Tuesday, March 18, 2008

A State Bar task force on eminent domain passes on blight but urges transparency

The U.S. Supreme Court’s 5-4 Kelo v. New London decision in 2005 mainly restated existing doctrine allowing eminent domain for economic development, but the widespread public outcry galvanized many state legislatures and state courts to more narrowly define the practice in their jurisdiction.

New York State, long seen as hospitable to eminent domain, has achieved no reforms. However, some mild reforms have been recommended by a Special Task Force on Eminent Domain organized by the New York State Bar Association. One, had it been in place, might have caused a second look at Atlantic Yards, given an emphasis on transparency in the selection of a developer.

Another recommendation by the task force, that the state appoint a commission to research and debate some outstanding issues like the proper scope of a public project, has languished, though perhaps the new Paterson administration might consider it.

The task’s force interim report, which included eight initial recommendations, was approved in August 2006, 30 years after the passage of New York’s Eminent Domain Procedure Law (EDPL), thus considered ripe for an update. The final report, finished in July 2007, added five recommendations; it was approved by the bar association’s House of Delegates and Executive Committee last month, but has received press coverage only in the New York Law Journal.

Other states go farther

The changes suggested pale before those in many other states, such as Ohio, where Senate Bill 7 redefined blight and required that a public agency “adopt a comprehensive development plan describing and documenting the public need for the property.” Both changes (detailed below), had they been in place in New York, might have scotched Atlantic Yards.

Both were missing in the Atlantic Yards case, since the Supreme Court's national standard is more loose, deferring to a condemning agency to define blight and, as the Second Circuit Court of Appeals said in upholding the dismissal of the case: “[O]nce it has been shown that the surrounding area is blighted, the state may condemn unblighted parcels as part of an overall plan to improve a blighted area."

In Ohio, “It is now the condemnor's burden to establish the right and necessity to use the power of eminent domain,” wrote M. Robert Goldstein, a member of the New York task force, and his partner Michael Rikon, in a 3/14/08 column in the New York Law Journal. “If Ohio is capable of such reform, why can't the Empire State?” (They represent condemnees, including several in the Atlantic Yards footprint.)

Fairer process?

The task force did not address the most controversial element of the Atlantic Yards plan, a loose definition of blight that allowed the Empire State Development Corporation (ESDC), for example, to declare that a building that fulfilled less than 60% of allowable development rights was blighted--a rule that seemingly could encompass vast swaths of Brownstone Brooklyn.

However, the task force did offer this telling recommendation regarding the process of selection:
Where the public property to be acquired is in turn conveyed to a private redeveloper, the condemning authority must set forth in the required findings the process it plans to follow to select that redeveloper, the basis for the selection of the redeveloper, the benefits that will accrue to that redeveloper, and the extent to which the public is informed and involved in the process of selecting the redeveloper. The findings must include a statement of the means that will be used to monitor the activities of the redeveloper and to ensure that the redeveloper’s primary purpose is to secure the public benefits of the redevelopment or the project.

That touches on the charges, as made in the Atlantic Yards eminent domain case, that the project is a sweetheart deal, given that the city and state announced backing for the project 18 months before an RFP was issued for the key piece of public property, the Metropolitan Transportation Authority's 8.5-acre Vanderbilt Yard.

In his nonbinding concurrence to the Kelo decision, Justice Anthony Kennedy went farther, citing indicia of legitimacy not present in the Atlantic Yards case, including the substantial commitment of public funds by the State to the development project before most of the private beneficiaries were known, id., at 276; 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....

Call for legitimacy

Indeed, a major supporter of the Kelo decision, Georgetown Environmental Law & Policy Institute Executive Director John Echeverria, testified on 11/4/05 before the New York State Assembly on the use of eminent domain for economic development purposes, suggesting even stronger measures than the task force ultimately called for. (Echeverria co-authored a brief on behalf of the American Planning Association supporting New London.)

He told the Assembly: I believe the primary legislative objective should be to establish additional procedural hurdles for the use of eminent domain, and create additional opportunities for the public to influence the exercise of this power. The goal should be to encourage uses of the eminent domain with significant public economic development benefits, and on the other hand to weed out those projects with modest public benefits or that primarily serve private interests. Steps in that direction would include requiring the senior elected body or official in the jurisdiction to take political responsibility for the use of eminent domain power in each instance, requiring that any use of the eminent domain power advance general, publicly adopted planning goals for the area, and requiring preparation of some type of formal community and homeowner impact analysis prior to the exercise of eminent domain, including a discussion of why the use of eminent domain is necessary, what alternatives to the use of eminent domain were considered and the expected impacts on homeowners and other property owners.

