Thursday, September 18, 2008

At state Senate hearing, calls for reform of state eminent domain laws, notably blight

Opponents of governmental plans to use eminent domain for Atlantic Yards, the Columbia University expansion, and Willets Point redevelopment were at center stage yesterday at a State Senate hearing on reforming state eminent domain laws, where they and others pointed out that, in the years following the Supreme Court’s 2005 Kelo v. New London Supreme Court decision, New York has been among the few states that has made no effort to tighten eminent domain laws either through legislative or judicial action.

“Nowhere else in the country is eminent domain used to benefit private interests so rampantly and so brazenly,” declared Christina Walsh, a representative of the Institute for Justice, the libertarian legal organization that has led the fight nationally against eminent domain.

Harlem State Senator Bill Perkins, an opponent of the Columbia expansion who convened the hearing, called for a moratorium on the use of eminent domain in the state and a stall on the Columbia plan. He said he supported a special commission to reform eminent domain laws--a recommendation made by a New York State Bar Association task force to study changes in the 32-year-old Eminent Domain Procedure Law (EDPL).

(Perkins is at center. State Senator Velmanette Montgomery is at left and State Senator Efrain Gonzalez is at right. Photos by Lucy Koteen.)

Among the recommendations: formally define and limit the definition of “blight,” which is undefined; give those threatened by eminent domain a chance to challenge determinations in court by calling witnesses; and even to eliminate the use of eminent domain for private redevelopment.

Daniel Goldstein of Develop Don't Destroy Brooklyn, drawing on the Atlantic Yards example, suggested that only locally elected legislative bodies, not the unelected agencies like the Empire State Development Corporation, approve the use of eminent domain.

The 5-4 Kelo decision essentially affirmed Supreme Court doctrine, which had long allowed eminent domain for “public purpose” rather than the constitutional “public use;” however, it was the first decision to affect individual private homes. States, however, have the option to narrow the doctrine.

Unbalanced hearing

The hearing drew some 70 people at its peak, with State Senator Efrain Gonzalez of the Bronx and Velmanette Montgomery of Brooklyn joining Perkins. In the audience: a mix of advocates and property owners, mainly white, plus several Harlem residents, people of color. (However the five elected officials who spoke or submitted testimony were all people of color, and expressed concern about their constituents.)

No supporters of eminent domain testified; Perkins said that Empire State Development Corporation was invited to testify but did not do so. (An ESDC representative was in the audience, as was Janella Meeks, a manager of community relations for the New Jersey Nets, who works out of 1 MetroTech Center.)

Nor were there any of the planners and lawyers who consider themselves supporters of prudent use of eminent domain and hope that the backlash against Kelo--at least nationally--doesn’t go too far.

In a Daily News op-ed today headlined We need eminent domain to keep New York City growing
Kathryn Wylde, president of the Partnership for New York City, wrote:
Eminent domain - the power to take ownership of private property and assemble sites for construction of projects that will serve a public purpose - is one of those [governmental] powers. New York has a pipeline of important projects that can go forward with the help of eminent domain.

She said that eminent domain is under attack and argued that holdouts are getting “fair market value” and more, but still in some cases refuse.

Indeed, in a column today headlined 
The right way to fight blight, Daily News columnist Errol Louis called it a “surreal hearing” because “a small but vocal group of anti-development advocates are pushing” for “a set of handcuffs on the public development agencies charged with planning and executing large-scale projects.”

Louis did allow that advocate Norman Siegel and his client Nick Sprayregen, the major landowner in Columbia’s expansion zone, “are perfectly within their rights to try and rewrite the law, and a re-examination of the 40-year-old rules makes sense.” But he didn’t try to sort out what might work. Nor did he reflect on the appeals court hearing later yesterday in which some judges expressed skepticism about blight claims regarding Atlantic Yards.

Community-based planning

Perhaps the person with the broadest view--who testified after Louis left the hearing room--was Julie Lawrence, a member of Brooklyn Community Board 1, who testified on behalf of the Community-Based Planning Task Force, a coalition that includes grassroots organizations, community boards, academics, and planners--and, as its name suggests, wants more community input.

Lawrence pointed out that, despite the city’s growth, "New York City still lacks a comprehensive planning framework. Redevelopment of New York City... will succeed only when all stakeholders are brought together to achieve consensus around development goals. We need a citywide planning framework grounded in consensus and based on city policies, city goals, and neighborhood plans—such as Manhattan Community Board 9’s 197-a Plan."

