Eminent Domain in New York State

[ZippyTheChimp]

50 State Report Card (http://www.castlecoalition.org/pdf/publications/report_card/50_State_Report.pdf) tracking state legislation since the US Supreme Court decision on Kelo v. City of New London (http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London).

8 states received the worst grade:

Arkansas, Hawaii, Massachusetts, Mississippi, New Jersey, New York, Oklahoma, Rhode Island.

WNY thread on Eminent Domain (http://www.wirednewyork.com/forum/showthread.php?t=6571&highlight=eminent+domain)



http://www.ij.org/templates/ijorg_interior/images/nav_IJ_header.gif


New Report Documents Widespread
Eminent Domain Abuse Across New York State


WEB RELEASE: October 7, 2009
Media Contact:
John Kramer (703) 682-9320

Arlington, Va.—New York is one of the worst states in the nation when it comes to abusing eminent domain for private gain, according to the Institute for Justice, which tracks such abuses nationwide.

The Institute for Justice, which litigated the infamous Kelo eminent domain case before the U.S. Supreme Court, today released a report that documents example after example where government officials across the Empire State used eminent domain not to create projects that would be owned and used by the public—such as a courthouse or post office—but, rather, to create private development that would financially benefit politically powerful private developers.

The report, “Building Empires, Destroying Homes: Eminent Domain Abuse in New York,” states, “Over the past decade, a host of government jurisdictions and agencies statewide have condemned or threatened to condemn homes and small businesses for the New York Stock Exchange, The New York Times, IKEA, Costco, and Stop & Shop. An inner-city church lost its future home to eminent domain for commercial development that never came to pass. Scores of small business owners have been threatened with seizure for a private university in Harlem and for office space in Queens and Syracuse. Older homes were on the chopping block near Buffalo, simply so newer homes could be built. From Montauk Point to Niagara Falls, every community in the Empire State is subject to what the U.S. Supreme Court has accurately called the ‘despotic power.’”

In addition to documenting examples of eminent domain abuse across New York, the report also spotlights problems in New York state law when it comes to eminent domain and suggests solutions the courts and the Legislature can implement to ensure everyone keeps what is rightfully theirs to own.

The report warns, “New York law not only makes it easy to condemn property, it actively encourages city agencies to do so. A variety of incentives are in place to motivate cities to create redevelopment zones, and to invite private developers to use government force to obtain the private properties contained in them, instead of negotiating in the free market. In this perverse system, city agencies and private developers are actually encouraged to team up together against local property owners.”

There may, however, be hope for New York property owners. New York’s Court of Appeals—the state’s highest court—will hear a case in Albany on Wednesday, October 14, at 2 p.m. that could finally offer property owners in the state some much-needed protection for the unholy and powerful alliance of tax-hungry government and land-hungry developers.

The case—Goldstein v. New York State Urban Development Corporation—challenges New York’s controversial use of eminent domain to hand privately owned businesses and homes in Brooklyn over to private developer Forest City Ratner as part of the Atlantic Yards development.

The Goldstein case will be the first time New York’s highest court will consider limits on the use of eminent domain since the infamous 2005 Kelo v. City of New London eminent domain case before the U.S. Supreme Court, which allowed eminent domain for private development and sparked a nationwide backlash. The Institute for Justice, which represented the property owners in Kelo, filed a brief in support of the Goldstein property owners and released a statewide analysis documenting how bad the issue of eminent domain has grown in the Empire State.

“If you own a piece of property in New York, you should care deeply about a case about to be argued before the state’s highest court,” said Dana Berliner, a senior attorney with the Institute for Justice. “Other people’s land has become just one more political favor to be passed out. In recent years, New York lower courts have turned a blind eye to the enormous benefits to private developers, outrageous behavior on the part of government bureaucrats, and even blatant evidence that the project will be a miserable flop. If owning a piece of property is going to mean anything, it is imperative that New York’s high court stop this abuse once and for all. They have that opportunity with the Goldstein case.”

