Friday, November 06, 2009

The condemnation process: what might happen if the ESDC wins the eminent domain case

So, what might happen if the Empire State Development Corporation (ESDC) prevails in the pending eminent domain case--decision expected around Thanksgiving, but who knows--and pursues condemnation of properties in the Atlantic Yards footprint.

In previous coverage of the ESDC's July 22 community information session, ESDC counsel Joe Petillo offered an outline, and I also asked an attorney representing potential condemnees.

The process can take 110 days, involving a 20-day process and then a 90-day process.

Meanwhile, if Forest City Ratner wants to have a groundbreaking before the end of the year, they can, but it won't be on a fully cleared arena block and it might well take place while footprint residents, including uber-opponent Daniel Goldstein of Develop Don't Destroy Brooklyn, are still in their homes. (Also see comment at bottom by attorney George Locker, who predicts longer delays because of other legal cases.)

Oh, and if the ESDC loses, well, the project would die and a new legal mess would begin.

The state's take


(Videography by Jonathan Barkey)

"What happens to people and their possessions if they refuse to leave their homes after the state completes an eminent domain proceeding?" asked moderator Craig Hammerman, District Manager of Community Board 6.

Petillo, speaking carefully and appearing slightly sheepish, said, "Y'know, Empire State Development Corporation is--we recognize that in a project where we're exercising eminent domain--it impacts people's live. We're very sensitive to that. "

There were a few catcalls from the audience.

"We try to minimize the impact of our projects on folks who are displaced by the project,” Petillo continued. “We have very little experience having to deal with people who refuse to leave. I think we have a good track record of assisting displaced residents and businesses in finding new locations, and trying to assist them in dealing with what admittedly is a disruptive process.”

"From a strictly legal perspective, if someone were to refuse to leave, there's a court process that Empire State Development Corporation would go through. It would be supervised by the condemnation judge in Kings County. Once the condemnation was approved and the property was needed for construction, Empire State Development Corporation would ask the judge to issue a writ of assistance, comparable to an eviction notice, which we then would deliver to the Kings County Sheriff. There would be a reasonable period of time that would pass. The individual would be given them a deadline for leaving."

Some of the others with Petillo looked somber. The room had become quiet.

"If they refused to leave," he said, "the sheriff would forcibly remove them and their possessions. Their possessions would be stored offsite for a reasonable period of time. We don’t anticipate that happening. It's--we're not in the habit of dealing with that situation on our projects."

And what if they lose?

Hammerman asked a follow-up question: "If the Court of Appeals finds that eminent domain may not be used in this case, then what?"

Some in the audience clapped. Petillo scratched his head. A few people clapped.

Petillo didn't quite answer: "To this point, every court that has considered the use of eminent domain on this project"--a few people murmured that he was evading the question--"has found it to be appropriate and lawful. And we're confident that we're going to prevail in the Court of Appeals and we're committed to moving the project forward by the end of the year." Some people clapped.

“I think in not answering the question, they’ve answered it,” commented CB 6 Chairman Richard Bashner a bit later. “They do not have a plan which does not rely on eminent domain.”

Translation: if they lose and the project gets scotched, there will be a lot more work for lawyers picking up the pieces.

A lawyer for condemnees

Eminent domain attorney Michael Rikon, who represents condemnees, including some in the footprint, explained that, if the decision comes down in favor of the state, "I expect them to move almost immediately to condemn the property. They will file and serve a petition to condemn. It’s generally returnable on 20 days notice before Judge Abraham Gerges, who is the condemnation judge in Kings County."

While condemnees can challenge the petition to condemn, he said, it cannot relate to the reasons presented in the eminent domain litigation: "It has to be limited to procedural defects, and that’s rare."

Then what? "He will grant the petition, sign the vesting order, which will order the filing of an acquisition map with the county clerk’s office," Rikon said. "It is the actual filing of the map which transfers title. That acts as a deed. I wouldn’t be surprised if they walk it down to clerk’s office [the same day]."

The vesting order, he said, will provide a period of time for condemnees to file claims. At that point, the condemning authority can authorize advance payments--generally the amount of money they offered in pre-vesting offers. (Those can be below market, as Goldstein has learned.)

A 90-day process

Those advance payments are generally authorized within 90 days and aim to get people to find a new home or business location. "Once advance payment is made, a condemning authority can move, by a writ of assistance, to remove condemnees from their premises," he said.

"This is a very delicate process, and the better judges will be very careful about making sure that people have received their advance payments on a timely basis and have been accorded proper relocation assistance," Rikon said. "In my experience before Gerges, if someone has a legitimate reason for needing additional time, they get it if it's reasonable."

A very strange groundbreaking

So, could a resident like Goldstein remain while they do groundbreaking?

Sure, said Rikon. "I’ve had condemning authorities ask for my assistance to enable them to start a groundbreaking ceremony"--not on the condemnee's property--"even while condemnees are in possession."

Those subject to condemnation

Those subject to condemnation include residential owners, residential tenants, commercial owners, and commercial tenants. Most would not be eligible for just compensation, and the state is required only to provide a "feasible" method of relocation, not actual relocation. And there are more than a hundred homeless families--350 people a couple of years ago--in a shelter that would have to close.

