NY Court of Appeals Deals Blow to Property Owners In Atlantic Yards Case
Associated Press Photo - Atlantic Yards, c. 2008
Within weeks of Pfizer abandoning the redevelopment project made infamous in Kelo v. City of New London, New York’s highest Court refused to overturn lower courts’ decisions that the area surrounding Brooklyn’s Atlantic Yards project is blighted. Read the opinion here. Amid calls for eminent domain reform, the project will now move forward by selling bonds to fund the building of a professional sports arena – the future home of the New Jersey Nets basketball team — and sixteen high rise buildings housing both commercial and residential units.
The Court’s Decision
The blight designation was first challenged in federal court, but that claim was dismissed. The New York State claim averred that the taking was not for a public use but to benefit a private party, and that the taking failed to conform to the standards enumerated by the New York Constitution. The property owners, and several public interest groups, claimed that the taking was not for a public purpose, the subject area’s condition did not rise to the level of blight, and that the land could only be used for low-income housing under New York’s Constitution. In rejecting the first argument, the 6-1 opinion of the Court confirmed that the removal of urban blight is a proper, and, indeed, constitutionally sanctioned, predicate for the exercise of the power of eminent domain.
The Court also refused to interfere with what qualifies as blight, even though it recognized that the bar may now be set too low as to what constitutes “blight.” However, the Court held that 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. The Court identified the only situation where it could interfere with a legislative blight determination – where the physical conditions of an area are such that it would be “irrational and baseless” to call it substandard or insanitary, but held that those conditions did not exist in Atlantic Yards. Finally, the majority refused to read the New York Constitution as requiring all removed blight to be replaced with low-income housing.
One high court Justice concurred with the majority’s result, but for different reasons. He would have permitted the Atlantic Yards project to move forward because he concluded that the lawsuit — which was commenced more than 18 months after the New York State Urban Development d/b/a Empire State Development Corporation (ESDC) published its determination and findings — was time-barred and jurisdictionally deficient.
Another Justice dissented with the majority. He concluded that the majority was much too deferential to the “self-serving determination by Empire State Development Corporation (ESDC) that petitioners live in a ‘blighted’ area,” and that the record failed to support ESDC’s blight determination.
Calls for Reform
Kelo v. City of New London ignited a firestorm of reform across the United States. The issue was raised again in New Jersey two years later when the New Jersey Supreme Court rejected a city’s blight designation in Gallenthin Realty v. Borough of Paulsboro. Recent press following release of the Atlantic Yards project opinion have had varied discussion on the need for eminent domain reform:
The Atlantic Yards Report Blog
Although the majority of states enacted some type of eminent domain reform following Kelo v. City of New London, New York and New Jersey have failed to enact any reforms to date. New Jersey currently has legislation pending under bills S-559/A-1492 that includes a tighter definition of blight and tighter notice and public hearing requirements, places time limits on acquisition of properties for redevelopment purposes, and requires that just compensation for takings be based on the highest value of the property, either at the time of taking or the time of the adoption of the redevelopment plan, based on the uses permitted under the redevelopment plan. But the proposed legislation has stalled. No eminent domain reform legislation is known to be currently pending in New York.
The author wishes to acknowledge the assistance of Cory K. Kestner, Esq., of McKirdy & Riskin, PA, in the preparation of this article.
