Monday, April 26, 2010

The denunciation of the ESDC's condemnation push that was never resolved, but surely influenced the Goldstein settlement

Why did Forest City Ratner settle with Daniel Goldstein last Wednesday for $3 million? The most obvious reasons were to save the alleged $6.7 million monthly cost of delay it alleged, and to pave the way for Russian billionaire Mikhail Prokhorov's purchase of the Nets, which was depending on vacant possession of the site.

Another reason--and a reason for Goldstein to settle--was that Kings County Supreme Court Justice Abraham Gerges pushed for a settlement. He didn't want to adjudicate the case, nor preside over an eviction that could easily have become a media event.

Given the Empire State Developmeny Corporation's initial and ridiculous lowball appraisal of his apartment, Goldstein had to calculate his vulnerability to pursuing the case and getting a check that was worth far less than a replacement apartment.

That said, it would have been of significant interest had the case continued, because, at least according to a response from Goldstein's attorney, the ESDC was way out of line.

Too fast

Wrote attorney Michael Rikon (disclosure):
The application by the condemnor brought by Writ of Assistance only a week after we appeared for condemnees, and only a month after Notice of Acquisition was served is unconscionable and unprecedented.

The application by condemnor marks a new low in eminent domain practice. It is violative of the statutory rights granted by the Eminent Domain Procedure Law and is based on pure vindictiveness and bad faith conduct. Further, it is not premised on accurate factual basis. Rather, what is submitted are affidavits containing generalizations which read more like public relations press releases than truthful statements or evidence to support the very drastic remedy of evicting a family from their home. The cost estimates provided by Forest City Ratner are wildly exaggerated. (See Atlantic Yards article by Norman Oder).
That was a citation to my post April 20 analyzing the ESDC's Order to Show Cause.

Accelerated timing

Remember, Gerges transferred title on March 1, upon which the ESDC asked everyone to leave by early April--and then filed papers seeking eviction by May 17. Wrote Rikon:
The agency (ESDC) is no stranger to the process. Normally fair and reasonable advance payments are made available within ninety or more days with interest. A condemnee is then accorded a reasonable period to find new premises and move out.
An accompanying affidavit by Goldstein detailed "a diligent effort to find a new home," including
visits to 48 dwellings since January 10, but the ESDC hadn't made it easy:
Not only is the search for a new home difficult, it is virtually impossible based on the bad faith offer made by ESDC which is lower than Goldstein paid for his home seven years ago. Further, any equivalent home that the family now lives in will cost at least twice as much as the alleged advance payment.

No writ should issue if the advance payment is on its face inadequate... Any application should be denied until there is a trial.
ESDC shortcuts

Goldstein pointed out:
The condemnor and the developer did not inform the court that the advance payment that has been authorized is $510,000. I have a three-bedroom, two bathroom, 1,295 square foot condominium in an architectural distinctive building with unobstructed south and west views. I paid more for my home seven years ago at the first offering. Obviously, this is a bad faith advance payment.

I have read the affidavit of Gary Curry of the Cornerstone Group. He states that he made twelve attempts to contact me regarding our relocation needs. I do not know what "an attempt to contact" means, but I never met with him. He never visited my home. His group only provided listings of five condos which we carefully examined. None were suitable or comparable. This is hardly effective relocation assistance.
Bad faith and vindictiveness

Rikon wrote:
There has never in my forty-one years of practice in this area of the law been a clearer example of bad faith and vindictiveness.

In her affidavit, sworn to on April 6, 2010, MaryAnne Gilmartin, Executive Vice President of Forest City Ratner, does little to hide the personal animus directed at Daniel Goldstein.
He noted that Gilmartin charged that Goldstein was delaying the demolition of 636 Pacific Street because it may take several months to perform the pre-demoliton work like an environmental assessment to determine whether asbestos or other hazardous materials are present:
I am not sure why Ms. Gilmartin swore to this under penalty of perjury. Forest City has controlled the building for over five years and has had environmental experts on its payroll for a longer period of time. it knows whether or not there is asbestos in the building. If if didn't, ESDC had statutory ability to conduct an environmental survey on the building before taking title. EDPL Sec. 404.
Strained argument

Rikon seemed on firm ground in the above argument, but strained in court and in the papers to argue that there should be a 90-day notice before condemnation, because there's federal money involved in the project.

There was no solid evidence of such funds, just evidence of federal lobbying, and potential federal grants for housing, as well as a community development grant to Forest City Enterprises, based in Brooklyn but with no clear evidence it was targeted for Atlantic Yards.

Demolition plans

Rikon said that it would take six months or longer to clear other buildings Forest City Ratner owns.

The developer stated it need to have the entire street closed to start digging, but there were no clear plans.

Affordable housing

While Gilmartin claimed that 2,250 affordable housing units were in jeopardy, Goldstein in his affidavit pointed out that "there are no available subsidies for the units now."

It would have been interesting, to say the least, to hear that argued fully in court. Rikon raised the issues in papers delivered that morning. The judge didn't provide the opportunity for much scrutiny.

1 comment:

  1. I don't oppose the use of eminent domain for public projects(like schools and roads-and sometimes other public amenities but for about 200 years, NY did without the use of eminent domain for private development and the world worked just fine. yes it took more time and there was sometimes a hold out on the block that was built around, but the right balance between public and private rights were maintained.
    Kelo upset that balance on a project that is NOT going to be built. Most states have passed laws that restrict the unbridled power of the government to take land for private development.
    Would anyone argue that for a rail yard for the subway eminent domain can't be used? But for a private shopping center, I doubt that people would want this particular government power to be used. An Arena is one thing that reasonable people can disagree.

    Lots of things can and should be done without the use of this governmental power.