June 24, 2010

N.Y. Court of Appeals Reverses Appellate Division and Says Columbia University Condemnation May Proceed

In a rebuke to the Appellate Division First Department, the New York Court of Appeals today held that the condemnation of land on the upper west side of Manhattan to benefit Columbia University may go forward. In Matter of Kaur v New York State Urban Dev. Corp., the Court of Appeals reversed the Appellate Division rejection of the proposed condemnation and, in reliance on its recent holding in Matter of Goldstein v. New York State Urban Development Corporation, held that the findings of (1) blight, (2) that the petitioner's property qualified as a "land use improvement project" and (3) the finding of a "civic purpose" to the project, were "rationally based and entitled to deference."

The proposal is for development of a new 17 acre campus for Columbia University. Over the last decade Columbia has acquire a majority of the parcels in the area, however, a number of property owners have held out and this challenge is to the proposal by the Empire State Development Corporation (ESDC) to utilize its authority under the Eminent Domain Procedure Law (EDPL) to acquire the balance of the parcels within the area covered by ESDC's General Project Plan (GPP) to implement the Columbia proposal. After reviewing the history of the case, the Court reviewed and struck down each of the holdings of the Appellate Division.

The Court noted that the main argument in opposition was that the condemnation is not for the purpose of putting the properties to a "public use" within the meaning of the New York Constitution and that the findings of blight were arrived at in bad faith. The Court noted that in "Matter of Goldstein, we reaffirmed the longstanding doctrine that the role of the Judiciary is limited in reviewing findings of blight in eminent domain proceedings...Thus, given our precedent, the de novo review of the record undertaken by the plurality of the Appellate Division was improper. On the "record upon which the ESDC determination was based and by which we are bound" (id. at 517, citing Matter of Levine v New York State Liq. Auth., 23 NY2d 863, 864 [1969]), it cannot be said that ESDC's finding of blight was irrational or baseless. Indeed, ESDC considered a wide range of factors including the physical, economic, engineering and environmental conditions at the Project site. Its decision was not based on any one of these factors, but on the Project site conditions as a whole. Accordingly, since there is record support — "extensively documented photographically and otherwise on a lot-by-lot basis" (id. at 526) — for ESDC's determination that the Project site was blighted, the Appellate Division plurality erred when it substituted its view for that of the legislatively designated agency."

The Court then went on to discount the claim of bad faith by ESDC, noting that the ESDC had undertaken multiple studies of the area and, in rejecting any findings by the Appellate Division to the contrary, found no support in the record for any finding of bad faith.

The next claim discussed was that the term used to define a blighted area "substandard or insanitary area" is void for vagueness. In likewise rejecting that claim the Court stated: "blight is an elastic concept that does not call for an inflexible, one-size-fits-all definition (see Berman v Parker, 348 US 26, 33-34 [1954]). Rather, blight or "substandard or insanitary areas," as we held in Matter of Goldstein and Yonkers Community Dev. Agency, must be viewed on a case-by-case basis. Accordingly, because the UDC Act provides adequate meaning to the term "substandard or insanitary area," we reject petitioners' argument that the statute is unconstitutionally vague on its face."

Then in dismissing the finding by the Appellate Division, which seemed (at least to some) the most likely to separate this case from others and form a basis for upholding that decision, the Court of Appeals reversed the lower court's finding that the area was not blighted before the majority of the properties were acquired by Columbia and that Columbia, in effect, caused the current blighting condition by vacating and neglecting the properties it had acquired.

"In determining that Columbia created the blighted conditions in West Harlem, the plurality of the Appellate Division disregarded the Urbitran blight study commenced in 2003. That study, made at EDC's request and not ESDC's, was based on a survey of the Project site and surrounding neighborhood at a time when Columbia was only beginning to purchase property in the area. Indeed, the Urbitran study unequivocally concluded that there was "ample evidence of deterioration of the building stock in the study area" and that "substandard and unsanitary conditions were detected in the area." Moreover, Earth Tech found that, since 1961, the neighborhood has suffered from a long-standing lack of investment interest. Thus, since there is record support that the Project site was blighted before Columbia began to acquire property in the area, the issue is beyond our further review."

