Skip to main content

In Columbia eminent domain case, some skeptical judges, AY echoes, and signs of emerging strategy for community resistance

Lawyers representing two property owners resisting the use of eminent domain for the Columbia University expansion maintained a passionate argument in appellate court yesterday, calling the Empire State Development Corporation’s (ESDC) actions in bad faith and seeing an ESDC lawyer clearly on the defensive before two clearly skeptical judges.

“Nobody’s opposed to Columbia expanding. They’re opposed to eminent domain,” attorney Norman Siegel said in his closing remarks before a five-judge panel of the Appellate Division, First Department. “The [skeptical] questions [from the Court] I hope will reflect the decision.”

Harlem State Senator Bill Perkins, speaking after the hearing on the sidewalk outside the courthouse, at 25th Street and Madison Avenue, was blunt: “It looks like Columbia’s going to lose.”

That’s unclear, given that three judges were largely quiet and ESDC lawyer John Casolaro, despite facing some withering skepticism from Justice James Catterson, reminded the court that the condemnor had a structural advantage. Their job, he told the judges, is to decide whether ESDC has some foundation for its decision. If they decide that the ESDC “had a reasonable basis or a basis, the inquiry is at its end.”

(Should two judges dissent, an appeal would be automatic.)


The argument came just a day after Mayor Mike Bloomberg and Gov. David Paterson saluted the Public Authority Control Board’s final approval of the General Project Plan for the Columbia University expansion into West Harlem, aka Manhattanville.

AY echoes, and a different strategy

There were echoes of and contrasts with Atlantic Yards, notably as Siegel compared parallel blight studies for each project, the petition pointed out that no alternative project was considered, and the judges found reason to consider the AY site a somewhat more legitimate subject for eminent domain.

(The lawsuit in the Columbia case includes a challenge to the environmental review, essentially combining some of the legal strategies separated in the AY case; in the latter, there was a much longer opportunity for a trial court hearing.)

Catterson, in the appeal of the case challenging the AY environmental review, wrote a concurrence that read like a dissent, and Siegel (I'm told; I missed part of the argument) opened up by quoting the judge's opening line: that the the Urban Development Corporation Act is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are "underutilized."

As Siegel’s aggressive strategy showed, there were hints of a road not taken in the AY case. (Siegel, a veteran civil rights attorney and candidate for Public Advocate, as he was in 2005, represented Develop Don't Destroy Brooklyn in the early stages of the AY fight.)

On behalf of client Nick Sprayregen of Tuck-it-Away Storage, the legal strategy included but went beyond questioning the benefit to a private actor, as has been the focus of the AY eminent domain cases.

As the Columbia project went through its approval process before the ESDC, Siegel created a factual record of 10,000 pages--as noted in the 107-page petition--to be presented for a court challenge in which there would be no new chance at fact-finding. Documents were gained through Freedom of Information Law (FOIL) requests, and a “No Blight” Study of the neighborhood countered the state’s Blight Studies. (The ESDC commissioned a second Blight Study after consultant AKRF was charged with conflict of interest.)

That “No Blight” Study examined the concept of blight, arguing that it must be seen in context of physical and social conditions impeding normal development and the suppression of investor interest leading to worsening social and physical conditions. (In other words, to quote planning professor Lynne Sagalyn, “the fabric of a community is shot to hell.”)

Priming an appeal

In an element that may prime an appeal to the U.S. Supreme Court, the lawsuit also included a wholesale assault on eminent domain law in New York State. It claims that the Urban Development Corporation Act (UDCA) is on its face unconstitutional because it offers no definition of blight and is impermissibly vague.

(The law states: The term "substandard or insanitary area" shall mean and be interchangeable with a slum, blighted, deteriorated or deteriorating area, or an area which has a blighting influence on the surrounding area, whether residential, non-residential, commercial, industrial, vacant or land in highways, waterways, railway and subway tracks and yards, bridge and tunnel approaches and entrances, or other similar facilities, over which air rights and easements or other rights of user necessary for the use and development of such air rights, to be developed as air rights sites for the elimination of the blighting influence, or any combination thereof and may include land, buildings or improvements, or air rights and concomitant easements or other rights of user necessary for the use and development of such air rights not in themselves substandard or insanitary.)

The lawsuit also claimed that the Eminent Domain Procedure Law (EDPL) is unconstitutional on its face because there is no opportunity to obtain evidence through discovery, no opportunity to cross-examine witnesses, and the 15 minutes afforded to each side--a time limit breached yesterday and in the AY case--denies the parties “adequate judicial resources” for consideration of complex facts.

Along with representatives of the ESDC and a few dozen West Harlem community members, Forest City Ratner attorney Jeffrey Braun was among the spectators in court.

Blight questioned

Questioning the Blight Study, Siegel argued that it was arbitrary for the ESDC to say properties were underutilized if they fulfilled only 60% of their allowable development rights--the same as in the AY Blight Study--especially given that only a Floor Area Ratio (FAR) of 2 was allowed before the area was rezoned. That means that a two-story building covering a lot would be fully built out and a one-story building--such as a functioning gas station--by definition would beblighted.

