'Public Benefit' = Private Profit

Jacob Sullum | June 7, 2007

Yesterday a federal judge dismissed a lawsuit challenging the condemnation of a dozen or so homes and businesses in Brooklyn to make way for a $4 billion, 22-acre project that is expected to include a basketball arena, office space, and apartments. The property owners argue that the plan originated with the developer, Forest City Ratner Companies, rather than the government, which has not followed the sort of careful, orderly process that the Supreme Court seemed to indicate was important in Kelo v. New London. Instead, says the lawsuit, city and state officials are just going along with what the developer wants, citing alleged public benefits as an afterthought. But U.S. District Judge Nicholas Garaufis ruled that "plaintiffs have not set forth facts supporting a plausible claim of an unconstitutional taking," since "nowhere in the amended complaint or their briefs do plaintiffs sufficiently allege any purpose to confer a private benefit." This reading of Kelo suggests that, in the absence of videotape showing a developer handing a briefcase full of cash to a politician or an explicit declaration that the government is using eminent domain to benefit a private party, the courts will uphold any condemnation that's part of a project expected to create jobs, generate new tax revenue, or provide some other "public benefit."

On a recent episode of the FX series The Riches, the sleazy developer who employs one of the main characters was able to fend off an eminent domain challenge by adding a skating rink to his project. Unfortunately, this is close enough to the current state of the law that I don't think it counts as satire.

Comments

|6.7.07 @ 12:28PM|#

Doesn't the area have to be blighted? With all the gentrificatio going on in Brooklyn, I find it dubious, at best, to say that the Ratner-condemned areas are blighted. Far from it, the real estate prices are going crazy.

It should also be noted that Ratner is a class A piece of shit.

moonunit|6.7.07 @ 12:32PM|#

The current eminent domain thinking based on the 2006 (2005?) supreme court ruling is depressing. It basically says: "if you're poor, the government has the power to force you to move so we can build [whatever we suppose brings in higher tax revenue]." Thus the poor in America are given a situation similar to the poor peasant farmers in China who get uprooted whenever the richer Chinese want to build a nice suburb (which will bring the land higher property value, I suppose).

BOooooooooooooooo! Property rights for all, not property rights for some.

|6.7.07 @ 12:36PM|#

Lamar,

The area does not have to be blighted. Eliminatig blight is one, but not the only, public purpose that satisfies the "public use" requirement.

The New London Development Corp never alleged that the area was blighted in the Kelo case. The public benefit there was the increased tax revenue, jobs, and investment that the project would create, and the court took the government's say-so that these alleged benefits are 1) going to occur and 2) satisfy the "public use" requirement.

That's the state of the law.

|6.7.07 @ 12:39PM|#

Thus the poor in America are given a situation similar to the poor peasant farmers in China who get uprooted whenever the richer Chinese want to build a nice suburb (which will bring the land higher property value, I suppose).

The ironic thing, is that it is mostly leftists and "progressives" who argue in support of the developer and government when land is being taken from the poor to give to the rich. I guess leftists are so programmed to support higher taxes and the erosion of property rights that it is just too hard to reprogram their minds when victims of property confiscation are the poor, and the benificiaries are rich.

|6.7.07 @ 12:40PM|#

I'm glad I'm getting out of NYC. Once Ratner turns Brooklyn into a strip-mall mecca, there will be very little left of the former New York City.

|6.7.07 @ 12:43PM|#

Eminent Domain abuse by shucksters like Ratner make me wonder: how much should we really respect private property? I sincerely hope that Ratner's buildings are defaced on a daily basis. I can't respect his private property when it is the result of sleazy payoffs and intimidation.

|6.7.07 @ 12:44PM|#

joe,

This is a job for. . .The Blighter!

Lamar,

Where are you moving to in Florida? We have a fairly large Central Florida contingent here abouts, but we are underrepresented in the rest of the state.

|6.7.07 @ 12:46PM|#

As a land developer i think it is wonderful that instead of competing in a market, trying to produce housing units and commercial space that people will buy, I am competing for the love of government employees and politicians.

