The Volokh Conspiracy

The last property owner in the condemned Atlantic Yards area of Brooklyn, New York has agreed to sell his land in order to avoid the condemnation of his property by the city government [HT: Josh Blackman]:

The last man standing in front of the Atlantic Yards bulldozer has stepped aside.

Daniel Goldstein — founder of the anti-Atlantic Yards group Develop Don’t Destroy Brooklyn and plaintiff in numerous unsuccessful suits against the $4.9 billion project — has reached an agreement with the project’s developer, Forest City Ratner, to move out of his condo on Pacific Street in Prospect Heights.

Mr. Goldstein confirmed that he would receive $3 million from Forest City. He bought his condo in 2003 for $590,000, but the state seized title to it under eminent domain last month, leaving Mr. Goldstein facing eviction. Mr. Goldstein said he would move by May 7.

He had told The Brooklyn Paper in an article published Wednesday morning that his lawyer would fight the condemnation or “get fair market value and just compensation” for the apartment, as eminent domain law requires when the state seizes property. He had said the state had previously made a lowball offer of $510,000 to him.

Goldstein may have received a higher than market value price for his land in exchange for agreeing not to speak out against the development project anymore:

According to executives who have been briefed on the negotiations, Mr. Goldstein also agreed to a highly modified form of the gag agreement that Forest City had initially imposed on those it bought out, under which he would step down as spokesman for Develop Don’t Destroy Brooklyn.

Mr. Goldstein said that he retains his right to free speech but is no longer allowed to “actively oppose the project.”

“There’s no end to the criticism and opposition to the project,” he said.

The release from Forest City was short on specifics and did not even speak Mr. Goldstein’s name.

“We are not going to discuss the details of the agreement,” Joe DePlasco, a spokesman for the developer, said in the statement.

Goldstein’s land and a great deal of other property in the area was condemned in order to transfer it to politically influential developer Bruce Ratner, under an extremely dubious rationale of alleviating “blight.” I criticized the recent New York state supreme court decision upholding the condemnation in this post; back in 2008, I commented on the federal court decision upholding the condemnation against challenges under the Takings Clause of the federal Constitution.

In my view, that federal decision was probably dictated by the Supreme Court’s 2005 decision upholding economic development takings in Kelo v. City of New London. The state decision, by contrast, was deeply flawed because it was based on a ridiculously broad definition of “blight” according to which virtually any area could be declared blighted and condemned; for reasons I explicate in my earlier post, such blight condemnations almost certainly violate the New York state constitution. Unfortunately, many other states also define “blight” just as broadly. Ultra-expansive definitions of blight have undermined the effectiveness of the majority of the many eminent domain reform statutes enacted since Kelo.

On the plus side, Goldstein’s dogged resistance to these condemnations helped focus public attention on the problem of eminent domain abuse. The state court decision upholding it is an important setback for property rights. However, many other state courts have gone the other way over the last 15 years. During that time, numerous state supreme courts have invalidated Keo-like “economic development” takings under their state constitutions – including Illinois, Michigan, Montana, Ohio, Oklahoma, and South Carolina (see this article for cites to these cases). Only the Atlantic Yards case and the Connecticut Supreme Court’s narrow 4-3 decision in Kelo itself have gone the other way.

UPDATE: Please don’t bother pointing out that the New York state supreme court is officially called the Court of Appeals. I know this, and was using the term “supreme court” as a generic term for the highest court of a jurisdiction. That way, I can avoid confusing readers who are not familiar with New York’s extremely confusing terminology.

UPDATE #2: Goldstein has issued this statement about the agreement, in which he denies agreeing to stop criticizing the Atlantic Yards takings and development project [HT: Scott Bullock]:

Contrary to press reports I have not given up my First Amendment rights or my involvement with Develop Don’t Destroy Brooklyn. (Ratner, though he tried to hide it, did require this of nearly all those who sold their homes to him years ago, and they agreed to it.) Ratner and ESDC tried very hard to force me to agree to give up those rights and the work I do with the organization I helped found. It wasn’t enough, I guess, for Ratner to decimate my neighborhood, take my home, and kick me out, they also felt they had to cut out my tongue. For nearly 3 hours of talks mediated by Judge Gerges I refused to accept any kind of gag order. I would not have taken any amount of money to do that, and I did not.