Eminent domain apologists often point to New York City’s Times Square as the best example of the glitzy success that can be achieved through eminent domain for private gain. But the government official who headed up that project and who directed the use of eminent domain there recently published a report with the Institute for Justice in which he states, without equivocation, that eminent domain actually caused Times Square to further decline. Only when government got out of the way to let in true private development, he writes, did Times Square grow into the success story that it is today, said William J. Stern in his April 2009 report, “The Truth About Times Square.” (For a copy of the report, go to: http://www.castlecoalition.org/1239.)

“New York is one of only seven states nationwide whose legislature has utterly failed to pass any kind of eminent domain reform in the wake of Kelo,” explained Institute for Justice Staff Attorney Robert McNamara. “With no hope coming from their legislators, New Yorkers must now look to their courts for protection from an eminent domain system that has flown entirely out of control.”

“The rate of eminent domain abuse in New York is simply staggering,” said Christina Walsh, the Institute’s director of activism and coalitions. “We have worked with property owners statewide to fight the most egregious abuses, but state and local government officials seem to have no limit on their ability to dream up ways to abuse eminent domain.”

“The right to own your home or your small business is absolutely central to the American dream,” said Chip Mellor, the Institute’s founder and generally counsel. “New York bureaucrats have been steadily chipping away at that right for decades. The Goldstein case provides the perfect opportunity for the state to begin reversing that process.”


Building Empires (http://www.ij.org/images/pdf_folder/other_pubs/buildingempires.pdf)

[Merry]

The Empire State and Eminent Domain

By NICOLE GELINAS

In September, Dan Goldstein received a letter from New York State informing him and his wife that the government was about to seize their Brooklyn apartment "In furtherance of the Atlantic Yards Arena and Redevelopment Project." The building would be razed as part of a 22-acre, $4.9 billion sports-complex project.

New York Mayor Michael Bloomberg, Brooklyn Borough President Marty Markowitz, and developer Bruce C. Ratner have promised that the project will bring jobs, affordable apartments and the Nets basketball team. Lost amid these promises is the story of Mr. Goldstein, his wife Shabnam Merchant, and a few others who have spent years resisting efforts to dislodge them. The state's highest court—the New York Court of Appeals—is expected to issue its ruling in Goldstein et al. v. Empire State Development Corporation any day. The case is a pivotal one in the struggle to prevent abuse of the power of eminent domain.

Eminent domain leapt onto the national stage in 2005 when the U.S. Supreme Court ruled in Kelo v. City of New London that governments can take private property for economic redevelopment because the redevelopment's "public purpose" fits a broad definition of the constitutional "public use" test. The decision sparked a national outcry that led more than 40 states to pass restrictions on eminent domain. Yet in New York there should not have been a debate at all.

For decades, New York courts rejected the notion that private landowners can be compelled to sell their property for the benefit for other individuals or companies, which is a central component of many redevelopment projects. In a 1951 case, for example, a state court prohibited a property seizure in New York City because the public use—the creation of a park—was incidental to the benefits for the private developer who would profit from building on land around the park.

Also in 1967, New York voters were asked whether to add a "public purpose" provision to the takings clause in the state's constitution to make it easier to seize private property. It was voted down.

So to push the Atlantic Yards project through the courts, New York state isn't arguing that it needs to take Mr. Goldstein's property for economic development. Instead, it has declared that Mr. Goldstein's neighborhood is "blighted." This allows the state to condemn property on the theory that clearing unsanitary and unsafe slums constitutes a public benefit.

In fact, the Prospect Heights neighborhood that Mr. Goldstein and his wife have made their home is hardly a slum. Prospect Heights was thriving before Atlantic Yards construction began. It's a hip neighborhood that's a short hop on the subway from Manhattan.

