Empire State of Mind

New York’s highest court recently decided two separate cases that centered around eminent domain abuse and the Fifth Amendment. In late November, the court allowed basketball tycoon Bruce Ratner to appropriate a good sized section of a Brooklyn, furthering his plan to move the New Jersey Nets franchise to a new arena. Last week, the intermediate appeals court stopped Columbia University’s attempt to gobble up much of the Manhattanville neighborhood north of Midtown. [Corrected 12/08.]

These cases highlight just how much of a mess eminent domain proceedings are in the wake of 2005’s U.S. Supreme Court decision Kelo v. City of New London. Supreme Court decisions are no stranger to controversy, but the outrage surrounding Kelo transcended party or ideology, and led to forty-three states adopting restrictions on their own eminent domain powers.

In the Brooklyn case, the issue is identical to Kelo. Bruce Ratner wants to tear down a significant portion of a vibrant neighborhood, and replace it with private economic developments including office towers, a shopping complex, and a basketball arena, which will likely be financed with a significant public subsidy.

Reason Magazine‘s Damon Root has an excellent analysis of the private property rights that Ratner and the Empire State Development Corporation trampled over:

Not only does this disastrous 6-1 decision put every property holder in the state at risk, it represents the court’s utter failure to serve as an independent tribunal of justice. Rather than judging the facts and, if necessary, voiding an illegal state action, the court punted, arguing that determining whether or not the properties in question were actually blighted—as New York dubiously asserts—is not “primarily a judicial exercise.”


In his excellent dissent, Judge Robert Smith takes a very different view of the court’s role, reminding his colleagues in the majority that they have a fundamental responsibility to protect individual rights from state abuse:

The right not to have one’s property taken for other than public use is a constitutional right like others.  It is hard to imagine any court saying that a decision about whether an utterance is constitutionally protected speech, or whether a search was unreasonable, or whether a school district has been guilty of racial discrimination, is not primarily a judicial exercise. While no doubt some degree of deference is due to public agencies and to legislatures, to allow them to decide the facts on which constitutional rights depend is to render the constitutional protections impotent.

That is exactly right. It’s also essential to remember that the Empire State Development Corporation (the state agency empowered to seize property via eminent domain) didn’t even start talking about blight until two years after the project was first announced. By that point, developer Bruce Ratner had already acquired many of the properties in the neighborhood (thanks to the state’s threat of eminent domain) and then left them empty, thus creating much of the unsightly neglect visible today. Moreover, the ESDC’s highly controversial blight study cited things like “weeds,” “graffiti,” and “underutilization” in the holdout properties, none of which actually constitute blight.

The majority’s reliance on the ESDC study is quite controversial, because it’s quite possible that the ESDC has significant conflicts of interest, if not outright corruption.  These problems came to light in the Columbia University case.  Again from Root:

[T]here is overwhelming evidence that the Empire State Development Corporation (ESDC) actively colluded with Columbia in order to produce the very conditions that would then allow ESDC to seize property on the university’s behalf. At the time of ESDC’s 2006 blight study, for instance, Columbia owned 76 percent of the neighborhood and was thus directly responsible for the overwhelming majority of blight that the report alleged, ranging from overflowing basement trash heaps to major roof and skylight leaks. As numerous tenants have reported, the university refused to perform basic and necessary repairs, which both pushed tenants out and manufactured the ugly conditions that later advanced Columbia’s long-term interests. Preliminary findings delivered to the ESDC admitted as much, noting “Open violations in CU Buildings” and “History of CU repairs to properties” among the “issues of concern.”

Thankfully, the New York court recognized this shameful mess for what it is: eminent domain abuse. As Justice James Catterson wrote for the majority:

“the blight designation in the instant case is mere sophistry. It was utilized by ESDC years after the scheme was hatched to justify the employment of eminent domain but this project has always primarily concerned a massive capital project for Columbia. Indeed, it is nothing more than economic redevelopment wearing a different face.”

Ratner ‘s case is likely headed to the Supreme Court and it will be interesting to see how the findings of ESDC collusion in the Columbia case affect that decision. The Court could use the case to repair some of the damage the Kelo decision has caused to private property rights and the rule of law.