Note that no "senior elected body or officials" is taking responsibility for eminent domain regarding Atlantic Yards, since the agency is the unelected Empire State Development Corporation, four of whose board members spent 15 minutes approving the project.

In addition, to address the concern that in some redevelopment projects the public political institutions appear to act as the agents of private development interests, rather than the other way around, a mechanism is needed to create, to the maximum extent possible, a separation between the formulation of the redevelopment plan and the process of selecting a developer to carry out the plan. Ideally, redevelopment planning should be led by local elected and appointed officials, with expert staff support, and based on extensive public consultations, with the developer selected after the planning process is completed based on an open, competitive bidding process.

Effect on AY?

Last month, I asked Task Force Chair Patricia Salkin, Associate Dean and Director, Government Law Center of Albany Law School, about whether the Atlantic Yards process might have been different had the task force recommendations been in place at the time. She said she couldn’t say: “There are just too many facts and circumstances that would result in a potentially misleading response.”

However, she did observe, “It is my own opinion that many of the abuses that have been alleged and in some cases documented in the eminent domain process [in general] are things that relate to irregularities or ethical lapses on the part the actions of public officials. In these situations, I believe that an appropriate public policy response is to examine the opportunities for strengthening state and local procurement laws and ethics laws that perhaps tie these laws more specifically into the condemnation and redevelopment processes. I see this as important and something that would not prevent, in the big picture, the use of eminent domain, but only that the power be exercised in an ethical and appropriate manner. I have not read all of the pleadings in the Atlantic Yards case, and obviously did not sit through strategy sessions, but I have wondered whether anyone sat with the state procurement law and with the public officers law to ascertain whether any wrongdoing occurred under these sections of the law.”

(Salkin, a widely respected academic in the field of land use law and author of the blog Law of the Land, is identified with the camp defending against major changes in eminent domain, though she does urge reforms, as I'll explain in a future post. In Kelo case, she signed onto two amicus briefs, one filed by the American Planning Association and the other filed by 13 law professors in response to a brief filed by 13 more conservative law professors; both urged the court not to require heightened scrutiny of eminent domain for economic development.)

Initial recommendations

The task force, which included lawyers who represent government as well as those who represent property owners, bolstered the status quo in certain ways. It recommended that eminent domain not be restricted to specified public projects, and that local governments not be able to veto exercises of eminent domain by public authorities of larger entities--like the ESDC. So it would not require elected bodies or officials to take responsibility, as Echeverria suggested,

It did say that agencies exercising eminent domain for economic development purposes should prepare “a comprehensive economic development plan and a property owner impact assessment.” (Note that Atlantic Yards is justified as removing blight and several public purposes beyond economic development.) And it suggested an expanded time period beyond the current 30-day statute of limitations in Eminent Domain Procedure Law (EDPL) judicial review of the condemnor’s determination and findings.

The interim report helped the New York State Bar Association recommend that members of the state’s Congressional delegation opposed a “proposed federal bill that would have had devastating effects on the ability of New York’s governmental entities to exercise the power of eminent domain.”

A day-long invitational summit on 10/24/06 involving attorney stakeholders from across the state was the basis for the additional recommendations. The summit showed that “there is great diversity of circumstances in condemnations” in the state, the report said. “In addition, reforms must respect the tension between furthering the public benefits of condemnations by avoiding cost and complexity while ensuring that the rights and interests of condemnees are respected”--in other words, don’t through the baby out with the bathwater.

Additional recommendations


The task force also recommended that the condemning authority “state the full range of anticipated benefits that are to be secured for the public, how those benefits are to be achieved, and what steps are necessary to ensure that the area-wide redevelopment or economic development program will be carried out as envisioned.”

It also said that the condemning authority “must also outline the anticipated adverse impacts of the proposed area-wide redevelopment plan or economic development project on all property owners and tenants to be affected by the project and the means by which those adverse impacts are to be mitigated.”