To meet the needs of in-flowing residents, developers had been converting sturdy old warehouses into condos. One of the newer arrivals, Mr. Goldstein, paid $590,000 in 2003 for his three-bedroom condo in a distinctive, eight-story dry-goods warehouse designed by a renowned Chicago architect and solidly built nearly 80 years before. His neighborhood was home, too, to small-scale industrial firms and a still-operating Prohibition-era bar, as well as to working-class renters.

To discover blight in all this, Albany hired consultants. Their 2006 report pointed to below-grade railyards for the Metropolitan Transportation Authority (MTA), which make up less than half the condemned area, and noted weeds growing and graffiti on some properties. All of this could be remedied without demolishing a large swath of urban landscape if the state compelled the MTA to sell the development rights above its underground tracks at a market rate.

Mainly, however, the report pointed to "underutilization" of the land, concluding that the area wasn't being used to the maximum economic benefit allowed by law. But that means the Atlantic Yards is really an economic-development project—and that the politicians along with Mr. Ratner want to manage Brooklyn's economy rather than let competitive forces continue to improve the neighborhood.

Specifically, New York would use its power to condemn private property, along with $700 million in subsidies to aid Mr. Ratner's arena, while he would deliver economic benefits favored by officials in City Hall and the state capital. To wit: 2,000 subsidized apartments and a few thousand jobs, a basketball arena and 4,000 luxury apartments.

Just last week, Mr. Ratner bristled at requests from a reporter at Crain's New York Business to see his specific building plans. "Why should people get to see plans?" he said. "This isn't a public project." A curious statement, given the state's use of eminent domain on behalf of the project.

All of this places Mr. Goldstein in an important spot. The case that bears his name is the first opportunity since Kelo for New York's highest court to affirm that the state's constitutional standard for seizing property is more stringent than the federal constitutional standard.

If the court rules against Mr. Goldstein, however, he and his wife could suffer one final injustice. The letter they received in September informed them that the state will compensate them $510,000 for their property—less than what they bought it for and less than half of what Mr. Ratner offered to pay them for it four years ago.

It's also less per square foot than what Mr. Ratner expects to sell his luxury apartments for once they are built. "I think [the state] lowballs to deter people from fighting like we have," Mr. Goldstein told me.
Mr. Goldstein should win. The state constitution supports him. If he loses, so will the owners of private property everywhere in the Empire State.

http://online.wsj.com/article/SB20001424052748704576204574530161194721796.html

[lofter1]

Pfizer to Leave City That Won Land-Use Case


... In a 5-to-4 decision, the high court ruled that it was permissible to take private property and turn it over to developers as part of a plan to bolster the local economy ... The decision was widely criticized, and spurred lawmakers across the country to adopt statutes to prevent similar uses of eminent domain ... 43 states had moved to protect private-property rights since the Kelo decision. New York and New Jersey are among the seven that have not ...

NY TIMES (http://www.nytimes.com/2009/11/13/nyregion/13pfizer.html?scp=1&sq=kelo%20new%20london&st=cse)
By PATRICK McGEEHAN
November 13, 2009

From the edge of the Thames River in New London, Conn., Michael Cristofaro surveyed the empty acres where his parents’ neighborhood had stood, before it became the crux of an epic battle over eminent domain.

“Look what they did,” Mr. Cristofaro said on Thursday. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.”

That sentiment has been echoing around New London since Monday, when Pfizer, the giant drug company, announced it would leave the city just eight years after its arrival led to a debate about urban redevelopment that rumbled through the United States Supreme Court, and reset the boundaries for governments to seize private land for commercial use.

Pfizer said it would pull 1,400 jobs out of New London within two years and move most of them a few miles away to a campus it owns in Groton, Conn., as a cost-cutting measure. It would leave behind the city’s biggest office complex and an adjacent swath of barren land that was cleared of dozens of homes to make room for a hotel, stores and condominiums that were never built.

The announcement stirred up resentment and bitterness among some local residents. They see Pfizer as a corporate carpetbagger that took public money, in the form of big tax breaks, and now wants to run.

