Could the Atlantic Yards eminent domain case survive in federal court rather than be shunted to state court, where it would stand little chance? Well, a reading of the transcript of the three-hour hearing held 3/30/07 before U.S. District Judge Nicholas Garaufis in Brooklyn suggests it might--and might not.
Remember, the 13 plaintiffs organized by Develop Don’t Destroy Brooklyn (DDDB) were fighting an uphill battle; Magistrate Judge Robert M. Levy had already recommended that the case be dismissed from federal court, because it would interfere with proceedings that should better be heard in state court, based on a precedent known as Burford v. Sun Oil. The plaintiffs were arguing that Levy was wrong, that the federal court should not sit this out, that it wasn’t crucial for only state courts in New York to handle eminent domain cases.
In some ways, it looked good for the plaintiffs, renters and property owners in the southern section of the Atlantic Yards footprint, on Pacific and Dean streets below the Metropolitan Transportation Authority’s (MTA) Vanderbilt Yard. Garaufis (right) seemed somewhat receptive to their argument that Levy was wrong on Burford. And he seemed unreceptive to arguments by the defendants—the Empire State Development Corporation (ESDC), Forest City Ratner (FCR), and representatives of Mayor Mike Bloomberg and former Governor George Pataki—that Levy erred in declaring the plaintiffs’ claims ripe for adjudication.
But Garaufis also cut to the chase, hearing significant arguments on the substance of the Goldstein v. Pataki, given the defendants’ motion to dismiss the case based on a failure to state a legitimate claim. To move to trial, the plaintiffs must offer the court some measure of evidence that Atlantic Yards is a sweetheart deal, that the public benefits are pretextual, incidental to the private benefits accruing to developer Bruce Ratner. But there certainly would be some public benefits, and the ESDC argued that the inquiry should end there.
Do the plaintiffs, asked the judge, ask for a higher standard of behavior from government agencies than in other development deals using eminent domain? The answer from plaintiffs’ attorney Matthew Brinckerhoff (right) was no, not quite. Whether the judge agrees with Brinckerhoff’s formulation should emerge in a few weeks, whereupon whichever side loses will feel very nervous, regroup , and file an appeal.
Should the plaintiffs win this round, it would put a wrench in the engine of inevitability FCR has tried to create by announcing demolitions of several buildings it owns on the project footprint. Should the plaintiffs lose, it would become that much harder to convince the public that the legal fight is not quixotic.
Press lack of interest
As an effort to stop an enormously controversial development project, the legal fight is one of high stakes, compounded by legal novelty, an attempt to challenge eminent domain based on uncertain formulations in the Supreme Court's controversial 2005 Kelo v. New London decision. Indeed, Garaufis, at one point, acknowledged the significance of the case, noting, “Ordinarily, I don’t take oral argument on civil motions at all.”
At another point, FCR attorney Jeffrey Braun described the company's interest in the case as "so extreme,” explaining why the developer wouldn’t move to be dismissed from a case that essentially targets government actors.
So there was a desperation palpable in the air, on both sides, according to Nik Kovac’s account in the Brooklyn Downtown Star. (I freelance for the Star; I encouraged him to cover the hearing.)
Still, it’s odd the hearing got so little press attention—other than Kovac’s story and a brief in the subscriber-only New York Law Journal, no newspaper covered it, not even the other Brooklyn papers. (My report here also draws slightly on notes from a few courtroom observers, all project opponents.)
If the case proceeds in federal court, it could represent not only a turning point in the Atlantic Yards project, but also a sign that courts will draw on the Kelo to scrutinize projects that seem to be sweetheart deals. Even if unsuccessful in the end, if the case goes to trial, it might expose some quite-friendly interplay between the developer and the city/state.
“Time is fleeting”
Garaufis, a no-nonsense type, declared at the outset that he aimed “to deal with the four corners of the Magistrate Judge’s recommendations to the Court, and we are not going to go into other areas, which we might go into later on, depending on what I decide to do with either accepting or not accepting the report and recommendations.”
Given that Magistrate Judge Levy did not rule at all on the merits—he did acknowledge that the complaint “raises serious and difficult questions regarding the exercise of eminent domain under emerging Supreme Court jurisprudence”—the fact that Garaufis later did get to the substance of the case suggests he was willing to overrule Levy in favor of the plaintiffs.
Garaufis said he would not send the issue of substance back to Levy for a further report, “but I would just make a decision on my own and move ahead because time is fleeting.” Everyone , he said, needs a prompt resolution on this. Surely that was an understatement.
Plaintiffs on Burford
Plaintiffs’ attorney Brinckerhoff was the first to argue, pressing the judge to keep the case in federal court. Levy, he argued, was wrong in saying the federal court should abstain, based on Burford. Levy, he noted, thought the state Eminent Domain Procedure Law (EDPL) was sufficiently specific and/or detailed.
“Why shouldn’t the state procedure be followed?” Garaufis asked.
It has been followed, responded Brinckerhoff, “although it’s a fairly one-sided proceeding.”
Why, the judge followed up, didn’t the plaintiffs avail themselves of the state court appeal under EDPL?
Because the claims are deprivations of constitutional rights, Brinckerhoff responded.
He went on to describe the complex nature of Burford, which involved regulation of oil drilling in Texas. “I know all about oil drilling,” Garaufis said, elaborating on the case and moving the argument along.
After Brinckerhoff went on to detail some related cases, the judge asked him to respond to the expected defense argument that hearing this case in federal court would “thwart the coherent imposition of a state-desired policy,” part of the rationale for abstention under Burford.
“The only policy that you can identify here is a policy that the state has decided it wants to retain in the state judiciary exclusive jurisdiction over constitutional questions—federal constitutional questions,” Brinckerhoff commented.
“They can’t do that,” Garaufis observed. Brinckerhoff agreed. In response to the judge’s follow-up question regarding the limited discussion of Burford at the 2/7/07 hearing, he said, “I think it is fair to say if you look at the briefs that nobody took it particularly seriously.”
Garaufis asked about the status of a parallel case brought by 13 rent-stabilized tenants in state court. Brinckerhoff said it would take at least six months.
He went on to insist that, if the court hears the case and finds that the transaction violated the evolving interpretation of the Fifth Amendment’s “public use” clause, “it will not have any affect on any other eminent domain proceeding”—an argument that the defense, of course, sees from the opposite angle.
Just because the state legislature “has indicated a preference” that the state courts decide such cases, Brinckerhoff argued, does not prohibit constitutional claims being made in federal court. And, of course, if the plaintiffs don’t stay in federal court, they’re in trouble; they won’t be able to get discovery (the production of documents and other information), nor recover attorney’s fees. And they won’t be able to sue “other defendants who were acting in concert with the ESDC.”
