Friday, January 08, 2010

At Senate hearing on eminent domain reform, forceful criticism of the status quo and the ESDC's answers, but reform won't happen overnight

They should have stuck around.

Though three representatives of the Empire State Development Corporation (ESDC), answering questions about contracting with AKRF and the operation of the Brooklyn Arena Local Development Corporation (BALDC), faced persistent (if not all too lengthy) scrutiny from state Senator Bill Perkins during the first hour of an oversight hearing Tuesday, they left before hearing others offer forceful criticism of both the agency's performance and the state's notoriously condemnor-friendly eminent domain laws.

After all, the ESDC representatives who spoke--Executive VP Darren Bloch and General Counsel Anita Laremont--not only admitted no qualms about hiring AKRF but were unwilling to suggest any ideas for reforms.

(The third representative, Executive Director Peter Davidson, was silent. He's their boss, but didn't join the ESDC until September. At bottom is the full four hour-plus hearing video.)

Assessing the ESDC

That left Perkins highly critical of their performance.



Asked about the ESDC's responsiveness, he said, "The word does not apply. Clearly, intellectually, they cannot be telling the truth that they think it's OK for AKRF, paid by Columbia for a blight study, can be the best choice for a similar kind of study by the agency. I can't believe that they believe it's no glaring conflict."

What about their openness to legislative reform?

"Upon being asked, do you have any ideas about how to do this better, to have more respect and credibility in the community... they were silent, evasive, and I thought irresponsible because, after all, they have an opportunity to be a part of change, in terms of trying to do this better," Perkins said. "So I don't think we're going to get what we're looking for from them that way… They like the status quo."

Movement coming?

The question, of course, is whether Perkins, the sole city elected official out-front on reforming eminent domain, can lead--or harness--a movement. He was joined at the hearing Tuesday by only one colleague Rochester Republican Sen. James Alesi, who, after the Supreme Court's controversial 5-4 decision Kelo vs. New London decision upholding eminent domain for economic development, held hearings concerning reform of the state laws, raising questions about the vagueness of the blight standard, among other things.

No reform passed, and New York's laws--which begin legal challenges in appellate court, with no opportunity to call witnesses or gather information via discovery--remain perhaps the most condemnor-friendly in the nation.

Both reforms--changing the blight standard and making it easier to bring challenges--are on the table now.

(Photos by Tracy Collins.)

And, while banning eminent domain for economic development is one thing, in New York--most notably in the controversial cases involving Columbia University and Atlantic Yards--the justification has been blight, a notoriously malleable term ("substandard and insanitary") backed by AKRF reports interpreted by the ESDC's lay board.

And, in the state legislature, reform is more complicated, given the enormous influence of New York City and its desire to retain sway over such land use decisions.

But Perkins, a Democrat from Harlem drawn into the fray by his opposition to Columbia University's expansion via eminent domain, perhaps improbably drew momentum from conservative columnist George Will, who just wrote a column slamming the New York State Court of Appeals' decision upholding eminent domain for Atlantic Yards.

"When you get someone who skews to the left as much I do, an upstate Republican like Senator Alesi, and a conservative icon like George Will to agree on public policy," Perkins said, "you have certainly created strange bedfellows. Clearly, something is amiss. Property rights are not safe. If you own property in an area targeted by the government and you do not want to sell, you are now a hostage."

Blunt criticism

Critics offered blunt words. Develop Don't Destroy Brooklyn's Daniel Goldstein said of the ESDC, "The agency acts as a front for the developer trying to do the project."

Noticing New York's Michael D.D. White said, 'Officials at highly political agencies like ESDC are no longer in service to the public, they are part of a crew of privateers, pirates sailing in the developer’s boat where the developer’s wish is their command." He suggested that the profit be taken out of eminent domain, with public agencies, not developers, left with the condemned land.

And historic preservationist Christabel Gough pointed out that AKRF has built up a monopoly, with many if not most consultants now working as their subcontractors, leading AKRF to serve as "a shadow administration."

One opponent, so far, however, is Governor David Paterson, who after Kelo joined Perkins in calling for a moratorium on eminent domain in New York State. Paterson, since he became governor, has not even taken the small step of establishing a commission to explore reforms, a strategy recommended by a New York State Bar Association special task force on eminent domain.

Nor has Paterson responded to Perkins' recent call to instruct the ESDC to avoid an "egregious conflict of interest" by hiring consultants like AKRF that also have been hired by the developer pursuing projects that require eminent domain.

The landscape going forward

Alesi, in his opening remarks, said he believed that, "far too often, blight has been overused, been abused, has been misidentified" and that, while eminent domain has been beneficial, "as a tool to literally take property, we need a better definition." He and Perkins promised future hearings on the issue.

In the short term, however, the focus will be on the Columbia case, which should get to the Court of Appeals in the spring. ESDC General Counsel Anita Laremont confidently told Perkins that she believes the Appellate Division's mixed ruling on the Columbia case was wrong, because it not only conflicted with the Court of Appeals' very recent decision upholding eminent domain for Atlantic Yards, it did not reference that decision.

