Eminent Domain Is Density

Something struck us when we recently posted a piece about whether New York City is becoming too dense: The relationship between eminent domain and density. The piece we posted, Is NYC Becoming Too Dense? Who’s to Say? (Thursday, December 11, 2008), was about the Bryant Park area, including the new Durst Bank of America Tower exceeding livable density.

In essence, we find ourselves concluding that “eminent domain is density” or, put another way, that greater density is now coming upon us by way of eminent domain.

NYC’s Brave New World: Three Examples of Surpassing Density that Coincide With . . .

It does not seem to be an accident that density and the use of eminent domain coincide in the following examples of recent and proposed NYC development:

1. The Bank of America Tower, the second-tallest building in New York (6th Avenue and West 42nd Street. Year of completion 2009)

2. The New York Times Tower, which is tied with Chrysler Building for third place as the third-tallest building in New York (8th Avenue between West 41st Street and 40th Street. Year of completion 2007)

3. The proposed 22-acre Atlantic Yards megadevelopment which, calculated on a per square mile basis, would be twice as dense as the densest census tract in the country. (Though the 22 contiguous acres of the megadevelopment should certainly be considered as a whole, the 22 acres do not constitute a single census tract since the span of acreage partakes in four different districts. See: Ratner Will Bring Us Closer Together, by Matthew Schuerman in the Observer, October 5, 2006. The project area unto itself is substantial: Though the project design involves discredited superblocking, its footprint could readily constitute 10 city blocks if it were better laid out.)

. .The Modern Proclivity: New Use of Eminent Domain

It is not an accident that the use of eminent domain coincides with these three surpassing examples of density: Eminent domain is being used as the tool to shoehorn in density that would not be achievable under normal circumstances. The fact that these three examples are current era projects separated by only a few years bespeaks something of the new proclivity to use eminent domain to force private owners to transfer their property to other private owners. Often the transfers being forced involve the new, after-transfer owners making similar or identical use of the land as the original owners even though the original owners’ actual buildings might be torn down.

Adding to the List, a New Reason to be Wary of Eminent Domain

Some general wariness about eminent domain has already taken hold in society. The practice of using eminent domain to force transfers of property from one private owner to another is often criticized as easy-to-recognize abuse. (See: Saturday, June 28, 2008, Kelo case drew the line in the wrong place, Re: Pols Remain Masters of Domain.) We also know from what we repeatedly witness that resort to eminent domain frequently engenders blight even when “elimination of blight” is being invoked as a purported rationale for its use. What has yet rarely been talked about is the way that eminent domain is now being used to reach unusually high densities and how eminent domain rewrites the equation of the densities. Though this does not seem to be something people are talking about just yet it is something that should be raised at every public hearing where questions of appropriate density and use of eminent domain overlap. For instance, there is concern that by virtue of its recent rezoning, Downtown Brooklyn will soon become too dense, but because the plan is projected to use eminent domain, the density increase coming to Downtown Brooklyn will be more pronounced. (Not to mention that streets may be shut down, something you don’t want particularly when density is increased.) (see: Sunday, December 07, 2008, Some Place Like Home: FUREE's new film takes on Downtown Brooklyn rezoning).

Permitted Density vs. Achievable Density

As we discussed in Is NYC Becoming Too Dense? Who’s to Say? there is significant difference between permitted densities in the city and those achieved. The theoretical maximum densities permitted for different areas of the city under the zoning code are rarely achieved. In fact, only a fraction of the densities that are permitted in various areas are normally achieved. In essence, the maximum permitted density is a density toward which people are always building but which, on an overall basis, is not likely ever to be reached. What is achieved is somewhere in the middle between what has been the actual density and that permitted maximum. And, it is always possible to roll back permitted density to a lower density if it is perceived that the actual density people are building towards is in danger of becoming oppressive.

