Saturday, September 20, 2008

Contrivance in the service of creating blight, real blight- Listen again- REAL blight

There are times, like now, when I bemoan the fact that I am a mere mortal- It is times like these when there is so much happening that would be worthwhile for Noticing New York to bear witness to.

I just can’t type, think or take shorthand anywhere near as fast as Norman Oder of Atlantic Yards Report. (Is Mr. Oder not a mere mortal?- Possibly.)

The theme for heavily-evented Wednesday, Thursday and this week as a whole is deceit, manipulation and contrivance in the service of bringing blight to our communities.

Wednesday Morning

Wednesday morning State Senator Bill Perkins held hearings about the need for eminent domain reform in New York where eminent domain abuse probably outstrips such abuse anywhere else in the country. From Atlantic Yards Report:

“Nowhere else in the country is eminent domain used to benefit private interests so rampantly and so brazenly,” declared Christina Walsh, a representative of the Institute for Justice, the libertarian legal organization that has led the fight nationally against eminent domain.

For the most complete and best account of the hearing, see that Atlantic Yards Report article: Thursday, September 18, 2008, At state Senate hearing, calls for reform of state eminent domain laws, notably blight

For the Noticing New York testimony we provided at that hearing, keep reading; it is provided below, at the very end of this post.

Speakers wishing to speak at the hearing spoke by invitation. It was mostly a forum for opponents of eminent domain. Senator Perkins said that Empire State Development Corporation was invited to testify but did not do so and an ESDC representative present in the audience did not speak.

The overall story told was one of developer/private-sector-driven eminent domain where manipulations and contrivances are used to find fictional blight and/or create ersatz or self-created blight conditions. This is not to say that communities don’t, ultimately, suffer real blight created by these machinations whenever eminent domain abuse plans get traction. More on this later. Government agencies were depicted in the testimony, (with an awful lot to back it up), as complicit and “for rent.” People spoke about how plans for eminent domain proceed without cost benefit assessments, how there is insensitivity to the communities whose wishes are often overridden, and insensitivity to those whose property is condemned with inadequate compensation. With one-sided private profit benefit driving these plans there is deep doubt about the validity of the objectives of many of them.

The overall quality of the testimony was extraordinarily excellent. I especially appreciated the following points made by Daniel Goldstein of Develop Don’t Destroy Brooklyn excerpted in the Atlantic Yards Report coverage:

When “used as an excuse” for eminent domain, “economic development” is always “highly speculative for the public while the eminent domain itself makes it a sure thing for the developer.”

* * *
“Every single purported public benefit touted by the Empire State Development Corporation (ESDC) could be achieved without the use of eminent domain. The only reason eminent domain is being used for the Atlantic Yards project is to give a massive private benefit to the private developer—the windfall benefit of cheap land and the windfall benefit of a complete zoning override.”

* * *

“The use of eminent domain for Atlantic Yards clearly serves no public purpose whatsoever,” he said. “If the purpose of the project was economic development, as claimed by the ESDC, then the proper way to accomplish that would be to rezone the area.”

* * *

“the agency’s predetermined analysis found that the exact same footprint that Ratner had drawn up in his boardroom was blighted”

I am fascinated by how one piece of Goldstein’s testimony above, which is absolutely correct, fits in with another piece of testimony also given at the hearing that was also absolutely correct. Goldstein is absolutely correct when he says: “If the purpose of the project was economic development, as claimed by the ESDC, then the proper way to accomplish that would be to rezone the area.” At the hearing, attorney Philip Van Buren was similarly absolutely correct when he noted that consultant AKRF was arbitrary in its Atlantic Yards Blight Study, asserting that buildings not utilizing 60% of its development (zoning) rights are “underutilized.” (He pointed out that "The City Planning Commission uses 50% for its policy planning purposes" and that “even 50% is arbitrary.”

