Nicholas Garaufis’s emphatic opinion, declare that the inquiry should end because the government—the ESDC—found that the project would achieve a public purpose, including affordable housing, an arena, and open space.

While that reflects longstanding Supreme Court doctrine, the plaintiffs look at it from another angle, arguing in their appeals brief that the court’s 2005 Kelo v. New London decision and Justice Anthony Kennedy’s concurrence require a more transparent sequence, which must be followed for condemnation to be legitimate. And in response, the defense says that Kelo doesn’t apply to this case and, even if it did, the sequence was legitimate.

The plaintiffs’ framework to some degree pushes the envelope—the ESDC points to the paradox that most commentators believed that Kelo “confirmed—and possibly even loosened—the already extremely deferential judicial review of the public purposes of proposed takings.” But the plaintiffs think it gives them more leverage.

(The case will be heard October 9, and the plaintiffs get one more chance to respond in court papers.)

A winding road

Still, it’s clear how far the Atlantic Yards case differs from some precursors. The ESDC defends its embrace of developer Forest City Ratner’s project by citing a clause in the law establishing the Urban Development Corporation (UDC), the agency’s alter ego, which aimed to clean up the slums. And Atlantic Yards, which would be mostly luxury housing, is hardly a slum clean-up effort.

Also, a reading of the Supreme Court’s foundation eminent domain cases, Berman v. Parker (1954) and Hawaii Housing Authority v. Midkiff (1984), shows the doctrine upholding deference to legislative pursuit of eminent domain emerged in dramatically more dire situations than the one facing Brooklyn.

Had Forest City Ratner and government officials not announced their Atlantic Yards plan, later to be justified by a finding of blight, arguably, the simple decision to put the Metropolitan Transportation Authority’s (MTA) Vanderbilt Yard up for bid would have attracted numerous developers for part of what Chuck Ratner of parent Forest City Enterprises has called “a great piece of real estate.”

(For the record, my analysis and speculations are my own; I haven’t communicated with the plaintiffs’ legal team.)

Crux of the case

In its response brief, the ESDC forcefully challenges the plaintiffs’ claim, as per language in Kelo describing impermissible use of eminent domain, that the public benefits are a “pretext” for a much larger (though unspecified) private gain:
Invoking the Public Use Clause, Plaintiffs-Appellants (“Plaintiffs”) make the far-fetched, conclusory claim that a host of state and local public officials, none of whom has any evident or even alleged motive to curry favor with the private defendants named in this action, abdicated their public responsibilities by conspiring to foist upon New York a redevelopment project that, though undeniably supported by numerous public purposes, is a mere “pretext” for their desires to confer private benefits. Even if allegations of nefarious motive alone could state a viable Public Use Clause claim, the allegations here, resting as they do on pure, implausible speculation, cannot survive a motion to dismiss. The district court properly so concluded.

Stripped of its conclusory accusations, the pleading in this consolidated action boils down to a series of complaints about the procedures New York’s eminent-domain-empowered agencies use to exercise their powers—procedures this Court has already concluded pass constitutional muster—and the bidding and contracting processes used in connection with the redevelopment project at issue. The Public Use Clause, however, is concerned not with Plaintiffs’ proffered model of good government, but rather with whether a taking of private property serves a conceivable public purpose. Because the proposed taking here plainly does so, the district court’s decision should be affirmed.


Beyond that, if the plaintiffs are correct that “a subjective inquiry into the hearts and minds of public officials” is required, the ESDC argues, the federal courts should stay out of the matter, which instead should go to state court.

Fighting blight

The ESDC reminds the court that the state law that established the UDC/ESDC aimed to fight slums and blight. Then the brief offers a curious framing to justify the Atlantic Yards case:
To remedy these and other problems, ESDC is directed to “encourag[e] maximum participation by the private sector of the economy,” id. (emphasis added), “in part by promoting large-scale real estate projects that create and retain jobs and/or reinvigorate distressed areas.” Develop Don’t Destroy Brooklyn v. Empire State Dev. Corp., 31 A.D.3d 144, 146, 816 N.Y.S.2d 424, 427 (1st Dep’t 2006).

However, as I wrote, the UDC, with its vast powers to override local zoning and condemn land, was not conceived to engage companies like Forest City Ratner to manage projects like Atlantic Yards. Rather, in the wake of urban riots, it was aimed to get the private sector to help clean up slums, to invest in low- and middle-income subsidized housing. (Atlantic Yards would contain 2250 affordable units, but they're hardly its raison d'etre. It’s unclear how subsidies for this affordable housing would compare to other projects, and some affordable units would be not so affordable.)

