Tuesday, June 30, 2009

State's highest court accepts eminent domain appeal; oral arguments in October, thus complicating AY end game

The Atlantic Yards end game just got a whole lot more complicated.

Despite claims May 15 by Forest City Ratner CEO Bruce Ratner that the unanimous dismissal of the state eminent domain case in May "is really the last hurdle," the state's highest court, the Court of Appeals, has accepted (PDF) an appeal in the case and won't hear oral arguments until the middle of October.

While eminent domain law still tilts significantly to the advantage of the condemnor, in this case the Empire State Development Corporation (ESDC), the court's willingness to hear it indicates that it believes the originating court, the Appellate Division, did not address some aspect of the legal argument.

Also, as Develop Don't Destroy Brooklyn (DDDB) noted, last year half of all civil appeals were affirmed, and the other half were either reversed (about 40%) or modified (about 10%).

The case is brought by nine residential and commercial tenants and property owners in the AY footprint, and is organized and significantly funded by DDDB.

Delays in groundbreaking, arena bonds

At the very least, the appeal delays Forest City Ratner's announced plans to begin construction by October and severely narrows--but does not close--the window of opportunity to have crucial tax-exempt bonds issued by the end of the year.

"We are gratified that the State’s High Court will hear this important case about whether our State’s Constitution protects the homes of its citizens from the wrecking ball of greed wielded by influential developers and the public officials who do their bidding," said Matthew Brinckerhoff, the lawyer representing the appellants, in a press release. "This case provides an opportunity for the New York Court of Appeals to continue its proud tradition of interpreting this State’s Constitution in a manner that affords more protection to individual rights and liberties. We look forward to the argument in October."

ESDC spokesman Warner Johnston initially offered no comment, then said, "We do not comment on pending litigation but can confirm that the Court of Appeals has granted our request for expedited review. ESD is pleased that the Court recognized the importance of resolving this matter quickly."

The ESDC had previously asked for the appeal to be dismissed or, if accepted, to be heard no later than the first week in September. The October date, Johnston said, "is still an expedited review. They typically take much longer to schedule." (Last year, the Court of Appeals decided all of its October cases by December 2, according to WNYC.)

Forest City Ratner spokesman Joe DePlasco, ignoring the decision to accept the case, told the Observer, "The Appellate Division ruled unanimously in May in favor of the use of eminent domain because of the public benefits associated with Atlantic Yards. We’re confident that the Court of Appeals will come to the same conclusion. We are moving forward aggressively following last week’s approval by the MTA and authorization by the Empire State Development Corporation. We intend to be in construction before the end of the year."

For those listening to Charles Bagli and Andrea Bernstein on the Brian Lehrer Show today (after about 17:15), note that they seemed to be confusing the July public hearing on the project held by the Empire State Development Corporation with the October--not September--hearing held by the Court of Appeals. Nonetheless, Bagli offered this observation about Ratner's quest for tax-exempt bonds: "He’s got a very small window of opportunity here, which just got even a little bit smaller today."



Briefing schedule

The appeal, which is scheduled for argument during the Court's October schedule (Oct. 13-15 or Oct. 20-22), is subject to the following briefing schedule: appellants' brief filed by July 31; respondent's brief filed by September 10; and appellants' reply brief filed by September 25.

Constitutional question at issue

The Court's letter states:
In addition to the merits, the briefs should address the Court's subject matter jurisdiction with respect to whether a substantial constitutional question is directly involved to support an appeal as of right, which the Court will consider with the arguments on the merits. The parties shall be prepared to address the jurisdictional issue at oral argument.


The ESDC had asked the Court not to accept the case because it did not raise a substantial constitutional question. Rather than doing so, the Court preserved that question for the briefs and oral arguments.

On June 22, I sketched the arguments on the merits of the case.

Constitutional argument #1: slum clearance

The first constitutional question raised by the petitioners is whether the public use requirement in the state Constitution "imposes a more stringent standard for takings" than does the federal Constitution, a question not yet considered by any state court.

The ESDC responded:
[N]otwithstanding any asserted difference between State and federal takings law, it is well settled under both New York and federal law that slum clearance is a valid public purpose for the exercise of eminent domain.

