Noticing New York Testimony at Senator Perkins’ Hearing on New York State Patterns of Eminent Domain Abuse

We attended and testified at yesterday evening’s hearing by Senator Bill Perkins on eminent domain abuse. One probable reason the hearing was being held now is because of the spotlight of the Appellate Division’s decision in the Columbia University expansion eminent domain case accentuates the need to address patterns of abuse by the public agencies involved (particularly misconduct by the Empire State Development Corporation) together with the fact that the findings of public agency misconduct in that case now need to be squared with decisions that must be made about very similar misconduct by the very same public agency and officials in the Atlantic Yards case. A lot will inevitably be happening. Among other things we consider that the public agency misconduct in New York is ultimately likely to go up in one or more cases for review by the U. S. Supreme Court.

Extra Tension Afforded by Overlay of Newly Emerged Federal Indictments of Public Officials

Adding to the drama, the intricacy and the stakes involved, just today the U.S. Attorney’s Office for the Second District put out a press release announcing that Forest City Ratner, the developer/subsidy collector and the most central player in the Atlantic Yards eminent domain abuse case is, in essence (but not yet technically), an as yet unindicted coconspirator in a federal corruption case in Yonkers involving one of its projects. The investigation is ongoing so additional indictments can be predicted but initially three public officials have been criminally indicted in a joint FBI/IRS investigation:

SANDY ANNABI, the former Democratic Majority Leader of theYonkers City Council, charging her with conspiracy, bribery, extortion, false statements, and tax crimes. The Indictment also charges ZEHY JEREIS, the former head of the Yonkers Republican Party, and ANTHONY MANGONE, a Westchester County attorney, with conspiracy, bribery, and extortion in connection with two real estate development projects within the City of Yonkers which were pending before ANNABI.

Senator Perkins’ Opening and Requested Moratorium

Senator Perkins has requested Governor Paterson to declare a moratorium on eminent domain until reform legislation is passed. Here is some of what said in his opening statement to the effect that something is seriously amiss in this state when it comes to the conduct of our public officials:

The Appellate Division’s Kaur decision only affirms the need for reform. The decision noted a pattern of bad faith.

* * *

In fact, conservative columnist George Will recently published an article titled, “Avaricious Developers and Governments Twist the Meaning of "Blight.”. In it he addressed what he called the, “life-shattering power of eminent domain.” He talked about ESDC.s actions in this case and also in the Atlantic Yards case. He concluded that these are examples of “pre-textual takings” where government uses “trumped-up accusations of blight to concoct a spurious “public use. for a preconceived project.” In fact, the Kaur decision notes that the property in question was not considered blighted until Columbia decided it wanted to own it. As Mr. Will puts it, “liberty is under assault…this time by overbearing American governments.”

I could not have put it better myself. When you get someone who skews to the left as much I do, an upstate Republican like Senator Alesi, and a conservative icon like George Will to agree on public policy…you have certainly created strange bedfellows. Clearly, something is amiss. Property rights are not safe. If you own property in an area targeted by the government and you do not want to sell, you are now a hostage. You are being mugged. It’s like you have no future. It makes no sense to improve your property. You can’t sell it on the open market. It’s hard to find tenants. Everybody, including you, knows that your property is marked for destruction. That is a problem.

But there is one sentence from the Kaur decision that really, really bothers me. The majority opinion quoted a recent article: “”few policies have done more to destroy community and opportunity for minorities than eminent domain.””

Our Noticing New York testimony was to similar effect. Here follows first the written testimony handed in and thereafter our shortened oral statement version of that testimony. Following our testimony, we have a few concluding observations.

* * * *
Noticing New York Written Testimony


January 5, 2010

Senator Bill Perkins
Office of State Senator Bill Perkins
163 West 125th Street, Suite 912
New York, New York 10027

Re: January 5, 2010- Hearing on Need for Eminent Domain Reform

Dear Senator Perkins:

This comment is being offered in the name of Noticing New York, an independent entity dedicated to the proposition that developing New York and appreciating New York go hand in hand.

1. A Professional’s Perspective. I am here as a lawyer, urban planner and former senior public development finance official for the state finance authorities to tell you that not only is the need for eminent domain reform as desperate as it could possibly be but that reform will be trickier than you think.

2. An Out of Control Migration to a World of Topsy-Turvy Opposites. We can no longer speak euphemistically about a need for greater transparency at the state public authorities. When it comes to the abuse of eminent domain our perpetrating public authorities are so absolutely out of control that everything is topsy-turvy; almost every crucial concept is taken to mean its opposite.