Indeed, the “maximum participation” quote, in context, offers a different meaning; it cites “encouraging maximum participation by the private sector of the economy, including the sale or lease of the corporation's interest in projects at the earliest time deemed feasible.”

In other words, the situation was so bad in the late 1960s that the UDC was prepared to invest its own money to get a project going, then to try to sell it off.

Moreover, as I wrote, the citation regarding ESDC’s role in “promoting large-scale real estate projects” may come from a state appellate court decision, but the language comes directly from the ESDC itself—a tautology.

Fruitless clean-up?

The ESDC, in its reply brief, offers a rather strained history of development over the Vanderbilt Yard:
At the heart of the Project site lie portions of the “Atlantic Terminal Urban Renewal Area” or “ATURA”—an area that, as Plaintiffs concede, the City first designated as blighted in 1968. All prior plans to remediate this blighted site have proven fruitless. As late as April 2004, the City reconfirmed, for the tenth consecutive time, the ATURA’s blight designation and accompanying renewal plan.

Whether prior plans to remediate the site “have proven fruitless” is a matter of debate. As Winston Von Engel of the Department of City Planning said in March 2006, the city hadn’t considered development over the railyard because it was heavily used by the MTA.

Forest City Ratner’s plan came in just a few years before the city concluded, as it did this year, that, given the growing cost of land, it was financially feasible to develop over railyards and highway cuts--and with a more transparent process. As to whether plans would be “fruitless,” the railyard—much less the AY footprint—was never put out for a bid before AY was announced, though its real estate value was rising.

Public purposes

The ESDC brief cites multiple public purposes, including the elimination of blight both in ATURA and the “Takings Area”—the blocks on Pacific and Dean streets where plaintiffs’ properties are located.

Another public purpose is “a publicly owned state-of-the-art arena to accommodate the return of a major-league sports franchise to Brooklyn [and] a valuable athletic facility for the City’s colleges and local academic institutions.”

Note that “publicly owned” is a formality; the state does not reap the rewards of ownership, since the developer, which gets state assistance in issuing tax-exempt bonds to pay for the arena, gets to sell naming rights, which could pay for a substantial portion of construction. As for the value to colleges and schools, a planning document indicates there might be only ten sports events a year.

Along with the housing—both affordable and market-rate—the brief cites “8 acres of publicly accessible open space that links together the surrounding neighborhoods.” But given the new population, the seemingly significant chunk of open space would most likely benefit the new project residents more than the public at large. As to whether it links neighborhoods, that’s been challenged by BrooklynSpeaks and others.

Also cited are improved public transport, “environmental remediation of the Project Site”; and a host of “economic benefits,” including the creation of “4,538 new jobs in the City” and the generation of hundreds of millions of new tax dollars for the City and State. The plaintiffs, as noted by the defense, did not challenge Garaufis’s specific assessment of the public benefits, though I wrote that his analysis could be questioned.

Indeed, there’s a legitimate question as to whether the project would offer a net gain in tax receipts; not only has no complete calculation been done to incorporate the impact of new costs generated by the project, the city’s additional $105 million contribution suggests that the arena itself might be a loss rather than a modest gain for the city.

Beyond that, the New York Observer recently pointed to a little-noticed clause in the General Project Plan that suggests that government entities could wind up paying half of Forest City Ratner’s contribution.

Plaintiffs’ theory

The ESDC is scornful of the plaintiffs’ theory, that public officials “band[ed] together to support the Atlantic Yards Project for the sole purpose of conferring a benefit on the Project’s corporate sponsor, FCRC, and its CEO, Bruce Ratner” and that the “facts” are merely “complaints about the process and sequence by which the Project was proposed and developed.”

The brief notes:
Plaintiffs do not dispute the District Court’s conclusion that they failed to allege that the Project serves no public purpose. Instead, on appeal they contend that the primary motive behind the Project is to enrich Bruce Ratner, and that any public benefits are therefore only secondary or incidental.

That language draws on Kelo.

The defense states:
Judge Garaufis articulated what he deemed to be the pertinent inquiry under that Clause: “[A] taking fails the public use requirement if and only if the uses offered to justify it are ‘palpably without reasonable foundation,’ such as if (1) the ‘sole purpose’ of the taking is to transfer property to a private party, or (2) the asserted purpose of the taking is a ‘mere pretext’ for an actual purpose to bestow a private benefit.”

