"As Naked an Abuse of Government Power as Could be Imagined"

How the Sotomayor nomination revived the debate over eminent domain abuse

Property rights were probably the last thing on President Barack Obama's mind when he selected Judge Sonia Sotomayor to replace retiring Supreme Court Justice David Souter. But that hasn't stopped Sotomayor's nomination from reigniting the long-simmering national debate over the use and abuse of eminent domain.

The controversy centers on Sotomayor's vote in a 2006 eminent domain case, Didden v. Village of Port Chester. New York entrepreneur Bart Didden says Port Chester condemned his land after he refused to pay $800,000 (or grant a 50 percent stake in his business) to a developer hired by the village. One day after Didden refused to pay those bribes, Port Chester began eminent domain proceedings against him.

As University of Chicago law professor Richard Epstein put it, "The case involved about as naked an abuse of government power as could be imagined." But that didn't stop Judge Sotomayor and two of her colleagues on the 2nd Circuit Court of Appeals from upholding the district court decision that ruled in favor of the village.

Still, this ugly decision wasn't entirely without precedent. Didden came on the heels of the Supreme Court's notorious 2005 decision in Kelo v. City of New London, which endorsed the government's power to seize property from one private party and hand it over to another so long as the taking was part of a "comprehensive" redevelopment scheme. That decision sparked nationwide outrage on both sides of the political aisle, including the passage of laws protecting property rights from Kelo-style abuse in 43 states. (The Supreme Court declined to hear Didden's appeal.)

None of that is likely to derail Sotomayor's nomination, however, which the Senate is fully expected to approve next month. But this renewed national focus on eminent domain abuse might still benefit a group of long-suffering property owners in Brooklyn, New York, who have been waging a five-year battle against the combined forces of Mayor Michael Bloomberg, the Metropolitan Transit Authority (MTA), real estate developer Bruce Ratner, and the Empire State Development Corporation (ESDC), a controversial quasi-public entity empowered by the state to seize private property via eminent domain.

At issue is the so-called Atlantic Yards project, a 22-acre redevelopment boondoggle centered on a new sports arena for the New Jersey Nets, a professional basketball team that just happens to be owned by Atlantic Yards developer Bruce Ratner. Property owner Daniel Goldstein and others brought suit, claiming the ESDC's use of eminent domain violates their property rights and oversteps even Kelo's generous interpretation of the Constitution's Public Use Clause. In particular, the plaintiffs argue that the alleged "civic benefits" of the project—including a fancy arena designed by celebrity architect Frank Gehry—were just pretexts used to justify handing both private and public land over to a politically-connected developer without considering any competing proposals. Last year the Supreme Court declined to hear arguments in their case, Goldstein v. Pataki, which is now working its way through state court.

This week the saga went from bad to worse, as the MTA, which controls the central portion of the land needed for the project, released a disastrous new plan. Consider this: In 2006 the MTA agreed to sell Ratner its 8-acre Vanderbilt rail yard—which had been appraised at over $200 million—for a lump-sum payment of just $100 million. Now the MTA says Ratner can pay just $20 million upfront, with the rest due over the next 22 years.

As the New York Post (which supports the Atlantic Yards project) declared in an editorial attacking the new deal, "After pleading poverty, jacking up [subway] fares and squeezing $2 billion from Albany, the MTA is now flush with cash. Or so one might think—if the agency OKs a plan to let a developer pay for air rights over the Atlantic Avenue rail yard on a 22-year layaway plan."

It's also worth noting that Ratner recently fired Frank Gehry, whose status as a global architectural celebrity had been one of the major "civic benefit" talking points in favor of the redevelopment. This prompted New York Times architectural critic Nicolai Ouroussoff to denounce Ratner's actions as "a shameful betrayal of the public trust, one that should enrage all those who care about this city." (The New York Times, by the way, currently operates out of a Times Square skyscraper built in partnership with Bruce Ratner that sits atop land seized via eminent domain.)

So what happens next? The state will no doubt approve this sweetheart deal just as it approved the previous one. But Ratner still needs to sell more than $500 million in arena bonds and break ground before year's end in order to qualify for tax-exempt status. Here's hoping Goldstein's lawsuit, a lousy economy, and renewed public outrage over eminent domain abuse make the Atlantic Yards the perfect size to fail.

Damon W. Root is a Reason associate editor.