3. “Public”Purpose Means “Private” Monopolies. One might think that reforming eminent domain should be as easy as writing into law provisions to say that private property should only be taken for “public use” or for “public benefit,” perhaps including something in the constitution for emphasis and to assure the rights of the individual against marauding public officials. But we know that both the state and the federal constitutions already say that private property can only be taken for “public use,” and even the current eminent domain procedure law says that takings should be for “a public use, benefit or purpose.” But in New York the principal purpose of eminent domain is now that of putting property into private hands and agencies now specialize in delivering vast monopolies to the likes of Columbia University and Forest City Ratner.

Columbia wants the exclusive, long-term right to develop 17 acres in West Harlem, thus adding to the approximately 36 acres it owns further south. Similarly, Forest City Ratner wants the exclusive, multi-decade right to develop 22 prime Brooklyn acres adjacent to another eight it has already been given, shutting down public streets, avenues and sidewalks that for an expansive 30 acre mega-monopoly upon which it is securing the special right to build, in addition to two shopping centers, an arena and a total 19 towers that will create the densest area of the city, the densest area in North America. Together with the 17+ acres of MetroTech and Forest City Ratner’s other nearby Brooklyn properties, this will consolidate ownership in Forest City Ratner more than 50 acres of Brooklyn’s most densely “zoned”* and accessible commercial properties sitting astride the public subway lines. (* “Zoning” has actually been superseded by an override permitting extra density.)

Ergo, abuse is now reversing traditional thinking that eminent domain was once viewed as a tool to thwart the accumulation of land in huge privatized monopolies.

4. Provision for Judicial Review Means None Is Possible. One might think that legal protection would be achieved if laws were written to say that our courts should review whether the state and federal constitutions are observed and whether “a public use, benefit or purpose will be served by the proposed acquisition.” But § 204 (B) (1) and (4) of the eminent domain law say that the Appellate Division and the Court of Appeals are supposed to review whether there was such a public purpose. In New York, however, this provision for review has been interpreted to mean the reverse; to mean that courts cannot review or question whether these private purpose thefts by eminent domain have a public purpose.

5. Blight Means Coveted Property. “Blight,” an important word in eminent domain law, doesn’t mean “blight” anymore since the majority of the property in the city now qualifies as blighted, (including the recently bought homes occupied by the Brooklyn Borough President and Forest City Ratner’s own officers). “Blight’ now simply means any land coveted for by a developer.

6. “Economic development” Means “Stagnation.” “Economic development” programs now mean programs that will bring stagnation and real blight. (I’ve personally seen the devastation in Kelo’s New London, Connecticut.) Developers like Columbia and Forest City Ratner covetously target our most vital up-coming neighborhoods, but when these neighborhoods are gifted to them without bid they don’t value the property they have received for what its worth: Valuable properties are torn down, allowed to deteriorate and lie fallow, perhaps being used as parking lots for decades.

7. Pliable Law, Pliable Privatized Public Officials. When the law is so utterly pliable that every word can mean its opposite we would hope that state officials would have the rectitude to be guided by the spirit of the law. Unfortunately, we find that our public officials are even more pliable than the law. This is why the situation is so desperate: Officials at highly political agencies like the Empire State Development Corporation (“ESDC”/”UDC”) are no longer in service to the public, they are part of a crew of privateers, pirates sailing in the developer’s boat where the developer’s wish is their command. Moratorium on eminent domain projects underway is therefore essential, and since these involve a kind of collusive theft and sale of public office we suggest criminal investigation is also in order. Eminent domain expert Gideon Kanner summarized his assessment of the judicial findings of what happened in the Columbia expansion case thus:

. . . in the Kaur case, the New York Appellate Division did examine the unseemly facts underlying the decision to condemn and found them to give rise to a miasma of favoritism, conflict of interest, procedural mistreatment of the condemnees, and deliberate blighting of the area.

The cast of characters in the Kaur case (substituting Forest City Ratner for Columbia University) is virtually identical in Atlantic Yards. The facts of abuse are very much the same, in some respects even worse.

8. One Particular Suggestion: Remove the Financial Incentive. While we have submitted many other suggestions for eminent domain reform, we now offer a key suggestion: Remove the incentive to turn all the concepts upside down; take the private profit out of eminent domain. Private profit is the gasoline that fuels eminent domain abuse. Long ago, when eminent domain really was for “public use,” the benefit of a lower cost of taking property by eminent domain accrued to the public. Today’s private purpose conduit deals are instead designed to channel the windfalls of eminent domain profit directly into private hands, without bid and, typically, we see accompanying devices like tremendous up-zoning or density increases special to the developer used to maximize that windfall. If you rigorously erase absolutely all that private-profit windfall we think you will find that a huge part of the incentive for turning common sense upside down will be eliminated as well.

Sincerely,


Michael D. D. White


* * * *
(Photo, via Atlantic Yards Report by Tracy Collins.)

