Monday, September 12, 2011

Law professor Somin: in Atlantic Yards and Columbia eminent domain cases, "the [NY Court of Appeals] broke dubious new ground"

Last February, libertarian law professor Ilya Somin of George Mason University, at a conference at Fordham Law School, called the Atlantic Yards eminent domain case in state court and the subsequent case challenging Columbia University's expansion "among the worst I've ever seen."

A law review article based on his presentation will be published in the October 2011 of the Fordham Urban Law Journal, titled Let There Be Blight: Blight Condemnations in New York after Goldstein and Kaur. (In several places, Somin cites an article I co-authored.)

(The AY case is known as Goldstein vs. New York State Urban Development Corporation and the Columbia case is known as Kaur vs. New York State Urban Development Corporation.)

Somin's argument:
the New York Court of Appeals erred badly, by allowing highly abusive blight condemnations and defining pretextual takings so narrowly as to essentially read the concept out of existence.
The "extraordinarily broad definition of “blight,” he allows, is not out of line with that of other states that define blight expansively though "odds with the text of the New York Constitution, which allows blight condemnations only in 'substandard and insanitary areas.'"

He also points to three areas in which the court failed to consider evidence and thus "broke dubious new ground":
  • evidence that the blight studies were predetermined
  • evidence that the firm conducting the blight studies, AKRF, had a conflict of interest, given that it had been concurrently and consecutively paid by Columbia and Forest City, respectively
  • evidence that the parties seeking the land had contributed to the blight
The issue of pretext

The Atlantic Yards plaintiffs placed great hope in part of the Supreme Court's 2005 5-4 Kelo v. City of New London ruling, which left open the possibility of significant judicial scrutiny in the case of “pretextual takings,” where the official rationale for condemnation is a pretext “for the purpose of conferring a private benefit on a particular private party.”

That effort didn't work. Part of problem is how to define pretext, since only Justice Anthony Kennedy, in his nonbinding concurring opinion, provided guidance. He 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.
I'd point out that public funds for Atlantic Yards were committed as part of a negotiation with Forest City Ratner, then increased.

Somin follows up, not completely tracking Kennedy:
In his thorough analysis of Kelo’s pretext standard, Professor Daniel Kelly identifies four criteria that courts use to determine whether a private-to-private taking is pretextual:
  1. The magnitude of the public benefit created by the condemnation. If the benefits are large, it seems less likely that they are merely pretextual.
  2. The extensiveness of the planning process that led to the taking.
  3. Whether or not the identity of the private beneficiary of the taking was known in advance. If the new owner’s identity was unknown to officials at the time they decided to use eminent domain, it is hard to conclude that government undertook the condemnation in order to advance the new owner’s interests.
  4. The intentions of the condemning authorities. Under this approach, courts would investigate the motives of government decision-makers to determine what the true purpose of a condemnation was.
In the aftermath of Kelo, various state and federal courts disagreed widely as to the relative importance of these four factors. The striking fact about Goldstein and Kaur is that they rejected pretextual takings claims despite strong evidence suggesting that all four factors were present. If none of the four factors is enough to prove pretext, the New York Court of Appeals’ approach comes close to reading the concept out of existence. At the very least, if the court’s majority believed that none of the four is an appropriate indication of pretext, it should have explained what, if anything, would be.
(Emphasis added)

Federal court impact

Somin writes:
In Goldstein, the majority probably ignored Kelo’s pretext standard and the lower court cases interpreting it because the property owners’ federal constitutional claims had already been rejected in federal court. 
That suggests that the perfunctory review in federal court already doomed the case in state court. However, I'd point out, that still doesn't explain why the majority in the Goldstein case made no effort to respond to dissenting Judge Robert Smith's arguments.

The Magnitude of Expected Public Benefits

Somin writes:
In Goldstein v. Pataki, the federal case addressing the pretextual takings claims of the Atlantic Yards property owners, the Second Circuit rejected the argument that the takings should be invalidated because most of the benefits would flow to Ratner, or because any benefits to the community might be “dwarf[ed]” by the project’s costs. So long as a taking is “rationally related to a classic public use,” the court ruled that the distribution of benefits was irrelevant.
Pretextual Motive

Somin writes:
In Goldstein v. Pataki, the Second Circuit simply refused to consider any evidence of improper motive, ruling that whenever a taking is “rationally related to a classic public use,” it is impermissible to “give close scrutiny to the mechanics of a taking . . . as a means to gauge the purity of the motives of various government officials who approved it.”
He adds that the failure to consider motive is particularly glaring given that the blight study was limited to the map Ratner chose.

The Extent of the Pre-Condemnation Planning Process

Somin writes
In Goldstein v. Pataki, the Second Circuit rejected the idea that any significant scrutiny was required because of the “acknowledged fact that Ratner was the impetus behind the Project, i.e., that he, not a state agency, first conceived of developing Atlantic Yards . . . and that it was his plan for the Project that the ESDC eventually adopted without significant modification.” ...If a planning process completely dominated by a private beneficiary does not qualify as pretextual, it is difficult to see what sort of process would.
The Presence of a Known Private Beneficiary of the Taking

Somin writes:
No one disputes that Ratner was the private beneficiary of the takings upheld in Goldstein, and that his identity as such was well-known in advance of the decision to condemn. Yet neither the Second Circuit nor the New York Court of Appeals gave any weight to this fact.
Opening the gates

Somin concludes:
As a result of these two rulings, there are virtually no remaining constitutional limits on blight condemnations in New York state, including America’s largest city.

...Effective eminent domain reform requires both narrowing the definition of “blight” and the reimposition of constraints on corrupt blight designation practices.

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