Blight or not

Beyond that, the issue of “pretext” as noted by Kelo, says the ESDC, doesn’t apply to the Brooklyn case:
The Kelo Court’s suggestion that “pretext” might offer a fruitful avenue of constitutional attack is limited to those cases, like Kelo itself, in which the sole public purpose being proffered for a project is economic development—a purpose that is not inherently public. Even in those cases, moreover, the “pretext” inquiry is an objective one—not a roving search into the hearts of all the public officials involved in the proposed project.

That may be murky; the court decision in Kelo did note:
There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.

How much public purpose?

The ESDC says the plaintiffs can’t win an argument about the degree of public benefit:
Plaintiffs’ gripe, then, is not about whether the Project serves public purposes, but rather to what extent some of the stated purposes will actually be realized, and whether taking of their properties is necessary to the accomplishment of the Project’s stated (and admittedly public) aims.

The plaintiffs had argued:
Surely Defendants cannot avoid the kind of meaningful review endorsed by the majority in Kelo, by merely mouthing the words “blight” (or “jobs” or “housing”) in the face of substantial evidence to the contrary.

But the ESDC notes that the Supreme Court, in Kelo, said courts shouldn’t second-guess the condemnor’s choice of boundaries, or “considered judgments about the efficacy of its development plan,” or try to evaluate for itself whether the public purpose asserted will actually be realized.

Sequence issues

The ESDC points out that the plaintiffs challenge the sequence in the case, but argues that any holding that a developer-driven project violates the constitution “would do violence to the UDC Act,” given the “maximum participation” issue.

Whatever the “alleged irregularities” in the bid for the railyard, the ESDC insists, that doesn’t “support an inference that the public Defendants actually named herein acted solely to enrich Bruce Ratner.” (The plaintiffs also use the term "primarily.”)

Kelo, however, raises questions. Was Atlantic Yards, as the Kelo majority noted regarding the New London project, “executed pursuant to a ‘carefully considered’ development plan.” It depends, perhaps, on the meaning of “development plan.” Is ATURA, which didn’t include more than one-third of the Atlantic Yards site, a development plan or just a framework?

The defendants apparently consider the ESDC’s review of Atlantic Yards a development plan. Forest City Ratner, in its brief, points out:
“Connecticut law does not establish procedures comparable to New York’s EDPL [Eminent Domain Procedure Law], which requires a condemnor to hold a public hearing and make a record that then can be reviewed by the courts. In Connecticut, unlike New York, a condemnor may make a determination to condemn without holding a hearing or making a record.

In his Kelo concurrence, Justice Kennedy noted that:
the trial court conducted a careful and extensive inquiry into “whether, in fact, the development plan is of primary benefit to … the developer [i.e., Corcoran Jennison], and private businesses which may eventually locate in the plan area [e.g., Pfizer], and in that regard, only of incidental benefit to the city.

Kennedy’s framework

But Kennedy’s concurrence suggests differences between the two cases; notably, in New London, as the judge observed, there was a “substantial commitment of public funds by the State to the development project before most of the private beneficiaries were known” and “evidence that respondents reviewed a variety of development plans and chose a private developer from a group of applicants rather than picking out a particular transferee beforehand.”

Forest City Ratner responds that, were the plaintiffs’ theory the law,
it would penalize private developers who approached condemnors with sound proposals. Furthermore, it would be especially inappropriate here, because large-scale public private development in New York City is inherently complicated and difficult, and FCRC has a record of success in the implementation of sophisticated large-scale public-private projects in Brooklyn (MetroTech Center and Atlantic Terminal) and elsewhere, including the new headquarters building for The New York Times Company in Manhattan.

City explanation

Interestingly, a city official questioned in 2004 framed the Atlantic Yards decision in terms of economic development—the justification for Kelo—rather than the later broader set of public purposes. Andrew Alper, then president of the New York City Economic Development Corporation, testified at the 5/4/04 City Council hearing:

This particular project came to us. We were not out soliciting, we were developing a Downtown Brooklyn Plan, but we were not out soliciting a professional sports franchise for Downtown Brooklyn.