The 2009 Modified General Project Plan (MGPP) stated:
All existing residential occupants within the Project Site, who are legally occupying a residential dwelling unit shall be provided with relocation assistance to find decent, safe and sanitary dwellings, in the project area or in other areas not generally less desirable, at rents or prices within the financial means of the displaced person(s). It is expected that ESDC will implement the relocation program with the assistance of a professional relocation consultant. Of 171 total residential units on the Project Site, 139 units are currently vacant, accounting for 82% of the units on the Project Site, while 32 households remain in occupancy. Based on the best information available to the Project Sponsors as of the date hereof, in the 31 households that are currently occupied with no agreements to vacate, 5 of which are owner-occupied and 27 of which are rental units, there are approximately 62 people who remain in occupancy.

3 These figures do not include transient occupants of the homeless facility who will be accommodated elsewhere.

At a minimum, the relocation program shall include the following:
• Referrals to alternative housing will be provided to displaced residential occupants.
• ESDC's relocation consultant will meet with the Project's residential occupants to assess their particular housing needs and to assist them in finding replacement housing. Real estate brokerage services will be made available at no charge to the occupants.
• Moving services and expenses will be provided. This will include payment for the cost of the physical move, including the cost of transporting personal property to the replacement housing location, labor and material, insurance and storage as necessary ("Moving Costs"). ESDC or its relocation consultant will bid out all moves and select the lowest reasonable and responsible bid. The occupant either may use the selected mover or may conduct a "self-move" and receive the amount of money that ESDC would otherwise have paid to the selected mover. No Moving Costs will be paid until the premises are vacated. Moving Costs will be uncapped as to amount.
• A relocation assistance payment will be made to each vacating occupant. A onetime payment of $5,000 per household will be made available to each vacating residential occupant or family to assist in meeting additional expenses encountered in establishing new living quarters, such as telephone and other utility hook-up charges, new return address labels, etc. This stipend is also intended to compensate occupants for the inconvenience of having to move, and to encourage them to vacate their units as quickly as possible.
• The above described residential relocation program is the minimum assistance that will be provided. The Project Sponsors have entered into a Community Benefits Agreement whereby they agreed to provide certain enhanced benefits to occupants who were in occupancy of their residence for at least one year. Such benefits include the right to return and to rent a comparable unit within the Project Site at a comparable rate to what they are currently paying.
• There are currently only 7 businesses that are operating on the Project Site which have not signed agreements with the Project Sponsors to relocate, and based on information generated in the FEIS, it is believed that the Project will displace approximately 185 employees of those remaining businesses. There is also a homeless shelter and a Fire Department of New York equipment clean/storage facility operating at the Project Site. Based on information generated in the FEIS, it is believed that the Project will displace approximately 35 employees of those institutions.
• Limited commercial relocation assistance will be provided to commercial tenants on the Project Site. Assistance will include locating and showing available space to the displaced occupant and providing information about private brokers located throughout the City.
• In addition, payment will be made for the cost of the physical move, including the cost of transporting personal property to the replacement site, labor and material, insurance and storage as necessary. ESDC or its relocation consultant will bid out any such moves and select the lowest reasonable and responsible bid. No Moving Costs will be paid until the premises are vacated.
• Payment will also be made to commercial tenants for other reasonable costs commonly associated with relocation, including the cost of relettering or replacing signs, replacing stationery and reinstalling telephone lines or other existing communications equipment. These re-establishment costs shall be capped at $20,000 per business. All costs related to the residential and commercial relocation program will be borne by the Project Sponsors.

2 comments:

  1. The residential tenants have to be actually relocated into comparable dwellings in the neighborhood and they have to be given leases for a new apartment in the AYP project. None of this has happened. Moreover, I will be bring a new legal challenge based on the evasion of the demolition procedures under Rent Stabilization. Plus, there are other cases filed by DDDB that will impact on the vesting process. So, this fight will continue into 2010, no doubt about it.

    ReplyDelete
  2. This post notes that there will be a point at which: the “condemning authority can authorize advance payments--generally the amount of money they offered in pre-vesting offers. (Those can be below market, as Goldstein has learned.)” The post notes the reasonably close relationship in time between that and the physical disposition of the condmenees. The post doesn’t note that, irrespective of the actual timing regarding the dispossession of the condemnees, there can still be ensuing litigation about what the condemnees should actual be paid no matter what the amount of the offered advance payment was. Such ensuing litigation would not directly affect Forest City Ratner's ability to access the condemned sites but it would introduce an additional level of financial uncertainty into FCR’s financial equation (unless the government once again stepped in to insulate FCR from transaction risk).

    The litigation to determine what had to be paid to the condemnees (and any financial uncertainty for Ratner-) could easily take MORE than a DECADE. Mr. Rikon litigated the compensation amount in the case of the Melrose Commons condemnations and that litigation lasted more than a decade. The only reason the litigation is now resolved is because the litigation was settled. There never was a final court determination of the matter.

    This case involves a situation where the value of the land to Forest City Ratner is flowing from a rarely used zoning override. At least a portion of the upzoning should be taken into account to substantially affect what the condemnees should be paid in compensation but with the unprecedented nature of the effect of the zoning override in play the determination of what is a proper amount to pay to the condemnees could be a very complicated time-consuming process.

    For a further discussion about the value of the condemned property and what condemnees should possibly be paid see AYR’s own link (within the above quote). See also our extensive Noticing New York musing on the subject:

    Sunday, November 1, 2009
    Compensating Justly? What Is the Property Being Condemned at the Atlantic Yards Site Really Worth?
    http://noticingnewyork.blogspot.com/2009/11/compensating-justly-what-is-property.html

    Please note the comment at the end of our NNY post. It is true that for simplicity’s sake we left out one appropriate step in determining value which would be to subtract out some development costs like demolition and reconstruction.

    ReplyDelete