Noticing New York Oral Testimony

1. As a lawyer, urban planner and former senior public development finance official for the state finance authorities I can tell you the need for eminent domain reform is absolutely desperate and will be tricky.

2. The public authorities perpetrating eminent domain abuse are so out of control that everything is topsy-turvy; almost every crucial concept is taken to mean its opposite.

3. One might think that reforming eminent domain should be as easy as writing into law provisions to say that private property should only be taken for “public use” or for “public benefit,” but the state and the federal constitutions already say “public use” and the current eminent domain statute says that takings must be for “a public use, benefit or purpose.” Nevertheless, in New York eminent domain’s principal purpose is now that of putting property into private hands and we have public agencies that specialize in delivering vast monopolies to the likes of Columbia University and Forest City Ratner.

Columbia wants the exclusive, long-term right to develop 17 acres in West Harlem, adding to the approximately 36 acres it owns further south.

Forest City Ratner wants the exclusive, multi-decade right to develop 22 prime Brooklyn acres adjacent to another eight it was already given, for an expansive 30 acre mega-monopoly upon which it is securing the special right to build (in addition to two shopping centers) an arena and a total of 19 towers that will create the densest area of the city, the densest area in North America. Together with the 17+ acre MetroTech and other nearby Brooklyn properties, this will consolidate ownership in Forest City Ratner more than 50 acres of Brooklyn’s most densely “zoned” and accessible commercial properties sitting astride our public subway lines.
(Above: Map of Forest City Ratner 50+ acre eminent domain granted Brooklyn Real Estate mega-monopoly.)

4. Would legal protection be achieved if laws were written to say that our courts should review whether the state and federal constitutions are observed and whether “a public use, benefit or purpose will be served by the proposed acquisition”? No. The eminent domain law already says that the courts should review whether there was such a public purpose but this has been interpreted to mean the reverse; to mean that courts cannot review or question whether these private purpose thefts by eminent domain have a public purpose.

5. “Blight,” an important word in eminent domain law, doesn’t mean “blight” anymore since the majority of the property in the city now qualifies as blighted, (including the home recently bought by the Brooklyn Borough President and the home recently bought by a Forest City Ratner executive). “Blight’ now simply means any land coveted by a developer.

6. Economic development” programs now mean programs that will bring stagnation and real blight. (I’ve personally seen the devastation in Kelo’s New London, Connecticut.) Developers like Columbia and Forest City Ratner covetously target our most vital up-coming neighborhoods, but when these neighborhoods are gifted to them without bid they don’t value the property they have received for its true worth: Valuable properties are torn down, allowed to deteriorate and lie fallow, perhaps being used as parking lots for decades.

7. When the law is so utterly pliable that every word can mean its opposite we would hope that state officials would have the rectitude to be guided by the spirit of the law. Unfortunately, we find that our public officials are even more pliable than the law. Officials at highly political agencies like ESDC are no longer in service to the public, they are part of a crew of privateers, pirates sailing in the developer’s boat where the developer’s wish is their command. A moratorium is therefore essential. Since these actions involve a kind of collusive theft and sale of public office we suggest criminal investigation is also in order.

8. While we have submitted many other suggestions for eminent domain reform, right now we conclude with one key suggestion: Remove the incentive to turn all the concepts upside down; take the private profit out of eminent domain. Private profit is the gasoline that fuels eminent domain abuse. Long ago, when eminent domain really was for “public use,” the benefit of a lower cost of taking property by eminent domain accrued to the public. Today’s private purpose conduit deals are instead designed to channel the windfalls of eminent domain profit directly into private hands, without bid and we typically see accompanying devices like tremendous up-zoning or density increases special to the developer used to maximize that windfall. We suggest you eliminate the incentive for turning common sense upside down by making certain that you rigorously erase absolutely all of that private-profit windfall.

(ESDC Counsel Anita Laremont in center above)

We concluded our oral remarks by saying that we wanted to offer Senator Perkins an observation about the testimony of Anita Laremont, Counsel of the Empire State Development Corporation (“ESDC) which had preceded our own. Senator Perkins had asked Ms. Laremont about the formation of BALDC, the Brooklyn Arens Local Development Corporation which ESDC had its coadministered sister agency, the Job Development Corporation (JDA), form to issue bonds. (Ms. Laremont is also responsible for JDA.) We suggested to Senator Perkins that he should ask follow-up questions of Ms. Laremont, given that we thought her testimony provided a serious misimpression of when and why state agency bonds must go to the Public Authority Control Board (PACB) for approval. This was something he was specifically asking her about. We are not sure whether Ms. Laremont was intentionally misleading the senator, but if she was trying to convey another point we are not sure what it is.