That's a huge hurdle; indeed, it's quite possible that, if the Court of Appeals chooses not to reverse the Appellate Division, it would rule narrowly on issues of bad faith--the simultaneous hiring by Columbia and the ESDC of AKRF--rather than the broad issue of agency discretion to determine blight, as it established in the Atlantic Yards case.

(That makes it an uphill effort by the Atlantic Yards plaintiffs to get the Court of Appeals to reopen the AY case.)

Columbia plaintiffs

Nick Sprayregen, the Tuck-It-Away owner who's financing the challenge to the Columbia expansion said that he believed that, after the Appellate Division decision, unethical conduct would be curtailed. He said he'd be shocked--at least until he heard ESDC's defenses of its practices--if the agency again hires a consultant that's also on the payroll of the project applicant. (With Atlantic Yards, the relationship was merely consecutive.)

His attorney, Norman Siegel, said, "You don't need to be a lawyer, to be a New York State senator to understand that something smells when you have that situation."

Siegel, charging that the law defining "substandard or insanitary" is vague, asserted that, when the ESDC reps said they don't have a checklist for blight, "that is prima facie vagueness." Courts, he said, have struck down such schemes: "Vagueness invites subjectivity, subjectivity invites selective enforcement, selective enforcement invites favoritism."

He argued that property owners should have the inalienable right to determine best course of their property, and the state should either eliminate the use of blight based exclusively on underutilization or it should establish uniform rules. The ESDC considers property built to less than 60% of its allowable development rights blighted, while the City Planning Commission sets the ratio at 50%.

He said that the process is unfair: "It appears that New York is only state in the nation" where the challenge starts in appellate court.

Attorney David Smith, who represents the other plaintiffs in the case, Kaur/Singh family, pointed out how the threat of eminent domain had kept the family from investing in the gas station they own.

Siegel, offering praise for the libertarian Institute for Justice, crusaders against eminent domain abuse, proposed a legal services eminent domain center to offer free legal advice and selective representation to those fighting eminent domain. (He reminded the audience that libertarians are allies on the issue, as he'd said last month.)

Smith was incredulous that those challenging eminent domain can't go to trial: "You're talking about taking people's property, [but] they don't even have the right to confront those doing it," he said. "It's a shocking thing."

Rikon's testimony

In his testimony, Michael Rikon, an attorney who specializes in representing condemnees in eminent domain cases, suggested that the new movie Avatar is a story about eminent domain abuse.



He criticized the New York Times for its editorial calling the Columbia opinion a "weakly reasoned decision," which was "completely out of step with eminent domain law"

"This decision was hardly a weakly reasoned decision, it was a fabulous decision, and it was the product of brilliant attorneys, who achieved something that was extremely rare, which was to stop a condemnation," Rikon said. However, he allowed that it was out of step, at least with New York state practice.

He criticized the Times for not disclosing its relationship with Forest City Ratner in building the Times Tower--construction that relied on eminent domain.

"I also found it strange that the newspaper would fail to comment on the evidence raising questions of bad faith and pretext regarding the New York State Urban Development Corporation's failure to comply with the Freedom of Information Law," he added. "Can you imagine what the Times would do if one of its FOIL requests was subject to bad faith and pretext? How long would they stand for that conduct?"

Rikon criticized ESDC comments that the courts have always upheld ESDC's blight determination. "That's not accurate," Rikon said. "The courts will state that a determination of blight is a legislative determination which cannot be reviewed. Yeah, they've always been upheld because the courts say you can't review it."

Moreover, he said, the state can get around the requirements to find blight, noting that the legislature was willing to exempt property for a proposed new New York Stock Exchange from the law. That project was eventually abandoned, "and it cost the taxpayers $109 million."

Rikon added that a jury trial was needed not just in challenging the pursuit of eminent domain, but also for setting condemnation awards.

Goldstein's testimony

Following Rikon was one of his many clients, Daniel Goldstein of Develop Don't Destroy Brooklyn, whose condo, Rikon said, was improperly considered blighted. (Actually, it wasn't; the condemnor can add nonblighted properties to its project map.)



Goldstein agreed that blight shouldn't be a justification for eminent domain, because it's always going to be subjective. "As the late great Assemblyman Richard Brodsky said, when he held a hearing, 'blight' is just Yiddish for 'poor,'" Goldstein said, in a tongue-in-cheek reference to the reform crusader who has been curiously silent about the Atlantic Yards project.

And, Goldstein pointed out, Institute for Justice attorney Bob McNamara said that blight represented coveted land.

In the case of Atlantic Yards, Goldstein said, he and activist Patti Hagan filed a lengthy response to the Blight Study, but "the ESDC didn't respond, whatsoever, in any meaningful way." And when the study was raised in the case challenging the ESDC's environmental review, "the court basically ignored it."