I did agree to give up my title as “DDDB spokesman”, but that’s just a title. And I did agree to remove my name from one outstanding lawsuit which remains in court despite that. Otherwise I can do and say whatever else I want, and my agreement explicitly states that I have maintained my First Amendment rights.

Nicole Gelinas has an interesting article on the expansive use of “blight condemnations” in New York. As she points out, New York courts have defined blight so broadly that virtually any area can be designated as such, and then condemned. This has created massive opportunities for abuse by politically connected interest groups who can use eminent domain to get the government to take property they covet.

Gelinas has an extensive discussion of two famous recent New York blight condemnation cases: the Atlantic Yards case, and Columbia University’s efforts to acquire property through condemnation in Manhattanville. I have written about both extensively. See here for my analysis of the Atlantic Yards decision, and here for the Columbia case. Both posts include links to earlier cases.

Unfortunately, New York is far from the only state that defines blight broadly enough to justify the condemnation of almost any area. As I discuss here and here, numerous other states have similar laws. This enables many state legislatures to pretend that they have banned Kelo-style “economic development” condemnations even as they allow them to continue under the guise of alleviating blight.

George Will has written a Washington Post column on the abuse of “blight” condemnations in New York:

On Aug. 27, 1776, British forces routed George Washington’s novice army in the Battle of Brooklyn, which was fought in fields and woods where today the battle of Prospect Heights is being fought. Americans’ liberty is again under assault, but this time by overbearing American governments.

The fight involves an especially egregious example of today’s eminent domain racket. The issue is a form of government theft that the Supreme Court encouraged with its worst decision of the past decade — one that probably will be radically revised in this one.

The Atlantic Yards site, where 10 subway lines and one railway line converge, is the center of the bustling Prospect Heights neighborhood of mostly small businesses and middle-class residences. Its energy and gentrification are reasons why 22 acres of this area — the World Trade Center site is only 16 acres — are coveted by Bruce Ratner, a politically connected developer collaborating with the avaricious city and state governments.

To seize the acres for Ratner’s use, government must claim that the area — which is desirable because it is vibrant — is “blighted….”

The Constitution says that government may not take private property other than for a “public use….” In 1954, however, in a case concerning a crime- and infectious-disease-ridden section of Washington, D.C., the court expanded the notion of “public use” to include removing “blight.”

Since then, that term, untethered from serious social dangers, has become elastic in the service of avarice….

I discussed the state high court decision upholding the Atlantic Yards condemnations in this post. For my earlier analyses of the case, see here and here. Will’s column also discusses the recent court decision striking down Columbia University’s efforts to use eminent domain to acquire supposedly “blighted” property, a case I discussed here.

As I explained in the earlier posts linked above, New York jurisprudence is perhaps the most hostile to property rights in the entire country. However, the general problem of overbroad definitions of blight exists in many states. Unconstrained definitions of “blight” undermine the efficacy of many states’ post-Kelo eminent domain reform laws, which forbid “economic development” condemnations but allow the same types of takings to continue under the guise of blight alleviation, an issue I discussed in detail in this article.

It is fortunate that a columnist as prominent as Will has taken up this issue. Hopefully, his contribution will increase awareness of the problem.

In Kaur v. New York Urban Development Corporation,a close 3-2 decision [HT: Neighborhood Retail Alliance], a New York intermediate appellate court has invalidated the taking of property in the Manhattanville neighborhood of New York City for transfer to Columbia University. Columbia and the government claimed that the land in question was blighted. However, the court ruled that there was no evidence of any real blight (especially before Columbia acquired much of the surrounding area after 2002), other than claims of “underutilization” of property. And mere “underutilization,” the majority concludes, is not enough to justify the condemnation of property as “blighted.” As the court puts it, “[t]he time has come to categorically reject eminent domain takings solely based on underutilization.” I wholeheartedly agree with this general sentiment. Indeed, I have often argued against broad definitions of blight that allow virtually any property to be condemned on the grounds that some other use might lead to increased development (see, e.g., here). Overbroad definitions of blight undercut many of the eminent domain “reform” laws enacted in response to the US Supreme Court’s decision upholding “economic development” takings in Kelo v. City of New London. I also think the majority makes a strong case that the blight determination in this case severely flawed, and in large part the product of the government’s desire to transfer property to a politically influential university. Indeed, I have often criticized Columbia’s plans to use eminent domain in Manhattanville, in a series of posts going back to 2006 (see here for the most recent post, and links to earlier ones).

