The Great Basketball Swindle

A riveting new documentary takes on New York's shameful eminent domain abuse

In December 2003, Bruce Ratner, a real estate tycoon and part-owner of the New Jersey Nets basketball team, held a press conference in New York City to announce his latest project, a 22-acre "urban utopia" called the Atlantic Yards. The idea was to transform downtown Brooklyn by erecting 16 office and residential skyscrapers, a luxury 180-room hotel, and a fancy new arena for the Nets. Standing by Ratner's side that day was the architect Frank Gehry, who told the press he was particularly excited "to build a whole neighborhood practically from scratch."

It was a revealing statement. After all, the Atlantic Yards wasn't going to be built on top of a blank slate. More than half of those 22-acres were privately-owned, with the properties ranging from small businesses and modest brownstone apartment buildings to luxury condominiums that sold for $500,000 or more. To build the Atlantic Yards from scratch meant you had to first wipe part of an existing neighborhood off the map.

Which is precisely what Ratner set out to do—only he didn't go about it the old-fashioned way, by contacting each property owner and making them a handsome cash offer. Instead Ratner turned to his powerful friends in the government, including his old Columbia law school buddy Gov. George Pataki, New York Mayor Michael Bloomberg, and Brooklyn Borough President Marty Markowitz, a buffoonish figure eager to prattle on about how the Atlantic Yards would make up for the loss of the Brooklyn Dodgers. But most importantly, Ratner reached out to New York's Empire State Development Corporation (ESDC), the secretive state agency with the power to seize private property via eminent domain.

The depressing and infuriating story of what happened next is the subject of Michael Galinsky and Suki Hawley's riveting new documentary Battle for Brooklyn, which tells the story of the Atlantic Yards land grab largely through the eyes of property owner Daniel Goldstein, who spent seven long years trying and failing to save his home from Ratner's state-sanctioned bulldozers.

Drawn from hundreds of hours of footage shot over the entire seven year saga that began with Ratner's 2003 press conference and ended with the razing of the building containing Goldstein's condo, Battle for Brooklyn gives audiences the rare opportunity to watch a massive government swindle unfold before their eyes.

As the film makes clear, this was a textbook case of eminent domain abuse. Ratner wasn't building a bridge or a tunnel or anything else that might conceivably be described as a "public use" under the state constitution. It was a money-making deal orchestrated by a powerful real estate developer. And New York officials backed him every step of the way.

For its part, the ESDC conveniently declared the proposed Atlantic Yards site to be "blighted," despite all evidence to the contrary. Never mind that Goldstein spent five years hunting for what he thought was going to be his dream home—the ESDC counted minor things like "weeds," "graffiti," and "underutilization" as examples of this so-called blight. Under those flimsy standards any property in the city could be seized and bulldozed.

And that wasn't even the worst of it. In a particularly noxious example of crony capitalism, the Metropolitan Transit Authority (MTA), the powerful agency that runs New York City's subways, buses, and commuter trains, struck a secret deal to sell Ratner a crucial piece of real estate—an 8-acre train yard—that lay at the center of the Atlantic Yards footprint, without first opening up the property for competitive bidding.

In response to the negative media attention generated by Goldstein and the activist group he helped found, Develop Don't Destroy Brooklyn, the MTA announced in 2005 that it would entertain competitive bids after all, but only if those offers were submitted within a mere 42 days. Ratner's detailed plans had of course been in the works for years at that point, while his would-be competitors had to scramble to make the deadline.

Yet the real estate firm Extell did file on time, submitting a $150 million bid for the property. Ratner then countered with a lowball offer of just $50 million and still won the rights. That figure was later negotiated to $100 million, which was still significantly less than Extell's bid. Then in June 2009 the MTA bailed Ratner out once again, allowing him to pay a measly $20 million up front, with the remaining sum due over the next 22 years. As the film points out, this sweetheart deal went down at the same time the MTA was pleading poverty and raising the price of bus and subway fares.

At its best, Battle for Brooklyn illustrates the scope of these mounting outrages while capturing Goldstein's shock and anger as he slowly realizes that the deck is truly stacked against him. But since the film clocks in at a lean 93-minutes, several other significant aspects of the story were only briefly addressed or left on the cutting room floor.

One such weakness is Battle for Brooklyn's treatment of the atrocious November 2009 decision by New York's Court of Appeals—the state's highest court—upholding the use of eminent domain. While there is a great scene showing Goldstein anxiously checking his computer for news of the ruling, the only real summary the audience receives is that "we lost."

Unfortunately, that's not the half of it. In its 6-1 ruling, the Court of Appeals actually admitted that the state's blight determination might be bogus and then went ahead and upheld it anyway. "It may be that the bar has now been set too low—that what will now pass as 'blight,' as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses," the majority declared. "But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts."

So much for an independent tribunal of justice. Indeed, as Judge Robert Smith acidly remarked in his lone dissent, "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."

In other words, property rights now had second-class status in New York's highest court. Not only did the Court of Appeals rubber stamp this specific use of eminent domain, it basically announced that it would be rubber stamping future uses as well—which is precisely what the court did seven months later in Kaur v. Urban Development Corporation, where it approved the ESDC's controversial West Harlem land grab on behalf of Columbia University.

"If I had to do it all over again," Goldstein declares early in the film, "I would do the exact same thing." It's heartening to hear him say so. Let's hope Battle for Brooklyn inspires an army of future property rights activists. The people of New York are going to need their help.

Damon W. Root is an associate editor at Reason magazine.

Bonus Reason.tv Video: "Billionaires vs. Brooklyn's Best Bar: Eminent Domain Abuse and the Atlantic Yards Project."