Digging into government e-mail
While Levy, in the February hearing, tossed around hypotheticals concerning the balance of public use and private benefit, Garaufis turned to more practical hypotheticals. “If you are successful with me, what kind of discovery do you think you are going to need?” the judge asked.
Brinckerhoff, by way of explanation, said that the Supreme Court in Kelo had said that, if the primary purpose of the taking is to benefit a private individual, and that public benefit is incidental, that violates the public use clause.
(That’s not exactly so; Justice Anthony Kennedy’s concurrence made that point, without guidelines, while the majority opinion more broadly cited the city’s “carefully formulated… economic development plan.”)
The issue is the intent of the decision makers, Brinckerhoff suggested. Otherwise, he said, “the defendants created a record where they say this is a wonderful project, it has all kinds of public benefits, and it doesn’t matter that he’s the one who identified which properties would be condemned. None of that matters, and so our job is to show, because we already have very powerful circumstantial evidence, which we’ll have to go over on another occasion--”
“Not today,” the judge said, to laughter. (Actually, later such evidence came up.)
Brinckerhoff suggested that discovery “would include going through the communication that led up to this decision between the governmental entities, meaning the ESDC and the city agencies and the Ratner companies.” In other words: e-mail.
How long could that take, asked the judge,
Brinckerhoff suggested it could be quick, given the electronic nature of the documents, and said a number of depositions would be necessary, opportunities to grill officials, presumably including Deputy Mayor Dan Doctoroff .
He finished by attempting to rebut the defense claim that allowing the case to proceed would open the floodgates to similar suits in federal court: “This kind of case is extremely unique.”
The judge cut him off, pointing out that “there’s no such thing as ‘extremely unique.’ It is either unique or it is not unique. I am sorry. I do this all the time.” The audience laughed.
“It is unique,” Brinckerhoff recovered. “We’ve never seen a case that’s reported until very recently where there was this kind of circumstantial evidence that gives rise to such a strong inference, that is, a specific individual was identified for the benefit of a taking from the start.”
In fact, he said a federal district judge in California had just denied a defense motion to dismiss an eminent domain case, citing the language in Kelo about pretext and saying the case would have to go to trial.
Garaufis wasn’t too impressed by a reference to a trial court under the famously liberal Ninth Circuit Court of Appeals, which is often reversed by the Supreme Court: “Well, I don’t want to sound like the Supreme Court, but anything that happens in the Ninth Circuit is not necessarily compelling to me,” he said. “Let’s stick to the Second Circuit as best we can.”
Defense on Burford
Brinckerhoff had gone on for a while, but Garaufis had less patience with ESDC lawyer Preeta Bansal (right). Federal constitutional claims by criminal defendants, she said, are adjudicated all the time in state court, and there’s no right for criminal defendants to go to federal court.
“They try sometimes,” Garaufis said.
“Yes, and usually they are booted out,” Bansal replied.
“Usually,” Garaufis countered.
When Bansal dwelled on some background principles, reading from a document without making eye contact, Garaufis blew up. “I don’t want the background,” he shouted. “I don’t want a primer on what they can do. This is not a law school class and I’m not your student, so let’s get to the issue that I asked you to argue. OK?”
“OK,” Bansal replied.
“I don’t have time for it. I’m a busy guy,” he said, adding, “I asked you to talk about Burford. You’re giving me the whole nine yards.” (Why was Garaufis so exercised? Kovac in the Downtown Star noted the judge had just sentenced a man to death the day before.)
Bansal pressed on, saying, “This is important to the procedural issues here.”
“Talk to me about Burford,” Garaufis continued. “If I ask you to argue on a certain subject, for you to go back and say the overarching [principles], you wouldn’t do that to [Supreme Court] Justice [Stephen] Breyer. Don’t do it to me.” (The background: Bansal once coached Breyer when, as an appeals court judge, he testified at his Senate confirmation hearing.)
Bansal, not unreasonably, pointed out, “Mr. Brinckerhoff gave you a long primer on the history of Burford jurisprudence.”
Bansal noted, as stated in the briefs, that the increased opportunity for public participation in eminent domain proceedings in New York is counterbalanced by expedited review and limited litigation. She suggested that a case involving the Alabama Public Service Commission was similar, since the Supreme Court said it was the province of state courts.
“An administrative review of a state-agency action largely happens in state court, and federal courts, we respectfully suggest, should be extremely loath to interfere with those ongoing state proceedings,” Bansal said.
Garaufis seemed skeptical. “Well, ordinarily, state proceedings implicate state policy, state practices, and not constitutional—federal constitutional issues,” he said. “So it depends, doesn’t it, on what it’s all about, and not whether it’s a state administrative law agency or not?”
Yes, said Bansal, who went on to point out that the state policy “would be unduly interfered with” if the federal courts heard such cases and allowed the discovery Brinckerhoff seeks.
“Which is any discovery?” Garaufis asked.
“Which is really any discovery,” Bansal confirmed, indicating no chance for plaintiffs pursuing a case like this.
Who’s on first?
Bansal got in hot water again, noting how a federal case would cause “very severe and undue” interference. “We have here a project which, whether people like it or not, was supported by the former Governor, the current Mayor, and the present Governor,” she said.
“There are three people who made the decision; isn’t that right?” Garaufis asked, holding up three fingers and indicating the Public Authorities Control Board (PACB).
Bansal didn’t get it. “And a host of other public officials,” she said.
Garaufis turned quiz show master: “The final decision was made by a body comprised of three officials, who were elected officials in some respect; right? Who were they?
Bansal paused. “They are elected officials. The mayor.”
“Right,” Garaufis said, incorrectly.
“The former governor,” Bansal continued.
“Right,” Garaufis replied. “And who else?”
“The present governor is also supporting it,” Bansal responded.
“I don’t care about the present governor,” Garaufis replied with exasperation. “He didn’t vote. I was asking you, who are the three?” Eventually they got to the answer: Governor Pataki, Senate Majority Leader Joseph Bruno, and Assembly Speaker Sheldon Silver.
Bansal, however, pointed out that the PACB vote happened after the ESDC's eminent domain determination. Other officials, she said, “supported the project” and “certainly their allegations go to others.” Indeed, Mayor Bloomberg is named as a defendant.
Bansal suggested that this case could be consolidated with the other case in state court, which is “one of the considerations in the Burford analysis.”
Garaufis allowed that it’s a policy consideration, but asked, “Why can’t the federal court be an alternative, a viable alternative for adjudicating a federal constitutional question involving a set of state procedures?”
Ripeness in the midst of demolition
Bansal turned to challenge Levy’s disagreement with the defense contention that the case wasn’t ripe, but she had a steep hill to climb. The right to sue, she suggested, materializes only when the deprivation has actually occurred or is “actually impending” or “very near.”
Garaufis asked, “Aren’t they tearing down buildings in anticipation of beginning construction?”