If failure to immediately utilize 60% of all of a parcel’s zoning rights means that property is “blighted” then huge portions of the city are blighted. Further, if I had been an owner of property in the Atlantic Yards footprint prior to the advent of Forest City Ratner’s land grab I would have been betting that an upzoning to promote extra development would have been likely. I speak of exactly the kind of upzoning Goldstein suggested was appropriate. In retrospect, it would have been a good bet, because the Atlantic Yards plan entails exactly that; an upzoning. (The problem is that ESDC is manipulating the upzoning in an unfair way to give all the benefit of the upzoning to Ratner rather than to the dispossessed owners who were entitled to make such a bet.) If you are betting on such an upzoning then it is good for you and good for the community if you speculatively wait to develop your land until the upzoning occurs. Your right to make and get the benefit of a desirable and smart investment decision is part of what privately-driven eminent domain takes away.

(After the hearing, I was talking with Henry Weinstein, an Atlantic Yards footprint developer who also testified at the hearing. He and Shaya Boymelgreen, another Atlantic Yards footprint developer, were certainly thinking in terms of development in the area because they were executing contracts about the use of development rights before Ratner appeared on the horizon. Both these footprint developers are now in a lawsuit that does not reflect well on ESDC or Forest City Ratner and should, in my opinion, cause people to speculate about the peculiar shape proposed for Atlantic Yards. See: Wednesday, March 07, 2007 “Unclean hands”? Judge raps Boymelgreen, Ratner in AY lease dispute.)

Although no one in favor of eminent domain testified at the hearing, the other side fought back with two op-ed pieces in the Daily News, one by Kathy Wylde, president of the Partnership for New York City, We need eminent domain to keep New York City growing, September 18th 2008, the other by Errol Louis, the Daily News columnist who frequently writes pieces promoting Atlantic Yards: The right way to fight blight, September 18th 2008. Louis mentions “Melrose Commons” as an example of the benefits of eminent domain. Coincidentally, there was testimony at the Perkins hearing by attorney Michael Rikon with respect to Melrose Commons related litigation: Rikon testified that more than a decade has passed and condemnees still await their full condemnation awards.

Wylde writes:

It is not as though these property owners are being left empty-handed. Far from it. Those trying to redevelop the property are required by law to offer them "fair market" rates for their land - and often bend over backward to go further, seeking to negotiate the best possible deal above and beyond that obligation. But in some cases, the holdouts refuse nonetheless.

This is naive, trite and just plain false. It sounds as if Ms. Wylde received, with much less skepticism, the same PR spiel I got from a Columbia/ESDC transaction attorney who approached me when I exited the ESDC eminent domain hearing held earlier this month. I wrote about our exchange in my account of my ESDC testimony. I also referred to it in my testimony Wednesday as I refuted the incorrect notions he and Ms. Wylde are promoting.

As Ms. Wylde has a position with an organization that is supposed to be promoting good development practices, I find it a second great lapse that she does not appreciate that eminent domain abuse does NOT promote economic development. It does the opposite. Eminent domain abuse misdirects economic resources, thereby dragging down the economy. The games of playing up ersatz blight and the way it halts, sometimes for decades, real ongoing development hurt everyone. I refer everybody again to statistics furnished by the Institute of Justice on this point, that eminent domain does not provide economic benefits, (op-ed piece, An Unnecessary Abuse, authored by Dick Carpenter, director of Strategic Research for the Institute for Justice, (January 15, 2008) and to the Wall Street Journal editorial Eminent Reality, January 30, 2008, wherein the Journal warns about the record of government putting its “hamfist” on the scales to promote projects that cannot proceed “without government interference” and in favor of the “most grandly conceived plans” which “are also often those most likely to fail.”

To my mind Wylde is wrong on both sides of the insufficiently considered “cost benefit” analysis she offers. If we are agreed that, as she suggests, “New York is facing some tough economic times” certainly now is not the time to drag things down further with eminent domain abuse and no-bid handouts to the likes of Bruce Ratner.

If anyone can possibly doubt that eminent domain in New York is accompanied by huge misdirections of public resources then we should move on to the subject of the Nets arena and Assemblyman Richard Brodsky’s report.- See “Thursday” below.