The developer came to us with what we thought was actually a very clever plan. It is not only bringing a sports team back to Brooklyn, but to do it in a way that provided dramatic economic development catalyst in terms of housing, retail, commercial jobs, construction jobs, permanent jobs.

So, they came to us, we did not come to them. And it is not really up to us then to go out and find to try to a better deal. I think that would discourage developers from coming to us, if every time they came to us we went out and tried to shop their idea to somebody else. So we are actively shopping, but not for another sports arena franchise for Brooklyn.


That plan led to special discretionary benefits, including $305 million in direct funding, tax-exempt bonds, and a zoning override. It also led the ESDC to conclude, at least, that it would serve a public purpose. What went on after the developer proposed the plan?

Unresolved in the pending case is whether “intent” simply means legislative intent, as expressed by government in its public decision, or whether, as the plaintiffs argue, it involves the hearts and minds of the governmental actors. The ESDC notes:
Federal courts are wary enough about discerning legislative intent from the face of an available public record. They should be especially loath to look behind a public record to attempt to ascertain the personal motivations of individual legislators.

Garaufis's framework

Forest City Ratner quotes a passage from the March 31 hearing, in which Garaufis mused:
“If an area has been designated a blighted area, ... or I drive by there every business day for six years and I say, This is an area that is undeveloped, considering what’s all around it ... , and I am an entrepreneur, I’m in real estate, all around me, in the entire City of New York, they are building high-rise condos and apartments and office buildings, and [here] is an area that is close to transportation, that is served by numerous arterial highways and large boulevards and it’s near the center city and there’s just nothing there except ... an open pit with railroad tracks, and I say, Wow, this is a great place to put a major development, and I think I can do it, which will serve several purposes – one is, I’ll profit from it, I’ll provide a use that is needed by the community ... and it’s already been determined that this is an area that is ripe for development because it’s ... in large measure fallow in terms of its highest and best use, it’s been recognized by the government on repeated occasions that it is such and is designated as such, and I take that to the agency which is sponsoring or developing plans for such blighted areas, among others, and that’s the process that brings us to a determination that there ought to be a redevelopment of that area, and then the agency ... puts out a notice, an RFP or whatever, I respond to it because it was my idea in the first place and I have the best plan, and I get selected and here I am, why doesn’t that comport – why isn’t that a lawful type of result? What’s the problem with that? “

In court, plaintiffs’ attorney Matthew Brinckerhoff responded that it would have to be an area that had been already been determined to be blighted.

His clients’ properties are not in ATURA, he reminded the judge. Secondly, he said, there was no competitive bidding process for the entire 22-acre footprint, just the MTA’s 8.5 acre Vanderbilt Yard, and that was questionable.

Other evidence

There are some other pieces of evidence, not mentioned in the original complaint, that hint at a predetermined outcome. For example, Empire State Development Corporation Chairman Charles Gargano, even before the environmental review had gotten started, told the New York Observer in December 2005 that “There is no need to scale down the project.”

And while the project went through two token scalebacks, that final eight percent cuts, ostensibly a response to a letter from the City Planning Commission, represented reductions in building heights mostly placed on the table more than eight months earlier by Atlantic Yards architect Frank Gehry.

Forest City Ratner rebuttals

Forest City Ratner’s brief is also scornful and, beyond reprising some of ESDC arguments, goes further to rebut claims made by the plaintiffs. Notably, FCR argues that “supplemental allegations” made in the plaintiffs’ brief are “either irrelevant or untrue – or both.”

FCR argues:
The MTA’s Hudson Yards RFP is entirely irrelevant to the Vanderbilt Yards RFP, and the MTA, which issued both RFPs, is not even a defendant in this action.

The plaintiffs argue that that points to the proper sequence to develop over railyards.

FCR continues:
Plaintiffs’ unattributed assertion that the City’s financial contribution to the project has increased from $100 to $205 million, as well as their assertion that financial calculations for one site were omitted from one report to ESDC, might affect the project’s finances if true, but would not alter the fact that the project includes numerous public uses.

Why it was unattributed is the plaintiffs’ lapse, but arguably, decreased tax revenues continue to call into question any net revenues, a significant element of the public use claim.

FCR cites a case regarding the assignment of a lease from Henry Weinstein’s tenant Shaya Boymelgreen to a Forest City Ratner affiliate:
The decision in 752 Pacific Carlton LLC v. Pacific Carlton Development Corp. concerned a private contractual dispute between fee owners that oppose the project and long-term ground lessees that attempted to assign their leaseholds to an FCRC affiliate; neither FCRC nor its affiliate was a party to the lawsuit or was found to have engaged in misconduct.