“I’m not surprised that they’re gone,” said Susette Kelo, who moved to Groton from New London after the city took her home near Pfizer’s property. “They didn’t get what they wanted: their development, their big plan.”

Ms. Kelo lived in a small pink house in the Fort Trumbull section that was square in the sights of city and state officials who wanted to revitalize the area. The city had created the New London Development Corporation to buy up the nine-acre neighborhood and find a developer to replace it with an “urban village” that would draw shoppers and tourists to the area.

Economic development officials in Connecticut used that plan — and a package of financial incentives — to lure Pfizer to build a headquarters for its research division on 26 acres nearby. With an agreement that it would pay just one-fifth of its property taxes for the first 10 years, Pfizer spent $294 million on a 750,000-square-foot complex that opened in 2001.

By then, Ms. Kelo, the Cristofaros and several neighbors had sued the city to stop it from using its power of eminent domain to take their property. The lawsuit, Kelo v. New London, wound up at the Supreme Court in 2005 as one of the most scrutinized property-rights cases in years.

In a 5-to-4 decision, the high court ruled that it was permissible to take private property and turn it over to developers as part of a plan to bolster the local economy. Conservative justices, including Clarence Thomas, dissented. Justice Thomas called New London’s plan “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation.”

The decision was widely criticized, and spurred lawmakers across the country to adopt statutes to prevent similar uses of eminent domain. Scott G. Bullock, senior attorney at the Institute for Justice, a libertarian group in Arlington, Va., said that 43 states had moved to protect private-property rights since the Kelo decision. New York and New Jersey are among the seven that have not, he said.

Mr. Bullock, who represented the landowners in New London, said Pfizer’s announcement “really shows the folly of these plans that use massive corporate welfare and abuse eminent domain for private development.”

“They oftentimes fail to live up to expectations,” he added.

For its part, Pfizer said it had no stake in the outcome of the Kelo case nor any interest in the development of the land that was acquired by eminent domain, according to a statement provided by a spokeswoman, Liz Power.

After Pfizer completed its $67 billion acquisition of Wyeth, another drug giant, in October, Ms. Power said, “We had a lot of real estate that we had to make strategic decisions about.” She said Pfizer would try to sell or lease its buildings in New London and would “continue to pay our taxes to the city as scheduled.”

The complex is currently assessed at $220 million, said Robert M. Pero, a city councilman who is scheduled to become mayor next month. The company pays tax on 20 percent of that value and the state pays an additional 40 percent, Mr. Pero said. That arrangement is scheduled to end in 2011, around the time Pfizer, which is currently the city’s biggest taxpayer, expects to complete its withdrawal.

“Basically, our economy lost a thousand jobs, but we still have a building,” Mr. Pero said. Then again, he added, “I don’t know who’s going to be looking for a building like that in this economy.”

Some residents said they expected Pfizer to seek a revaluation of its buildings if they wind up vacant in two years; Ms. Power declined to comment.

Mr. Pero said that he was offended that Pfizer did not notify city officials about the decision before Monday or give them a chance to argue against it or even fully understand it. But he said he did not regret the decisions he and other elected officials had made to bring Pfizer to New London for what they had hoped would be a long and fruitful stay.

“I’m sure that there are people that are waiting out there to say, ‘I told you so,’ ” Mr. Pero said. “I don’t know that even today you can say, ‘I told you so.’ ”

But Mr. Cristofaro and Ms. Kelo both said just that.

Ms. Kelo, a nurse who works in New London and Norwich, Conn., said she was still bitter about the loss of her house, which she sold for $1 to Avner Gregory, a preservationist. Mr. Gregory dismantled the house and moved it across town. It now stands as a bright-pink symbol of the divisive dispute that drew so much attention to New London.

“In all honesty, I’m not happy about what happened to me,” Ms. Kelo said. But, she added, “With 43 states changing their laws, in that sense I feel we did some good for people across the country.”

Copyright 2009 The New York Times Company