There is, however, one major problem with the Kaur decision: it seems to contradict the New York Court of Appeals’ (the state supreme court) recent decision in the Atlantic Yards case, Goldstein v. New York Urban Development Corporation, which specifically ruled that a property can be declared blighted and condemned if there was “economic underdevelopment” or “stagnation” in the area. As I explained in this post, Goldstein allows state officials to designate almost any area as blighted and then condemn property within it. As an intermediate appellate court the, Kaur court is required to follow state supreme court rulings. Unfortunately, the Kaur majority barely even mentions Goldstein, except for noting that the same private consultant conducted the study allegedly proving the existence of “blight” in both cases. Perhaps this neglect is explained by the fact that the Atlantic Yards opinion was only issued last week. If so, the Kaur court should have taken more time to fully consider it. The contradiction with Goldstein is in fact noted by the Kaur dissenters, who point out that the state supreme court ruling requires broad deference to administrative blight determinations, even if there is considerable evidence that the determination was flawed.

It might still be possible to invalidate the Manhattanville takings in a way consistent with Goldstein. For example, the Kaur majority based its ruling in part on the fact that the government failed to follow some of the procedural requirements of New York’s blight statute.

However, the central holding of Kaur - that “underutilization” isn’t enough to prove blight – is in clear tension with the Atlantic Yards decision. The fact that the same consultant conducted both blight studies and used similar arguments to justify his findings only accentuates the tension. Indeed, “underutilization” was the main evidence for the existence of blight in the Atlantic Yards project area, as well as in the part of Manhattanville condemned for transfer to Columbia.

In sum, I think that Kaur is a much better reasoned decision than Goldstein (except for its neglect of Goldstein itself). Unfortunately, the court that reached the wrong result is also the higher of the two. Thus, I fear that Kaur may well eventually be overruled by the Court of Appeals. At the very least, the Kaur majority should have taken more time to produce their opinion, and clearly explained why this case differs from Goldstein.

UPDATE: Perhaps it isn’t necessary to point this out. But in the title of the post, I was using “state supreme court” in the colloquial sense in which “supreme court” is used to indicate the highest court of the jurisdiction in question, regardless of its official name. I am well aware that the official name of New York’s supreme court is “Court of Appeals.” Similarly, one can use “head of state” as a generic term referring to the top official in a government, even though the official title may be “president” or “king” or whatever. Using “court of appeals” in the post title would have been confusing, because readers unfamiliar with New York’s strange nomenclature wouldn’t realize that I was referring to state’s highest court.

UPDATE #2: I have fixed an annoying typo in the title of the post.

UPDATE #3: Rick Hills at Prawfsblawg interprets Kaur as striking down the Columbia takings on federal constitutional grounds under Kelo v. City of New London, rather than on the state constitutional ground that there was insufficient proof of blight. Rick argues that the opinion ultimately holds that this is a “pretextual” taking forbidden by Kelo because the true purpose was to benefit Columbia, not alleviate blight. I don’t think this is correct. If the court merely sought to show that the taking failed to meet federal pretext standards, there would have been no need for the extensive discussion of state blight requirements. Moreover, the court at no point specifies that is ruling depends on the federal Constitution and not the state one, and indeed cites both at different times. In any event, the federal justification of the court’s decision is actually much weaker than the state justification. As Rick emphasizes, Kelo is extremely permissive. Moreover, Kelo explicitly focused on “economic development” takings rather than blight condemnations, setting up extremely permissive standards for the former, which are generally viewed as much more problematic than the latter.

The New York Court of Appeals has issued its opinion in Goldstein v. New York State Urban Development Corporation, an important property rights case. The 6-1 decision upholds the condemnation of numerous properties in Atlantic Yards project area in Brooklyn for the purpose of transferring them to powerful developer Bruce Ratner, who plans to use most of the land to build a new stadium for the New Jersey Nets and to construct “luxury” housing. This outcome is not surprising. As I explained in this post, where I predicted the result, New York courts are among the most hostile to property rights of any in the country. New York is also one of only seven states that hasn’t enacted eminent domain reform of any kind since the federal Supreme Court’s controversial 2005 decision upholding “economic development” condemnations in Kelo v. City of New London.