PACB Approval Is Not Linked to State Guarantees of Agency Bonds

The point of Ms. Laremont’s testimony as we understood it was that agency bonds only need to go to the PACB for review and approval if the bonds involve a state guarantee and that her agencies, ESDC and JDA, normally don’t have the ability to issue bonds without state backing, but that by using the device of forming a Local Development Corporation, ESDC and JDA had avoided having the state back bonds; This meant that a PACB approval was neither required nor appropriate. However, a state guarantee of an agency’s obligations is not what necessitates PACB review. When we worked for the state finance agencies we oversaw the issuance of billions of dollars of bonds (over $36 billion in bonds between 1993 and the end of 2006 and many more in the decade or so before that). The vast majority of these were revenue bonds not backed by any form of state guarantee. They all went to the PACB for review and approval. We would also question the assertion that ESDC and JDA have no power to issue bonds unless the state is guaranteeing them.

One Final Thought On Eminent Domain Reform: Process Could Be Hijacked

The abuses by public officials in New York have gotten to the point that, whether people publicly acknowledge it or not, virtually everyone who has thought about it probably believes that something will have to be done about eminent domain reform in New York if only because the U.S. Supreme Court could so readily step into the picture to shake things up. What we need, however, is real eminent domain reform. The eminent domain industry, those who are making big profits from eminent domain, will instead want to continue with some version of business as usual. Therefore, expect that getting real reform will not only be tough to achieve but that one reason it is likely to be especially tough is that there will almost certainly be an attempt by the eminent domain industry to hijack the reform process and substitute an ineffective placebo for real reform.

One evidence we see of how ineffectually mild proposed reform could be (if everyone is not vigilant) can be seen in the very mild reforms recommended by a Special Task Force on Eminent Domain organized by the New York State Bar Association. (See: Tuesday, March 18, 2008, A State Bar task force on eminent domain passes on blight but urges transparency.)

Update posted on the evening of January 7, 2010 and updated again on the morning of January 8, 2010.

Here are links to two stories in Atlantic Yards Report covering the hearing:

Thursday, January 07, 2010
At Senate hearing, ESDC general counsel defends BALDC, but isn't even sure she's on the board; Perkins skeptical of PACB avoidance

Thursday, January 07, 2010
At hearing, ESDC representatives defend use of consultant AKRF; Perkins slams "egregious conflict of interest" given simultaneous work for developers

Here from the first of those two posts is video of an after-the-hearing interview of Senator Perkins by Norman Oder in which we discuss with the senator some of the Ms. Laremont’s assertions that a requirement for PACB review is linked to state guarantees of an agency’s bonds.



Friday, January 08, 2010
At Senate hearing on eminent domain reform, forceful criticism of the status quo and the ESDC's answers, but reform won't happen overnight

A photo from this last AYR post is a photo with more photos such as the below (beside us is Christina Walsh of the Institute) available from Photos by Tracy Collins.
Update posted January 12, 2010.

Here are a links to four more stories covering the hearing in Atlantic Yards Report the first of which provides a link to full video of the entire hearing and the second of which provides new better video of testimony by Ms. Laremont about how “blight” is found by her agency.

Friday, January 08, 2010
Now available, full hearing video of January 5 state Senate oversight hearing on ESDC and eminent domain

Monday, January 11, 2010
In new and better view on video, ESDC General Counsel acknowledges no disagreement ever with consultant AKRF

Monday, January 11, 2010
The ESDC: "quasi-governmental corporation," "public benefit corporation," "economic development agency," or just an "entity"?

Monday, January 11, 2010
Does ESDC board determine blight? On video, Dorkey can't find Pacific, Gargano evades Lehrer; both avoid Pinamonti's invitation to "come down and see"

Update posted February 3, 2010:

Here is a belated update to provide links to three more stories covering the hearing in Atlantic Yards Report. The first, posted on Martin Luther King Junior’s birthday covers how the purpose of ESDC (legally still the Urban Development Corporation), created in the wake of Dr. Kings assassination, has been subverted to things quite the opposite of what he stood for.

The second provides many additional videos of individuals testifying at the hearing, including one of our own Noticing New York testimony appearing below.

The third post covers more about more of the problems that result in AKRF predictably always finding “blight” when hired to rather than providing a neutral opinion as to whether true blight might actually, verifiably exist.

Monday, January 18, 2010
A scolding from Norman Siegel about the history of the Urban Development Corporation, founded after Martin Luther King's assassination

Sunday, January 17, 2010
More videos from the January 5 state Senate oversight hearing



Thursday, January 14, 2010
How ESDC practices ensure that, in cases like Atlantic Yards, the developer's choice of consultants, AKRF, will work for the state