Yes, said Bansal, pointing out that Forest City is entitled to do what it wants with its property and bear the risks that the project might be stalled. Before the condemnations of the plaintiffs’ properties, she said, the state court case has to be resolved, and that wouldn't be until September.
“We’re not that far away from September in the sense of a court adjudicating a constitutional right,” Garaufis observed. “It takes time.”
Bansal said the ESDC has up to three years to pursue condemnation.
Garaufis didn’t buy that theoretical deadline. “But there are practical business reasons why there is an interest on the part of the city and Ratner to move this along quickly,” he said. “There’s a great deal of money at stake.”
Projects, Bansal said, can take a while. “That’s only when the state does them,” Garaufis countered. “When private industry does them, they happen… It’s in the developer’s interest to be efficient, which means it’s a way of limiting costs.”
He went on to stress that, whatever he decides, it wouldn’t necessarily serve as a precedent for other cases that have very different facts. “So I just don’t want you to go too far in saying, ‘Well, if you decide such and such in this case, it’s going to have some overarching adverse effect on how a state statute is interpreted for perpetuity.’ I think it’s unfair,” he declared, “to put that kind of burden on the court.”
Still, Bansal insisted, “To allow the plaintiffs’ claim to proceed here… would open up the floodgates.” It would delay eminent domain cases beyond what the State Legislature intended, she contended.
Michael Burger, a lawyer for the city, told Garaufis that the city would be willing to wait for the state case to be resolved. He suggested that Atlantic Yards was little different from any other public/private partnership in which the city has entered.
Forest City on Burford
FCR lawyer Braun got up and wanted to correct Garaufis on the role of the PACB, nothing that state board was not named a defendant.
“No, but we’re talking about a process,” the judge responded, pointing out that only three elected officials had statutory authority to determine whether the project should proceed.
Braun (right) pointed out that the eminent domain determination was actually made by the ESDC’s board of directors, representing a political subdivision of the state. (He didn’t mention some details: only four--a bare majority--were present, and they took 15 minutes, showing little understanding of the project.) The PACB, he noted, approved the state financial contribution of the project—which was a crucial green light.
“Are you a proper defendant here?” Garaufis asked. “Should you be here?”
“As a technical sense, probably not,” Braun acknowledged, noting Forest City did not ask to be removed from the case. “I wanted to participate.” The ESDC is the primary defendant, he said, adding that the developer’s interest “is so extreme.”
Braun offered a procedural argument: because state eminent domain cases are all heard by the Appellate Division rather than the trial court, all decisions are published and thus can serve as a body of law. Decisions in the lower courts of the state are not necessarily published, he said.
Garaufis countered, “That ought to change, and I think it’s in the process of changing, when they go to an electronic system of filing.”
Also, he pointed out, the Appellate Division doesn’t always issue a full decision. “So, it depends on how significant they think the legal question is,” he said. “Let’s go on to something else.”
Hearts and minds?
Braun took up a theme that would recur through the rest of the hearing. “If you are in the state court or federal court, it’s clear that you don’t get discovery,” he said. “The issue of the subjective motivations of decision makers is just not an appropriate subject of inquiry…. I think the court is not allowed to look into the hearts and minds of the decision makers. I don’t think it’s allowed to get into reevaluation of whether the public uses are going to benefit the public as much as the decision makers thought.”
He quoted a Supreme Court case known as Brody: “The wisdom or advisability of a public project is not reasonably subject to the adversarial adjudicative process.”
Braun pointed out that, while Brody referred to “legislative decisions” regarding condemnation, that doesn’t mean that eminent domain regarding the properties at issue in Brooklyn must go through a legislature. Other cases, not unlike that in Brooklyn, involve agencies empowered by legislatures to pursue eminent domain.
ESDC lawyer Douglas Kraus pointed out that if Garaufis agreed with Levy’s ruling for the plaintiffs and disagreed with him about Burford, then the judge should still hear the defense argument that the case failed to state a valid claim.
Compromise possible?
After a break, they eventually got to that argument. First, though, the judge asked Brinckerhoff if some “informal discovery” could obviate the need for a federal proceeding: “I’m trying to get a sense of whether there is some way of avoiding extended federal litigation here.”
“Yes, it is important that we get discovery,” Brinckerhoff replied, but said that it was equally important to have the claims heard in federal court.
“Oftentimes one goes to court with the hope that the process can be truncated and that a solution can be resolved,” Garaufis said, noting that, as in any other civil case he hears, he must raise the possibility of a settlement. “Most cases do get resolved without a final judicial decision.”
Brinckerhoff said it was an all or nothing fight: “You know, some of the plaintiffs are sitting right in center court.”
ESDC defense
The ESDC’s Kraus (right), on the counterattack, argued that the plaintiffs had no case. “What they’ve got to plead in order to make a prima facie case is that there is no legitimate public purpose, and that the project isn’t rationally related to any proper public purpose, and they have not done that here, and in fact, just the reverse is true.” He noted that nearly half the project is part of the Atlantic Terminal Urban Renewal Area (ATURA), designated as blighted by New York City in 1968.
Not only is eradication of blight a legitimate public purpose, he said, “There are numerous other purposes. There are going to be hundreds of millions of dollars of mass transit and infrastructure improvements. There’s going to be a new public sports arena constructed. There will be green spaces, public green spaces that are built. There are going to be thousands of jobs, and millions of tax revenues coming into the public coffers.”
(Of course the “public green spaces” are not parks, and would not be built until the second phase of the project, which may take 20 years, rather than the promised ten, to complete. The “public sports arena” would be “public” in the narrowest way, leased to a private entity that has already sold naming rights for $400 million. And the estimates of jobs and tax revenues have been in steady decline.)
But Kraus took on that general challenge. “The plaintiffs don’t say there won’t be jobs here,” he said, arguing that overestimates of jobs or tax revenues aren’t enough to make a claim. “You have to say that there’s no proper public purpose or that if there is one, the project has no conceivable relationship.”
Justice Kennedy’s concurrence in Kelo, Kraus said, required a clear showing of favoritism and Brinckerhoff already acknowledged that the public record would support the ESDC’s rationale. “Well, if that’s the case, and they concede that, that’s the end of the inquiry,” Kraus declared.
Then Kraus offered the hypothetical that Levy entertained during the hearing nearly two months earlier, of a 22-acre project with a school on half an acre. Atlantic Yards, he said, would have to have similarly skewed facts to make out a prima facie (self-evident) case for favoritism. And, he noted, Kennedy gave no examples regarding what constituted impermissible favoritism.
So Kraus gave his own example, a case in which Target had threatened to leave a store in St. Louis if the city didn’t condemn land it wanted, an example that to the defense hardly resembles Atlantic Yards. And, he reminded the judge, the ESDC is legislatively directed “to seek out maximum private participation.”
