Skip to main content

AY eminent domain decision "among the worst I've ever seen," says law prof; former NJ Public Advocate says NY court abdicated role in policing blight

This is Part 2 of a three-part series (Part 1, Part 3) on Fordham Law School's eminent domain symposium in February.

Appellate Division Justice James Catterson was not the only person at a symposium February 11 to slam the New York Court of Appeals' decision in the Columbia (Kaur) and predecessor Atlantic Yards (Goldstein) cases.

So too did several academics, including some longstanding critics of eminent domain and others who, while recognizing the importance of the tool, agree that jurisprudence in New York has gotten out of hand. They spoke at Taking New York: The Opportunities, Challenges, and Dangers Posed by the Use of Eminent Domain in New York, a symposium at Fordham Law School.

In other words, instead of "junk lawsuits" and "frivolous litigation," as then-Daily News columnist Errol Louis dismissed Atlantic Yards legal filings, or "contrived lawsuits," in the words of academic Bruce Berg, maybe we should be talking about "junk judicial decisions."

After all, the former Public Advocate in New Jersey--a self-described "ACLU civil liberties lawyer"--declared that "the New York Court of Appeals basically abdicated any meaningful role for the judiciary in determining whether a blight designation even passed the laugh test."

And, though the court has indicated that the legislature should step in, panelists expressed little hope that the notoriously dysfunctional New York legislature would act to reform eminent domain laws.

In other words, even though the U.S. Supreme Court wouldn't hear the appeal in the case challenging the condemnation for the Columbia University expansion, a good number of legal experts agree that New York is an outlier.

New York hasn't acted


At a debate nearly five years ago, as I reported 3/19/06, Columbia University law professor Michael Dorf took aim at the backlash against the U.S. Supreme Court's controversial 5-4 Kelo vs. New London decision.

"When [dissenting] Justice [Sandra Day] O'Connnor said there's nothing to stop people from taking your house, it's sheer nonsense," Dorf declared. "The thing to stop them is sheer democracy."

Dorf had a point: 43 states narrowed their eminent domain laws in the wake of Kelo. The New York legislature, however, did not act.

And the state Court of Appeals made it even harder for plaintiffs, such as residents and businesses in the Atlantic Yards footprint, to challenge eminent domain.

New York decisions "among the worst"

"I read all sorts of blight cases," law professor Ilya Somin of George Mason University observed at the symposium. "And after a while, you sort of become inured to the idea that, in lots of jurisdictions, property is condemned under extremely broad definitions of blight, such that really almost anything can be condemned as blighted."

After all, downtown Las Vegas was once deemed to be blighted, recalled Somin, who wrote the amicus brief for Jane Jacobs in support of the Kelo petitioners and has a libertarian bent.

Somin said he first thought the New York cases were "just more of the same... [but] it's actually even worse. As inured as I was to these kind of abusive and dubious blight condemnations, these cases are among the worst I've ever seen, certainly among the worst that have ever come out of a state Supreme Court in a major state in the United States."

After all, the Court of Appeals' rationale--that any property that is "stagnant" or "underdeveloped" is subject to eminent domain--can apply to almost limitless "because almost any property is underdeveloped compared to some alternative use of the property," Somin said, echoing comments he made shortly after the decision.

While such a doctrine had roots in some previous New York cases, "in Goldstein [the Atlantic Yards decision], the court actually went a step behind it."

He then quoted the passage targeted by Catterson:
It is only where there is no room for reasonable difference of opinion as to whether an area is blighted, that judges may substitute their views
Given that there's always room for some reasonable disagreement, "this is a virtually limitless definition of blight, which goes against the text, what it originally meant," Somin said. It also goes beyond previous Court of Appeals decisions, he noted.

AKRF's conflict, and dubious blight

"So far this is worse than what I've seen in other states, but it's not that much worse," Somin observed. "However, there are additional facts that make it even worse."

He noted that the consultant that conducted the blight studies in both cases, AKRF, had worked simultaneously for Columbia and previously for Forest City Ratner, producing "a fundamental conflict of interest."

"Moreover, at least in the Columbia case, and possibly in the Atlantic Yards case, ESDC had given them instructions to go out and find blight," rather than do an objective study, he said. (Indeed, with Atlantic Yards, AKRF was asked to find blight, too, according to the contract.)

