Monday, February 08, 2010

Perkins introduces bill to reform eminent domain by redefining blight; had provisions been enacted earlier, AY would have been blocked

As previewed (Gotham Gazette, New York Times), State Senator Bill Perkins has introduced a sweeping bill (S. 6971) to redefine eminent domain by redefining blight--currently subsumed under the amorphous terms "substandard and insanitary."

Thus environmental consultants like AKRF inevitably find blight when so requested by agencies like the Empire State Development Corporation (ESDC)

The bill, which likely will gain both supporters and critics, is clearly a response to the efforts to use eminent domain in the cases of Atlantic Yards, Columbia University, and Willets Point. The bill's provisions aren't retroactive, but if they were, they almost certainly would've have precluded the use of eminent domain for the AY site.

New York is one of few states--perhaps seven--that failed to enact any reforms regarding eminent domain after the Supreme Court's controversial 2005 Kelo v. New London decision, and the libertarian Institute for Justice, which brought the Kelo case, considers New York "one of the worst" states in the country when it comes to eminent domain abuse.

Underutilization

Notably, the bill eliminates the opportunity for condemning authorities like the ESDC to cite underutilization--as it did in the Atlantic Yards and Columbia cases--as an indicia of blight.

Given that AKRF deemed properties occupying less than 60% of allowable development rights (Floor Area Ratio, or FAR) as blighted, that could potentially doom broad swaths of the city.

“We now hear they don’t like using 60%” of FAR as a criteria for underutilization, Empire State Development Corporation Philip Karmel said during a May 2007 court hearing on challenges to the AY environmental review. “You have to have a cutoff somewhere.”

In his plurality opinion overturning the ESDC's use of underutilization--"the most egregious conclusion offered in support of the finding of blight"--in the Columbia case, Appellate Division Justice James Catterson wrote:
Lack of demand can only be determined in relation to the FAR when combined with the zoning for the area in question. Manhattanville, for the relevant period, was zoned to allow maximum FAR of two, leaving owners essentially with a choice between a one or two-story structure. No rationale was presented by the respondents for the wholly arbitrary standard of counting any lot built to 60% or less of maximum FAR as constituting a blighted condition.
Other changes

It requires that vacant or deteriorating buildings be condemned only after a grace period to abate code violations, pay back taxes, and repair the structures.

And, in cases where multiple parcels are part of a blighted area, the condemnor must demonstrate in writing that 75% of the parcels in the area are individually blighted.

AY site = not blighted (in retrospect)

The bill is not retroactive, but if it were, the changes almost surely would reverse the blight finding made by the Empire State Development Corporation regarding Atlantic Yards.

Of the site, 79% of the parcels were deemed blighted--and many of those blight designations were made thanks to broad definitions precluded in the bill.

Impact on Willets Point and a legislative battle

The eminent domain fight on which the bill might have most impact is the city's redevelopment plan for Willets Point, where some business owners are fighting fiercely as Willets Point United, pointing out that the city long neglected the industrial area.

The bill would bar the use of eminent domain where utility services and infrastructure were not provided.

Given this clear challenge to the Bloomberg administration--and New York City has long resisted any change in blight laws--the Perkins bill likely will face some serious pushback in the legislature.

What's missing

The bill is not a wholesale revision of state eminent domain laws. The Eminent Domain Procedure Law (EDPL) requires that challenges to eminent domain begin in the Appellate Division, not state Supreme Court, with no opportunity for witnesses, cross-examination, or the process of discovery.

Draws on other states

As hinted in the Times article, the bill draws on but doesn't mirror Pennsylvania's revision of its blight statute.

Amy Lavine, a staff attorney with Albany Law School’s Government Law Center, who advised Perkins on the bill, also pointed me to a September 2007 report, Seven Principles for Reforming Blight Statutes, prepared for the National Association of Realtors, a group that has called for tightening eminent domain laws (and filed a friend-of-the-court brief on behalf of Susette Kelo).

One principle in the report that was not adopted in the Perkins bill (but presumably could be part of a separate bill) says that, in the case of judicial review of the condemnor's decision, additional evidence may be presented by property owner(s), or a court review would begin fresh, not limited to the administrative record.

In New York, courts pay enormous deference to the administrative record created by consultants like AKRF.