"Well, you may like Governor Pataki or Mayor Bloomberg," Kraus said. "You may not like them, but all of these public officials are people with unblemished reputations for integrity"--several people in the room laughed--"and there's certainly nothing in the complaint that indicates otherwise."
The motivations of city and state official, Kraus argued, ultimately don’t matter. Rather, he said, “In a public-use case, what counts is, ‘Is the project for a legitimate public use, or is it not?’” Otherwise, he warned, the courts would be inundated by plaintiffs seeking to probe the motives of government officials.
Plaintiffs respond
Brinckerhoff stepped up to counter. “We would not be here if the facts in this case were the same as” in cases cited by the defense, he said. “In those cases, before any private developer was identified, there was a lengthy process, where a legislative body with representative, elected officials made decisions specifically about what should happen in a particular development,” then put it out for bid.
Garaufis offered a not-so-hypothetical example, seemingly a reading of Ratner’s thought process: if a developer sees an underdeveloped area and offers a use needed by the community and can bring it profits, “and I take that to the agency which is sponsoring or developing plans for such blighted areas… and the agency puts out a notice… and I get selected… what’s the problem with that?”
Brinckerhoff swung back. First, he said, it would have to be an area that had been already been determined to be blighted. His clients’ properties are not in ATURA, he reminded the judge. Secondly, he said, there was no competitive bidding process for the entire 22-acre footprint, just the MTA’s 8.5 acre Vanderbilt Yard, and that was questionable.
He pointed to statements from the chief MTA spokesperson, who in 2003 told the press that Ratner had acquired the rights to the Vanderbilt Yard. (See p. 7 of this Brooklyn Paper PDF.) And, he noted, the RFP the MTA eventually issued in 2005 gave respondents only 45 days to reply. (Actually, it was 42 days.) The one developer that replied, Extell, offered $150 million, he said, while Forest City offered only $50 million and did not produce the required pro forma explaining expected expenses and profits. Moreover, he said, Deputy Mayor Dan Doctoroff wrote a letter to the MTA saying the city wouldn’t support the Extell bid.
Garaufis was skeptical. “It doesn’t always happen the way the Mayor wants,” he said, asking why that was relevant to a decision made by the ESDC.
Brinckerhoff said the mayor and deputy mayor furthered the bypass of city land use review: “The primary purpose of this development, not the only purpose, the primary purpose is to benefit a private developer, and all of these facts, the bypassing of city review, the facts related to the RFP, the fact that the procedures that were used with respect to the Ratner companies were not the same procedures that were used with the only other company that had anything to do with just the MTA railyard RFP, all of the rest of this was never put out to bid to anybody. They can’t dispute this. No other developer has ever been considered for this area and this project.”
He suggested that the Atlantic Yards case does in fact resemble that involving Target, because Ratner also went to a government official who had the unilateral power to condemn property. And then he reminded the judge that the threshold to move the case forward was lower than that for winning the case: “It’s not that we’re going to stop the project by winning a motion to dismiss.”
The defense responds
The ESDC’s Kraus offered to respond. Instead, Garaufis said he wanted to hear from Forest City Ratner’s lawyer, “since his client is the one whose motives have been implicated here as to his actions to facilitate his enrichment.”
Braun responded, “My client is a businessman. My client is in it to make money. However, there was a public process.” The ESDC, he repeated, is required to maximize private participation. And Forest City’s railyard bid, he said, was worth much more, the $100 million in cash it ultimately bid, plus another $270 million in other value. (Extell never got to the stage where it could package the value of a new railyard; indeed, a dissenting board member of the MTA said it should be getting the highest price for its land.)
“I think what happened here is proper,” Braun continued. “This is how public/private partnerships redevelop our city.” He noted that Extell is not a plaintiff and the MTA is not a defendant.
Kraus said that Brinckerhoff’s reading of precedent was wrong, that there were in fact “allegations of favoritism and tailoring a project for the benefit of a private developer” in a case involving Times Square redevelopment. And, he noted, the judge in that case ruled, “In order to state a constitutional cause of action, plaintiffs would have to charge a level of corruption beyond that pleaded or reasonably inferred from the pleading here.”
Garaufis asked Brinckerhoff if the plaintiffs alleged fraud. The answer was no.
Taking aim at Brinckerhoff's point that the plaintiffs were outside the boundaries of ATURA, Kraus reminded the judge that the Supreme Court had said that it’s not for the courts to review the choice of the boundary line once a public purpose has been decided.
Public use
“So what is it?” Garaufis asked, getting to the question. “A question of degree if proper use is only for a small portion of the condemned property, then the question is whether there’s a real public purpose or whether it is a sham public purpose?”
Kraus offered Levy’s example of the half-acre school.
“He never got to that issue,” Garaufis pointed out.
“No,” Kraus responded.
“So I don’t know what he was thinking,” Garaufis continued.
Kraus said the plaintiffs would have to have much stronger evidence, given the designation of ATURA as blighted.
Burger, representing the city, noted that the ESDC doesn’t need the city’s consent to bypass local regulations. “The mayor’s agreement,” he said, “is something… to be lauded, to seek local consent, rather than condemn as a conspiracy.”
Last word for plaintiffs
Brinckerhoff got the final chance at rebuttal, and first made reference to the news that the ESDC never got a business plan from the developer and relied on an outside audit that never estimated Forest City’s profits. “One you didn’t hear from Mr. Braun was an explanation for why it is that even today nobody has any idea for what the profits are for this project and it turns out that will be put in a supplemental pleading because it is only recently revealed that ESDC was never provided this information either,” he said.
As for the Times Square example, he said, redevelopment proceeded through public hearings and the authorization of a development corporation before an RFP was issued, leading to 26 separate proposals.
Then the Board of Estimate—the since-found-unconstitutional body that involved one vote from each borough president, plus the mayor, City Council president, and city Comptroller—approved eminent domain, Brinckerhoff said.
Garaufis offered some skepticism. “Do you think it would be appropriate for there to be discovery as to the reasons why members of the Board of Estimate read the agreement,” he asked, pointing out that the board “was not exactly an operation that provided you with a sense of rationale for what they did.”
“Aren’t you,” he asked Brinckerhoff, “asking for more of the ESDC than was ever required in the Board of Estimate or most other legislative bodies about land use?”
Different in Brooklyn
Brinckerhoff distinguished between the Board of Estimate, which was functioning as a legislative body, and the ESDC, which is “purely a creature of the executive branch.” (Here's my article about the ESDC board.)
If the City Council had been involved, “we would be absolutely forbidden from doing anything to inquire into the motives,” Brinckerhoff said.
And he said, Kraus was wrong in pointing to the line of cases leading to the Supreme Court on eminent domain. He pointed to a case in the District of Columbia, and another in Oregon: “It is not in the briefs but, suffice it to say, in that case it makes it very clear there was a public competitive process for these developers. That obviously is not—“
“I hear you,” Garaufis said, cutting him off before he go further beyond the briefs.
