Private Property and “Public Use” in NY

| NY Torch

New York State and New York City were pushing the envelope on “public use” condemnations of private property to benefit other private owners even before the practice was ratified in a controversial U.S. Supreme Court decision last week.

With an eye towards the Supreme Court case of Kelo v. City of New London, Julia Vitullo-Martin, Manhattan Institute senior fellow, made this point in a recent newsletter of the Institute’s Center for Rethinking Development:

New York City, usually with the help of New York State, is actively engaged in taking prime property in good neighborhoods away from private owners, in order to turn it over to wealthier and more powerful owners. In Times Square, for example, which is itself the product of one of the 20th century’s largest land condemnations, the city and state condemned property on 43rd Street in order to turn it over to Forest City Ratner to build the new headquarters of the New York Times. Similarly, the state plans to condemn the property of hundreds of homeowners and businesses in downtown Brooklyn to make way for a 19,000-seat basketball arena for the Nets and 5,800 housing units also developed by Ratner. Other recent takings include the condemnation of several Wall Street buildings to expedite the expansion of the New York Stock Exchange, on which the exchange reneged, and the condemnation of a dozen businesses in Harlem to make way for a Home Depot.To add insult to injury, the new private owners not only get someone else’s property they invariably also get substantial state and local tax breaks, subsidies, and a bypass of the city’s usual land use review procedures. The Ratner development in Brooklyn, for example, will receive something between $10 million and $1 billion in government subsidies (its estimate), and will bypass the standard public review processes required of all normal private development. But, of course, this is not normal private development, because Ratner’s partner is the state of New York — the Empire State Development Corporation, successor agency to the old Urban Development Corporation.

The UDC was created by Gov. Nelson Rockefeller 37 years ago with sweeping power to condemn “blighted properties” — a phrase that, in the hands of state officials, arguably has come to mean “property desired by a politically wired developer as the site for a big tax-subsidized project.”

The Kelo case involved the condemnation by the city of New London of seven homes, which will be demolished to make way for offices, upscale condos, and a waterfront hotel. Justice Stevens said the project was consistent with precedents establishing the Fifth Amendment definition of permissible “public use” takings. But in a strong dissent, Justice Sandra Day O’Connor warned the ruling means that “all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded–i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public–in the process.”

For more insights on eminent domain from a New York perspective, see this blog entry (also written before the Kelo decision was handed down) by a principal in a major Manhattan real estate valuation firm.

The Kelo ruling provides more than enough justification for a careful reconsideration of eminent domain and its uses by the UDC and other government agencies in New York. Will any of our elected officials take the hint? Stay tuned.