She added that the role of the ESDC "means projects sidestep ULURP—our flawed yet Charter-defined due process for projects seeking discretionary approvals. Removing ULURP means removing the community boards, borough presidents, and City Council members in the deliberations that shape outcomes. Projects that rely on the taking of private property need more transparency, accountability, and standardization, not less."

She acknowledged that blight “is notoriously subjective,” but requires local input for better comprehension: "As we have seen in the case of Atlantic Yards, without a participatory planning process in place, development gets delayed, faith in government erodes, and land use decisions end up being made in the courts."

She did express support for eminent domain as a “tool to achieve community development goals.” But she said it should be used carefully: "Until and unless the public benefit is undeniable, flows from a clear plan, and has been agreed upon through a public process, eminent domain should not be used."

(Her use of the term “public benefit,” rather than “public use,” left open the possibility that eminent domain could be used for projects beyond the traditional schools, roads, hospitals, etc.)

Limiting eminent domain

Attorney Michael Rikon, whose firm is the only one in the state that limits its practice to eminent domain case, argued that “the use of this most extreme power should be limited to a true public purpose.”

Rikon noted that the U.S. Supreme Court in Kelo, upheld eminent domain for economic development because it occurred within an integrated development plan. “Actually, the Supreme Court had it wrong,” Rikon declared. “There was no integrated development plan by New London. There were no obligations by the developer at all.”

Rikon noted that 42 states have passed post-Kelo legislative reforms. (Some critics of Kelo think most of those reforms are minor.) He also called for a temporary commission. There is no real or effective procedure to stop a condemnation,” he said. “It is virtually impossible to win a challenge.”

Perkins asked if there was a model for such a commission. Rikon pointed to a New York State commission a quarter-century ago. But didn’t that commission come up with the law we have today, Gonzalez asked. Rikon said that government agencies and lobbyists “chopped and amended” the recommendations

Walsh of the Institute for Justice suggested that blight be limited only to properties that pose immediate threat to public health and safety.

(Walsh is at left. Atlantic Yards footprint property owner Henry Weinstein is at center, and Dan Feinstein of the Willets Point Industrial and Realty Association is at right.)

Michael D. D. White of Noticing New York, an attorney and urban planner, called for prohibition of “so-called gag order, non-disclosure, and tout-for-the-project agreements,” noting that “private entities like Forest City Ratner and Columbia University, while obtaining property with the threat of eminent domain, now also obtain non-disclosure agreements.” He also suggested that compensation is not yet fair, since, numerous transaction costs--including brokerage and lawyer fees to acquire new property, costs of changing employees or changing arrangements with employees, skittishness and lost business opportunities--are not generally reimbursed.

Legislation coming

“I plan to craft legislation that addresses the inequities and weeds out the potential corruption that could exist when mixing private purposes with the public interest,” said Perkins. “It will be important to ensure that valid economic development objectives can be clearly identified, while abuses are identified and corrected.”

Despite Perkins’s criticism of eminent domain, his statement suggested more of a willingness to compromise than those speaking at the hearing--or maybe it was just a recognition of the political realities. He acknowledged that no legislation would move this year but suggested it might gain momentum once the Democratic Party, as is expected, gain control of the State Senate. Still, there is considerable support for the status quo.

Elected officials’ concerns

Despite that support, several political officials expressed concern. Gonzalez commented, “My concern is that, when developers or government--by the time it reaches the community, it’s already almost a done deal.”

A representative of State Senator José Serrano argued for blight to be narrowly and uniformly defined and that New York eliminate the use of eminent domain for private developers. He expressed concern about the steady increase of developer interest in East Harlem and the South Bronx.

A staff member from the office of Council Member Hiram Monserrate, who represents Willets Point, read a statement in which Monserrate explained how he’s introduced legislation in the City Council “to require responsible use of eminent domain in cases of economic development.” It would require financial impact reports, including the estimated costs and benefits of the proposed project, and would require increased compensation for property taken by eminent domain.

Inconsistencies with blight

Two inconsistencies in the application of blight were noted. Serrano’s representative testified that the case of Atlantic Yards, buildings were deemed vacant with 50% vacancy rates, while in the Columbia University expansion, buildings were initially deemed vacant at 25% vacancy rates.

Attorney Philip Van Buren noted that consultant AKRF has asserted that a building not fulfilling 60% of its development rights is underutilized. (This was part of the Atlantic Yards Blight Study.) However, he said, “The City Planning Commission uses 50% for its policy planning purposes. Even 50% is arbitrary.”

The Columbia case

Siegel, a veteran civil rights attorney, past (and current) candidate for Public Advocate, and representative of Sprayregen, declared, “The entire process is unfair. Perhaps the single most serious problem is the fact that the condemnee must file the challenge in an appellate court, not a trial court. If you can change anything, and you should change a lot, you should change this violation of due process.”

