Friday, November 13, 2009

Gelinas: how the AY Blight Study is about economic development (and how the ESDC has lowballed Goldstein)

Given that the justification for eminent domain in the Atlantic Yards case is blight, rather than economic development (as in the Supreme Court's controversial Kelo vs. New London decision, now back in the news), Nicole Gelinas's op-ed in tomorrow's Wall Street Journal is especially timely.

It's headlined The Empire State and Eminent Domain: A neighborhood with $600,000 apartments is declared 'blighted.'

Gelinas, who's part of the free-market Manhattan Institute, points to a state court decision that suggests that when private benefit trumps public use, eminent domain is invalid, and the failure of state voters to approve an amendment adding "public purpose" to "public use."

The blight argument

She writes:
So to push the Atlantic Yards project through the courts, New York state isn't arguing that it needs to take Mr. Goldstein's property for economic development. Instead, it has declared that Mr. Goldstein's neighborhood is "blighted." This allows the state to condemn property on the theory that clearing unsanitary and unsafe slums constitutes a public benefit.

In fact, the Prospect Heights neighborhood that Mr. Goldstein and his wife have made their home is hardly a slum. Prospect Heights was thriving before Atlantic Yards construction began. It's a hip neighborhood that's a short hop on the subway from Manhattan.
Well, not every block was thriving, but Prospect Heights was surely on the way up, as New York Times Real Estate section stories indicated.

The blight argument is bogus--remember, then-Assemblyman Roger Green, a supporter of the project, declared in 2005 that the neighborhood around the site wasn't blighted.

From blight to economic development

Gelinas points out that the Blight Study by AKRF cites weeds and graffiti as examples of blight--which could be removed by development. She adds:
Mainly, however, the report pointed to "underutilization" of the land, concluding that the area wasn't being used to the maximum economic benefit allowed by law. But that means the Atlantic Yards is really an economic-development project—and that the politicians along with Mr. Ratner want to manage Brooklyn's economy rather than let competitive forces continue to improve the neighborhood.
The next conclusion should be this: Atlantic Yards then is not very distinct from Kelo.

There is an unmentioned argument for eminent domain: the difficulty of assembling land for a large project. But there has to be a legitimate public use/purpose, like, say building new rail networks.

Lowballing Goldstein

While Goldstein in 2003 paid $590,000 for a 1290 square foot apartment, now, Gelinas reveals, the state has offered only $510,000, less than half of what Ratner offered four years ago.

That offer is $395/sf, a stunning figure, given that the ESDC's consultant, KPMG, says that the current range for Prospect Heights starts at $470/sf and ranges up to $1225/sf.

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