New York State's eminent domain dilemma
Some say timing is everything. Would it have made a difference if Judge James M. Catterson published the opinion in Matter of Kaur v. New York State Urban Dev. Corp. prior to oral arguments before the Court of Appeals in the Atlantic Yards case, Goldstein v. New York State Urban Development Corporation, d/b/a Empire State Development Corporation? While many think Catterson’s strongly worded opinion could have persuaded the Court of Appeals on the blight issue, in reading the majority opinion in the Atlantic Yards case, it is unlikely that Kaur would have changed the outcome.
Nevertheless, these two cases create a muddle in New York Eminent Domain law regarding blight and its use to acquire properties. A recent poll conducted by Crane’s New York finds public opinion mixed on which of these two court decisions is better for New York City. A majority voted: “Neither. Until it becomes more transparent, the eminent domain process is bad for the city, no matter what project it affects.”
On November 24, 2009, the New York Court of Appeals issued its opinion in the matter of Daniel Goldstein et al vs. New York State Urban Development Corp. and the Empire State Development Corp. The decision, written by Chief Judge Lippman, speaks for a 5 judge majority and affirms a lower court ruling regarding the use of eminent domain to acquire the plaintiff’s properties. Download the decision.The properties are part of the controversial Atlantic Yards project which includes the proposed Brooklyn Arena for the New Jersey Nets. The decision was hailed by developer Bruce Ratner, the owner of the Nets, as the removal of the last impediment to the building of project; however, the plaintiffs have pending lawsuits. The controversy will not end here.
Ten days later, on Thursday, December 3, 2009, the New York Appellate Division ruled 3-2 in favor of the property owners in the Columbia University project. In the Matter of Kaur v. New York State Urban Dev. Corp., the court rejected so called “underutilization” as a justification for a declaration of blight and condemnation of plaintiff’s properties. Download the decision. Judge Catterson, under a heading titled "The Folly of Underutilization," called for the removal of “underutilization” as a justification for blight:
The time has come to categorically reject eminent domain takings solely based on underutilization. This concept put forward by the respondent transforms the purpose of blight removal from the elimination of harmful social and economic conditions in a specific area to a policy affirmatively requiring the ultimate commercial development of all property regardless of the character of the community subject to such urban renewal. See Gallenthin Realty Dev. Inc. v. Borough of Paulsboro, 191 N.J. 344, 365, 924 A.2d 447, 460 (2007) ("Under that approach, any property that is operated in a less than optimal manner is arguably blighted.' If such an all-encompassing definition of "blight" were adopted, most property in the State would be eligible for redevelopment"); In re Condemnation by Redevelopment Authority of Lawrence County, 962 A.2d 1257, 1265 (Pa. 2008), appeal denied, 973 A.2d 1008 (Pa. 2009) (holding use to less than full potential does not constitute "economically undesirable" land use); Sweetwater Valley Civic Assoc. v. City of National City, 18 Cal.3d 270, 555 P.2d 1099 (1976); Southwestern Illinois Dev. [*14]Auth. v. National City Envtl., 304 Ill.App.3d 542, 556, 710 N.E.2d 896, 906 (1999), aff'd, 199 Ill2d 225, 768 N.E.2d 1 (2002), cert. denied, 537 U.S. 880, 123 S.Ct. 88, 154 L.Ed.2d 135 (2002) ("If a government agency can decide property ownership solely upon its view of who would put that property to more productive or attractive use, the inalienable right to own and enjoy property to the exclusion of others will pass to a privileged few who constitute society's elite"). (Slip opinion at 24-25)
In this regard, the Kaur opinion is in line with the New Jersey Supreme Court in Gallenthin v. Paulsboro. See our blog post, N.J. Supreme Court clarifies 'blight' meaning in Gallenthin eminent domain case (June 13, 2007.)
Another important aspect of Kaur is its examination of Justice Kennedy’s concurrence in Kelo, described by Prof. Patty Salkin in her blog, Law of the Land:
Perhaps the most important aspect of the decision is the Court’s careful examination of Justice Kennedy’s concurring opinion in Kelo, and the finding that this case is an example of what Kennedy warned about – situations where “improper motive in transfers to private parties with only discrete secondary benefits to the public.” Judge Catterson recounts Justice Kennedy’s test for pretext: 1) city’s awareness of a depressed condition; 2) formulation of a comprehensive development plan; 3) substantial commitment of public funds; 4) city’s review of a variety of development plans; and 5) city’s choice of a private developer from a group of applicants rather than picking a particular transferee beforehand. While all of these elements were present in the Kelo case, in the Columbia case, Judge Catterson finds that: 1) when the City and State started to look at the expansion project, the area was not depressed; 2) there was no comprehensive development plan to address area-wide economic depression; 3) no public funds were being used to support the project – Columbia is paying for 100% of the project; 4) no competing plans were submitted – although the community board submitted a 197-a plan that acknowledged the importance of the expansion project, the plan clearly indicated no support for the use of eminent domain; and 5) the ultimate beneficiary of the project was predetermined from the beginning – Columbia University.
The Court of Appeals will hear the Kaur case based on the dissent (3-2) and its conflict with the Atlantic Yards case. Chief Judge Lippman, writing for the majority in the Atlantic Yards case, thinks the issue of blight is best addressed by the New York Legislature:
It may be that the bar has now been set too low – that what will now pass as "blight," as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses. But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts. Properly involved in redrawing the range of the sovereign prerogative would not be a simple return to the days when private property rights were viewed as virtually inviolable, even when they stood in the way of meeting compelling public needs, but a re-weighing of public as against private interests and a reassessment of the need for and public utility of what may now be out-moded approaches to the revivification of the urban landscape. These are not tasks courts are suited to perform. They are appropriately situated in the policy-making branches of government. (Slip opinion at 17-18)
In contrast, the New Jersey Supreme Court reiterated its standard of review in Gallenthin vs. Paulsboro: Blight has to be proved by substantial, credible evidence. The courts insist on more than a cursory review of the properties or a recitation without substantiation of the statutory blight criteria. Thus, there is a trend toward a more restrictive interpretation of the law. Chief Justice James Zazzali, writing for a unanimous court, said that while the New Jersey Legislature enlarged the power of eminent domain to include the taking of private property for redevelopment, the judiciary is the final arbiter. By placing the responsibility for defining the limitations of eminent domain primarily with the Legislature, the New York Court of Appeals abdicates its ultimate role.