And that was it. “I want to thank you, all, and I’ll reserve [my opinion],” the judge said, leaving both sides with a sense of mystery.
Remember, the 13 plaintiffs organized by Develop Don’t Destroy Brooklyn (DDDB) were fighting an uphill battle; Magistrate Judge Robert M. Levy had already recommended that the case be dismissed from federal court, because it would interfere with proceedings that should better be heard in state court, based on a precedent known as Burford v. Sun Oil. The plaintiffs were arguing that Levy was wrong, that the federal court should not sit this out, that it wasn’t crucial for only state courts in New York to handle eminent domain cases.
In some ways, it looked good for the plaintiffs, renters and property owners in the southern section of the Atlantic Yards footprint, on Pacific and Dean streets below the Metropolitan Transportation Authority’s (MTA) Vanderbilt Yard. Garaufis (right) seemed somewhat receptive to their argument that Levy was wrong on Burford. And he seemed unreceptive to arguments by the defendants—the Empire State Development Corporation (ESDC), Forest City Ratner (FCR), and representatives of Mayor Mike Bloomberg and former Governor George Pataki—that Levy erred in declaring the plaintiffs’ claims ripe for adjudication.But Garaufis also cut to the chase, hearing significant arguments on the substance of the Goldstein v. Pataki, given the defendants’ motion to dismiss the case based on a failure to state a legitimate claim. To move to trial, the plaintiffs must offer the court some measure of evidence that Atlantic Yards is a sweetheart deal, that the public benefits are pretextual, incidental to the private benefits accruing to developer Bruce Ratner. But there certainly would be some public benefits, and the ESDC argued that the inquiry should end there.
Do the plaintiffs, asked the judge, ask for a higher standard of behavior from government agencies than in other development deals using eminent domain? The answer from plaintiffs’ attorney Matthew Brinckerhoff (right) was no, not quite. Whether the judge agrees with Brinckerhoff’s formulation should emerge in a few weeks, whereupon whichever side loses will feel very nervous, regroup , and file an appeal.Should the plaintiffs win this round, it would put a wrench in the engine of inevitability FCR has tried to create by announcing demolitions of several buildings it owns on the project footprint. Should the plaintiffs lose, it would become that much harder to convince the public that the legal fight is not quixotic.
Press lack of interest
As an effort to stop an enormously controversial development project, the legal fight is one of high stakes, compounded by legal novelty, an attempt to challenge eminent domain based on uncertain formulations in the Supreme Court's controversial 2005 Kelo v. New London decision. Indeed, Garaufis, at one point, acknowledged the significance of the case, noting, “Ordinarily, I don’t take oral argument on civil motions at all.”
At another point, FCR attorney Jeffrey Braun described the company's interest in the case as "so extreme,” explaining why the developer wouldn’t move to be dismissed from a case that essentially targets government actors.
So there was a desperation palpable in the air, on both sides, according to Nik Kovac’s account in the Brooklyn Downtown Star. (I freelance for the Star; I encouraged him to cover the hearing.)
Still, it’s odd the hearing got so little press attention—other than Kovac’s story and a brief in the subscriber-only New York Law Journal, no newspaper covered it, not even the other Brooklyn papers. (My report here also draws slightly on notes from a few courtroom observers, all project opponents.)
If the case proceeds in federal court, it could represent not only a turning point in the Atlantic Yards project, but also a sign that courts will draw on the Kelo to scrutinize projects that seem to be sweetheart deals. Even if unsuccessful in the end, if the case goes to trial, it might expose some quite-friendly interplay between the developer and the city/state.
“Time is fleeting”
Garaufis, a no-nonsense type, declared at the outset that he aimed “to deal with the four corners of the Magistrate Judge’s recommendations to the Court, and we are not going to go into other areas, which we might go into later on, depending on what I decide to do with either accepting or not accepting the report and recommendations.”
Given that Magistrate Judge Levy did not rule at all on the merits—he did acknowledge that the complaint “raises serious and difficult questions regarding the exercise of eminent domain under emerging Supreme Court jurisprudence”—the fact that Garaufis later did get to the substance of the case suggests he was willing to overrule Levy in favor of the plaintiffs.
Garaufis said he would not send the issue of substance back to Levy for a further report, “but I would just make a decision on my own and move ahead because time is fleeting.” Everyone , he said, needs a prompt resolution on this. Surely that was an understatement.
Plaintiffs on Burford
Plaintiffs’ attorney Brinckerhoff was the first to argue, pressing the judge to keep the case in federal court. Levy, he argued, was wrong in saying the federal court should abstain, based on Burford. Levy, he noted, thought the state Eminent Domain Procedure Law (EDPL) was sufficiently specific and/or detailed.
“Why shouldn’t the state procedure be followed?” Garaufis asked.
It has been followed, responded Brinckerhoff, “although it’s a fairly one-sided proceeding.”
Why, the judge followed up, didn’t the plaintiffs avail themselves of the state court appeal under EDPL?
Because the claims are deprivations of constitutional rights, Brinckerhoff responded.
He went on to describe the complex nature of Burford, which involved regulation of oil drilling in Texas. “I know all about oil drilling,” Garaufis said, elaborating on the case and moving the argument along.
After Brinckerhoff went on to detail some related cases, the judge asked him to respond to the expected defense argument that hearing this case in federal court would “thwart the coherent imposition of a state-desired policy,” part of the rationale for abstention under Burford.
“The only policy that you can identify here is a policy that the state has decided it wants to retain in the state judiciary exclusive jurisdiction over constitutional questions—federal constitutional questions,” Brinckerhoff commented.
“They can’t do that,” Garaufis observed. Brinckerhoff agreed. In response to the judge’s follow-up question regarding the limited discussion of Burford at the 2/7/07 hearing, he said, “I think it is fair to say if you look at the briefs that nobody took it particularly seriously.”
Garaufis asked about the status of a parallel case brought by 13 rent-stabilized tenants in state court. Brinckerhoff said it would take at least six months.
He went on to insist that, if the court hears the case and finds that the transaction violated the evolving interpretation of the Fifth Amendment’s “public use” clause, “it will not have any affect on any other eminent domain proceeding”—an argument that the defense, of course, sees from the opposite angle.
Just because the state legislature “has indicated a preference” that the state courts decide such cases, Brinckerhoff argued, does not prohibit constitutional claims being made in federal court. And, of course, if the plaintiffs don’t stay in federal court, they’re in trouble; they won’t be able to get discovery (the production of documents and other information), nor recover attorney’s fees. And they won’t be able to sue “other defendants who were acting in concert with the ESDC.”
Digging into government e-mail
While Levy, in the February hearing, tossed around hypotheticals concerning the balance of public use and private benefit, Garaufis turned to more practical hypotheticals. “If you are successful with me, what kind of discovery do you think you are going to need?” the judge asked.