Goldstein noted that the ESDC's Darren Bloch said he couldn't give his opinion because the agency doesn't make make policy.

Goldstein said that both the ESDC and he aim to stay within the bounds of the law. "We have found out, if you live next to a railyard, you're basically breaking the law," he said, in a reference to how his property could be included in an overall finding of a blighted area.

Getting served

Goldstein described how the legal petition seeking to condemn his land was received.
"How was this served to me? It was served to me yesterday in my building. I live in a building that has secured doors. I got a knock on [my apartment] door from a process server,"

Goldstein recounted how he went downstairs and asked the building super how the process server got in the building. The super said that Forest City Ratner (which effectively owns the building, controlling all but one of the condos) called him, but, Goldstein said, the developer "should have absolutely nothing to do with the petition."

Similarly, Goldstein said, when the ESDC sent an appraiser to look at his apartment, "about an hour later, I heard them down the hall, they were in one of the other units that had been padlocked." That unit is owned by FCR, and the developer had let them in.

The AY case

Goldstein said that, in the AY blight study, "they lied about the crime statistics" and AKRF did not do a market study, as was requested in the contract scope.

"Blight in the end is about what's going on economically, it's not about cracks in the sidewalk or a bad paint job," Goldstein said, adding that the ESDC does not deserve the deference that the courts repeatedly afford.

As for the "just compensation" required for property owners, Goldstein said, "that does not mean low-ball the property owner, force them to go to court to get fair market value." He added, "ESDC has to be removed from the equation. The appraisal they've given me is a joke and they know it's a joke."

The IJ's take

Christina Walsh of the Institute of Justice called the Columbia decision a "promising sign" but said that, given the Court of Appeals' deference to state agencies, New Yorkers "have lost hope that highest protectors will affirm their sworn duty."

She proposed a change in the standard for judicial review, with the burden of proof on the government and a banning of economic development as a public use..

"New York lacks any objective criteria for blight designations," she said, proposing that it be tightened "to include only those properties that pose an immediate threat to health and safety."

White's testimony

Noticing New York's White, a lawyer, urban planner and former state Housing Finance Agency official, testified at length, excerpted here:
The public authorities perpetrating eminent domain abuse are so out of control that everything is topsy-turvy; almost every crucial concept is taken to mean its opposite.

One might think that reforming eminent domain should be as easy as writing into law provisions to say that private property should only be taken for “public use” or for “public benefit,” but the state and the federal constitutions already say “public use” and the current eminent domain statute says that takings must be for “a public use, benefit or purpose.” Nevertheless, in New York eminent domain’s principal purpose is now that of putting property into private hands and we have public agencies that specialize in delivering vast monopolies to the likes of Columbia University and Forest City Ratner.

Would legal protection be achieved if laws were written to say that our courts should review whether the state and federal constitutions are observed and whether “a public use, benefit or purpose will be served by the proposed acquisition”? No. The eminent domain law already says that the courts should review whether there was such a public purpose but this has been interpreted to mean the reverse; to mean that courts cannot review or question whether these private purpose thefts by eminent domain have a public purpose.

“Blight,” an important word in eminent domain law, doesn’t mean “blight” anymore since the majority of the property in the city now qualifies as blighted, (including the home recently bought by the Brooklyn Borough President and the home recently bought by a Forest City Ratner executive). “Blight’ now simply means any land coveted by a developer.

Economic development” programs now mean programs that will bring stagnation and real blight.

While we have submitted many other suggestions for eminent domain reform, right now we conclude with one key suggestion: Remove the incentive to turn all the concepts upside down; take the private profit out of eminent domain. Private profit is the gasoline that fuels eminent domain abuse. Long ago, when eminent domain really was for “public use,” the benefit of a lower cost of taking property by eminent domain accrued to the public.
In the end

One of the last people testifying after nearly four and a half hours, spoke briefly.

Hagan, in this case representing the Prospect Heights Historic District Landmarks Committee, called for "the Urban Development Corporation -- doing business as The Empire State Development Corporation to be abolished. Let developers -- Ratner, Columbia, The New York Times -- try to buy the private properties they covet the old-fashioned American way -- on the open market."

Momentum coming?

That may not be on Perkins' agenda, but reforms will be discussed. Afterward, he cautioned, "This is not like instant rice... it's going to be an uphill battle, we're going to win, without a doubt, but I don't want us to think this is going to happen overnight… This is a struggle that is going to require our continued participation and continued vigilance."



There's more momentum in the Legislature, he said: "Members have contacted me that I've never had contact with to indicate to me that they're interested, particularly on the Assembly side. Partnerships are going to be developing across the Senate and the Assembly, and clearly, of course, the aisle."

"Will this happen overnight? No," he allowed. "But I think, little by little, the bird builds his nest, and I think that the need, the demand for reform has arrived."

The full hearing

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