Somin detailed the "extremely dubious" evidence of blight, including weeds, graffiti, and cracked sidewalks--and "my favorite instance, a mural protesting the potential use of eminent domain." That drew some laughs from the audience.

(The Atlantic Yards Blight Study, under the classification of Unsanitary and Unsafe Conditions on p. C-171, stated that "the metal door and wall to its left have messages painted on them.")

Somin also noted that Forest City Ratner and Columbia owned property where blighted conditions had developed.

"In both cases, the Court of Appeals decision either completely ignores these facts or says it's irrelevant," Somin observed. "To my mind, even under a very minimalistic approach to the public use clause, this kind of evidence should be relevant as to whether it's a public use or not."

Issues of pretext

What about the notion, as expressed in Justice Anthony Kennedy's concurring opinion in Kelo--on which the Atlantic Yards plaintiffs placed much hope-- "that transfers intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause"?

Somin observed that both Justice John Paul Stevens' majority opinion in Kelo and Kennedy's concurrence, though both "very deferential" to condemning agencies, still said a pretextual taking--to benefit a private party--is unconstitutional.

While Stevens offered murky guidance, Kennedy offered more detailed indicia of pretext.

Kennedy wrote:
The trial court considered testimony from government officials and corporate officers; documentary evidence of communications between these parties, ibid.; respondents’ awareness of New London’s depressed economic condition and evidence corroborating the validity of this concern; the substantial commitment of public funds by the State to the development project before most of the private beneficiaries were known; evidence that respondents reviewed a variety of development plans and chose a private developer from a group of applicants rather than picking out a particular transferee beforehand; and the fact that the other private beneficiaries of the project are still unknown because the office space proposed to be built has not yet been rented.
Since then, he said, the lower court jurisprudence on pretext "is all over the map," he said.

Somin suggested four signs of pretext, and that all were present in the Atlantic Yards and Columbia cases.

First, a pretextual intent by public authorities--indicated by the questionable hiring of AKRF.

Second, a distribution of benefits that may favor a private party disproportionately. "Again, Ratner and Columbia get the lion's share," he said. (That accounting, at least as presented in the official case record, is contestable; judges in the Atlantic Yards didn't agree.)

Third, a lack of extensive public planning. "Almost all the planning was done by the private party and more or less rubber-stamped by the government," Somin said. (With Atlantic Yards, there was extensive public process, but it never changed the fundamentals of the deal.)

Fourth, whether there is an identifiable private beneficiary of the taking. "Pretty much this existed in both," he said.

"Although I'm very much inured to dubious blight condemnations," Somin concluded, "these two in many ways take the cake."

The view from New Jersey

Two law professors from New Jersey, which in contrast to New York has narrowed the definition of blight, offered suggestions as to why New Jersey has chosen a different path.

"New Jersey courts simply have a tradition of more searching judicial review of agency decisions," observed Rutgers Law Professor Ronald Chen, who served as Public Advocate (now abolished) and produced reports and amicus briefs on eminent domain reform. "It's enshrined in our state constitution."

"Many of the arguments made unsuccessfully in Kaur were made to New Jersey Supreme Court," Chen noted. The Blighted Areas Clause of the New Jersey Constitution, which is equivalent to the "substandard and insanitary" clause in New York's Constitution, serves as "both a grant of power and also a limitation on power."

Eminent domain for redevelopment is not permitted unless the land is blighted. "Second and more importantly, the court was willing to provide a judicially enforceable definition" of blight, which New York's Court of Appeals was unwilling to do, he said.

(The state Supreme Court in June 2007 held that, because the state authorizes government redevelopment of only “blighted” areas, the Legislature did not intend it to apply in circumstances where the sole argument is that the property is “not fully productive.”)

Chen, self-described as "basically an ACLU civil liberties lawyer," noted that he was quoted as saying, even Drumthwacket, the governor's residence in Princeton, could be subject to eminent domain,

The court, he said, had continued to strike down blight, in contrast with courts in New York. "My personal view is the New York Court of Appeals basically abdicated any meaningful role for the judiciary in determining whether a blight designation even passed the laugh test," he concluded.

