The final collapse of redevelopment plans in New London leads to new scrutiny of eminent domain for Atlantic Yards

The Kelo vs. New London case is experiencing some serious blowback, now that the entire rationale for eminent domain there has unraveled.

While the commentary does not directly address Atlantic Yards--where the justification for eminent domain is the removal of blight, not the pursuit of economic development--the experience in New London may nudge judges (like, say, the New York Court of Appeals in the AY eminent domain case) and legislatures toward greater scrutiny and skepticism of eminent domain.

The court decision

Remember, the Supreme Court, in its controversial 5-4 2005 decision, upheld the city of New London's plan for eminent domain because, as the majority opinion concluded:

The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including–but by no means limited to–new jobs and increased tax revenue.

Moreover, Justice Anthony Kennedy, in his nonbinding concurrence (seized on by plaintiffs in the unsuccessful Atlantic Yards federal eminent domain case), observed:

This taking occurred in the context of a comprehensive development plan meant to address a serious city-wide depression, and the projected economic benefits of the project cannot be characterized as de minimus.

(Emphases added)

The problem: Pfizer will close its global research and development headquarters in New London, ending any lingering hopes that anything would happen with the long-dormant plan.

The response

Both conservative (such as the Wall Street Journal) and liberal opponents of eminent domain are piling on. In the New York Daily News, columnist Juan Gonzalez writes, in a column headlined Eminent-domain outrage in Conn. shows why Ratner's Yards plan stirs anger:

It is not just New London, of course, where local governments have rushed to use eminent domain in recent years to bulldoze neighborhoods for the benefit of the rich and powerful.

Here in this town, the Bloomberg administration keeps trying to seize properties in downtown Brooklyn to make way for the giant Forest City Ratner Atlantic Yards Project. In Willets Point, Queens, it wants to condemn scores of small businesses for another grandiose commercial development project.

But local residents and owners, like Dan Goldstein of Develop Don't Destroy Brooklyn, and Jake Bono of Willets Point United, refuse to give in.

Kelo and her neighbors in Trumbull may have lost their homes, they say, but the fight they started continues.

Note that the column barely mentions Atlantic Yards, so the headline could be seen as a way to localize the story.

A debate in the Times

On the New York Times web site, a quartet of commentators argue about whether this is A Turning Point for Eminent Domain?

Law professor Paul Finkelman suggests that the Supreme Court "simply affirmed what has been going since the early colonists allowed for the first grist mills and lumber mills to be built." That's not true, because the Supreme Court affirmed the 20th century conception that "public use" means "public purpose."

Veteran New Haven journalist Paul Bass contends that "urban liberals make mistakes, big mistakes when they stand against the little guy through the misuse of eminent domain." (Bass, a longtime friend of mine, is politically progressive, but more than that he's a journalist who follows the story.)

Institute for Justice attorney Dana Berliner, whose organization brought the Kelo case, notes that the developer "did a study showing there was no market for the biotech office buildings the city claimed would replace the homes."

Stevens, however, wrote:

Alternatively, petitioners maintain that for takings of this kind we should require a “reasonable certainty” that the expected public benefits will actually accrue. Such a rule, however, would represent an even greater departure from our precedent.... A constitutional rule that required postponement of the judicial approval of every condemnation until the likelihood of success of the plan had been assured would unquestionably impose a significant impediment to the successful consummation of many such plans.

In the Times, law professor Matthew Festa responds:

The legal rationale of Kelo remains intact, but perhaps courts will be less easily persuaded by the comprehensiveness of a proposed redevelopment plan when hearing challenges to eminent domain.

The implications for AY

A couple of commentators on the Times web site also point to Atlantic Yards as an abuse of eminent domain.

However, the state Court of Appeals could bypass the Kelo debate by relying on the state's loose definition of blight. Then again, should the court uphold the use of eminent domain, the Atlantic Yards case may stand as a turning point in courts' use of blight.

But the court also could take a more careful look at the "comprehensiveness of a proposed redevelopment plan." The record before the court assumes a ten-year buildout of the project and pie-in-the-sky tax revenues.

Meanwhile, back in the real world, developer Bruce Ratner tells Crain's, “Can you tell me when we are going to need a new office tower?”

The state's economic projections for Atlantic Yards have already been proven bogus. The question is whether the court will notice.