Skip to main content

"If the blight comes through": why reform of state eminent domain laws is overdue, and notes from Senator Perkins's workshop Saturday

So, if laypeople of the Empire State Development Corporation (ESDC) board can determine blight in Prospect Heights even if they never visit to Brooklyn, it's a mighty subjective science.

Which is why state Senator Bill Perkins's effort to reform the state's eminent domain laws is long overdue--and will be a tough battle.

For those closely following eminent domain in New York, there wasn't a huge amount new at the workshop Perkins sponsored Saturday in Albany, but--when the video becomes available--it was a good introduction to the issue.

Flashback from Radio Golf

Before I offer a summary, let's flash back to August Wilson's play about urban redevelopment, Radio Golf, on Broadway in 2007. During the play, the Bedford Hills Redevelopment Agency aims to get the city to designate certain properties as blighted.

"If the blight comes through," project supporters say at several points and, eventually, it does.

Because it, like Atlantic Yards, was a wired deal.

From the workshop

Christina Walsh of the libertarian Institute for Justice gave the big picture, calling New York "the worst state in the country for eminent domain abuse" and noting that courts "defer fully to determinations of blight" made by agencies like the ESDC.

She cited issues ignored by the state Court of Appeals in its November decision upholding the ESDC, such as the timing of the Blight Study, created after the project site was determined by Forest City Ratner, and the fact that it was paid for by the developer.

She said a study by the IJ concluded that eminent domain reform in the past few years "has no impact on economic growth."

And while that surely would be disputed by eminent domain supporters in New York, she noted that the former head of the Urban Development Corporation (the ESDC's formal name), William Stern, now thinks that eminent domain retarded progress in Times Square.

Setting the problem

Walsh quoted from Chief Judge Jonathan Lippman's opinion:
It may be that the bar has now been set too low -- that what will now pass as "blight," as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses. But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts.
And she quoted from Judge Robert Smith's dissent:
The whole point of the public use limitation is to prevent takings even when a state agency deems them desirable. To let the agency itself determine when the public use requirement is satisfied is to make the agency a judge in its own cause. I think that it is we who should perform the role of judges, and that we should do so by deciding that the proposed taking in this case is not for public use.
Some history

Amy Lavine of the Government Law Center at Albany Law School gave some history of blight in the state, showing the tenement houses that actually caused health hazards, and describing how the law expanded to slum clearance for public and private housing, then to increasing the tax base.

She cited dubious aspects of the blight studies for the Columbia University expansion and Atlantic Yards, such as cracked sidewalks or cars parked on the sidewalk.

As for Atlantic Yards, the site is near and abuts historic districts. And while the Vanderbilt Yard may be ugly, "is an esthetic determination enough to call it blight?" After all, she noted, the "ugly railyards" didn't stop the redevelopment of a Daily News printing plant into the Newswalk condos.

While some deteriorated buildings--she showed a slide of the Underberg Building--could be called blighted, others were deemed blighted despite no physical deterioration; she showed slides of four buildings deemed blighted because they're underutilized.

She acknowledged that blighted areas that can benefit from redevelopment but said process was important; Melrose Commons is a revived part of the South Bronx, but the development came from a coalition that worked with the city to limit displacement and reuse buildings. "There are better ways to do this," she said.

From the audience

Garry Johnson, a community board member from East Harlem, commented from the audience that affordable housing and jobs are often offered as carrots to get projects passed. "What happens, invariably, is you can't afford the affordable housing... or the jobs are temporary," as with recent layoffs at a Costco in East Harlem.

"How do we empower the community not to be so easily enticed?" he asked.

Perkins responded, "They make a fool out of us time and time again, because they dangle goodies" that are either absent or insignificant. His not-so-simple solution: vigilance.

On another note, one audience member, suggested that one way to to curtail eminent domain is to ensure that those who lose their property are stakeholders in the projects that get built, thus sharing some of the upside of the increase in development rights.

(That's been done elsewhere; see the end of this post on a post-Kelo conference.)


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…