The Model in the Middle: Achievable Density

Therefore, whenever we are dealing with an area that is already relatively developed, maximum permitted density should not be perceived as a model toward which we as a city are building: The goal should be perceived to be that middle ground toward which building is heading. Actually it should be those middle grounds (plural) since achieving density is normally a gradual process. The equilibrium of what is achievable will change and increase over time. This is desirable. Respected urbanist Jane Jacobs prescribed that one aspect of making higher levels of density tolerable and successful is the achievement of density over time. (See: Saturday, November 29, 2008, Jane Jacobs Atlantic Yards Report Card #4: Appropriate Density? NO.)

The Experience of Density Relates to the Speed With Which it Materializes

It occurs to us that achieving an appropriate level of density is therefore a little bit like the macroeconomic formula prescriptions for achieving an appropriate size for the nation’s money supply: the question of the speed becomes important. In macroeconomics the size of the nation’s money supply (which affects inflation, or, these days, possibly deflation) is not just a question of the amount of currency in circulation plus the deposits available on demand in banks and financial institutions; it is also affected by the “velocity” of money, the rate at which money changes hands. The faster money changes hands between consumers, the greater the effective size of the money supply that influences the economy. Similarly, the effects of density in the city and whether it is beneficial or tolerable has to do not just with how much total density there is overall and whether there are streets, avenues and infrastructure to support it, but also how fast that density is being created: density created at greater speed will be experienced as more overwhelming in nature.

Permitted Density Should Exceed That Density Which Is Our Goal

Back to maximum permitted density: as we said, it should not be the goal. The goal, the desired density, should be somewhere in between what has existed and what under the maximum permitted can be built as a practical matter. Accordingly, maximum permitted density should be greater than what one expects will be achievable. How much greater permitted density is, will influence the speed with which new higher densities will be achieved. If higher density is intended to be achieved at a faster rate (which will increase the experience of inordinate density during that increase) then the permitted density should be all the more greater than the density which is the actual goal.

Problems with Using Eminent Domain to Attain Greater Density

The problems with using eminent domain to attain greater density are several fold. First off it should be noted that when it is used this way we are in uncharted territory. Eminent domain was not previously used to create density. When eminent domain was used to create roads, parks, police stations, court houses, fire houses, public schools, transportation centers, its goal was something else: Its goal was public use. The focus was on use and good design. The use of eminent domain to create density is an outgrowth of the use of eminent domain for “economic development” purposes, but even when it was first used for this new purpose the goal did not initially seem to be to maximize density. The impulse toward maximizing density seems to be a new fashion.

The following problems materialize:

1. Using eminent domain to boost density circumvents the normal practical constraints on the maximum levels of density that can be practically achieved. Notwithstanding that maximum permitted density was never the model or ideal and notwithstanding what we have said to the effect that the maximum permitted density should normally be substantially above the ideal, the maximum permitted density now becomes achievable. It becomes what is achieved or targeted. In ways that may not be immediately and transparently apparent to the public, it is now possible to shoehorn in every last little lick of permitted density. Ergo we get more density than is ideal and more than was truly planned for when the maximum density levels were established.

2. If developers are able to adhere to their desired schedules, the increase in density will be achieved too rapidly, thus aggravating the negative overwhelming impact of the growth in density.

3. Eminent domain is likely only to be made available as a tool to the politically favored. It therefore shifts substantial resources, as represented by the density that only the politically favored will be afforded, into the hands of what David Cay Johnston refers to as the “rigged economy.” Those resources are consequently shifted away from optimal free market resource allocation. (Listen to: The Leonard Lopate Show: Sick Economy, Wednesday, January 07, 2009) The result is getting less of what society actually wants and more of what is politically favored.

4. One of the reasons Jane Jacobs favored slow build-ups of density is that it allows for development of greater variety. The political favoring associated with building up through the use of eminent domain becomes a second element, in addition to speed, that makes the development of such desirable variety less likely. Slow build-ups of density also allow that variety to accrete interactively in a natural up from the ground way rather than being formulaically filled in.