In further rejecting the Appellate Division determination that this is a private project, the Court concluded that this project fell with the UDC Act definition of a a "civic project." It noted that this is an educational institution and that "education and the expansion of knowledge are pivotal government interests." Further, the Court noted other civic benefits from the project such as open space, transit infrastructure improvements and job growth.

Finally, the Court rejected the claim that there was a deprivation of due process because of a FOIL violation, which was later remedied in favor of the property owners. Noting first that there is no discovery permitted in this phase of a condemnation proceeding, the Court held that the release of substantial numbers of documents (8,000 pages) as well as the lengthy submission made by the objectors demonstrated that they had a fair opportunity to present their case.

"Here, petitioners have not met their burden, neither explaining how they were deprived of a meaningful opportunity to be heard during the administrative process nor demonstrating the materiality of the records sought through FOIL."

The Court therefore conclude:

"In sum, we give deference to the findings and determination of the ESDC that the Project qualifies as both a land use improvement project and as a civic project serving a public purpose under the UDC Act. We further conclude that petitioners were not deprived of procedural due process."

-Steven Silverberg

June 6, 2010

Condemnation Award Will Not Be Disturbed On Appeal If Based On Evidence

An appellate court upheld an award for condemnation of land underwater as well as denial of consequential damages for a partial taking, in a case where part of a residential subdivision was taken for parkland. In Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, the Appellate Division Second Department upheld the decision of the lower court noting that if the lower court's "explanation of its award is supported by the evidence, it is entitled to deference and will not be disturbed on appeal...."

The property at issue was just over 6 acres, including almost an acre of underwater land. The taking was 2.3 acres, including the underwater land. The property owner sought consequential damages claiming that by creating a park the value of the remaining land it owned was reduced, as the park reduced privacy. The park district's appraiser claimed that the park enhanced the value of the remaining property because it provided an unobstructed view of Long Island Sound as a result of restrictions on the use.

The Court noted in determining damages:
"[t]he measure of damages for a partial taking of real property is the difference between the value of the whole property before the taking and the value of the remainder after the taking...Consequential damages are measured by the difference between the before and after values of the property, less the value of the land and improvements appropriated...The measure of damages must reflect the fair market value of the property in its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time..." and where a partial taking enhances the value of the remaining land "the Supreme Court was precluded from taking that enhanced value into account in rendering the award."

The Court concluded the determination by the lower court that the park actually enhanced the value of the remaining land was supported by the evidence and therefore the lower court was correct in not modifying the award based upon the effect of the taking on the remaining land. As for the issue of land underwater, the Court noted there were letters patent granting title to that land and therefore the property owner was entitled to damages for the taking.

-Steven Silverberg

December 4, 2009

Court Throws Out Condemnation for Columbia University Campus

In a case that appears to break new ground, the Appellate Division, First Department, found that the proposed condemnation of a number of parcels to make way for a new Columbia University Campus should be rejected. In Matter of Kaur v. New York State Urban Development Corporation the split court issued a strongly worded decision finding the "process employed by ESDC predetermined the unconstitutional outcome, was bereft of facts which established that the neighborhood in question was blighted, and ultimately precluded the petitioners from presenting a full record before either the ESDC or, ultimately, this Court. In short, it is a skein worth unraveling."

By way of background, the Manhattanville area of West Harlem has been in the sights of Columbia University for a number of years as the location for a new campus. Several years ago it began acquiring property in the area, but a number of property owners refused to sell to Columbia and Columbia began working with the Empire State Development Corporation (ESDC) to acquire the holdouts through eminent domain. The court found that while in 2000 Columbia owned only 2 properties in the area, by 2003 Columbia owned 51% of the properties in the roughly 17 acres at issue. In 2004, the New York City Economic Development Corporation (EDC), the ESDC and Columbia began meeting concerning the project. In 2006, the ESDC hired Columbia's planning consultant to do a study of the area. The study, issued in 2007 noted that by 2007 Columbia controlled 72% of the properties. The study concluded that the majority of the lots in the area were substandard.