However, Forest City Ratner has, according to Weinstein’s lawyer, agreed to fund attorneys representing Boymelgreen.

FCR states:
Finally, the report entitled Delivering the Promise of New York State: A Strategy for Economic Growth and Development, which was prepared for ESDC by a consultant, is quoted in a misleading and out-of-context manner, because the quoted language specifically refers to two ESDC subsidiaries that have nothing to do with the Atlantic Yards project.

True, they have nothing to do with AY; the question is whether that offers telling commentary on the agency as a whole.

FCR also argues that the total value of the deal with the MTA, while less than the cash offered by rival bidder Extell ($150 million), was far more valuable: “$329.4 million dollars before the cash component was increased from $50 million to $100 million.” (The complaint states that the MTA refused to answer technical questions from Extell; it's unclear whether that developer was able to present a complete package regarding railyard improvements.)

Blight and Block 1128

FCR goes further to defend the controversial blight study, focusing on the 100-foot stretch east of Sixth Avenue between Pacific and Dean streets. FCR noted that the study “reported that in the small portion of Block 1128 that is within the project’s footprint, the mid-block area was ‘overgrown with weeds, enclosed by a chain-link fence, and occupied by several parked cars, many of which appear to be abandoned.’”

Unmentioned is that the lot was on sale for $2.25 million.

Plaintiffs’ paranoia?

FCR contends that the plaintiffs are grasping at straws in challenging the role of public officials:
Here, the emptiness of plaintiffs’ assertions was exposed at the hearing before the District Court when plaintiffs’ counsel responded to a question by Judge Garaufis as to the basis of plaintiffs’ claim that Mayor Bloomberg’s role in the approval of this project was improper:
“Mayor Bloomberg’s background is, he’s a businessman. What happened here is, a businessman approached another businessman and said, Hey, I have a great deal. Let’s do a deal together. And he said, I love it. Let’s do the deal. He completely jettisoned his responsibilities as a public official ....”


This assertion is “paranoid fantasy,” FCR argues.

Indeed, it may sound paranoid, but the continuation of the quote, omitted in the brief, provides more context: “which also requires him to look to other possibilities, look to other uses, to not use the power—he has the governmental power to seize somebody’s home, to take it from them forcibly, and that power can’t be used in the service of one private developer to the exclusion of all others, and that’s exactly what happened here.”

Legislative decision?

FCR points out that the appellate court “has specifically rejected ‘examination of the thought processes of those exercising the legislative prerogative’ to condemn as ‘a judicial invasion into an area exclusively reserved for the legislature,’” citing a case called Brody v. Village of Port Chester.

And FCR points to Garaufis’s question, during oral argument, “Aren’t you asking for more of the ESDC than was ever required in the Board of Estimate or most other legislative bodies about land use?”

In response, plaintiffs’ attorney Brinckerhoff distinguished between the Board of Estimate, which was functioning as a legislative body, and the less-representative ESDC, which he called “purely a creature of the executive branch.”

Kennedy’s rules

By FCR’s reading, even applying Kennedy’s reading of Kelo to Atlantic Yards snuffs out the plaintiffs’ claim:
In Kelo, the “taking occurred in the context of a comprehensive development plan,” and “the economic benefits of the project [could not] be characterized as de minimis.” Here, too, ESDC’s exercise of eminent domain is part of a comprehensive development plan that is expected to engender substantial public benefits.

As noted, whether the plan is comprehensive and the benefits substantial remain under debate.

FCR notes, that, in Kelo, the condemnor complied with elaborate procedural requirements that facilitate review of the record and inquiry into [its] purposes.” Similarly, here ESDC complied with the procedural requirements of the EDPL, SEQRA and the UDC Act and, in the process, generated an extensive record containing numerous documents that are matters of public record.

Finally, in Kelo, "[t]he identity of most of the private beneficiaries were unknown at the time the city formulated its plans.” Here, of course, the project’s sponsor is alleged by plaintiffs to have been determined from the outset. The Amended Complaint acknowledges, however, that the MTA issued a request for bids for the right to build over its property, and a competing bid was received .

However, that bid came 18 months after city and state officials announced their backing for the Atlantic Yards plan, and the 22-acre site, rather than the 8.5-acre railyard, was not bid.