Not.

|6.7.07 @ 12:47PM|#

Moving to Orlando in about a month. I'm going to have to spend a week in a decompression chamber after living in Manhattan for the last 8 years.

Paul|6.7.07 @ 12:48PM|#

public purpose that satisfies the "public use" requirement.

Is this irony?

|6.7.07 @ 12:49PM|#

Once Ratner turns Brooklyn into a strip-mall mecca, there will be very little left of the former New York City.

yeah cuz it was good that someone turned brooklyn into what it is today from what it was before...but it is bad that this guy Ratner is turning Brooklyn from what it is today into what it will be later.

That fucking bastard!

|6.7.07 @ 12:50PM|#

PL, this is a job for Juan Antonio Roca

Christopher Monnier|6.7.07 @ 12:52PM|#

> The ironic thing, is that it is mostly leftists and "progressives" who argue in support of the developer and government when land is being taken from the poor to give to the rich.

But how are we going to pay for all our social programs to take care of the displaced poor if we don't increase tax revenues via greater property values?

dhex|6.7.07 @ 12:55PM|#

the brooklyn project - from which i live about 20 minutes by foot or 5 by train - is super hella ugly.

there's also that sort of weird phenomena where a lot of people sold immediately who had lived there a while, while newcomers who had bought into a structurally sound but price-depressed market (relatively speaking) don't want to go.

|6.7.07 @ 12:56PM|#

paul,

A blighter of a different sort.

Lamar,

Orlando's not too bad (though I think Tampa's many times better). At least there's plenty of indigenous folkloric entertainment in the area.

|6.7.07 @ 12:56PM|#

Joshua Corning: don't know much anything about Brooklyn, huh?

Just to start, Brooklyn turned into what it is today because people moved in, not because a developer greased some palms. But don't worry, I also comment on things I know absolutely nothing about.

|6.7.07 @ 12:58PM|#

Pro Lib: I grew up outside of St. Pete and couldn't agree with you more re: Tampa Bay vs. Orlando. But they're showering me with money and they've promised to tell me that I'm a valuable employee every single day. Guess I'll have to learn lake fishin'.

Paul|6.7.07 @ 1:02PM|#

who argue in support of the developer and government when land is being taken from the poor to give to the rich. I guess leftists are so programmed to support higher taxes and the erosion of property

Rex, progressives bask in the glow of eminent domain takings because of their potential, not necessarily because of what the are.

With the government ability to take any property any time, this gives the left hope that someday, the government will start taking land from big corporations simply because they're big, ugly and all corporatey 'n stuff.

If you haven't guessed, this leaves the left's whole philosophy of eminent domain completely intellectually bankrupt.

|6.7.07 @ 1:11PM|#

In a system that prizes private property, any eminent domain philosophy is intellectually bankrupt.

Paul|6.7.07 @ 1:16PM|#

, any eminent domain philosophy is intellectually bankrupt

And y'see, even I'm not that extreme. I still believe in the "public use" doctrine. Not the new doctrine of the Lllllliving constitution, weeeeeeeeeeeeeeeeeeeeeee!!! where "public use" has been bastardized into "public purpose".

|6.7.07 @ 1:18PM|#

I just mean that "public use" is a practical concern, not a philosophical foundation.

|6.7.07 @ 1:22PM|#

Down here in South Florida (Miami-Ft. Lauderdale area), eminent domain is rampant. They're knocking down a good portion of historic downtown Ft. Laudy to build a bunch of high-rise condos.

What I don't get is: How will the new condo tenants eat when all the restaurants are demolished to build said condos?

I'm glad I have a rental.

|6.7.07 @ 1:24PM|#

Oh, and Dave Barry's satire of South Florida, called "Big Trouble," is slowly edging toward the non-fiction section of the gigantic fucking Borders they just build by my house.

|6.7.07 @ 1:25PM|#

...built by my house.


Preview thyself!

