Perkins introduces bill to reform eminent domain by redefining blight; had provisions been enacted earlier, AY would have been blocked

As previewed (Gotham Gazette, New York Times), State Senator Bill Perkins has introduced a sweeping bill (S. 6971) to redefine eminent domain by redefining blight--currently subsumed under the amorphous terms "substandard and insanitary."

Thus environmental consultants like AKRF inevitably find blight when so requested by agencies like the Empire State Development Corporation (ESDC)

The bill, which likely will gain both supporters and critics, is clearly a response to the efforts to use eminent domain in the cases of Atlantic Yards, Columbia University, and Willets Point. The bill's provisions aren't retroactive, but if they were, they almost certainly would've have precluded the use of eminent domain for the AY site.

New York is one of few states--perhaps seven--that failed to enact any reforms regarding eminent domain after the Supreme Court's controversial 2005 Kelo v. New London decision, and the libertarian Institute for Justice, which brought the Kelo case, considers New York "one of the worst" states in the country when it comes to eminent domain abuse.

Underutilization

Notably, the bill eliminates the opportunity for condemning authorities like the ESDC to cite underutilization--as it did in the Atlantic Yards and Columbia cases--as an indicia of blight.

Given that AKRF deemed properties occupying less than 60% of allowable development rights (Floor Area Ratio, or FAR) as blighted, that could potentially doom broad swaths of the city.

“We now hear they don’t like using 60%” of FAR as a criteria for underutilization, Empire State Development Corporation Philip Karmel said during a May 2007 court hearing on challenges to the AY environmental review. “You have to have a cutoff somewhere.”

In his plurality opinion overturning the ESDC's use of underutilization--"the most egregious conclusion offered in support of the finding of blight"--inthe Columbia case, Appellate Division Justice James Catterson wrote:

Lack of demand can only be determined in relation to the FAR when combined with the zoning for the area in question. Manhattanville, for the relevant period, was zoned to allow maximum FAR of two, leaving owners essentially with a choice between a one or two-story structure. No rationale was presented by the respondents for the wholly arbitrary standard of counting any lot built to 60% or less of maximum FAR as constituting a blighted condition.

Other changes

It requires that vacant or deteriorating buildings be condemned only after a grace period to abate code violations, pay back taxes, and repair the structures.
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Bill lays out landscape of concern

The introduction to the bill lays out the concerns expressed at an oversight hearing last month:

The legislature hereby finds and declares that eminent domain, while a meaningful tool for government to move forward on important projects, has come under a great deal of criticism in recent years for many alleged abuses that have occurred within the state of New York. Traditionally, the right of eminent domain, or the state's ability to seize private land was limited for "public use". However, over the years, phrases such as "public use" and "blighted" have taken on more expansive meanings.

Since Kelo v. City of New London, the 2005 decision in which the U.S. Supreme Court approved the forcible transfer of property from one private owner to another in the name of "economic development", forty-three states have passed eminent domain reform legislation. New York has thus far failed to take such action but continues again and again to approve eminent domain condemnation for projects that benefit private entities at the public's expense. A 2009 report by the Institute for Justice entitled "Building Empires, Destroying Homes: Eminent Domain Abuse in New York" detailed widespread eminent domain abuse throughout the state.

Furthermore, two recent court decisions, Goldstein v. New York State Urban Development Corporation [the AY case] and Kaur v. New York State Urban Development Corporation [the Columbia case] demonstrate the need to balance the rights of property owners without stifling positive economic development programs. Instead, New Yorkers suffer under an inequitable system of eminent domain laws that greatly favors private developers partnered with public actors at the expense of homeowners, businesses, and tenants.

The use of "blight" as a basis for condemnation is vaguely defined and in need of clarification. Under the loose standards of existing law practically anything can qualify as blighted. Consequently it is imperative that the legislature enact objective criteria to ensure that blight determinations are consistent, predictable, and based on factors actually related to the public's health and safety. There also needs to be better protections in place so that tenants and low income residents are ensured that they are not excluded from the development process.

Among the changes

The bill defines "unfit for human habitation" as "premises which have identifiable conditions that endanger the life, health and safety of the owners, occupants, or the public," including "substantial structural defects or deterioration, vermin infestation, lack of necessary utilities, and fire hazards."

Rather than simply assessing vacancy of a building--which can be a product of "developer's blight"--the bill would define "abandoned property" as unoccupied and tax delinquent for at least two years; or an unoccupied building unfit for habitation and has deteriorated to the point where it is structurally unsound or poses an immediate threat to life or other property or
the cost of rehabilitation significantly exceeds the post-rehabilitation market value; or the owner fails to respond within six months to a violation notice regarding code violations or demolitions.

Responsibility for blight

Remember how the ESDC was unable to say whether the Metropolitan Transportation Authority or the city of New York was responsible for weeds around the railyard?

Well, the new bill allows a designation of blight for a vacant property overgrown with weeds--or trash, or vermin--if the owner fails to remedy the problem within six months after receiving notice of violation

Also blighted is occupied or unoccupied property that has tax delinquencies exceeding the value of the property and property used for pervasive and persistent criminal activity.