Public v. private

In describing the difference between Kelo and the Brooklyn case, FCR argues that “major portions of the project” will remain under public ownership by ESDC, the MTA, and the LIRR, the city may lease space for a school, and the project’s open space will be owned by a not-for-profit entity.

By contrasts, other cases cited by the plaintiffs “all involved condemnations that would effectuate a ‘one-to-one transfer’ of property from one private party to another.” In other words, there’s enough public use:
Here, the undisputed benefits of the project to the public at large are numerous. The fact that a private developer also will benefit does not render the condemnations unconstitutional. See Kelo (“the government’s pursuit of a public purpose will often benefit individual private parties”).

Adverse treatment?

FCR challenges the plaintiffs’ claim of an equal protection violation, noting that Brinckerhoff argued in court that “we are being singled out for adverse treatment than others similarly situated, namely the other people who are right next door to us.”

FCR argues:
Had this been further argued, FCR would have submitted documents from the public record that show that the portion of Block 1128 not being condemned is not blighted, but contains numerous properties determined to be historic resources by New York State or the New York City Landmarks Preservation Commission, including a church and several rowhouses in officially designated historic districts.
(Above, the first five Dean Street buildings would be demolished.)

Similarly, the developer says, it was reasonable to exclude the Newswalk condo building on Pacific Street between Sixth and Carlton avenues, because it would have displaced 168 households. Unmentioned, however, is why the clearing of blight didn’t include an empty lot (right) just outside the footprint.

Done deal?

FCR points out that the massive record argues against claims of a “done deal”:
Prudence dictates that ESDC not embark on such a huge expenditure of time and resources unless the project had the support of high governmental officials. However, the inference that plaintiffs seek to draw – that, because of these senior officials’ support, the outcome was predetermined – is unreasonable and cannot be accepted.

There is no factual allegation of any act of interference in the process by the Governor, the Mayor or anyone acting on their behalf, nor is there any factual allegation of any other wrongful act. There is no factual allegation of any specific defect in the review process. Therefore, there is no viable claim of a corrupt process.

There may be no smoking gun, and the defense argues that plaintiffs should not be allowed to pry into e-mail of public officials. But some evidence suggests that the outcome was never in doubt, given, for example, the ESDC board’s perfunctory and uninformed review of the project last December.

As for defects in the review process, while the plaintiffs didn’t make the point, the ESDC arguably published misleading information. The environmental review suggested that FCR “controlled” property owned by Weinstein, but with an asterix indicating that “the property owner has objected to such assignments.” Weinstein later won his case in court, which indicates that the property might more neutrally have been described as “in dispute.”

City response

The city of New York’s response in many ways repeats defense arguments offered by the ESDC, noting that the court found the plaintiffs’ allegations were conclusory and insufficient to go forward, given the public benefits the project would provide.

The brief responds to the core argument of the plaintiffs:
Nor is there anything inherently sinister in involving a private developer before a redevelopment plan takes final shape and has completed the review process, as plaintiffs seem to suggest. As an initial matter, the redevelopment of this area has been contemplated since at least 1968, when the ATURA was created, and a stadium has been planned since the 1970s before Forest City Ratner’s involvement.

The area, however, does not include the blocks south of the Vanderbilt Yard on Pacific and Dean streets where the plaintiffs live. A sports facility was not so much planned as contemplated; a 1974 “preliminary feasibility study” suggested two locations within ATURA for an arena, but no effort was made to establish such an arena.

Foundation case

The brief points to Midkiff as a foundation case for Kelo:
At any rate, the individuals who would benefit from the legislation at issue in Midkiff were certainly known to the Legislature before they acted, and yet, the Court nevertheless found that the legislation was enacted “not to benefit a particular class of identifiable individuals but to attack certain perceived evils of concentrated property ownership in Hawaii -- a legitimate public purpose….. Indeed, this fact is even less sinister given that Forest City Ratner undeniably has a demonstrated track record of successfully spearheading large-scale, complex redevelopment projects of this nature in New York.

The Midkiff reference, however, might be seen to be tightened by Kennedy’s concurrence in Kelo.

State case

The State of New York, representing former Gov. George Pataki, argues separately that plaintiffs have stated no claim for damages against Mr. Pataki personally. Their vague, conclusory allegations that Mr. Pataki ‘controlled’ and ‘conspired’ with ESDC do not sufficiently suggest that he was personally involved in the particular actions they challenge as unconstitutional.