Significantly the Court concluded that the property in question could be condemned because it is “blighted” and blight alleviation is a “public use” recognized by the New York Constitution, thanks to a constitutional amendment allowing the condemnation of slum areas. This despite the fact that it is very far from being a slum of any kind, and much of it is actually middle or lower middle class housing. Indeed, the opinion itself notes (pg. 14) that the Atlantic Yards area “do[e]s not begin to approach in severity the dire circumstances of urban slum dwelling” that led to the enactment of the blight amendment. To get around this problem, the Court held that “blight” alleviation is not limited to “’slums’ as that term was formerly applied, and that, among other things, economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose” (pp. 15-16, quoting a 1975 decision).

Obviously, virtually any area occasionally suffers from “economic underdevelopment” or “stagnation” and therefore could potentially be condemned under this rationale. Moreover, even under this expansive definition of blight, the decision states that courts can only strike down a condemnation if “there is no room for reasonable difference of opinion as to whether an area is blighted.” With respect to any neighborhood, there is nearly always “room for reasonable difference of opinion” as to whether the area is “underdeveloped” relative to some possible alternative uses of the land in question. Defining blight this broadly and then deferring to the government’s determination of whether such “blight” actually exists effectively reads the public use restriction out of the state constitution. I highly doubt that New York state constitutional amendment allowing condemnation of “substandard and insanitary areas” (Article XVIII, Section 1 here) would have passed had it been understood to mean that virtually any area could be declared blighted and condemned. As with most other blight condemnation laws, the amendment was sold to the public as a tool for eliminating “slums” (a point the majority concedes).

Allowing government agencies to declare virtually any area “blighted” and then condemn it at will is an abdication of judicial responsibility to protect constitutional property rights. As Judge Smith points out in his dissent:

The whole point of the public use limitation is to prevent takings even when a state agency deems them desirable. To let the agency itself determine when the public use requirement is satisfied is to make the agency a judge in its own cause. I think that it is we who should perform the role of judges, and that we should do so by deciding that the proposed taking in this case is not for public use.

Unfortunately, New York is not the only state that has come to define “blight” so broadly that virtually any property could be condemned. The same pattern is evident in numerous other states, including many that claim to have banned “economic development” takings since Kelo.

The case is also significant because it is the first major state supreme court defeat for property rights on a public use issue since Kelo. Over the last 10 years, the tide had been going the other way, with more and more state high courts applying restrictive definitions of “public use” and forbidding economic development takings of the kind upheld in Kelo, including important decisions in Ohio, Oklahoma, and Michigan, among others. Hopefully, Goldstein will not be the start of a counterrevolution.

UPDATE: I addressed the earlier federal litigation on this taking in this 2008 post, where I noted that the Second Circuit’s decision upholding the condemnation under the federal Constitution was probably required by Kelo, and also discussed some of the policy flaws with the Atlantic Yards project.

UPDATE #2: I have corrected a mistake in Judge Smith’s title (which is indeed, “Judge” and not “Justice,” as I originally stated). Just as New York confusingly refers to its supreme court as the Court of Appeals, while using the term “supreme court” for its trial courts, it also denies its high court judges the title used in most other states. In addition to issuing dubious property rights decisions, New York courts also have terrible nomenclature.

The New York Court of Appeals – the state’s highest court -is about to consider an important property rights case, Goldstein v. New York State Urban Development Corporation. The case involves a challenge to the condemnation of large amounts of property for the purpose of transferring the land to influential developer Bruce Ratner, who plans to use most of it to build a stadium for the New Jersey Nets (which he owns), and “luxury housing.” The targeted property owners argue that these takings are not for a “public use,” as the New York state constitution requires. Certainly, the case is a fairly egregious example of the use of eminent domain power to benefit private interests. I wrote about this taking in a 2008 post addressing the federal court case in which the Second Circuit Court of Appeals upheld these condemnations under the federal Constitution (as it was required to do, given the Supreme Court’s decision in Kelo v. City of New London):

…[T]he fact that much of the condemned land is to be used to build a sports stadium raises serious red flags about the true likelihood that the general public will benefit from the condemnation. Numerous studies by economists show that public subsidies for stadium construction create no economic benefits for the general public….