Jennifer|6.7.07 @ 1:28PM|#

The public benefit there was the increased tax revenue, jobs, and investment that the project would create, and the court took the government's say-so that these alleged benefits are 1) going to occur and 2) satisfy the "public use" requirement.

Because people's purpose in life is to generate tax revenue for the government, and if you don't pay what the government considers an appropriate amount of taxes you clearly shouldn't be allowed to live in the home you bought and paid for yourself.

|6.7.07 @ 1:30PM|#

Lamar,

Eat frequently at Emeril's at City Walk and visit the Bay Area whenever possible.

Jim Morrison lived in St. Pete for a while, too. Coincidence? And I work there. Or, rather, here.

|6.7.07 @ 1:55PM|#

Wait, this is a shock? This past January the SCOTUS refused to consider the case of a Bart Didden, who decided to build a CVS on his property and applied for a building permit from the city of Port Chester, NY. A few days later he was contacted by a developer who demanded $800,000 or 50% ownership of the venture, or else. Didden refused, and the next day, the city condemned his property and gave it to the developer. Keep in mind that neither the city nor the developer deny that these events took place, and still every federal court sided with the city.

Fluffy|6.7.07 @ 1:58PM|#

The progressives have no particular love of eminent domain. I also don't think they dream of massive future takings. But they can read the Constitution and can anticipate the future maneuvers of people who believe in property.

When the Kelo case was decided and people on both sides of the aisle were bitching, Atrios and Kos came out and told their people to shut up about it - because any challenge to any government purpose whatsoever based on the 5th Amendment was dangerous and "needed" to fail, from their perspective.

If Kelo had gone the other way, it could have served as one link in a precedent chain leading to an eventual "regulatory takings" case. That had to be prevented at all costs. If a few connected developers enrich themselves, that's a small price for progressives to pay to protect the modern state from the potential implications of the 5th Amendment.

|6.7.07 @ 1:59PM|#

Just to start, Brooklyn turned into what it is today because people moved in, not because a developer greased some palms.

BWahahahahahahahahah

So what were the real estate ads like in Brooklyn from 1600-2000? "Come to Brooklyn: the one city in all of New England with zero corruption."

|6.7.07 @ 2:05PM|#

?

theknickerblogger|6.7.07 @ 2:08PM|#

What the ESDC (the State authority that can use eminent domain) called 'blight' is a joke - its more or less what the developer needed (it skipped around buildings of a developer he cut a deal with.


Blighted?

|6.7.07 @ 2:19PM|#

This is yet another example of how Kelo has, in any real sense, completely completely removed the "public use" standard from the Constitution. As critics of it said at the time, there is now simply no development that a city cannot declare of sufficient "public benefit" to get it past any judicial review if it wishes (read: if it has been paid enough by a wealthy developer) to do so.

A purportedly substantive standard that can never be violated as long as the city produces enough paperwork is not substantive (nor a standard) at all, but is instead a rubber stamp. At best, Kelo has reduced what was clearly meant to be substantive, to merely procedural - hold enough hearings, crank out a study that shows how much tax revenues will increase, do some hand waving, spin around three times while rubbing your head, and voilà! - "public use" is satisfied. The worst that can happen to a city now is to be told "sorry, looks like you only spun around twice, please go back and do it again."

|6.7.07 @ 2:30PM|#

Fuck Jay-Z

Rhywun|6.7.07 @ 3:09PM|#

"nowhere in the amended complaint or their briefs do plaintiffs sufficiently allege any purpose to confer a private benefit."

Wow. So the office buildings and condos which are really only there to make the stadium "look better", not to mention the stadium itself, were never intended to make a profit? Ratner's just building the complex out of the goodness of his heart?