During the course of related litigation over release of documents under the Freedom of Information Law (discussed in this Blog in July, 2008) issues were raised concerning the neutrality of the consultant who worked for both Columbia and ESDC. ESDC thereafter retained another consultant to do a further study. By the time of the new study Columbia either owned or was in contract to purchase 48 of the 67 lots in the study area. The new study concluded many of the properties were neglected and the area was "blighted."

In rejecting the findings of blight the court noted: "EDC's 2002 West Harlem Master Plan which was created prior to the scheme to balkanize Manhattanville for Columbia's benefit found no blight, nor did it describe any blighted condition or area in Manhattanville. Instead, as described above, the Plan noted that West Harlem had great potential for development that could be jump-started with re-zoning. It was only after the Plan was published in July 2002 that the rezoning of the "upland" area was essentially given over to the unbridled discretion of Columbia. In little more than a year from publication of the Plan, EDC joined with Columbia in proposing the use of eminent domain to allow Columbia to develop Manhattanville for Columbia's sole benefit.... Columbia not only purchased or gained control over most of the properties in the area, but it also forced out tenant businesses, ultimately vacating, in 17 buildings, 50% or more of the tenants. The petitioners clearly demonstrate that Columbia also let water infiltration conditions in property it acquired go unaddressed, even when minor and economically rational repairs could arrest deterioration....Thus, ESDC delayed making any inquiry into the conditions in Manhattanville until long after Columbia gained control over the very properties that would form the basis for a subsequent blight study."

The court then went on to reject "underutilization" as sole criteria in determining blight, no doubt because Columbia, in acquiring the properties and vacating them created much of the underutilization, stating "time has come to categorically reject eminent domain takings solely based on underutilization." The court further found that the project had no "civic purpose, "Columbia is virtually the sole beneficiary of the Project. This alone is reason to invalidate the condemnation especially where, as here, the public benefit is incrementally incidental to the private benefits of the Project."

The court then went on to find additional procedural defects which rendered the actions unconstitutional.

As this case is likely to be heard by the Court of Appeals, it will be interesting to see how these issues are ultimately resolved, particularly in light of the Court's decision on eminent domain last week in the case of Goldstein v. the New York State Urban Development Corporation.

November 29, 2009

New York Court of Appeals Upholds "Atlantic Yards" Condemnation

In a major decision, the New York Court of Appeals put a new gloss on the New York Eminent Domain Procedure Law (EDPL) allowing the condemnation by the Empire State Development Corporation (ESDC) of the so called "Atlantic Yards" area of Brooklyn to proceed. In Matter of Goldstein v. New York State Urban Development Corporation d/b/a Empire State Development Corporation, the court found that the ESDC had properly determined that the area at issue met the criteria for being "blighted." Therefore, the taking of private property for the development of 16 commercial and residential towers along with, most notably, a new arena for the "NBA Nets franchise" may proceed.

Initially the court addressed the issue of timeliness of the action. As previously noted in this Blog the EDPL sets forth a two part process for condemnation in New York. The first step is a determination under Article 2 of the EDPL that a site would serve a public purpose and is appropriate for condemnation. Once such a determination has been made a challenge must be brought in the Appellate Division within 30 days pursuant to EDPL section 207. However, in this case the petitioners initially brought an action in federal court and raised federal constitutional issues as well as state claims. The federal action was decided against the petitioners and the state claims dismissed without prejudice. The Court of Appeals therefore concluded that since the state claims were raised in federal court and dismissed without prejudice CPLR 205 (a), which allows a tolling of the statute of limitations under certain circumstances, tolled the statute of limitations in this case.