When Tuck-it-Away’s properties are condemned, it does not have an opportunity to challenge it in trial court, Siegel said, contrasting the case with a challenge to other government agency decisions, and eminent domain proceedings “in every other state of which we are aware.” He noted that there is no opportunity for discovery, no right to introduce no evidence after the closing of the record, no right to call witnesses, and no right to cross-examine experts. There’s only 15 minutes to argue the case. “Give the property owner a right to a fair hearing,” he said.

Siegel said that the public hearing process gives speakers too little time--five minutes in one case, three in the other--to express objections. “There’s virtually no possibility for persuading the ESDC to alter its course,” he said.

Further, he argued, the proceeding is unconstitutional because no information can be added after the closing of the record, even though he’s in court on behalf of Sprayregen to pry additional records from the state.

He said that the state should mandate that ESDC board members be present at public hearings. “Assigning an independent hearing officer is inadequate,” Siegel said. “The dynamic adds to the too-high cynicism about the process being a sham.”

ESDC role

No board members were at the Atlantic Yards hearings, either. Perkins said he’d sent a letter to the ESDC after the Columbia hearings saying he viewed the Directors’ failure to attend as an insult, given that “you might as well put a recorder there, or a camera and walk away.” An ESDC response stated. “The Directors’ presence was not necessary to accomplish the hearings’ purpose, which was to provide the public with an opportunity to comment” and that the Directors would be provided with a transcript and a summary of comments and responses to them. An ESDC staffer in the audience invited people to submit comments on the Columbia plan.

Siegel said that ESDC quorum requirements should be a majority of board members, not a majority of those sitting at the time. “I was shocked,” he said, when the ESDC board, which is supposed to have nine members, passed the Columbia General Project Plan with only three members present. (Four board members approved Atlantic Yards.)

Changing eminent domain

Siegel said that, as in other states, there should be be written criteria setting forth what constitutes blight. In terms of eminent domain, he said, the city has moved from slum clearance to urban renewal to the “economic development era,” when the government shows “enormous deference to the developer.”

Siegel also said the use of eminent domain should conform to the state constitution, which simply says “public use.” He added that the ESDC, formally known as the Urban Development Corporation, was set up in the wake of the assassination of Martin Luther King, Jr. to provide affordable housing for low-income people. “Somewhere in the last 40 years,” he said, the agency has lost sight of its mission.

More on Columbia

Sprayregen, who also offered an op-ed in today’s Daily News, testified: “The system right now is broken, biased and clearly unfair. it is robbery in the broad daylight. How is it that the state can declare Manhattanville blighted? .. How can the state feel it is OK to share the same consultant--AKRF--as Columbia--the applicant requesting eminent domain? How can the state, prior to formally hiring AKRF, first receive a preliminary draft of a blight study so as to confirm... what the conclusion will be?”

Sprayregen has filed four lawsuits and won two, with two decisions pending. His lawyers have asked for the record to remain open.

He seconded Siegel’s call for a reform of the court procedures: “As it stands now, in a few months when the state formally condemns my family’s property, I will not be allowed to take the witness stand.” He noted that “the vast majority of those threatened with eminent domain do not have the financial resources that I have.”

Siegel, responding to questions from Perkins, noted that the EDPL was set up 32 years ago, “to expedite the condemnation, to be deferential to developers,” and sent a message to the ESDC and city agencies to work in partnership with the private developers.

Van Buren, co-counsel for Tuck-It-Away and also a representative of tenants, detailed four attempts to try to find blight in the Columbia expansion zone When the firm AKRF “was found to be in a tangled relationship with Columbia University” by a state appellate court, he noted, ESDC made a fourth attempt and hired a consultant, Earth Tech, to “replicate” the AKRF study, in the words of an ESDC staffer.

(A state appellate justice yesterday expressed skepticism about AKRF in the appeal of the decision dismissing the challenge to the Atlantic Yards environmental review.)


Walter South, member of Manhattan Community Board 9 (which includes Columbia and produced its own plan for Manhattanville) but speaking individually, noted that he has master’s degrees in sociology, urban planning, and historic preservation. “In New York State, if you’re well-connected politically and have money, you can actually rent the New York State government,” he declared.

He sardonically called Columbia’s plan “a fantasy” illustrated by “a fancy architect” and backed up by chimerical numbers. He suggested that blight could not be redefined, nor should just compensation or the hearing process fixed: “The right answer is there should be no condemnation of private property given over to private individuals.”