5. With fast build-ups of density, society is less likely to be in a position where it can evaluate soon enough and respond by easing off on the creation new density if experience points to the value of doing so.

6. The developer bias toward density of development is blessed and often accentuated with modern-style, density-creating eminent domain. That is because today’s “economic development” eminent domain is so often developer-initiated and developer-driven. Atlantic Yards is clearly a case where the project was both developer-initiated and developer-driven. In the case of the Durst Bank of America Tower, the Durst organization had assembled most of its development site before it approached the state to use the threat of eminent domain to acquire the rest of the site. (See: Developers Can't Imagine a World Without Eminent Domain, by Terry Pristin, January 18, 2006.) The New York Times Tower has Forest City Ratner as one of its developers, the same developer responsible for the developer-initiated and -driven Atlantic Yards megadevelopment. Condemnation and assembly of the Times Tower site by Empire State Development Corporation did not occur until after the New York Times was identified as the prospective owner of the building. (See: Blight to Some Is Home to Others; Concern Over Displacement by a New Times Building, by David W. Dunlap, October 25, 2001). According to the Village Voice “After the Times expressed interest, the city and state abandoned previous plans to seek bids on the property, which is privately owned but in the Times Square redevelopment area.” Instead the state and city signed off on a sole-source deal with multiple special benefits for the Times and its partner, Forest City Ratner Companies. (See: The Paper of Wreckage, The 'Times' Bulldozes Its Way to a Sweetheart Land Deal You Will Pay For, Paul Moses, June 18th 2002.)*

By definition, the price paid to acquire private property through eminent domain creates a windfall since it is not equal to market value, given that it is not the price at which the original owners would willingly sell the property. The windfall is greater since the original owners of the real estate (including such parties as tenants) are not fully compensated for all the value lost in the process of the forced transfer. Therefore, eminent domain is attractive to developers because of the per se windfall it represents in any acquisition price. But the greatest possible windfall is made possible to the extent that the density of the new development exceeds the density of the area’s development that would have been reasonably expected or anticipated. To the extent that density in the new development exceeds the generally expected, reasonably anticipated density for the area, there will be eminent domain windfall that is gravy over and above the base level of eminent domain windfall that could be expected. That is because, while condemnation law does not presently fully compensate original owners, the law prescribes that the portion of the compensation that will be paid will be geared to the foreseeable development value of the property. To the extent that density is pushed to exceed the foreseeable development value, the developers will not have to additionally compensate the original owners at all. Therefore, there is a strong incentive associated with developer-driven eminent domain to push the density beyond what was reasonably foreseeable so as to access this gravy windfall.

* (The June 2002 Village Voice article presciently reported: Robert McChesney, a communications professor at the University of Illinois, said the deal "gives the appearance of impropriety" and will undermine the Times' ability to criticize similar arrangements between government and business. The materialization of that prediction has been reported upon by Atlantic Yards Report and most recently in an IFC Media Project documentary segment devoted to the issue. See: Wednesday, December 17, 2008, Time to Times; Dear, Dear, Dear, Thursday, December 11, 2008, "Unreliable Sources" redux: only one of three dailies covers the Forest City conference call, Monday, December 08, 2008, A dozen Atlantic Yards stories that have gotten scant or no coverage, Unreliable Sources and December 13, 2008, Unreliable Sources: "Undue Influence." See also the picture of the Times Tower on the cover of the Forest City Enterprises new annual report, click to enlarge, laid out to look like the New York Times Magazine: Fr more on this see: Sunday, May 25, 2008, The FCE annual report looks like the NYT Magazine.)