In a concurring opinion, Judge Read invokes what appeared to be the conventional wisdom prior to this decision. Judge Read argues that EDPL section 207 confers exclusive jurisdiction on the Appellate Division in an EDPL Article 2 challenge and therefore starting the action in another forum, even a federal court, does not toll the statute.

On the merits of the case, as outlined by the court, the petitioners argued "the State Constitution's takings clause, unlike its federal counterpart, has been consistently understood literally, to permit a taking of private property only for "public use," and not simply to accomplish a public purpose." The dissent by Judge Smith seems to view this statement as the position of the majority of the court as well. Yet, the next sentence of the majority opinion appears to reject this premise by stating: "...if this gloss on this State's takings laws and jurisprudence were correct — and it is not...." Thus, the majority appears to adopt the broader holdings of the federal courts in condemnation actions which reject the proposition that there may only be a taking for a public use "and not simply to accomplish a public purpose."

However, the court decides this case on other grounds holding "it is indisputable that the removal of urban blight is a proper, and, indeed, constitutionally sanctioned, predicate for the exercise of the power of eminent domain. It has been deemed a "public use" within the meaning of the State's takings clause at least since Matter of New York City Housing Authority v Muller (270 NY 333 [1936]) and is expressly recognized by the Constitution as a ground for condemnation." The court's analysis continues finding that, while the area in question may not meet the classic description of a slum, the ESDC made findings that the area was substandard and insanitary and those terms have evolved over time to have a broader application than when the statutes were adopted for slum clearance purposes.

Further, the court limits the scope of judicial review of such findings. "It is important to stress that lending precise content to these general terms has not been, and may not be, primarily a judicial exercise. Whether a matter should be the subject of a public undertaking — whether its pursuit will serve a public purpose or use — is ordinarily the province of the Legislature, not the Judiciary, and the actual specification of the uses identified by the Legislature as public has been largely left to quasi-legislative administrative agencies. It is only where there is no room for reasonable difference of opinion as to whether an area is blighted, that judges may substitute their views as to the adequacy with which the public purpose of blight removal has been made out for that of the legislatively designated agencies..."

The court then goes on to state that it is possible that in determining blight "the bar has now been set too low" but declines to act stating that this is something for legislative determination.

The other argument raised by the petitioner is that the proposed condemnation violates Article XIII section 6 the State Constitution which provides that projects which receive state loans or subsidies must be for low income housing. The court distinguishes this provision of the Constitution finding that the project at issue is not one of large scale slum clearance where there will be a large displacement of low income families requiring relocation. Therefore the court concludes that low income housing is a "worthy objective" but not mandated for a project "that does not entail substantial slum clearance."

In a dissent, Judge Smith argues that the court has given too much deference to the "self-serving" determination of the ESDC. He concludes: "I think 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."

-Steven M. Silverberg

November 22, 2009

Property Owner Who Successfully Challenges Finding of Public Purpose for Condemnation May Recover Attorney's Fees and Costs

The New York Court of Appeals ruled last week that a property owner who was successful in defeating an attempt to acquire her property by eminent domain may recover certain of her attorney's fees and costs. In Hargett v. Town of Ticonderoga the Court noted that in a prior action the Appellate Division had ruled that the Town's superintendent of highways had exceeded his authority in attempting to condemn property for purposes unrelated to his position. In the earlier action the property owner had challenged the initial finding by the Town that there would be a public purpose in taking her property.In the current action the property owner sought reimbursement pursuant to EDPL 702 for costs and attorney's fees incurred in the successful challenge to the finding of public purpose. The issue in the case was whether the reimbursement provisions of EDPL 702 would apply to this first stage of the condemnation process in which the Town targeted the property for acquisition or only after the Town actually commenced an acquisition/vesting procedure to condemn the property.