Wednesday Afternoon

After Senator Perkins’ eminent domain hearing there was hardly time to get to the oral argument, in the state lawsuit challenging the Atlantic Yards environmental review. For the most complete and best account of the oral argument see the Atlantic Yards Report article: In appeal of case challenging AY environmental review, some justices skeptical of state’s blight claim.

Once again we were considering a record of deceit, manipulation and contrivance in the service of bringing blight to our communities.

The oral argument dealt with the fashion in which ESDC engineered its arrival at its predetermined goal of finding blight for the peculiar project footprint the developer originally drew. Norman Oder’s Atlantic Yards Report will give a better feeling for the technicality of some of the discussion. I couldn’t always see which justices were speaking but his account breaks it down, complete with information about political background of the justices. In all, you will probably get a more tempered sense of cautiousness from the meticulousness of his writing than from my own.

There is no assurance that, as I hope, the judicial review of this case will dispose of things based on the real reality of what is going on. I have written previously about the difficulty of judicial review of politically-wired deals: Wired Deals. Still. There are glimmers that this time the facts might trump the fictions in this case.

I heard reality in the room.

At the oral argument, Jeff Baker, the attorney for the plaintiffs, including Goldstein, stated that “the project sponsors predetermined the site, with no mention of blight, and the Blight Study never looked beyond the project footprint.”

Looking at the question of the predetermined outcome of the “analysis” undertaken, I heard one Justice ask ESDC’s attorney whether consultant AKRF has ever studied an area that it didn’t consider blighted. He said he knew a lot about this because he had just written about AKRF and Columbia University. (In both the Columbia University and Atlantic Yards situations AKRF worked for both the private entity and theoretically also for the government, raising all sorts of accountability and conflict of interest issues.)

I heard justices suggest that the procedures ESDC was arguing for would mean that ESDC would always, per se, have the right to build whatever it wanted to (presumably meaning absolutely unfettered with no check or balance).

I heard the judicial question asked of the ESDC attorney, Philip Karmel, “You don’t seriously argue that the blight study is solely an objective conclusion?” “Certainly not wholly objective?”
Everyone clearly acknowledged there was new multi-million dollar development in the form of recently rehabilitated buildings within the footprint that is being condemned as blighted.

The justices asked questions about the new development within the site. They asked how new it was. The ESDC attorney awkwardly acknowledged that it was very new. (It is exceedingly reasonable to believe that the fact of new development going on in the area is what made land grabbing so attractive to Ratner in drawing his lines around the land he wanted. He knew about the development as he was in negotiation with those local developers responsible.)

The justices asked whether other development was planned in addition to the new development going on. Such was the case. (In fact, one of the developers with such plans was in the room listening to the oral argument.) The justices asked whether it wasn’t reasonable to conclude that such development would continue. Whether, when development occurs, isn’t momentum an important factor? Whether there was a concept of needing to give neighborhoods a “fair chance” to develop? Whether, in essence the area was not being given a fair chance to succeed?

Karmel, the attorney for ESDC, acknowledged that the area was improving. Having acknowledged the area was improving, Karmel, asserted, (incorrectly?) that improvement was irrelevant because when ESDC wanted to condemn property, ESDC did not have a burden of proof to show that without ESDC’s “intervention” the area would remain the same. (As Nick Sprayregen testified at the Senator Perkins’ hearing there is a lot to be said about the lack of due process when one private owner goes after the forced transfer of another’s property through eminent domain abuse. That includes all sorts of burden of proof issues and the ability to obtain and present evidence.)

There seemed to be a sense that new development might be a particularly important evidentiary factor in a “poor neighborhood.” People are generally conscious that, as discussed at the federal level in the Kelo case, poorer neighborhoods have a special vulnerability when private developers want to come in and seize property. When it comes to developing “unslumming” neighborhoods, I have referred to this as knocking the less advantaged off the up-economic escalator. Quoting the justices in the room Wednesday: “If there’s all of a sudden new development in a poor neighborhood, why would we characterize it as blighted?”