Brinckerhoff, by way of explanation, said that the Supreme Court in Kelo had said that, if the primary purpose of the taking is to benefit a private individual, and that public benefit is incidental, that violates the public use clause.
(That’s not exactly so; Justice Anthony Kennedy’s concurrence made that point, without guidelines, while the majority opinion more broadly cited the city’s “carefully formulated… economic development plan.”)
The issue is the intent of the decision makers, Brinckerhoff suggested. Otherwise, he said, “the defendants created a record where they say this is a wonderful project, it has all kinds of public benefits, and it doesn’t matter that he’s the one who identified which properties would be condemned. None of that matters, and so our job is to show, because we already have very powerful circumstantial evidence, which we’ll have to go over on another occasion--”
“Not today,” the judge said, to laughter. (Actually, later such evidence came up.)
Brinckerhoff suggested that discovery “would include going through the communication that led up to this decision between the governmental entities, meaning the ESDC and the city agencies and the Ratner companies.” In other words: e-mail.
How long could that take, asked the judge,
Brinckerhoff suggested it could be quick, given the electronic nature of the documents, and said a number of depositions would be necessary, opportunities to grill officials, presumably including Deputy Mayor Dan Doctoroff .
He finished by attempting to rebut the defense claim that allowing the case to proceed would open the floodgates to similar suits in federal court: “This kind of case is extremely unique.”
The judge cut him off, pointing out that “there’s no such thing as ‘extremely unique.’ It is either unique or it is not unique. I am sorry. I do this all the time.” The audience laughed.
“It is unique,” Brinckerhoff recovered. “We’ve never seen a case that’s reported until very recently where there was this kind of circumstantial evidence that gives rise to such a strong inference, that is, a specific individual was identified for the benefit of a taking from the start.”
In fact, he said a federal district judge in California had just denied a defense motion to dismiss an eminent domain case, citing the language in Kelo about pretext and saying the case would have to go to trial.
Garaufis wasn’t too impressed by a reference to a trial court under the famously liberal Ninth Circuit Court of Appeals, which is often reversed by the Supreme Court: “Well, I don’t want to sound like the Supreme Court, but anything that happens in the Ninth Circuit is not necessarily compelling to me,” he said. “Let’s stick to the Second Circuit as best we can.”
Defense on Burford
Brinckerhoff had gone on for a while, but Garaufis had less patience with ESDC lawyer Preeta Bansal (right). Federal constitutional claims by criminal defendants, she said, are adjudicated all the time in state court, and there’s no right for criminal defendants to go to federal court.“They try sometimes,” Garaufis said.
“Yes, and usually they are booted out,” Bansal replied.
“Usually,” Garaufis countered.
When Bansal dwelled on some background principles, reading from a document without making eye contact, Garaufis blew up. “I don’t want the background,” he shouted. “I don’t want a primer on what they can do. This is not a law school class and I’m not your student, so let’s get to the issue that I asked you to argue. OK?”
“OK,” Bansal replied.
“I don’t have time for it. I’m a busy guy,” he said, adding, “I asked you to talk about Burford. You’re giving me the whole nine yards.” (Why was Garaufis so exercised? Kovac in the Downtown Star noted the judge had just sentenced a man to death the day before.)
Bansal pressed on, saying, “This is important to the procedural issues here.”
“Talk to me about Burford,” Garaufis continued. “If I ask you to argue on a certain subject, for you to go back and say the overarching [principles], you wouldn’t do that to [Supreme Court] Justice [Stephen] Breyer. Don’t do it to me.” (The background: Bansal once coached Breyer when, as an appeals court judge, he testified at his Senate confirmation hearing.)
Bansal, not unreasonably, pointed out, “Mr. Brinckerhoff gave you a long primer on the history of Burford jurisprudence.”
Bansal noted, as stated in the briefs, that the increased opportunity for public participation in eminent domain proceedings in New York is counterbalanced by expedited review and limited litigation. She suggested that a case involving the Alabama Public Service Commission was similar, since the Supreme Court said it was the province of state courts.
“An administrative review of a state-agency action largely happens in state court, and federal courts, we respectfully suggest, should be extremely loath to interfere with those ongoing state proceedings,” Bansal said.
Garaufis seemed skeptical. “Well, ordinarily, state proceedings implicate state policy, state practices, and not constitutional—federal constitutional issues,” he said. “So it depends, doesn’t it, on what it’s all about, and not whether it’s a state administrative law agency or not?”
Yes, said Bansal, who went on to point out that the state policy “would be unduly interfered with” if the federal courts heard such cases and allowed the discovery Brinckerhoff seeks.
“Which is any discovery?” Garaufis asked.
“Which is really any discovery,” Bansal confirmed, indicating no chance for plaintiffs pursuing a case like this.
Who’s on first?
Bansal got in hot water again, noting how a federal case would cause “very severe and undue” interference. “We have here a project which, whether people like it or not, was supported by the former Governor, the current Mayor, and the present Governor,” she said.
“There are three people who made the decision; isn’t that right?” Garaufis asked, holding up three fingers and indicating the Public Authorities Control Board (PACB).
Bansal didn’t get it. “And a host of other public officials,” she said.
Garaufis turned quiz show master: “The final decision was made by a body comprised of three officials, who were elected officials in some respect; right? Who were they?
Bansal paused. “They are elected officials. The mayor.”
“Right,” Garaufis said, incorrectly.
“The former governor,” Bansal continued.
“Right,” Garaufis replied. “And who else?”
“The present governor is also supporting it,” Bansal responded.
“I don’t care about the present governor,” Garaufis replied with exasperation. “He didn’t vote. I was asking you, who are the three?” Eventually they got to the answer: Governor Pataki, Senate Majority Leader Joseph Bruno, and Assembly Speaker Sheldon Silver.
Bansal, however, pointed out that the PACB vote happened after the ESDC's eminent domain determination. Other officials, she said, “supported the project” and “certainly their allegations go to others.” Indeed, Mayor Bloomberg is named as a defendant.
Bansal suggested that this case could be consolidated with the other case in state court, which is “one of the considerations in the Burford analysis.”
Garaufis allowed that it’s a policy consideration, but asked, “Why can’t the federal court be an alternative, a viable alternative for adjudicating a federal constitutional question involving a set of state procedures?”
Ripeness in the midst of demolition
Bansal turned to challenge Levy’s disagreement with the defense contention that the case wasn’t ripe, but she had a steep hill to climb. The right to sue, she suggested, materializes only when the deprivation has actually occurred or is “actually impending” or “very near.”
Garaufis asked, “Aren’t they tearing down buildings in anticipation of beginning construction?”
Yes, said Bansal, pointing out that Forest City is entitled to do what it wants with its property and bear the risks that the project might be stalled. Before the condemnations of the plaintiffs’ properties, she said, the state court case has to be resolved, and that wouldn't be until September.