The Appellate Division Third Department denied the application relying upon the holding in Matter of 49 WB, LLC v. Village of Haverstraw in which the Appellate Division Second Department concluded that no reimbursement was available under similar circumstances. As previously discussed on this Blog in a June 23, 2007 post the Second Department in the Haverstraw case held that the petitioner was not entitled to attorney’s fees and costs under EDPL 702 (B) as no acquisition procedure had been commenced. EDPL has a two step process (1) determining public purpose and (2) acquisition. As Haverstraw had only identified the public purpose but no actual acquisition procedure had been commenced, the Court determined there was no right to recover fees and costs.

In reliance on the Haverstraw case the Town of Ticonderoga argued that EDPL 702 only provides for reimbursement during the vesting stage of a condemnation proceeding. The Court of Appeals, however, disagreed with that prior holding and concluded that under these circumstances the property owner is entitled to recover certain fees and costs. The Court held in the first stage of the eminent domain process, prior to an actual vesting procedure has been commenced, "reimbursement for attorney's fees and other costs incurred by a condemnee may be sought pursuant to EDPL 702 (B) after it is determined in an EDPL article 2 proceeding that the condemnor lacked authority to pursue the proposed acquisition." The Court concluded that this first stage was part of the "acquisition" process contemplated by the language in EDPL 702.

The Court qualified the extent of available reimbursement by stating reimbursement is available for "fees and costs incurred by a condemnee after a condemnor makes a determination and findings that are adverse to the condemnee pursuant to EDPL 203 and 204... However, we take no view here as to whether fees incurred before such an adverse determination may be said to be incurred "because of the acquisition procedure" within the meaning of EDPL 702 (B)." Thus, once a municipality makes a determination that a particular property would serve a public purpose, if a property owner successfully challenges that determination the property owner can seek reimbursement. Yet, whether the costs of preparing for the hearing conducted by the municipality in reaching its public purpose determination are also reimbursable is still an open question.

-Steven M. Silverberg

August 13, 2009

Property Owner Entitled to Repairs When Pre-Acquisition Emergency Access Is Granted During EDPL Process

An appellate court has ruled that EDPL section 402 [B] [6], which authorizes a court to permit pre-condemnation access to property, also authorizes a court to require a condemnor to correct an unsafe or dangerous condition it has created. In Matter of Village of Saranac Lake, the Appellate Division upheld the right of the court to order the Village to correct a dangerous condition created during pre-acquisition access that was granted to perform emergency repairs to a sewer line, but remitted the matter to the lower court for further factual findings on the need
for such repairs.

The Village of Saranac Lake had commenced EDPL proceedings to acquire easements over certain properties for installation, repair and replacement of sewer lines. Under EDPL 402 [B] [6} the Village obtained pre-acquisition permission from the court to conduct emergency repairs of certain sewer lines. The work was performed and the EDPL process continued. However, one of the property owners brought an application to force the Village to repair certain claimed unsafe conditions created by the Village when it made its repairs. The lower court granted the relief. The Village appealed claiming the court had no authority to require the repairs and that the property owners were not entitled to compensation until after acquisition was complete.

The appellate division disagreed. Noting that there are several stages in the process of petitioning to acquire property, the court held that the pre-acquisition procedure for access under EDPL 402 [B] [6] also “provides that property owners will be compensated for damages to their land even if, among other things, the petition is ultimately dismissed and no award is made….It would defy common sense for a court to be authorized to permit a proposed condemnor to enter immediately upon the property of a landowner in ‘the public interests’ (EDPL 402 [B] [6}), but then maintain that said court has no power to direct further remediation in the face of established proof that the condmenor created an unsafe or dangerous condition on the land.”

April 13, 2009

Road Improvement Serving Primarily Commercial Vehicles Does not Defeat Eminent Domain

The Appellate Division held that taking of private property by eminent domain fulfilled a public purpose even though the taking primarily benefited commercial traffic. In the Matter of 225 Front Street, Ltd. v. City of Binghamton the court noted the limited scope of judicial review of a proceeding under the EDPL which "must focus on "whether the proceeding was in conformity with constitutional requirements, whether the proposed acquisition is within the statutory jurisdiction or authority of the condemnor, whether the condemnor's determination and findings were made in accordance with the procedures set forth in EDPL article 2 and ECL article 8, and whether a proposed [public] use, benefit or purpose will be served by the proposed acquisition."