In all, it seemed quite clearly understood by everyone, ESDC’s counsel included, that there were buildings within the footprint that were definitely NOT blighted as exemplified particularly by the recent multi-million dollar gut-rehabilitation co-op conversations. Further, it seemed quite well understood by all and sundry that the peculiar shape of the footprint had been drawn to exclude equivalent buildings in essentially the same vicinity that were also not blighted. (Everyone should be conscious of the multiple exceedingly tangled relationships between Forest City Ratner, Boymelgreen, ESDC and the state. I therefore expect that with proper discovery much more will come out about exactly what was likely to have contributed to the footprint’s peculiar shape.)

The question everyone was clearly grappling with was whether ESDC could bless the drawing of the zig-zagging lines wherever and with whatever zigs and zags the developer wanted and thereby allow the developer to take whatever non-blighted property the developer wanted based on the fact that some blighted property was circumstantially included in the lasso. How much property within the lasso was actually blighted was not clear: It seemed ESDC, through AKRF, had only inchoate facts to offer, without analysis. Perhaps the only thing everyone seems to clearly accept is that if the rail yards themselves were built upon they would have a less negative or blighting effect on the community.

That was the reality I heard in the room.

From reality we go to magic words. Can magic words transmute reality? At one point I heard a justice putting forth in an almost prompting fashion words for Mr. Karmel It seemed to me he was halting and pausing as if giving Mr. Karmel a chance to jump in and take over the recitation of the very recognizable incantatory words. It seemed like a chance Mr. Karmel was, for some reason, reluctant and concerned about taking. I can’t for a moment believe that Karmel didn’t know the magic incantation.

The justice’s phrasing of the magic incantation went something like this:

“You are saying.. . .that though there are these new buildings within the footprint . . .. that are not blighted . .. that is not dispositive. . .. because within your discretion what you did is not arbitrary . . .because you looked at it . . .took it into account .considered .the new buildings . ..exercised your judgment and found it all to be blighted.”

I wasn’t sure why the justice offered the incantatory words. Perhaps Karmel didn’t quickly take up the incantation because he too wasn’t sure why the justice was giving him the chance to recite the magic words. He may have been fearful of signing on to the wrong choice. One possibility is that the justice was holding out the words to Karmel as the sole magic he needed, an incantation to transmute and make as good as gold everything ESDC had done, notwithstanding perverse motivations. On the other hand, could it have been offered as a trap, to test whether ESDC has the arrogance to believe that whatever they do and however improperly motivated it is, a simple magic incantation changes fact to fiction, replaces real motives with the ostensible ones that are legally permitted. Taking property for another’s private use should never be as easy as just saying a few magic words. Was it a test to find out whether ESDC thinks, as they appear to, that they are so mightily empowered?

“Arbitrary” was a key word in the discussions; whether or not the actions and determinations of ESDC were “arbitrary.” In the context of the discussions that day, it is the way to take away ESDC’s unfettered power to privilege Bruce Ratner over everyone else. ESDC’s power to give special benefits to big developer and subsidy collector Bruce Ratner at the expense of typical private property owners in the community fails if ESDC’s actions are deemed “arbitrary.” Technically, “arbitrary”is a correct word to be using from a legal point of view. It is even more or less correct from the standpoint of proper usage of English. I have problems with the word’s use however. I have less trouble with a phrase that is sometimes looked on as its equivalent, “abuse of discretion.”

Here are definitions for arbitrary from Merriam-Webster's Dictionary of Law: Function: adjective
1 : depending on individual discretion (as of a judge)and not fixed by standards, rules, or law
2 a : not restrained or limited in the exercise of power b : marked by or resulting from the unrestrained exercise of power
3 a : based on preference, bias, prejudice, or convenience rather than on reason or fact b : existing or coming about seemingly at random or by chance or as an unreasonable act of individual will without regard for facts or applicablelaw —often used in the phrase arbitrary and capricious

With respect to more common language use try the American Heritage Dictionary:, adj.
1.) Determined by chance, whim, or impulse, and not by necessity, reason, or principle: stopped at the first motel we passed, an arbitrary choice.
2.) Based on or subject to individual judgment or preference: The diet imposes overall calorie limits, but daily menus are arbitrary.
3.) Established by a court or judge rather than by a specific law or statute: an arbitrary penalty. Not limited by law; despotic: the arbitrary rule of a dictator.

