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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