Here the Court found that the purpose of acquiring the petitioner's property was to facilitate road improvements in order to resolve traffic congestion in the City. Petitioner argued that the taking served no public purpose but was for the private benefit of commercial traffic. The court held: "[p]utting aside the fact that commercial use of public highways has obvious public benefits, there can be no doubt but that where an intersection of two public roadways is constructed in such a way that some vehicles cannot safely negotiate it, all vehicular traffic that utilizes the area is obviously affected. This project, as designed, seeks to address such a concern and, as such, has a public purpose."

February 27, 2009

Atlantic Yards Condemnation Litigation Continues

Last year we reported on the case of Goldstein v Pataki, 516 F3d 50 [2008] involving the proposed condemnation of property in Brooklyn, New York in order to build the so called Atlantic Yards Project which includes a huge residential and commercial development along with an arena for the New Jersey Nets. This week the Appellate Division, First Department (In re Develop Don't Destroy (Brooklyn) v. Urban Development Corporation) again addressed claims by property owners alleging that the State Environmental Quality Review Act (SEQRA) had not been adequately followed and that the project does not involve an appropriate public project within the meaning of the various governing statutes including the Eminent Domain Procedures Law.

In dismissing the claims the court made far reaching findings which are best recited in the court’s own words. The first claim was that the financial participation of the Empire State development Corporation (ESDC) in the project had not been properly analyzed as part of the SEQRA review findings and therefore had not been subjected to appropriate environmental scrutiny. The court disagreed that the ESDC’s financial participation was an area for environmental inquiry holding: “[a]ccordingly, where the decision, although discretionary, is governed by criteria unrelated to the environmental concerns addressed in an EIS, environmental findings based on the EIS are unnecessary as it would be pointless to mandate reliance on an EIS in the interest of informed decision-making in circumstances where the EIS is by hypothesis irrelevant to and cannot inform the decision to be made”

The Plaintiffs then argued that the lead agency failed to take a “hard look” under SEQRA at the threat of a terrorist incident, particularly with respect to the arena. The Court disagreed finding that although there may be exceptions in the case of storage of particularly dangerous materials: “SEQRA contains no provision expressly requiring an EIS to address the risk of terrorism and, indeed, it would not appear that terrorism may ordinarily be viewed as an "environmental impact of [a] proposed action" (ECL 8-0109[2][b] [emphasis added]) within the statute's purview.”

Next the Plaintiffs claimed that the lead agency did not properly determine the build year for various aspects of the project, which they claim resulted in an inadequate review of the proposal. Yet again the court disagreed noting: “the ultimate accuracy of the estimates is neither within our competence to judge nor dispositive of the issue properly before us, which is simply whether the lead agency's selection of build dates based on its independent review of the extensive construction scheduling data obtained from the project contractor may be deemed irrational or arbitrary and capricious”

The final SEQRA claim was that the lead agency did not adequately consider alternatives and specifically failed to take into account prevailing real estate trends. In perhaps its most devastating conclusion with respect to the Plaintiffs’ SEQRA claims the court held: “[t]o be sure, as the EIS discloses, there were more adverse impacts associated with the proposed project than with its less ambitious alternatives, but, on balance, there is no tenable argument that that lead agency's preference for the FCRC project, arrived at after an evidently conscientious weighing of alternatives, was not rationally and sufficiently based on the project's distinctive constellation of otherwise unattainable benefits. Certainly, the lead agency did not in this case exceed the "considerable latitude" afforded it under SEQRA to evaluate environmental effects and choose among alternatives (Jackson, 67 NY2d at 417).”