Just because Pataki backed the project from the start and his policy preferences may influence others, the defense notes, “he had no supervisory authority over ESDC and no power to approve or veto its decisions.”

Though such details were not mentioned in the suit, Pataki’s stamp was clearly on the ESDC, with Gargano, his chief campaign fundraiser, serving as chairman, and several of the appointees big Republican donors. How much does this resemble a legislature?

Looking at the precursors

The 1954 case Berman v. Parker involved a part of Washington, DC where 64.3% of the dwellings were beyond repair, 18.4% needed major repairs, only 17.3% were satisfactory; 57.8% of the dwellings had outside toilets, 60.3% had no baths, 29.3% lacked electricity, 82.2% had no wash basins or laundry tubs, 83.8% lacked central heating.

Wrote Justice William O. Douglas in eloquent outrage:
Miserable and disreputable housing conditions may do more than spread disease and crime and immorality. They may also suffocate the spirit by reducing the people who live there to the status of cattle. They may also be an ugly sore, a blight on the community which robs it of charm, which makes it a place from which men turn.

Does this sound like Prospect Heights? No, but eminent domain law has evolved.

Douglas described the need for planning:
The experts concluded that, if the community were to be healthy, if it were not to revert again to a blighted or slum area, as though possessed of a congenital disease, the area must be planned as a whole. It was not enough, they believed, to remove existing buildings that were insanitary or unsightly. It was important to redesign the whole area so as to eliminate the conditions that cause slums…

That ultimately led Douglas to write language that has been applied to some vastly different projects:
It is not for the courts to oversee the choice of the boundary line, nor to sit in review on the size of a particular project area. Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.

The other main case, Hawaii Housing Authority v. Midkiff, involved a severely skewed system: In the mid-1960's, after extensive hearings, the Hawaii Legislature discovered that, while the State and Federal Governments owned almost 49% of the State's land, another 47% was in the hands of only 72 private landowners…. The legislature further found that 18 landholders, with tracts of 21,000 acres or more, owned more than 40% of this land and that on Oahu, the most urbanized of the islands, 22 landowners owned 72.5% of the fee simple titles.

The court pointed to a malfunctioning market:
Nor can we condemn as irrational the Act's approach to correcting the land oligopoly problem. The Act presumes that, when a sufficiently large number of persons declare that they are willing but unable to buy lots at fair prices, the land market is malfunctioning.

Was Atlantic Yards an example of such a malfunctioning market--was there an open chance to bid on the Vanderbilt Yard, or for a rezoning to encourage new, more dense construction?

Back to the agency

In Midkiff, the court stated:
Judicial deference is required because, in our system of government, legislatures are better able to assess what public purposes should be advanced by an exercise of the taking power. State legislatures are as capable as Congress of making such determinations within their respective spheres of authority. See Berman v. Parker… Thus, if a legislature, state or federal, determines there are substantial reasons for an exercise of the taking power, courts must defer to its determination that the taking will serve a public use.

The ESDC notes in its brief:
Although the Berman Court used the term “legislative branch,” Congress had in fact delegated its power of eminent domain to the District of Columbia Redevelopment Land Agency…. Hence the Court’s admonition, elsewhere in its opinion, that federal courts defer to “congress and its authorized agencies.” (emphasis added).

So, a key question for the appeal is whether the ESDC is simply an authorized agency that expresses the will of the Legislature, or whether it is an expression of the executive branch.

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  1. I have identified another reason why Ratner is shutting down public streets, sidewalks and avenues despite the fact that doing so is bad design. Therefore, to my five points setting forth why, for various wrong reasons, Ratner probably desires to shut down streets, avenue and sidewalks, (comment to 09/09/’07 Atlantic Yards Report Post), I should have added a sixth point. The additional point is this. By allowing streets and avenues to stay in place the Atlantic Yards project would present itself simply as several separate blocks in an overall area which thereby makes it much more readily apparent that there is nothing to distinguish these blocks from any of their surrounding areas except the extraordinary density which makes Ratner’s planning of them absolutely inconsistent with the planning for any of the immediately adjacent blocks. This is even though there is contemporaneous development of immediately adjacent blocks also being done with substantial public stewardship.

    Is Atlantic Yards really being “executed pursuant to a ‘carefully considered’ development plan” and “in the context of a comprehensive development plan?”