Would this have added any burden to the Atlantic Yards process? After all, the ESDC pursued an environmental impact statement under the State Environmental Quality Review (SEQR) Act, I noted to Salkin.

“Some members of the Environmental Law Section of the State Bar had suggested in response to the draft report that SEQR did encompass all of the things you point out,” she responded. “They believed that our recommendations in this regard might not be necessary. The Task Force considered these comments, and decided to keep our recommendations to be clear about the types of findings the Task Force thought were important. It is possible that government officials and courts could determine that these items might not be required under SEQR.”

What about blight?

I asked Salkin if New York, like other states, had looked at redefining blight. “If my memory is correct, some suggested re-looking at the definition of blight, [but] the consensus was that the law already had guidance on blight,” she said.

Added Vicki Been, a New York University law professor who also served on the task force, "At least some members of the committee were concerned that further limiting the definition of blight would have the undesirable consequence of making it even easier to use eminent domain in poorer communities than in middle class and wealthier communities."

By contrast, Goldstein and Rikon wrote, “It is necessary for the Legislature to define what exactly is ‘blight.’ It seems to us that ‘blight’ is in the eyes of the beholder. Since a court will not review a blight designation, justice and fairness require a solid definition.”

That “eye of the beholder” sentiment has been widely expressed, including by planner and Develop Don’t Destroy Brooklyn board member Ron Shiffman and in a 7/25/06 New York Times headline on blight and Atlantic Yards. “There are no hard and fast rules regarding blight,” an ESDC spokeswoman told the Times.

Unlike in a recent case in New Jersey, Atlantic Yards critics were not given an opportunity to have a professional planner try to rebut the state's blight findings before a neutral arbiter.

Georgetown's Echeverria, in his 11/4/05 testimony , cautioned about blight:
For a variety of reasons, I believe that focusing on blight as a guideline for determining whether or not to use the eminent domain power represents a mistaken approach. First, historically, the term “blight” has proven very difficult to define and has been applied, or more accurately stretched, by some local governments in quite unpredictable and sometimes surprising ways. As a result, the use of a finding of blight as a precondition for the exercise of eminent domain has been the source of much wasteful litigation. Second, the blight designation is inherently backward looking rather than forward looking. The nature of the current uses of the property should be one consideration in evaluating a proposed use of the eminent domain power, but the potential benefits of the projected use arguably deserve at least equal consideration. Third, the use of a blight designation appears counterproductively pejorative, in the sense that it converts debates over the use of eminent domain into contests over whether an area is “bad” enough to justify use of eminent domain. Again, it appears more productive to focus on the potential future uses of the property and, perhaps more importantly, the procedures used in making the decision to deploy the eminent domain power and the level of compensation being offered to affected property owners. Finally, the use of a blight exception has the potential to encourage the more frequent use of eminent domain in lower-income communities, visiting the burdens of the eminent domain power on communities that may lack the political power to resist and on citizens who cannot easily relocate to other areas.

Supercompensation & AY

As for “supercompensation” for condemnees, a solution suggested by law professor Richard Epstein, Salkin responded, “There was discussion of the increased compensation for certain condemnations, but no consensus... fairness issues on this work both ways (including the taxpayers who bear the cost as well) and we did not have a chance to fully analyze the issue. As you know, a few other states have taken this approach in limited cases.”

Longstanding need

In their column last Friday, Goldstein and Rikon reminded readers that back in October 2000 they suggested that the Legislature define "public purpose and blight." They expressed regret that no temporary state commission had been established, even though a state bar association committee had urged such a commission back in January 2000.

(Public purpose was among the list of topics that the task force mentioned could be addressed by the commission, though there’s nothing to stop a commission from addressing blight.)

Legislative decisions

Goldstein and Rikon believe courts should be able to scrutinize some legislative decisions, even though state law guides them not to do so. In a 12/29/06 New York Law Journal column, they cited a 1999 expansion process for the New York Stock Exchange; a state court said it was restricted in its review, but the expansion never took place, though it cost “$110 million dollars to pay architects, planners and lawyers as well as the uprooted tenants of 45 Wall Street, just one of the properties cleared and held vacant.”

So, if properties are condemned for Atlantic Yards, and the project does not proceed in part or in full, under state law for now that’s not a problem.