The Plaintiffs also raised issues relating to the determination of blight for purposes of condemnation, arguing in part that the properties in question were not actually blighted. In rejecting this argument the court stated: “reinforced by a standard of review that may with great understatement be described as lenient: ‘When [the agencies to which the initial blight determination has been committed] have made their finding, not corruptly or irrationally or baselessly, there is nothing for the courts to do about it, unless every act and decision of other departments of government is subject to revision by the courts" (Kaskel v Impellitteri, 306 NY 73, 78 [1953], cert denied 347 US 934 [1954])’…. Plaintiff does not dispute with defendants as to the condition of these properties or of the whole area. He is simply opposing his opinion and his judgment to that of public officials, on a matter which must necessarily be one of opinion or judgment, that is, as to whether a specified area is so substandard or insanitary, or both, as to justify clearance and redevelopment under the law.”

Finally, the court concluded: “The issue posed is not which of the parties has more persuasively characterized the area in question, but whether there was any basis at all for the exercise by the agency of the legislatively conferred power to make a blight finding, and plainly there was.”

March 8, 2008

Article by Silverberg Featured in New York Real Estate Law Reporter

An article entitled " 'Atlantic Yards' Condemnation Upheld," written by Steven Silverberg, founding partner of Silverberg Zalantis LLP, is featured in the March, 2008 ALM Law Journal Newsletter, New York Real Estate Law Reporter. The article discusses the recent decision by the Second Circuit Court of Appeals to dismiss the challenge by several property owners to the condemnation of their properties in order to construct a huge private development in downtown Brooklyn, New York. See: http://www.lawjournalnewsletters.com/newsletters/home/ljn_nyrelaw.html

February 2, 2008

Second Circuit Affirms Dismissal of Challenge to “Atlantic Yards” Condemnation

The Second Circuit Court of Appeals upheld dismissal of the challenge to condemnation of private property for the Atlantic Yards Project in Brooklyn stating in the case Goldstein v. Pataki, decided on February 1, 2008: “…eminent domain has its costs, it has its benefits, and in all but the most extreme cases, Supreme Court precedent requires us to leave questions of how to balance the two to the elected representatives of government, notwithstanding the hardships felt by those whose property is slated for condemnation.” The Court found that neither the fact that the area at issue would be developed privately nor the fact that the individual property owners’ lots are not themselves blighted changed the public purposes of the project to remove blight and provide affordable housing.

The well publicized proposal is to construct a new sports arena for the New Jersey Nets, sixteen high rise apartment buildings and several office towers in a portion of downtown Brooklyn which the Court described as being “afflicted for decades with substantial blight.” Plaintiffs are 15 property owners whose homes or businesses are in a less blighted portion of the project area which are slated for condemnation.

Plaintiffs claimed violations of the “Public Use Clause” of the Fifth Amendment and the Equal Protection and Due Process Clauses of the Fourteenth Amendment to the United States Constitution, along with a New York State law claim. The basis for the action was the allegation that the “public use” for the project is merely a pretext and any incidental public benefit is secondary to the primary purpose of the project, which Plaintiffs’ claim is to allow a private taking in order to advance the personal fortune of the developer, Bruce Ratner.

The District Court, on a motion to dismiss, dismissed the federal claims and declined to retain supplemental jurisdiction over the state claim. Finding that “pretext” was an argument that could be advanced under the Supreme Court decision in Kelo v. City of New London, the District Court determined a reasonable juror could not conclude removal of blight and construction of 2,250 new units of affordable housing were mere pretexts. The District Court also concluded, based upon a prior holding by the Circuit Court in Brody v. Port Chester, that the due process challenge to the New York Eminent Domain Procedure Law would fail.

On appeal, Plaintiffs claimed that government officials had abdicated their eminent domain authority and had been co-opted by Mr. Ratner in order to increase his personal profit. While the Circuit Court noted that the Fifth Amendment requirement that private property may not be taken without just compensation has been understood to include the prohibition of taking private property for the benefit of another private person without “a justifying public purpose” the court also observed that “the primary mechanism for enforcing the public-use requirement has been the accountability of political officials to the electorate, not the scrutiny of the federal courts.”