Yet... I hate to admit it but I lean toward building the damn thing, despite the fact that it's totally corrupt. That part of Brooklyn is totally deserted at night. I don't mind seeing something glitzy in downtown Brooklyn. Purely selfish, I know.

dhex|6.7.07 @ 3:13PM|#

"So what were the real estate ads like in Brooklyn from 1600-2000? "Come to Brooklyn: the one city in all of New England with zero corruption."

you've been reading my notes!

no, seriously, ?

|6.7.07 @ 3:48PM|#

Eminent domain is theft. The Founders screwed up putting that in the constitution, though in their defense few of them imagined what a statist society would arise in the future, where the Ninth Amendment would be simply ignored, states like my own (Hawaii) would pass laws to legislatively do away with the Electoral College without any constitutional amendment, and the "well-regulated militia" clause of the Second Amendment would be twisted into being an abrogation of any individual right to bear arms.

|6.7.07 @ 4:26PM|#

This is one area where Civil Law-based legal systems have an edge over ones with Common Law. For example, Japanese governments have very weak eminent domain powers and developers have to bend over backwards to get anything built. Refer to the struggle over Narita Airport.

|6.7.07 @ 4:53PM|#

Deus,

Of course, part of that may stem from the fact that Japan has about 100 acres of arable land.

Paul|6.7.07 @ 6:31PM|#

The progressives have no particular love of eminent domain. I also don't think they dream of massive future takings. But they can read the Constitution and can anticipate the future maneuvers of people who believe in property.

I disagree profoundly, Fluffy. Progressives have been quite explicit in their desire to democratize property rights. Specific examples suggesting that a community could shut down a WalMart or other "Big Box" store through eminent domain abound.

And the suggestion that upholding a property right we already had causing a slippery slope is ludicrous. The property rights we had were fairly clear until the chipping away started: land had to be taken for "public use" as the Constitution explicity defines. The first chip in the stone was the removal of blighted properties. This, in practice was something that seemed reasonable to reasonable people. But once cities discovered that they could simply move the "blight goalpost", and these cases were subsequently upheld, it was all over but the crying.

Constitutional interpretations or expansions come in two distinct flavors. 1: The ruling expands the right of the individual (freedom of speech/expression, abortion rights etc.,). 2: The ruling expands the right of the state. (kelo, raich) The former is preferable, the latter should almost never happen except in extreme cases.

|6.7.07 @ 8:38PM|#

Paul,

"Not the new doctrine of the Lllllliving constitution, weeeeeeeeeeeeeeeeeeeeeee!!! where "public use" has been bastardized into "public purpose"."

Actually, the "public purpose" doctrine dates back to the 19th century. It's not actually a modern, living constitution theory.

The "first chip" in your theory is actually the Mill Acts various states adopted when the nation was formed.

Jennifer,

"Because people's purpose in life is to generate tax revenue for the government, and if you don't pay what the government considers an appropriate amount of taxes you clearly shouldn't be allowed to live in the home you bought and paid for yourself."

I agree, the court shouldn't have accepted the NLDC's public use claim.

Brian Courts, you're right about the problems with the Kelo ruling, but mistaken to claim that they were novel to that decision. Kelo just upheld the reasoning of decisions from the mid-20th century.

|6.7.07 @ 8:47PM|#

Hopefully, the case will reach the Supreme Court, and they won't whiff on setting standards for a public plan.

The Kelo decision accepted that the implementation of a redevelopment plan can satisfy the public use requirement, as long as the plan and the process that created it was good enough. These plaintiff's claimed that the process behind this plan, and thus its final form, weren't good enough.

The Kelo decision completely whiffed on defining what is good enough in a public planning process; hopefully the Roberts court will put some meat on those bones. Right now, all that's required is for the city doing the taking to say that the plan and the planning process were good enough.

In my opinion, if the sufficiency of the planning process is the controlling factor, there should be an avenue for due process appeals as well.

|6.7.07 @ 8:50PM|#

Rhywun,

"So the office buildings and condos which are really only there to make the stadium "look better", not to mention the stadium itself, were never intended to make a profit? Ratner's just building the complex out of the goodness of his heart?"

The decision was referring to the city's purpose, not the developer's purpose. Of course the developer's purpose was to make money. The question is what the government's purpose was.