Ohio redefines blight


Ohio Senate Bill 7 offers new definitions for blight and requires agencies purusing property for private use adopt a comprehensive development plan. Would this go too far to stop noncontroversial uses of eminent domain such as Melrose Commons in the Bronx? I’m not sure. But such a redefinition, had it been adopted in New York, likely would have thrown a wrench into Atlantic Yards, since it would've been tougher to declare that 70% of the parcels are blighted.

The act defines "blighted area" or "slum," as used in the Revised Code, as an area in which at least 70% of the parcels are blighted parcels and those blighted parcels substantially impair or arrest the sound growth of the state or a political subdivision of the state, retard the provision of housing accommodations, constitute an economic or social liability, or are a menace to the public health, safety, morals, or welfare in their present condition and use.
Under the act, "blighted parcel," as used throughout the Revised Code except Chapter 725. means either of the following:

(1) A parcel that has one or more of the following conditions:
(a) A structure that is dilapidated, unsanitary, unsafe, or vermin infested, and because of its condition an agency that is responsible for the enforcement of housing, building, or fire codes has designated it unfit for human habitation or use;
(b) The property poses a direct threat to public health or safety in its present condition by reason of environmentally hazardous conditions, solid waste pollution, or contamination;
(c) Tax or special assessment delinquencies exceeding the fair value of the land that remain unpaid 35 days after notice to pay has been mailed.

(2) A parcel that has two or more of the following conditions that collectively considered adversely affect surrounding or community property values or entail land use relationships that cannot reasonably be corrected through existing zoning codes or other land use regulations:
(a) Dilapidation and deterioration;
(b) Age and obsolescence;
(c) Inadequate provision for ventilation, light, air, sanitation, or open spaces;
(d) Unsafe and unsanitary conditions;
(e) Hazards that endanger lives or properties by fire or other causes;
(f) Noncompliance with building, housing, or other codes;
(g) Nonworking or disconnected utilities;
(h) Is vacant or contains an abandoned structure;
(i) Excessive dwelling unit density;
(j) Is located in an area of defective or inadequate street layout;
(k) Overcrowding of buildings on the land;
(l) Faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
(m) Vermin infestation;
(n) Extensive damage or destruction caused by a major disaster when the damage has not been remediated within a reasonable time;
(o) Identified hazards to health and safety that are conducive to ill health, transmission of disease, juvenile delinquency, or crime;
(p) Ownership or multiple ownership of a single parcel when the owner, or a majority of the owners of a parcel in the case of multiple ownership, cannot be located.

...When determining whether a property is a blighted parcel or whether an area is a blighted area or slum for purposes of these definitions, the act prohibits persons from considering whether there is a comparatively better use for the property, premises, structure, area, or portion of an area, or whether the property could generate more tax revenue if put to another use

Limitations

The act provides that before an agency appropriates property based on a finding that the property is a blighted area or slum, the agency must adopt a comprehensive development plan describing the public need for the property. The plan must include at least one study documenting the public need for the property. All of the costs of developing the plan must be publicly financed. Additionally, if the agency is governed by a legislative body, it must obtain a resolution from that body affirming the public need for the property.

Public use

Prior statutory law did not define "public use" for eminent domain purposes. The act establishes a presumption that utility facilities, roads, sewers, water lines, public schools, public institutions of higher education, private institutions of higher education that are authorized to appropriate property under R.C. 3333.08, public parks, government buildings, port authority transportation facilities, projects by an agency that is a public utility, and similar facilities and uses of land are public uses. The act specifies that "public use" does not include any taking that is for conveyance to a private commercial enterprise, economic development, or solely for the purpose of increasing public revenue, unless the property is conveyed or leased to (1) a public utility, common carrier, or municipal power agency, (2) a private entity that occupies a port authority transportation facility or an incidental area within a publicly owned and occupied project, or (3) a private entity when the agency that takes the property establishes by a preponderance of the evidence that the property is a blighted parcel or is included in a blighted area.

1 comment:

  1. Yes, the changes suggested by the task force are exceedingly mild and do “pale before those in many other states” and they pale in comparison to what is needed if particular aspects of the status quo are maintained as the report endorses and perhaps shouldn’t.

    See my long comment on the related accompanying story about possible appointment of a commission.-

    http://atlanticyardsreport.blogspot.com/2008/03/why-david-paterson-should-appoint-state.html

    ReplyDelete