“We’re not that far away from September in the sense of a court adjudicating a constitutional right,” Garaufis observed. “It takes time.”
Bansal said the ESDC has up to three years to pursue condemnation.
Garaufis didn’t buy that theoretical deadline. “But there are practical business reasons why there is an interest on the part of the city and Ratner to move this along quickly,” he said. “There’s a great deal of money at stake.”
Projects, Bansal said, can take a while. “That’s only when the state does them,” Garaufis countered. “When private industry does them, they happen… It’s in the developer’s interest to be efficient, which means it’s a way of limiting costs.”
He went on to stress that, whatever he decides, it wouldn’t necessarily serve as a precedent for other cases that have very different facts. “So I just don’t want you to go too far in saying, ‘Well, if you decide such and such in this case, it’s going to have some overarching adverse effect on how a state statute is interpreted for perpetuity.’ I think it’s unfair,” he declared, “to put that kind of burden on the court.”
Still, Bansal insisted, “To allow the plaintiffs’ claim to proceed here… would open up the floodgates.” It would delay eminent domain cases beyond what the State Legislature intended, she contended.
Michael Burger, a lawyer for the city, told Garaufis that the city would be willing to wait for the state case to be resolved. He suggested that Atlantic Yards was little different from any other public/private partnership in which the city has entered.
Forest City on Burford
FCR lawyer Braun got up and wanted to correct Garaufis on the role of the PACB, nothing that state board was not named a defendant.
“No, but we’re talking about a process,” the judge responded, pointing out that only three elected officials had statutory authority to determine whether the project should proceed.
Braun (right) pointed out that the eminent domain determination was actually made by the ESDC’s board of directors, representing a political subdivision of the state. (He didn’t mention some details: only four--a bare majority--were present, and they took 15 minutes, showing little understanding of the project.) The PACB, he noted, approved the state financial contribution of the project—which was a crucial green light.“Are you a proper defendant here?” Garaufis asked. “Should you be here?”
“As a technical sense, probably not,” Braun acknowledged, noting Forest City did not ask to be removed from the case. “I wanted to participate.” The ESDC is the primary defendant, he said, adding that the developer’s interest “is so extreme.”
Braun offered a procedural argument: because state eminent domain cases are all heard by the Appellate Division rather than the trial court, all decisions are published and thus can serve as a body of law. Decisions in the lower courts of the state are not necessarily published, he said.
Garaufis countered, “That ought to change, and I think it’s in the process of changing, when they go to an electronic system of filing.”
Also, he pointed out, the Appellate Division doesn’t always issue a full decision. “So, it depends on how significant they think the legal question is,” he said. “Let’s go on to something else.”
Hearts and minds?
Braun took up a theme that would recur through the rest of the hearing. “If you are in the state court or federal court, it’s clear that you don’t get discovery,” he said. “The issue of the subjective motivations of decision makers is just not an appropriate subject of inquiry…. I think the court is not allowed to look into the hearts and minds of the decision makers. I don’t think it’s allowed to get into reevaluation of whether the public uses are going to benefit the public as much as the decision makers thought.”
He quoted a Supreme Court case known as Brody: “The wisdom or advisability of a public project is not reasonably subject to the adversarial adjudicative process.”
Braun pointed out that, while Brody referred to “legislative decisions” regarding condemnation, that doesn’t mean that eminent domain regarding the properties at issue in Brooklyn must go through a legislature. Other cases, not unlike that in Brooklyn, involve agencies empowered by legislatures to pursue eminent domain.
ESDC lawyer Douglas Kraus pointed out that if Garaufis agreed with Levy’s ruling for the plaintiffs and disagreed with him about Burford, then the judge should still hear the defense argument that the case failed to state a valid claim.
Compromise possible?
After a break, they eventually got to that argument. First, though, the judge asked Brinckerhoff if some “informal discovery” could obviate the need for a federal proceeding: “I’m trying to get a sense of whether there is some way of avoiding extended federal litigation here.”
“Yes, it is important that we get discovery,” Brinckerhoff replied, but said that it was equally important to have the claims heard in federal court.
“Oftentimes one goes to court with the hope that the process can be truncated and that a solution can be resolved,” Garaufis said, noting that, as in any other civil case he hears, he must raise the possibility of a settlement. “Most cases do get resolved without a final judicial decision.”
Brinckerhoff said it was an all or nothing fight: “You know, some of the plaintiffs are sitting right in center court.”
ESDC defense
The ESDC’s Kraus (right), on the counterattack, argued that the plaintiffs had no case. “What they’ve got to plead in order to make a prima facie case is that there is no legitimate public purpose, and that the project isn’t rationally related to any proper public purpose, and they have not done that here, and in fact, just the reverse is true.” He noted that nearly half the project is part of the Atlantic Terminal Urban Renewal Area (ATURA), designated as blighted by New York City in 1968.Not only is eradication of blight a legitimate public purpose, he said, “There are numerous other purposes. There are going to be hundreds of millions of dollars of mass transit and infrastructure improvements. There’s going to be a new public sports arena constructed. There will be green spaces, public green spaces that are built. There are going to be thousands of jobs, and millions of tax revenues coming into the public coffers.”
(Of course the “public green spaces” are not parks, and would not be built until the second phase of the project, which may take 20 years, rather than the promised ten, to complete. The “public sports arena” would be “public” in the narrowest way, leased to a private entity that has already sold naming rights for $400 million. And the estimates of jobs and tax revenues have been in steady decline.)
But Kraus took on that general challenge. “The plaintiffs don’t say there won’t be jobs here,” he said, arguing that overestimates of jobs or tax revenues aren’t enough to make a claim. “You have to say that there’s no proper public purpose or that if there is one, the project has no conceivable relationship.”
Justice Kennedy’s concurrence in Kelo, Kraus said, required a clear showing of favoritism and Brinckerhoff already acknowledged that the public record would support the ESDC’s rationale. “Well, if that’s the case, and they concede that, that’s the end of the inquiry,” Kraus declared.
Then Kraus offered the hypothetical that Levy entertained during the hearing nearly two months earlier, of a 22-acre project with a school on half an acre. Atlantic Yards, he said, would have to have similarly skewed facts to make out a prima facie (self-evident) case for favoritism. And, he noted, Kennedy gave no examples regarding what constituted impermissible favoritism.
So Kraus gave his own example, a case in which Target had threatened to leave a store in St. Louis if the city didn’t condemn land it wanted, an example that to the defense hardly resembles Atlantic Yards. And, he reminded the judge, the ESDC is legislatively directed “to seek out maximum private participation.”
"Well, you may like Governor Pataki or Mayor Bloomberg," Kraus said. "You may not like them, but all of these public officials are people with unblemished reputations for integrity"--several people in the room laughed--"and there's certainly nothing in the complaint that indicates otherwise."