In the AY Blight Study, a vacancy rate of 50% or greater was an element of blight; with Columbia, the initial determination--later revised--was a vacancy rate of 25%. (Wouldn’t that cover a lot of new condo buildings?)

In New Jersey, Siegel pointed out, the state highest court decided to stop using underutilization as a standard for blight. As for state law declaring blight to be a “substandard and insanitary,” he said, “it’s void for vagueness,” noting that the Ohio Supreme Court had abandoned similar language.

Beyond that, the petition contended that 43% of the buildings found to be blighted crossed the line after Columbia assumed ownership.

How, Siegel asked, could his client know what standards to follow? “There are so many ways,” he implored the court, “for you to say ‘Enough is enough; we’re not allowing it to go on any more.’”

Catterson leads the charge

Catterson was not unfamiliar with the Columbia conflict, last July writing an opinion upholding a Supreme Court justice’s order that the ESDC turn over to the West Harlem Business Group correspondence with consultant AKRF, which had also worked for Columbia. (AKRF also worked for Forest City Ratner and the ESDC on Atlantic Yards, though consecutively, not concurrently.)

Yesterday he was skeptical. Why, he asked, did ESDC’s Blight Study of Manhattanville use building code violations to determine blight, but the Atlantic Yards Blight Study did not?

(The AY Blight Study did inventory such violations but stated:
Building code violations are also not shown [as indicia of blight] because building code violations vary widely in date of issuance and type of violation, making it difficult to make meaningful comparisons in data across lots.
)

ESDC attorney Casolaro suggested that records were better in Manhattan. “It’s an indicia” of blight, he said.

“That’s a claim you make,” Catterson shot back. “How does a 15-year old boiler violation means a building is deteriorating?”

Casolaro backed off, switching the subject, noting that only two new buildings had been built in the area since 1975.

Justice Rosalyn Richter was skeptical, suggesting that the zoning was a more important factor.

“It’s a FAR 2 district,” Catterson followed up. “New construction may or may not be viable… Your adversary’s position seems to be unrebutted.”

Casolaro took another tack, pointing out that 88% of the buildings were more than 65 years old.

“So what,” responded Catterson, pointing out that the same could be said for the neighborhood of Chelsea.

Siegel got back to the building code violations, noting that nearly all the buildings were owned or controlled by Columbia, and that most of the violations were either obsolete, purely administrative, or dealt with boiler issues. At most there were about a dozen building code violations “that create a real problem,” he asserted.

“In Brooklyn they didn’t use [violations],” he said. “Here they used it. They were doing what they could do to shoehorn it” into blight.

Difference with AY

I missed part of the argument, but elements were reconstructed for me by some spectators and lawyers for the petitioners. The AY federal eminent domain case, Goldstein v. Pataki, was cited by the ESDC to buttress its support for Columbia. Similarly, the state court, in its recent eminent domain ruling on AY, cited that federal case, deferring to governmental claims of public use.

However, the Columbia case, the petitioners argued, is different, because Columbia is a private university and there are no cases that allow a taking for private education.

An ESDC attorney, however, countered that public use is a flexible concept and educational institutions serve the public interest. Beyond that, the Columbia project serves economic development, via the creation of jobs, and also removes blight--though that's obviously an issue of controversy.

Petitioners’ attorney David L. Smith, who represented the Singh family (as noted in the Columbia Spectator's report), pointed out that a state case, Murphy v. Erie County, supports claims in the AY case that a sports facility is a public use and a civic purpose.

Smith said that the “collateral” non-educational purposes of Columbia’s project benefiting the community--such as a swimming pool--were not identified until late in the process and remain under Columbia’s control.

Manhattanville, the lawsuit pointed out, was never previously found to be blighted. By contrast, as one judge noted yesterday, in the case of Atlantic Yards, the state could point to the longstanding Atlantic Terminal Urban Renewal Area (ATURA), which includes the part of the AY site north of Pacific Street.

The record is key

The record before New York courts in eminent domain cases, Siegel said after the hearing, is generally “only what the government puts in.” The strategy in the Columbia case was to create an alternate record that could be presented to the ESDC and then used when the case went to court.

The key, he said, was to file FOIL requests-something he asserted does not necessarily require a well-funded client (as in the case of Sprayregen), but, I suspect, certainly doesn’t hurt, since going to court to pursue rejections of FOIL requests can be costly.

Another key was creating both a No Blight Study, which included a market study. In the case of Atlantic Yards, the state was supposed to perform a market study--a plan that surfaced only after I filed a FOIL request--and the issue was raised in the case challenging not eminent domain but the environmental review. However, the court ignored it.

In hindsight: need for reform

Could Atlantic Yards opponents have created a more robust record to challenge the project in court? Quite possibly, though it would have been more costly.

Would it have made a difference? Unclear, given that the AY cases aren't over and we don't know the result of the Columbia case. As noted above, the fact pattern is somewhat more sympathetic to the petitioners in the Columbia case.

What is clear is that both the AY litigation and the Columbia litigation have brought to light the need to reform state eminent domain laws.

Comments

Popular posts from this blog

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…

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…