The Atlantic Yards case

Goldstein, who owns a condo in the Atlantic Yards footprint, testified that state procedure “are serving private interests for private benefits and private profit. In reality, more often than not, eminent domain in New York has become the tool of the all powerful real estate lobby.” he noted that, “over these five years not one single elected official or official from the Empire State Development Corporation... or any other agency has ever convened a meeting with those property owners and tenants whose homes and businesses would be seized to supposedly benefit the public. Throughout, we have been treated as the enemy, and entirely ignored by the government actors who claim the eminent domain is for the public’s benefit.”

When “used as an excuse” for eminent domain, he said, “economic development” is always “highly speculative for the public while the eminent domain itself makes it a sure thing for the developer.”

(Well, it makes it easier, but, as we’ve seen with the recent economic downturn, may become much more uncertain. Update: Goldstein e-mails me to say, "a 'sure thing' meaning the developer gains the valuable control of the land." Emphases in his testimony are from the written version.)

(Goldstein is at center. Walter South is to his right and Michael Rikon to his left.)

As for Atlantic Yards, he asserted, “Every single purported public benefit touted by the Empire State Development Corporation (ESDC) could be achieved without the use of eminent domain. The only reason eminent domain is being used for the Atlantic Yards project is to give a massive private benefit to the private developer—the windfall benefit of cheap land and the windfall benefit of a complete zoning override.”

(The ESDC says it needs to assemble land for an arena, though Forest City Ratner, some argued, could have chosen to replace its Atlantic Center mall, or an arena could have been sited in Coney Island.)

“The use of eminent domain for Atlantic Yards clearly serves no public purpose whatsoever,” he said. “If the purpose of the project was economic development, as claimed by the ESDC, then the proper way to accomplish that would be to rezone the area.” (The ESDC did find public purpose; that has been contested in court.)

Goldstein noted that “the agency’s predetermined analysis found that the exact same footprint that Ratner had drawn up in his boardroom was blighted,” pointing out that the ESDC Board approved the blight determination, the project and the use of eminent domain during a hearing that lasted 15 minutes.

He suggested that state law require that only locally elected legislative bodies—such as the City Council— approve the use of eminent domain, thus excluding “unelected, unaccountable public authorities.” He said a “transparent and independent economic impact study and cost/benefit analysis must be undertaken and completed before any condemnation decisions are made.”

He said the definition of blight should be narrowed, perhaps restricted to “areas that are a true hindrance to public health only after remediation attempts have proven ineffective.” He suggested that compensation exceed market value and should be mandated for tenants, who often are excluded.

Goldstein’s detailed testimony--he spoke for some 11 minutes; Perkins had asked people to keep their remarks to five minutes, but did not curtail Goldstein--concluded with the recommendation that eminent domain be limited to public use--”or, alternatively, only legislative bodies can initiate economic development projects that require the use of eminent domain.”

Henry Weinstein, a property owner in the footprint, decried the state's "disingenuous" tactics regarding the ownership of his building. (ESDC said that the building was controlled by Forest City Ratner, though Weinstein disputed the assignment of the lease and so far has prevailed in court, though the case is under appeal.) He added that “the facts coming out about the trickery and lies used to push the new Yankees and Mets stadiums should give everyone pause.”

Montgomery called Atlantic Yards, “the most embarrassing and outrageous experience that I’ve had in government.., the ESDC has worked essentially in concert, in cahoots with the developer.” She saluted Goldstein for his effort to stand up to eminent domain.

She said that part of the $300 million (actually $305 million) in governmental funds was to assist the developer in “removing people from their land.” (Well, $100 million in city funding was used to compensate the developer for negotiated buyouts, not for the expected use of eminent domain, but the buyouts, some of them considered generous, were accomplished under the threat of eminent domain.)

Willets Point

Dan Feinstein of the Willets Point Industry and Realty Association (WPIRA) discarded his prepared testimony, noting that many of the points had already been made. Noting that members of his group own more than 50 percent of the land at issue, he called the city’s plan “the next great pipe dream,” as a yet-to-be-chosen developer does not have financing nor a concrete plan.

(Attorney Van Buren later suggested that Feinstein’s formulation was wrong, that it was better to find blight “before negotiations begin with any developer, so there’s a public review before there are interested players.” That seems to better conform with the process outlined in Kelo.)

“Could you imagine what it is to wake up one day and see in the newspaper that someone's going to build an office building where your land is, land that’s been in your family for 80 years," Feinstein said, generating a sympathetic “hmm” from Perkins.

“They say it’s blighted and must be fixed,” Feinstein said. “What’s really blighted are the streets and the services that the city’s never provided.”

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