Corruption

New York's Shameful Eminent Domain Abuse

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In the wake of last week's big news that the Pfizer Corporation is pulling out of New London, Connecticut just four years after that municipality received Supreme Court approval to seize private property on Pfizer's behalf, the Atlantic Yards eminent domain case in Brooklyn is receiving lots of well-deserved attention. In a superb article from Saturday's Wall Street Journal, Nicole Gelinas outlines New York's shameful behavior:

So to push the Atlantic Yards project through the courts, New York state isn't arguing that it needs to take Mr. [Daniel] Goldstein's property for economic development. Instead, it has declared that Mr. Goldstein's neighborhood is "blighted." This allows the state to condemn property on the theory that clearing unsanitary and unsafe slums constitutes a public benefit.

In fact, the Prospect Heights neighborhood that Mr. Goldstein and his wife have made their home is hardly a slum. Prospect Heights was thriving before Atlantic Yards construction began. It's a hip neighborhood that's a short hop on the subway from Manhattan….

To discover blight in all this, Albany hired consultants. Their 2006 report pointed to below-grade railyards for the Metropolitan Transportation Authority (MTA), which make up less than half the condemned area, and noted weeds growing and graffiti on some properties. All of this could be remedied without demolishing a large swath of urban landscape if the state compelled the MTA to sell the development rights above its underground tracks at a market rate.

Mainly, however, the report pointed to "underutilization" of the land, concluding that the area wasn't being used to the maximum economic benefit allowed by law. But that means the Atlantic Yards is really an economic-development project—and that the politicians along with Mr. Ratner want to manage Brooklyn's economy rather than let competitive forces continue to improve the neighborhood.

It's also worth noting that New York didn't even start talking about blight until two years after the project was first announced. By that point, 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.

Here's another depressing fact: The MTA quietly struck a deal with Ratner for that below-grade railyard (the Vanderbilt Yards) as early as February 2005—without first opening the property up for competitive bidding. This prompted a public outcry, so the MTA offered prospective buyers a mere 42 days to put up their own bids. This was hardly "competitive," however, since Ratner's plans had been in the works for years and everybody else had to scramble to meet the deadline. Still, the Extell firm successfully submitted a $150 million offer for the property, which has been appraised at over $200 million. But then Ratner bid just $50 million and won, with that figure later negotiated to a lump-sum payment of $100 million. Finally, the MTA sweetened the deal even further this past June by allowing Ratner to pay just $20 million up front, with the remaining $80 million due over the next 22 years. Now that's a bailout!

As Genilas notes, New York's highest court will rule any day now on whether this despicable land grab will stand. Here's what the court should do. Here's lead plaintiff Daniel Goldstein on why private developers like Ratner have no right to his home. And here's the trailer for Battle of Brooklyn, a forthcoming documentary on the case (help the filmmakers out via this fundraiser):