Bill lays out landscape of concern

The introduction to the bill lays out the concerns expressed at an oversight hearing last month:
The legislature hereby finds and declares that eminent domain, while a meaningful tool for government to move forward on important projects, has come under a great deal of criticism in recent years for many alleged abuses that have occurred within the state of New York. Traditionally, the right of eminent domain, or the state's ability to seize private land was limited for "public use". However, over the years, phrases such as "public use" and "blighted" have taken on more expansive meanings.

Since Kelo v. City of New London, the 2005 decision in which the U.S. Supreme Court approved the forcible transfer of property from one private owner to another in the name of "economic development", forty-three states have passed eminent domain reform legislation. New York has thus far failed to take such action but continues again and again to approve eminent domain condemnation for projects that benefit private entities at the public's expense. A 2009 report by the Institute for Justice entitled "Building Empires, Destroying Homes: Eminent Domain Abuse in New York" detailed widespread eminent domain abuse throughout the state.

Furthermore, two recent court decisions, Goldstein v. New York State Urban Development Corporation [the AY case] and Kaur v. New York State Urban Development Corporation [the Columbia case] demonstrate the need to balance the rights of property owners without stifling positive economic development programs. Instead, New Yorkers suffer under an inequitable system of eminent domain laws that greatly favors private developers partnered with public actors at the expense of homeowners, businesses, and tenants.

The use of "blight" as a basis for condemnation is vaguely defined and in need of clarification. Under the loose standards of existing law practically anything can qualify as blighted. Consequently it is imperative that the legislature enact objective criteria to ensure that blight determinations are consistent, predictable, and based on factors actually related to the public's health and safety. There also needs to be better protections in place so that tenants and low income residents are ensured that they are not excluded from the development process.
Among the changes

The bill defines "unfit for human habitation" as "premises which have identifiable conditions that endanger the life, health and safety of the owners, occupants, or the public," including "substantial structural defects or deterioration, vermin infestation, lack of necessary utilities, and fire hazards."

Rather than simply assessing vacancy of a building--which can be a product of "developer's blight"--the bill would define "abandoned property" as unoccupied and tax delinquent for at least two years; or an unoccupied building unfit for habitation and has deteriorated to the point where it is structurally unsound or poses an immediate threat to life or other property or
the cost of rehabilitation significantly exceeds the post-rehabilitation market value; or the owner fails to respond within six months to a violation notice regarding code violations or demolitions.

Responsibility for blight

Remember how the ESDC was unable to say whether the Metropolitan Transportation Authority or the city of New York was responsible for weeds around the railyard?

Well, the new bill allows a designation of blight for a vacant property overgrown with weeds--or trash, or vermin--if the owner fails to remedy the problem within six months after receiving notice of violation

Also blighted is occupied or unoccupied property that has tax delinquencies exceeding the value of the property and property used for pervasive and persistent criminal activity.

What's not blighted

The bill lists several examples of property that can't be declared blighted:
  • vacant and unimproved property in a rural or suburban area not served by existing utilities
  • viable agricultural land and other types of agricultural land
  • "if a developer or condemnor involved in a redevelopment project has caused or brought about by action or inaction or maintained for more than seven years" a blighted condition (a nod to the Columbia case)
  • if blight is caused by failure "to provide necessary utility services and/or infrastructure" (a nod to Willets Point)
What's needed

For a single property, written findings identifying the specific conditions which render the property blighted are required.

To declare multiple properties or project areas blighted, the condemnor must make written findings, including an identification and description of each parcel.

More specific relocation aid

The bill also tweaks the language regarding those displaced from project areas, saying displacement should be limited to the maximum extent possible, that adequate compensation and/or assistance is necessary to be relocated to "substantially comparable properties," located either in the project area or "reasonably proximate," at "substantially comparable rents."

That seems more specific than the "feasible method" for relocation, which, for renters in the AY footprint, involves, at minimum, the services of a real estate broker, moving assistance, and a $5000 payment—a plan that was held up in court but called "illusory" by attorney George Locker.

Perkins on video

This 1/25/10 Perkins Report" video shows Perkins discussing eminent domain with Senate Fellow Umair Khan who notes that the state Court of Appeals, in its decision in the Atlantic Yards case, invited the legislature to better define blight.

If cracked sidewalks fit in the loose definition of blight, Khan said, government entities like the ESDC can then come in and condemn property. (Also see Michael D.D. White's post February 6 on his Noticing New York blog about the elusive nature of cracked sidewalks.)

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