Paul|6.7.07 @ 10:05PM|#

Joe,

Mill Acts were seen at the time as a "public use" as the Mills themselves (existing in a largely agrarian economy) were seen much like public utilities.

Though use of the eminent domain power was sparse at the time of the founding, many States did have so-called Mill Acts, which authorized the owners of grist mills operated by water power to flood upstream lands with the payment of compensation to the upstream landowner. See, e.g., id., §178, at 245-246; Head v. Amoskeag Mfg. Co., 113 U.S. 9, 16-19, and n. (1885). Those early grist mills "were regulated by law and compelled to serve the public for a stipulated toll and in regular order," and therefore were actually used by the public. Lewis §178, at 246, and n. 3; see also Head, supra, at 18-19. They were common carriers-quasi-public entities. These were "public uses" in the fullest sense of the word, because the public could legally use and benefit from them equally. See Public Use Limitations 903 (common-carrier status traditionally afforded to "private beneficiaries of a state franchise or another form of state monopoly, or to companies that operated in conditions of natural monopoly").

http://www.law.cornell.edu/supct/html/04-108.ZD1.html

Which brings us to:

But if the public purpose/public benefit seeds were planted in the [Mill Acts] case law so early, then the question is not why state legislatures have gone so hog wild lately, passing condemnation statutes premised on nothing more than revitalizing a depressed downtown, but what kept them from going hog wild much earlier?

http://www.hoover.org/publications/policyreview/2920831.html

Paul|6.7.07 @ 10:22PM|#

Of course the developer's purpose was to make money. The question is what the government's purpose was.

The government's purpose is to make money.

|6.7.07 @ 10:35PM|#

Paul,

If the Mill Acts allowed for land to be taken to construct mills, that would be a good argument, because the mills were indeed required to have public access.

But they didn't. They allowed land to be taken for mill ponds, which the public most certainly was not allowed to access. If you tried to build a damn or fish, the mill owner could call down the law to stop your trespass. For your "public utility" comparison to be valid, the water power produced by the mill pond would have to have been made available to the public.

The Mill Acts did not take land for public occupation or ownership (the definition of "public use" that the strictist Kelo critics tell themselves is the only possible reading of the Fifth Amendment). They allowed land to be taken to faciliate the establishment of private businesses that were seen to promote the economy and development of a given region. That's why they were not only applied to grist mills, but to textile and paper mills (for example), which had no common-carrier-type regulations. Getting grain ground was not the public purpose of the Mill Acts - the effect of having that business operating on the economic and physical development of the district was.

"But if the public purpose/public benefit seeds were planted in the [Mill Acts] case law so early, then the question is not why state legislatures have gone so hog wild lately, passing condemnation statutes premised on nothing more than revitalizing a depressed downtown, but what kept them from going hog wild much earlier?"

Well, by "lately," they must mean "since the 1940s." The answer is "on policy grounds." Prior to the disinvestment in older urban centers that occured after World War Two, there was really no pressing reason to make urban redevelopment initiatives a frequent occurance.

|6.7.07 @ 10:36PM|#

"The government's purpose is to make money."

LoL!

|6.7.07 @ 10:41PM|#

Paul, hope you dont mind my correction...

"The government's purpose is to m t ake money."

|6.7.07 @ 10:49PM|#

BTW, that's where I draw the line. It is a public use under the meaning of the Fifth Amendment to "promote the economy and development of a given region." It is not a public use "to make money."

I would have found against the NLDC, because their development plan didn't even claim to accomplish anything other than making money by taking the subject properties. The development project wasn't going to, for instance, separate noxious industry from dense residential blocks and allow local industrial businesses to relocated onto bigger parcels with better access (as in one urban renewal plan I'm aware of). The takings weren't meant to spur the redevelopment of nearby properties in the area. In New London, the only thing the new development on the taken land was supposed to achieve was to make the taken land itself more more economically active (ie, producing more jobs and tax revenue.)