Clearly, picking up the phrases from the above, the concept of ESDC’s behavior here is that its actions are “despotic” and “not limited by law,” nor “fixed by standards,” proper “rules or law,” that there is an “unrestrained exercise of power.” Clearly the ESDC actions are “based on preference, bias, prejudice,” and they may be viewed as for “convenience rather than on reason or fact.” Nevertheless, what echos in my head is the first common English usage in the American Heritage Dictionary cited above: “Determined by chance, whim, or impulse, and not by necessity, reason, or principle” or what Wikipedia sets forth to explain what “arbitrary” is: “Arbitrary is a term given to choices and actions which are considered to be done not by means of any underlying principle or logic, but by whim or some decidedly illogical formula.”

ESDC’s actions are not by chance or whim. ESDC is quite directed in fulfilling their predetermined goal of sanctioning the footprint drawn by the developer. Finding blight is entirely the logical subservient to that goal. Serving the developer’s goal of taking property is the “necessity, reason, and principle” that drives ESDC and the underlying logic guiding their actions. ESDC’s actions can only be considered to be illogical if you change the principles that should be applied: ESDC’s actions are only illogical if we say that it is required of ESDC to be concerned with what and what is not really and truly blight.

So I prefer “abuse of discretion.” In this case, I think that abuse amounts to the level of an abuse of trust which I consider, something called “bad faith.” No one talks about the “bad faith” (still another legal term of art) when they talk about the issues here. That is only because it is associated with a higher required standard of proof if it is to be judicially recognized. But doesn’t everyone sense the faith is bad?

At the end of the oral argument the subject switched over from the fictive blight ESDC was promoting to sanction the developer’s chosen footprint to the real blight with which ESDC and Forest City Ratner are now besetting the community. One of the justices asked whether it was viewed that a blight designation becomes a self-fulfilling prophecy.” No doubt, was the answer. The justice amplified that this was because development thereupon stops? Answer: Yes. Because then development would be “a foolish undertaking” concluded the justice emphasizing the point.

The way that “designation of blight” in a community converts development into “a foolish undertaking” is sometimes referred to as “planner’s blight.” This planner’s blight is exactly what City Planning Commissioner Irwin Cantor expressed concerns about with respect to the exercise of eminent domain in the expansion plan proposed by Columbia University.

As I said at the outset, the theme for this week in these events is about deceit, manipulation and contrivance in the service of bringing blight to our communities.

Wednesday Evening

Wednesday evening I went to an excellent panel discussion at the Municipal Art Society about the, I think, not-so-excellent plans for the redevelopment of Coney Island.

Afterward the subject of eminent domain came up. The City apparently does not want to consider the use of eminent domain to create a Coney Island public park and preserve its history as an amusement park. I was told the City prefers “friendly negotiations” with the developer. If the City considers that the desirability of eminent domain is inverse to the actual degree of public benefit and if the common denominator governing whether eminent domain should or should not be used is `friendliness’ to developers, we clearly have a problem.

In my conversation, I mentioned the far less appropriate ways in which eminent domain was being used. I didn’t mention Atlantic Yards but the city development officials I was talking to apparently assumed I was referring to Atlantic Yards so I was immediately informed that Atlantic Yards was “not a city project.” That made me think about what I have written concerning Atlantic Yards being a political hot potato.

As I pursued the correction that Atlantic Yards most certainly ought to be viewed as a city project with city blessing, city funds and city agreements respecting funding and development, I learned that even city development officials can be misinformed about the fact that Atlantic Yards is not all or mostly above the Vanderbilt rail yards. I am assuming that it is an example of even informed professionals picking up the kind of misinformation the New York Times has been printing when they do not know that 60% of the project is on land not over the rail yards, where eminent domain abuse comes into play as an operative feature. (Admittedly, this is not a project on which these particular individuals are working.)