Second, the court claims that the creation of “affordable housing” for the poor is one of the public benefits to be expected from the project. The project will indeed create some new housing units (in addition to the stadium). However, as the Second Circuit opinion concedes (pg. 15), almost 70% of the new housing units will be “luxury” units for the wealthy, and the remainder is mostly not guaranteed to be ever built and is still intended for the “middle class” rather than the poor. Like the stadium, the housing portion of the project seems likely to be a straight redistribution of wealth from the current residents of the area to the very wealthy Mr. Ratner and the types of wealthy people who will be able to afford to buy the luxury housing he intends to build. To say the least, it is hard to discern any genuine public benefit here.

The Second Circuit also justifies the takings on the basis that they will serve to alleviate “blight.” New York City has indeed designated much of the area condemned area as blighted. However, the validity of this designation is debatable at best (the plaintiffs pointed out that much of the land in the area is among the most valuable in Brooklyn). . . . New York is one of many states with a definition of “blight” so broad that it can encompass virtually any property. Even if the area really is “blighted,” it doesn’t necessarily follow that the current owners and residents should be expelled and their land transferred to a politically powerful developer. Cities have many other options for alleviating genuine blight that do not infringe so greatly on property rights. At the very least, there is no good reason to condemn the 50% of the project area that even the city acknowledges to be free of blight….

In this case, as in Kelo itself, the court took account of the claimed benefits to the general public, but explicitly refused to consider the massive costs (pp. 13-15). Ignoring cost is a requirement under Kelo. But it is not a good way of determining whether a planned condemnation is actually likely to serve a “public use” – even if “public use” is defined broadly to include indirect public “benefits….” Ignoring costs is a blank check for local governments to undertake condemnations that benefit politically powerful interests while imposing the costs on taxpayers and the politically weak.

Finally, the Second Circuit notes that “Ratner was the impetus behind the [condemnation] Project, i.e., that he, not a state agency, first conceived of developing Atlantic Yards, that the Ratner Group proposed the geographic boundaries of the Project, and that it was his plan for the Project that the ESDC [government agency undertaking the condemnations] eventually adopted without significant modification.” The court is probably right to conclude that this is not enough to prove that the taking was a “pretextual” one under Kelo. At the very least, however, such a pattern of events should trigger heightened judicial scrutiny of the government’s true purposes in undertaking the condemnation.

Damon Root of Reason has some more details here:

In December 2003, Bruce Ratner, a New York real estate tycoon and owner of the New Jersey Nets basketball team, announced his long-simmering plans to build a 22-acre “urban utopia” in central Brooklyn, featuring more than a dozen office and apartment towers rising as high as 60 stories, a 180-room hotel, and a fancy new basketball arena for Ratner’s Nets to call home…..

So Ratner did what most politically-connected elites do when they run into trouble: He turned to the government—including his old Columbia law school pal Gov. George Pataki—for a bailout. More specifically, Ratner partnered with the Empire State Development Corporation (ESDC), a controversial and embattled state agency with the power to bypass zoning laws and seize private property via eminent domain.

It’s a classic case of eminent domain abuse. Ratner isn’t planning to build a bridge or a road or any other legitimate public project that might permit the forceful taking of private property. He wants to build a basketball arena, sell tickets to the games (not to mention sell broadcast rights, advertising space, concessions, and merchandise), and make a big fat profit. That’s not public use, it’s private gain.

Furthermore, state officials have gone out of their way to put those profits in Ratner’s hands. Consider that when the project was officially announced in 2003 there was no mention of blight, which is the state of extreme disrepair frequently cited by the ESDC to trigger an eminent domain taking under state law. Two years later, however, Ratner and the ESDC started claiming that the neighborhood was “blighted.” Yet by that point Ratner had already acquired many of the properties he wanted (thanks to eminent domain) and left them empty, thus creating much of the unsightly neglect he now cites in support of his project.

Moreover, the ESDC report counted minor things like “weeds,” “graffiti,” and “underutilization” as evidence of blight….

New York case law is among the most hostile to property rights in the entire country, allowing the condemnation of virtually any property for any reason. For example, a 2001 state appellate court decision ruled that Times Square was blighted, allowing the condemnation of property there for the purpose of transferring it to the New York Times to build a new headquarters. New York is also one of only seven states that have enacted no eminent domain reform law whatsoever since the Supreme Court’s controversial 2005 decision upholding “economic development” condemnations in Kelo. For these reasons, I am not optimistic about the property owners’ chances in this case. However, the litigation might still do some good by focusing greater attention on eminent domain abuse in New York. Moreover, there is always the possibility that the state supreme court will change its ways, as several other state high courts have done in recent years.