The motivations of city and state official, Kraus argued, ultimately don’t matter. Rather, he said, “In a public-use case, what counts is, ‘Is the project for a legitimate public use, or is it not?’” Otherwise, he warned, the courts would be inundated by plaintiffs seeking to probe the motives of government officials.
Plaintiffs respond
Brinckerhoff stepped up to counter. “We would not be here if the facts in this case were the same as” in cases cited by the defense, he said. “In those cases, before any private developer was identified, there was a lengthy process, where a legislative body with representative, elected officials made decisions specifically about what should happen in a particular development,” then put it out for bid.
Garaufis offered a not-so-hypothetical example, seemingly a reading of Ratner’s thought process: if a developer sees an underdeveloped area and offers a use needed by the community and can bring it profits, “and I take that to the agency which is sponsoring or developing plans for such blighted areas… and the agency puts out a notice… and I get selected… what’s the problem with that?”
Brinckerhoff swung back. First, he said, it would have to be an area that had been already been determined to be blighted. His clients’ properties are not in ATURA, he reminded the judge. Secondly, he said, there was no competitive bidding process for the entire 22-acre footprint, just the MTA’s 8.5 acre Vanderbilt Yard, and that was questionable.
He pointed to statements from the chief MTA spokesperson, who in 2003 told the press that Ratner had acquired the rights to the Vanderbilt Yard. (See p. 7 of this Brooklyn Paper PDF.) And, he noted, the RFP the MTA eventually issued in 2005 gave respondents only 45 days to reply. (Actually, it was 42 days.) The one developer that replied, Extell, offered $150 million, he said, while Forest City offered only $50 million and did not produce the required pro forma explaining expected expenses and profits. Moreover, he said, Deputy Mayor Dan Doctoroff wrote a letter to the MTA saying the city wouldn’t support the Extell bid.
Garaufis was skeptical. “It doesn’t always happen the way the Mayor wants,” he said, asking why that was relevant to a decision made by the ESDC.
Brinckerhoff said the mayor and deputy mayor furthered the bypass of city land use review: “The primary purpose of this development, not the only purpose, the primary purpose is to benefit a private developer, and all of these facts, the bypassing of city review, the facts related to the RFP, the fact that the procedures that were used with respect to the Ratner companies were not the same procedures that were used with the only other company that had anything to do with just the MTA railyard RFP, all of the rest of this was never put out to bid to anybody. They can’t dispute this. No other developer has ever been considered for this area and this project.”
He suggested that the Atlantic Yards case does in fact resemble that involving Target, because Ratner also went to a government official who had the unilateral power to condemn property. And then he reminded the judge that the threshold to move the case forward was lower than that for winning the case: “It’s not that we’re going to stop the project by winning a motion to dismiss.”
The defense responds
The ESDC’s Kraus offered to respond. Instead, Garaufis said he wanted to hear from Forest City Ratner’s lawyer, “since his client is the one whose motives have been implicated here as to his actions to facilitate his enrichment.”
Braun responded, “My client is a businessman. My client is in it to make money. However, there was a public process.” The ESDC, he repeated, is required to maximize private participation. And Forest City’s railyard bid, he said, was worth much more, the $100 million in cash it ultimately bid, plus another $270 million in other value. (Extell never got to the stage where it could package the value of a new railyard; indeed, a dissenting board member of the MTA said it should be getting the highest price for its land.)
“I think what happened here is proper,” Braun continued. “This is how public/private partnerships redevelop our city.” He noted that Extell is not a plaintiff and the MTA is not a defendant.
Kraus said that Brinckerhoff’s reading of precedent was wrong, that there were in fact “allegations of favoritism and tailoring a project for the benefit of a private developer” in a case involving Times Square redevelopment. And, he noted, the judge in that case ruled, “In order to state a constitutional cause of action, plaintiffs would have to charge a level of corruption beyond that pleaded or reasonably inferred from the pleading here.”
Garaufis asked Brinckerhoff if the plaintiffs alleged fraud. The answer was no.
Taking aim at Brinckerhoff's point that the plaintiffs were outside the boundaries of ATURA, Kraus reminded the judge that the Supreme Court had said that it’s not for the courts to review the choice of the boundary line once a public purpose has been decided.
Public use
“So what is it?” Garaufis asked, getting to the question. “A question of degree if proper use is only for a small portion of the condemned property, then the question is whether there’s a real public purpose or whether it is a sham public purpose?”
Kraus offered Levy’s example of the half-acre school.
“He never got to that issue,” Garaufis pointed out.
“No,” Kraus responded.
“So I don’t know what he was thinking,” Garaufis continued.
Kraus said the plaintiffs would have to have much stronger evidence, given the designation of ATURA as blighted.
Burger, representing the city, noted that the ESDC doesn’t need the city’s consent to bypass local regulations. “The mayor’s agreement,” he said, “is something… to be lauded, to seek local consent, rather than condemn as a conspiracy.”
Last word for plaintiffs
Brinckerhoff got the final chance at rebuttal, and first made reference to the news that the ESDC never got a business plan from the developer and relied on an outside audit that never estimated Forest City’s profits. “One you didn’t hear from Mr. Braun was an explanation for why it is that even today nobody has any idea for what the profits are for this project and it turns out that will be put in a supplemental pleading because it is only recently revealed that ESDC was never provided this information either,” he said.
As for the Times Square example, he said, redevelopment proceeded through public hearings and the authorization of a development corporation before an RFP was issued, leading to 26 separate proposals.
Then the Board of Estimate—the since-found-unconstitutional body that involved one vote from each borough president, plus the mayor, City Council president, and city Comptroller—approved eminent domain, Brinckerhoff said.
Garaufis offered some skepticism. “Do you think it would be appropriate for there to be discovery as to the reasons why members of the Board of Estimate read the agreement,” he asked, pointing out that the board “was not exactly an operation that provided you with a sense of rationale for what they did.”
“Aren’t you,” he asked Brinckerhoff, “asking for more of the ESDC than was ever required in the Board of Estimate or most other legislative bodies about land use?”
Different in Brooklyn
Brinckerhoff distinguished between the Board of Estimate, which was functioning as a legislative body, and the ESDC, which is “purely a creature of the executive branch.” (Here's my article about the ESDC board.)
If the City Council had been involved, “we would be absolutely forbidden from doing anything to inquire into the motives,” Brinckerhoff said.
And he said, Kraus was wrong in pointing to the line of cases leading to the Supreme Court on eminent domain. He pointed to a case in the District of Columbia, and another in Oregon: “It is not in the briefs but, suffice it to say, in that case it makes it very clear there was a public competitive process for these developers. That obviously is not—“
“I hear you,” Garaufis said, cutting him off before he go further beyond the briefs.
And that was it. “I want to thank you, all, and I’ll reserve [my opinion],” the judge said, leaving both sides with a sense of mystery.
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