Another voice from New Jersey

Paula Franzeze, professor at Seton Hall Law School, joined an amicus brief signed by 13 law professors in support of the plaintiffs in Kelo, thus placing her toward the libertarian side of the divide. "It seems plain to me, in New York, blight has essentially become a standardless standard," she observed.

She acknowledged a few biases. First, when she returns to visit her mother in Bensonhurst, she sees graffiti on a store or steps in disrepair. While kids think the visit "is the coolest experience," Franzeze, via her legal lens, concludes, "I think it's susceptible to blight."

Also, as a law clerk for the New Jersey Supreme Court, Franzeze recognized that the state courts "have long appreciated the independence and also the interdependence among the branches." And, given her role working on ethics reform in New Jersey, "I've witnessed the corrosive influences ...[of] the privatized capacity for heavy-handedness,"

As an alumna of Columbia Law School and Barnard College, where she teaches as an adjunct, "I witnessed the emergence of the Manhattanville project and then, with a vary wary student body, came to the conclusion: what Columbia wants is what Columbia gets."

Impermissible favoritism

She drew on Kennedy's concurrence in Kelo, which suggests that courts should strike down takings that by a clear showing are shown to favor a private party.

"I wonder if Kaur is not an instance of impressible favoritism, then what is?" she mused. "Columbia was the architect of the condemnation, Columbia was the beneficiary."

Even with a modest conceptualization of rational basis review by the courts, judges would have to assert themselves and examine eminent domain, Franzeze concluded. "Certainly, I would state quite emphatically that the public trust demands nothing less."

IJ: look to the legislature?


Bob MacNamara, staff attorney for the libertarian Institute for Justice (which brought the Kelo case), looked at the bigger picture: "In Goldstein, the Court of Appeals expressly said the remedy for these sorts of takings cannot lie with the courts, they must look to the legislature."

However, he noted, "New York's legislature is neck and neck with the court system in being equally terrible." (Indeed, the Brennan Center for Justice at the NYU School of Law has notoriously called the legislature "dysfunctional.")

New York was one of only seven states to not reform eminent domain laws in the wake of Kelo, and a 2008 recommendation by a State Bar task force that a commission be set up to study eminent domain reform was ignored by the legislature.

Structural challenge


Beyond the loose standards, McNamara reminded the audience that, in New York, challenges to eminent domain start not in the trial courts but in the appellate division, where no discovery or cross-examination is permitted. (Attorney Norman Siegel has made this point repeatedly.)

"Your property can be taken without anybody having to take an oath as to whether it's blighted," McNamara said.

In other states, he said, "with almost no exception, every successful challenge has involved examination of evidence... contracts and correspondence that were obtained through discovery."

The tension over pretext

McNamara suggested a tension between the New York cases and Kelo. While the latter reaffirmed a doctrine of pretextual takings, "there's a tension between that and the utterly supine federal rational basis test that says, provided the government's action can be justified by any conceivable reason… to rationally advance a legitimate government interest, that action will pass the rational basis test."

For pretextual takings, he said, there must be some legitimate ends, as well as an effort by the court to ferret out illegitimate ends.

But "that can't be squared with the test," as McNamara described, "does the government state a reason [for the condemnation], with a straight face that does not require us to immediately condemn the government's attorneys to some sort of mental health institution?"

"What that means is that pretextual takings are still forbidden, but a pretextual taking is perfectly legitimate provided the government states a reason," he summed up. "But all pretextual takings involve the government stating a reason. If not, we're not talking about pretext, we're just talking about stealing."

Another take on pretext

Lynn Blais, a law professor at the University of Texas, offered some skepticism about claims of pretext. She said it "came up only as an afterthought in the majority [opinion] and taken up in concurrence more seriously by Kennedy."

While motive also counts in issues like discrimination and free speech, she said, none of those areas of law "devote jurisprudence on trying to find out what the motive is... it's a threshold test, followed by heightened scrutiny" by courts.

Blais argued that it was impossible to set a threshold. While the procedural requirements set forth by Kennedy "seem very wise," they " seem much more policy driven and very difficult to discern from the text of the Fifth Amendment."

Moreover, she suggested, there's no remedy for pretext if the taking still serves the public.

Comments

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…