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, 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 fancy 180-room hotel, and a new basketball arena for the Nets. Standing by Ratner's side was the architect Frank Gehry, who said 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 empty land. More than half of those 22 acres were privately owned, with the properties ranging from small businesses and modest brownstone apartment buildings to luxury condos that sold for $500,000 or more. To build the Atlantic Yards from scratch meant you first had to wipe part of an existing neighborhood off the map.

That is precisely what Ratner set out to do. But he didn't approach each property owner and make a handsome cash offer. He 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. Most important, Ratner reached out to New York's Empire State Development Corporation (ESDC), the 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. The movie tells the story of the Atlantic Yards land grab largely through the eyes of property owner Daniel Goldstein, who spent seven years trying and failing to save his home from Ratner's state-sanctioned bulldozers. Drawn from hundreds of hours of footage, Battle for Brooklyn gives audiences the rare opportunity to watch a massive 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 much evidence to the contrary. Among the alleged evidence of blight: "weeds," "graffiti," and "underutilization." Under those flimsy standards, just about any property in the city could be seized.

And that wasn't the worst of it. In a noxious example of crony capitalism, the Metropolitan Transit Authority (MTA), which runs New York City's subways, buses, and commuter trains, struck a secret deal to sell Ratner a crucial piece of real estate—an eight-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 other activists, the MTA announced in 2005 that it would entertain bids after all—but only if those offers were submitted within a mere 42 days. Ratner's detailed plans had been in the works for years, while his would-be competitors had to scramble.

Yet the real estate firm Extell did file on time, submitting a $150 million bid. 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 again, allowing him to pay a measly $20 million up front, with the remainder due over the next 22 years. As the film points out, this sweetheart deal went down at the same time the MTA was 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 realizes that the deck is stacked against him. But since the film clocks in at a lean 93 minutes, some important aspects of the story were left on the cutting room floor.

One such omission involves 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-to-1 ruling, the Court of Appeals admitted that the state's blight determination might be bogus, then 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. 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 rubber-stamp future uses as well—which is precisely what the court did seven months later, when 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.