    It is interesting to look at the level of care and comprehensiveness the City and State have exercised planning for density in the immediate area of which Atlantic Yards is a part. In this regard, the anomalies are most informing.

    Atlantic Yards has neighbors, neighbors in the form of immediately adjacent blocks and neighborhood. That it has neighbors is actually part of the reasons expressed for its being undertaken. In theory, it is part of a comprehensive plan to benefit those that are its neighbors in the ways that it is planned to integrate with them.

    It is therefore odd and informative that the plans for the neighboring property do not mesh with the plans for Atlantic Yards. Not even time warp surgery can ameliorate the patent inconsistencies.

    Let’s look at the contrasting plans for the parcels in this area, Atlantic Yards and all its immediate adjacent neighbors:

    1. Atlantic Yards: Incomparably dense with respect to every square inch of property that Ratner will own.- Not taking into account the arena (and the oppressive effect it will have on circulation and traffic), the density is somewhere in excess of a 12 FAR.

    2. Atlantic Commons: Across the street from Atlantic Yards. On average it is the same distance from the transit hub. It was built with government aid (both from the City and State) and supervision only a dozen years ago. (For those too young or naive to see a dozen years as recent in real estate terms, it should be borne in mind that this is likely less time than it will take to build Atlantic Yards.) This project is not built as large as would be permitted under the R7-2 district zoning where it is located. The proposed R7-2 district, a medium-density general residential district, has a commercial FAR of 3.4, (or going up to 6.5 with community facilities). Though the original street network has proportionally more streets in this area, I believe a street was added, rather than subtracted when this project was built and it helps create a park which is properly designed so as to feel shared by the all the public and surrounding community. The project is all residential and all affordable.

    3. Atlantic Terrace: Across the street from Atlantic Yards. On average it is closer to the transit hub. Being built with government aid and supervision within approximately the same time frame as Atlantic Yards but will be completed much sooner. It is also being built on a site the reclamation of which is being promoted by government- a brown field. Many key coordinating officials are credited in common with Atlantic Yards. It is not being built as large as would be permitted under the C6-2 district zoning where it is located. The proposed C6-2 district, a medium-density general commercial and residential district, has a commercial FAR of 6.0 and a residential FAR of 6.02 (R8 equivalent). 63 of the project’s 80 residential units (78.8%) will be affordable units with at least 50% of the project’s units being affordable to families with incomes at or below 80% AMI. The project will have commercial space at ground level. Atlantic Yards is so much taller than this 10-story project that its shadow will prevent Atlantic Terrace from using solar panels as originally planned. The almost unavoidable conclusion is that if the Atlantic Yards project density is desirable, then the government-sponsored planning for this more laudable non-Ratner project being built now right across the street ought also to have involved much greater density.

    4. Zoning for the Ward Bakery Building Block (part of the land being condemned for the AY project): The block is zoned almost entirely M1-1 with an edge zoned R7A. This zoning, with its far lower density, represents the plan that the City developed for this block and which will presently apply for this block absent the Ratner high density sudden replacement of this plan. M1-1 is an FAR of 1.0 (or up to 2.4 with a community facility), and R7A is an FAR of 4.0. This is also consistent with and representative of the City’s still-persisting zoning plans for the blocks in the area just south of this block.

    5. Zoning for the Arena Block where cooperatives apartment buildings were recently created and are being condemned (part of the land being condemned for the AY project): This block is one of those closest to the transit hub. It is zoned C4-4A, R6B and R7A. C4-4A is an FAR of 4.0, R6B is an FAR of 2.0 and R7A is an FAR of 4.0. This is also consistent with and representative of the City’s still-persisting zoning plans for the blocks in the area just south of this block.

    Noted above, the almost unavoidable conclusion is that if the Atlantic Yards project density is actually desirable, then present planning for neighboring (probably better) non-Ratner property development logically ought to similarly involve much greater density. Assuming a careful and comprehensive design for the area, the only way to avoid this conclusion would be to suppose that the planning intentionally plans for very low density right next to the very high density Ratner-owned property as a mechanism to ameliorate the negatives of the extreme density at which Ratner is to build. Such a conclusion, if reached, would, in essence, require concluding that, in addition to the properties being condemned directly so that Ratner may take actual ownership of them, there is also proposed a subtle inverse condemnation of the ability and right of the neighboring parcel owners to, at an appropriate juncture, seek zoning changes to permit greater density on their property with the resulting increase in property value.

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