I will have to return to write more about the Coney Island plans and discussion when I have more time.


Another day, another hearing and back to the subject of contrivance and manipulation. Are these public officials who administer eminent domain for the benefit of the likes of Bruce Ratner and Columbia University above deceit, manipulation and contrivance at the expense of the public?

Not according to the report issued by Assemblyman Richard Brodsky (See: Wednesday, September 17, 2008 In Brodsky’s report slamming Yankee Stadium deal, major questions implied about Atlantic Yards arena plan) Thursday there was more testimony about this on the federal level. Congressman Dennis Kucinich's subcommittee is holding hearings called “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” (See: Wednesday, September 10, 2008 Kucinich's Subcommittee to look at stadium and AY arena deals) where Assemblyman Brodsky was the only New Yorker testifying because those involved in setting up these tax-free bond transactions don’t want to testify about them (See:Wednesday, September 17, 2008 At Congressional hearing tomorrow, Brodsky will be the sole New Yorker)

One more time I have to direct you to Atlantic Yards Report for surpassingly excellent and extensive coverage of this hearing: Friday, September 19, 2008
At Congressional hearing, criticism of Yankees deal and stadium funding; IRS says final regulation coming soon.

The Atlantic Yards Report coverage addresses itself to the speculation that the tax-exempt bonds that have been issued for Yankee Stadium (and certainly any similar bonds) may be declared taxable based on the misrepresentations made to the IRS in obtaining private letter rulings from the IRS. Not spelled out is that the bonds would almost certainly be declared taxable retroactively to the date of issuance, which would mean that taxes would be owed by bond holders not only going forward but for past years as well. The IRS ruling would be invalidated because of the contrived fictions of city government officials. Accordingly, it is envisioned that the city would be called upon to step in with payments to financially compensate the aggrieved bond holders. Bond counsel on the transactions are probably predicting that the IRS would seek to negotiate a compromise. There is a persuasive argument that IRS might just want to collect money straight from the city rather than having to chase down and reopen the tax returns of multiple bond holders. Maximum liability to the city might be somewhat circumscribed to the extent that the bonds can be made subject to an early call, with or without paying an early call premium. Though the payments required from the city could be very substantial; this is not to say that they wouldn’t be proportionate to the arrogant carefreeness with which officials were willing to contrive fictive realities at the expense of the public.

Noticing New York’s Testimony at Senator Perkins Hearing

Here is Noticing new York’s testimony at Senator Perkins’ hearing. Delivering it I extemporized by adding to what I had written, reference to my long career in government and that, until recently, I was running the legal department at the state finance authorities. Also, I pointed out that the Institute of Justice recommended a simple reform of eminent domain, prohibition of eminent domain to force private-to-private party transfers, and that if that were done my list of fourteen suggested reforms would get a lot shorter.

* * * *

September 17, 2008

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

Re: September 17, 2008- Hearing on Use of Eminent Domain for Columbia University Expansion

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.

I offer this testimony calling for eminent domain reform in New York as an attorney experienced in real estate and as an urban planner.

Eminent domain reform is sorely needed in New York State. I have written about how eminent domain driven by private entities wishing to acquire property at the expense of their neighbors has become an industry in this State. I refer you to my op-ed piece in the New York Sun, “Columbia Pulls a Kelo” (December 20, 2007). Attached to my testimony is a list of 14 recommended reforms. Today, I would like to testify about just two of them.