Examples of Developers Pursuing Unforeseeably High Levels of Density in Order to Get Eminent Domain Windfall Gravy

Eminent domain-associated, developer-driven campaigns to exceed density increases that would be reasonably expected through foreseeable upzonings are likely to be most apparent in the case of areas zoned for relatively low density, where the difference between current low zoning and the maximum possible legal zoning is greatest. Atlantic Yards is a clear example of this difference. Atlantic Yards evaded public hearings on the zoning change to increase density. The proposed Columbia University expansion into West Harlem is another such example. Columbia’s proposal to put a huge “bathtub” basement underlying most of what it is proposing to build, including under the intervening streets, can be seen as a convenient rationale to undergird its argument for the use of eminent domain to take over a complete neighborhood rather than integrate into it. The seven-story-deep bathtub can also be seen as a way of maximizing the jump in density beyond what might have been reasonably expected. Thus it is associated with the pursuit of maximum eminent domain windfall gravy.

The extent to which Columbia’s increase in density is unexpected or beyond what might be reasonably anticipated is somewhat disguised by the fact that there was a competing community plan and the community, stretching to get its own plan accepted, sought to propose as much maximization of density to accommodate Columbia as possible. The difference was that with the community’s alternative plan, other property owners, not just Columbia, would have benefitted by acquiring the value associated with increases to permitted density of their property. Those owners would have benefitted even if they then sold their land to Columbia. (Even as is, the community plan’s proposal to increase density should assist in providing an evidentiary foundation for the owners in the West Harlem to obtain greater compensation to the extent that eminent domain forces transfers of their property to Columbia.)

But Doesn’t the Creation of All This New Density Stimulate the Economy?: Not Likely

Could we at least say that these new concentrations of density will benefit society by representing development and economic stimulus that would not have occurred otherwise? No, not reliably and it may be the opposite. It will not be so to the extent that these new overly dense areas are subsidized to out-compete the less dense and more diffuse alternative development the economy would naturally have engendered. In this regard, things like the level of the tax abatement subsidies received by the New York Times Tower must be examined. It will not be so to the extent that these areas of huge development shift resources into the less efficient and productive rigged economy benefitting the politically favored. It will not be so to the extent that these new areas of density involve, as they more likely will, unnecessary demolitions of worthwhile buildings rather than infilling around them. It will not be so to the extent that these developments capture and misdirect scarce resources like subsidies that would be better used elsewhere. Last, and most important, it will not be so to the extent that we create an undesirable environment in which to live and work.

What Hasn’t Yet Been Noticed

At the moment we are unaware that anyone else has pointed out the linkage between eminent domain and the delivery of unprecedented new and unexpected levels of density. You may be reading about it here first. In Is NYC Becoming Too Dense? Who’s to Say? we pointed out that there are lag times involved before increases in density are fully noticed or comprehended. In the end, whether a level of density is the right level or too great depends upon how it is experienced and that experience does not come until the tail end of a process. It doesn’t even come when sky-blocking buildings are built; it comes only after they are fully rented and occupied in a thriving economy. As fast as things have been moving in Yew York, we are not yet at the stage where significant increases in density have been fully noticed. For instance, though we wrote about how the Bryant Park area is destined to become denser than it has ever been before, right now the buildings that overlook Bryant Park are have difficulty renting to fill up. (See: Market’s Troubles Echo in a Building’s Vacant Floors, by Charles V. Bagli, November 9, 2008 and Square Feet: Manhattan Awash in Open Office Space, by J. Alex Tarquinio, December 2, 2008.)

You Heard It Here First

Once we more fully notice with full comprehension the density building up around us, we will perhaps also notice the new important relationship between that density and eminent domain. As we said, we are in uncharted territory since we have not seen this before. Because this is uncharted territory, people should be talking about what is going on in order to decide how to navigate going forward. So remember, you heard it here first when we pointed out that New York’s brand new second-tallest building, its new third-tallest building and its new proposed 22-acre neighborhood that would be twice as dense as the densest census tract in the country, all rely on a new proclivity to use eminent domain as it has never been used before, to subject us to new unexpectedly high levels of density.