Slum clearance? Forest City Enterprises CEO Chuck Ratner calls it "a great piece of real estate."
Not only would the AY project eliminate blight--a sufficient public purpose unto itself--it would accomplish "numerous other valid public purposes," as noted in the Appellate Division decision, ESDC lawyer Philip Karmel wrote.

That decision cited:
creating an arena publicly accessible open space, affordable housing, improvements to public transit, and new job opportunities... The petitioners' argument that some of these public benefits may never actually be realized is conclusory and speculative.

Isn't the argument becoming less speculative now--especially given the uncertainty in the revised Modified General Project Plan issued last week, which essentially guarantees only an arena and one tower ?

Constitutional argument #2: cost-benefit analysis

The second constitutional question raised by the petitioners is whether the state Constitution's public use requirement can be satisfied when the condemning authority does not examine whether the public benefit "is not incidental or pretextual in comparison with benefits to particular, favored private entities."

The ESDC responded:
To our knowledge, no condemning authority... has ever included this type of information in the EDPL record. In fact, this Court's opinion in Yonkers Community Dev. Agency v. Morris expressly held that once the land at issue is found to be blighted, no further inquiry is required."

The ESDC added that the case cited by the petitioners, Aspen Creek Estates, Ltd. v. Brookhaven is not on point because it concerned eminent domain for economic development rather than for removal of blight.

That may be so, but it's curious that the ESDC in legal papers claimed that it had examined the quantity of private benefit, though it cited a document that didn't perform such a measure. In court, the ESDC lawyer said it wasn't necessary, and the court agreed.

Constitutional argument #3: low-income housing

The third constitutional question raised by the petitioners is whether the project violates a clause of the state Constitution which requires that subsidies for reconstruction of blighted areas must be restricted to "persons of low income."

The ESDC responded that this claim was never mentioned in federal court, and that it would "hamstring the State's ability to advance important capital projects across the State and is utterly meritless, for the reasons explained in the Appellate Division decision."

If this is "utterly meritless"--and it probably is, I suggested--then are the other elements of the appeal with some merit? The Court of Appeals apparently thinks so. And the acceptance of the appeal is another challenge to claims by the New York Daily News's Errol Louis (and others) that the Atlantic Yards litigation is "frivolous."

5 comments:

  1. The appeal halts all moves by ESDC to proceed with relocation and the EDPL Article 4 vesting proceeding. The project has just ground to a halt. There certainly will be no groundbreaking in 2009, and probably no groundbreaking ever. Or maybe the basketball coach sees it differently.

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  2. looks like the dddb et al get a kick save on this one.

    but i disagree that the third isssue is utterly meritless.

    somewhere the state of new york understood and codified that you dont steal from the poor to give to the rich with regards to housing.

    and millions have been given to ratner to accomplish what the state cannot do, use state funds to buy out poor to build housing for the rich. that they have an intermediary will eventually be found to be irrelevant because it still is state funds.

    cant wait for the ratner/times/esdc/mta spin on this one.

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  3. we would know more about that 1938 constitutional amendment if courts had addressed it along the way

    the courts did not because there have been very few, if any, intelligent and imaginative legal challenges over the 70 years (in the case of the constitutional amendment) or 40 years (in the case of the UDC Act).

    So DDDB and the bloggers are legal pioneers. They have stopped an urban development disaster and the hijacking of a state agency, in its tracks.

    In an era where mayors, governors and most electeds couldn't care less what happens to ordinary people, these Brooklynites are a model and a beacon for citizen democracy everywhere.

    If the Atlantic Yards Project is not inevitable - if this civic monster can be slain - think what else out there might be different ...

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  4. Norman, in the event that the Court of Appeals rules in the ESDC's favor, how would it be possible that Ratner would have enough time to (i) sell the tax-emempt bonds and (ii) acquire the land by December 31, 2009? Also, is any of the land in the arena footprint even being acquire by eminent domain?

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  5. A decision should come down by early December. Presumably the local development corporation authorizing the bonds, the banks, and the institutional purchasers would all be lined up. Not sure that land needs to be acquired for bonds to be sold. Yes, several properties in the footprint would have to be acquired via eminent domain.

    In other words, as far as I know, this tightens but does not close the window of opportunity.

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