What's not blighted

The bill lists several examples of property that can't be declared blighted:

• vacant and unimproved property in a rural or suburban area not served by existing utilities
• viable agricultural land and other types of agricultural land
• "if a developer or condemnor involved in a redevelopment project has caused or brought about by action or inaction or maintained for more than seven years" a blighted condition (a nod to the Columbia case)
• if blight is caused by failure "to provide necessary utility services and/or infrastructure" (a nod to Willets Point)
  
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What's wrong with the picture? Some much-touted benefits of the project, as calculated in new construction jobs, new permanent jobs, and new tax revenues, were all predicated on a full buildout. No alternative analysis was provided.

Forest City Ratner waited well over two days to change digital signs warning that Fifth Avenue between Atlantic and Flatbush avenues would close on February 1--despite a judge's decision last Friday to defer any decision on transferring title to properties and streets in the Atlantic Yards footprint to the Empire State Development Corporation (ESDC).

So a lot of people walking and driving this weekend had a right to be confused when the street turned out to be open this morning.

Who's in charge?

And no one really knew who was in charge.

Was it the New York City Department of Transportation (DOT)? Not really, even though FCR said it would have to ask for DOT permission to close the streets without a judicial order. After all, I couldn't even get an on-the-record statement out of DOT.

Was it the ESDC? Maybe, given that an ESDC attorney said in court that no request for street closure would be made until title had been vested. But I couldn't get any further statement from the ESDC last Friday.

Was it the developer? Well, it appears that FCR has a pretty long leash, if it can place signs on streets and sidewalks and decide when the message gets changed.

And remember, Bruce Ratner told Crain's last November in another context, regarding project designs, “Why should people get to see plans? This isn't a public project."

...the report claimed that Richard Meier's On Prospect Park was 75% sold. However the New York Times reported September 27 that the developer asserted that half of the units had been sold and the web site StreetEasy.com documented only 25 closings.

KPMG also claimed that the Oro Condos in Downtown Brooklyn were 75% sold. That didn't ring right.

In September, Crain's reported that prices at Oro had been slashed 25%. And yesterday the New York Times reported that the building is 44 percent sold.

Why does this matter?

Because the ESDC relied on the "expert" KPMG to validate its dubious estimate that the Atlantic Yards housing could be absorbed in a decade, a crucial defense in the case challenging the ESDC's approval of the 2009 Modified General Project Plan and the failure to issue a Supplementary Environmental Impact Statement (SEIS).

 

After nearly two hours of oft-contentious oral argument before Kings County Supreme Court Judge Abraham Gerges--argument that, according to counsel for the Empire State Development Corporation (ESDC) went well beyond the proceeding at hand--the judge chose not to rule on the motions and counter-motions filed in the last two days.

"While the court will proceed promptly, the parties are entitled to a review of their claims," Gerges said at the end of the hearing, promising to "proceed expeditiously."

That means, most likely, that streets planned for closure February 1 will not close, even though developer Forest City Ratner seeks the closure of Fifth Avenue between Flatbush and Atlantic avenues for sewer work needed before arena construction will go forward--and has said it wanted that street closed even if the case was delayed.

"We will not even ask that [streets] be closed until after vesting [of title]," ESDC attorney Charles Webb told the judge.

Friday, January 29, 9:30 AM

Atlantic Yards Condemnation Proceeding Oral Argument

Kings County State Supreme Court
IAS Part 74
320 Jay Street, Room 17.21
Brooklyn
[ MAP ] [ Street View ]

The property owners and leaseholders fighting the condemnation proceedings, who include DDDB spokesperson Daniel Goldstein, Henry Weinstein and Freddy's Bar & Backroom, intend to vigorously oppose the state's attempt to take their properties and businesses against their will.

Attorney Matthew Brinckerhoff, who will represent them in the hearing, told Atlantic Yards Report's Norman Oder last month that "we will challenge the petition. It is defective in many respects." Weinstein said he would "fight tooth and nail" to save his property. In addition to seeking the dismissal of the condemnation petition, the property and leaseholders, with the support of DDDB, are pursuing all available legal means in their efforts to stop the project in its tracks.

The arguments will be heard before Judge Abraham Gerges. Be sure to arrive early to guarantee yourself a seat in the courtroom. You can read the ESDC's petition here.

Develop Don't Destroy Brooklyn continues to offer its full support to the property owners and leaseholders in their ongoing legal effort to defend their homes and businesses against Forest City Ratner's ill-conceived, politically corrupt project.  Today, their attorney, Matthew Brinckerhoff, has filed an answer challenging both the substance of the petition and the procedure by which the Empire State Development Corporation is attempting to seize title to their properties, which, unfortunately for Forest City, continue to stand in the way of its taxpayer-subsidized basketball arena and its thousands of parking spaces.

The respondents' answer points out, among many defects in the ESDC's papers, that the ESDC seeks to condemn this property to support a plan long ago abandoned by the developer in favor of a much-altered project that the state freely admits - but not in front of a judge - could take 25 years to build.  The answer also demands dismissal of the proceeding because the ESDC has failed to set forth the public benefits of the project, although it's expressly required by the law to do so.

DDDB and the property owners and leaseholders continue to hold out faith that the judicial system will finally expose the gross, irreparable flaws in the Atlantic Yards project, and in the governmental abuse of the public trust, and will refuse to grant Forest City Ratner the private property that it covets.