The Court concluded the role of the Courts is the narrow one of determining if the exercise of eminent domain is “rationally related to a conceivable public purpose” (citing Hawaii Housing Authority v. Midkiff). It found the Complaint on its face conceded “several well-established categories of public uses, among them the redress of blight, the creation of affordable housing, the creation of a public open space, and various mass-transit movements.”

Finally, the Court determined that the “single sentence” in the Kelo decision referring to pretext did not open the door “to require federal courts in all cases to give close scrutiny to the mechanics of a taking rationally related to a classic public use as a means to gauge the purity of the motives of the various government officials who approved it.”

June 23, 2007

Appellate Court Rules Use of Eminent Domain Improper


In what the Appellate Division, Second Department called a case of first impression, the court has ruled an attempt by the Village of Haverstraw to acquire a property by condemnation for affordable housing violated the Eminent Domain Procedure Law. In the case 49 WB, LLC v. Village of Haverstraw the court found the Village failed to demonstrate a public purpose.

The Village proposed to condemn the property at issue for acquisition by a local not-for- profit, HOGAR. In finding that the acquisition of the property had a public purpose the Village had determined that (1) HOGAR would provide a community outreach health center, (2) provide an office for HOGAR and (3) the site would be suitable to construct 16 units of affordable housing. The Court found: (1) the Village failed to demonstrate that HOGAR was more likely to provide a community outreach health center than the current owner who had a plan for such use and therefore “failed to articulate how or in what manner the condemnation …fosters any benefit to the public which would not be obtained absent condemnation”; (2)HOGAR already leased space in the building and the owner had offered a long term lease, further “there is no foundational support in the record to conclude that any “public” benefit would flow from having a private, not-for-profit corporation such as HOGAR be an owner of its office space rather than a tenant”; and (3) the condemnation, through a complex analysis outlined below, actually results in fewer affordable housing units for the Village.

The Court found that the entire affordable housing argument was tied to a private development of the Village’s waterfront. The Court noted that in exchange for permission to construct a large development on the Village’s waterfront, the waterfront developer was required to “participate” in the development of 85 units of affordable housing. The developer intended to contribute to HOGAR’s acquisition of the property and therefore, the Court found, would get credit for participating in the 16 units of affordable housing HOGAR proposed for the site. This would reduce the developer’s obligation to build affordable housing by the 16 units. But the Court found that the present owner already proposed 6 units of affordable housing on the site which, unlike HOGAR’s proposal, did not include “participation” by the developer and would not be credited to the developer’s requirement of 85 units. Therefore, by pursuing the condemnation and giving the developer credit for HOGAR’s 16 units, the Village was actually losing the 6 additional units that would have been constructed by the owner of the property. The Court concluded allowing the present owner to construct 6 units would net the Village 91 units of affordable housing rather than 85. Thus the purported public purpose of providing more affordable housing was illusory.

The Court found, based upon this analysis, “the condemnation solely benefits the private entities.” Significantly the Court then limited its holding by stating: “we do not suggest that private owners of property can avoid the proper exercise of a municipality’s condemnation authority by merely offering to utilize the property in the same manner as intended by the municipality. Instead, our opinion rests upon the evidentiary record that the Village invoked its power of condemnation for the sole purpose of benefiting private and not public interests.”

Another issue was whether the challenge had been brought within the 30 day statute of limitations. The court noted that EDPL 204(A) provides for publication of notice of the determination and findings in “at least” two successive newspapers. In this case the Village published notice in five successive newspapers. The court found that since the publication was not “complete” until the last date of publication, even though the three additional days of publication were optional by the Village, the time to appeal did not run under EDPL 207 (A) until thirty days from the date publication was completed.

Finally, the Court found that the petitioner was not entitled to attorney’s fees and costs under EDPL 702 (B) as no acquisition procedure had been commenced. EDPL has a two step process (1) determining public purpose and (2) acquisition. As no actual acquisition procedure had been commenced the Court determined there was no right to recover fees and costs.