1. We need to prohibit the use of so-called gag order, non-disclosure, and tout-for-the-project agreements. This hearing is being held in order to find out what is going on in the world of New York eminent domain. Well, you are faced with a problem in that regard. Things are not like they were when condemnations were truly being done by the government and for a governmentally determined public purposes. In the new private-sector-propelled world of eminent domain, a new form of agreement has emerged. Private entities like Forest City Ratner and Columbia University, while obtaining property with the threat of eminent domain, now also obtain non-disclosure agreements known in the vernacular as “gag order” agreements. These agreements prohibit those selling property as they succumb to the eminent domain threat from criticizing the project and process. These agreements have been increasingly refined to disrupt the transparency of what should be a public process by including provisions that require the signers to speak in favor of the project, not come forward with facts for the public record and may designate people to speak for the signers of the agreements who will tout the project irrespective of what the signer would otherwise have said or testified about the project. In the old days when eminent domain was conducted through a government negotiation process had the government sought to get such gag orders they would more likely have been held to be unconstitutional and/or void as against public policy precisely because they would have been using government power to silence free speech and obscure a government process.

Politicians, like City Council Speaker Quinn, who support the use of eminent domain to force private-to-private owner transfers in the name of economic development say that eminent domain “should be used carefully and cautiously and it should only be used when there is an overriding greater good in the interest of the city.” But scrutiny in the service of such care and caution is not possible when the transparency of the process and public oversight are prevented through the use of gag orders.

2. Private sector-driven condemnations are an abuse, but the abuse would be a lot less enticing to abusers if those whose property is condemned were fully compensated, including for all the transaction costs that are forced upon them. I am providing, as an attachment, testimony I gave at the recent ESDC hearing about Columbia’s use of eminent domain. Leaving the hearing I was approached by an attorney involved in the Columbia transactions who averred that condemnation is not an issue because the condemned are fully recompensed. Since he is wrong about this I wanted to address it here. Since the federal and state constitutions require “just”compensation, this matter, not yet addressed by the U.S. Supreme Court, goes to the heart of what is equitable, especially when one private owner is being burdened to benefit another.

Why so many condemned businesses don’t continue should be looked at. Here are just some of the ways that condemnees are not adequately compensated. There is no compensation for a business’s good will or its advantageously negotiated (cheap) leases. The following transaction costs are not generally reimbursed: brokerage and lawyer fees to acquire new property, costs of changing employees or changing arrangements with employees, skittishness and lost business opportunities such as contracts and leases due to condemnation-caused uncertainty, defense lawyers and expert fees if it is judicially determined that the pre-litigation offer was higher, all sorts of extra internal administration costs. There is inadequate or incomplete compensation for: fixtures and investments which become worthless because the value was tied to the particular property, and interest (only 6-9%) on money that is not awarded until perhaps a decade later because of litigation. There is no compensation for the losses caused by eminent domain uncertainty such as investments made misanticipating a condemnation that doesn’t happen, or doesn’t happen when expected, investments that are not made optimally because of uncertainty, or investments not made because of illiquidity or not knowing when
the balance of the condemnation award money will materialize.


Michael D. D. White

CC: Hon. David A. Paterson
Hon. Michael Bloomberg
Speaker, City Council, Christine Quinn



1. Restrict use of the threat of eminent domain.

2. Prohibit pre-existing relationships between private owners who will get benefit from condemnations and the government entities expected to carry them out and allow discovery in the courts about it.

3. Prohibit so called gag order, non-disclosure, and tout-for-the-project agreements.

4. Create protections against situations where developers are donating funds or otherwise benefitting politicians and public officials responsible for making decisions
about the contemplated forced transfers of land.

5. Reimburse all the transaction costs incurred by private owners confronted by any attempted use of eminent domain to transfer their property to another private owner.

6. Require full-value compensation for those whose property is taken away.

7. Require that realization of speculative increases in value due to up-zonings be paid to the original owner.

8. Prohibit use of eminent domain in neighborhoods that are already naturally “unslumming” (even though they may still be poor).

9. At a minimum require a rigorous open-bid process.

10. Make eminent domain pursued through misrepresentations actionable fraud.

11. Require urban renewal plans to be renewed in order to maintain effectiveness.

12. Change the operative presumptions for court review of public agency actions.

13. Eliminate backdoor sidestepping of process and protections.

14. Prohibit use of eminent domain for private commercial development where the public doesn’t concur with the purported “public good.”


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