Eminent Domain and Atlantic Yards: A Reprise

Last year, the Second Circuit faced a constitutional challenge to condemnation of private land for purposes of building the Atlantic Yards Arena Redevelopment Project. In that case, the court held that the federal constitution did not prevent condemnation, because the proposed project was rationally related to several classic public uses, including relief of blight and provision of a sporting arena. Goldstein v. Pataki, 516 F.3d 50. At the end of February, however, the First Department faced another challenge to the Atlantic Yards condemnation ' this one a statutory challenge to the authority of the Empire State Development Corporation (ESDC) to condemn some of the private land. In Matter of Don't Destroy (Brooklyn) v. Urban Development Corp., the First Department rejected that challenge as well, suggesting in effect that the statutory power granted to the ESDC is co-extensive with its constitutional power.

The Project

The Atlantic Yards project is designed to sit atop the rail yards adjacent to the Long Island Railroad's Atlantic Terminal, and is to encompass a total of 22 acres, including blocks adjacent to the rail yards. Included in the project will be 16 high-rise structures and a sports arena. The mixed-use design includes 6,430 residential units, together with significant commercial space.

Although Forest City Ratner, the developer of the project, purchased some of the land proposed for the project, the ESDC sought to acquire the remainder of the land by condemnation. Much of the land has been designated, since 1968, as the Atlantic Terminal Urban Renewal Area (ATURA). There is little dispute that the ATURA land is blighted, and little opposition to condemnation of that land, much of which sits atop the subgrade rail yards. The principal dispute is over three blocks not within ATURA. Many of the owners of this land contend that their parcels are not blighted, and have opposed condemnation.

The Role of the ESDC

The Urban Development Corporation Act gives the Urban Development Corporation condemnation authority, but also requires that the Corporation make specified findings before undertaking the “acquisition, construction, reconstruction, rehabilitation or improvement of a project.” Unconsolidated Laws, ch. 252, sec. 10. In this case, the Urban Development Corporation, doing business as ESDC, determined that the Atlantic Yards project qualifies as a “land use improvement project” and as a “civic project.” Before embarking on a land use improvement project, the ESDC must find, and did find, the project “is located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area.” Before embarking on a “civic project,” the ESDC must find, and did find, a need for an “educational, cultural, recreational, community, municipal, public service or other civic facility to be included in the project.” In this action, a community group challenged both of those findings, and therefore the validity of the ESDC's condemnation. (The group also challenged the environmental review process surrounding the project, in part due to failure to address the risk of terrorist attack, but that challenge, which proved unsuccessful, is beyond the scope of this article).

The gist of petitioner's challenge to condemnation of the land outside the original ATURA is that those blocks were not and are not located in a “substandard or insanitary area,” and were not in danger of becoming such an area. As a result, petitioners contended, the condemnation exceeded ESDC's statutory authority.

Appellate Division Response

In response, however, the Appellate Division majority concluded that the ESDC's determination that the area might be or become “substandard and insanitary” was entitled to deference. The court concluded that the same reasons the Supreme Court has offered for holding that legislative determinations of blight are entitled to deference when landowners raise federal constitutional claims should also apply when landowners raise a challenge to the statutory predicate for the condemnation. The court held that the UDCA was meant to be construed liberally “so as not to unduly constrict the governmental prerogative to take measures directed at improving the urban environment.” And the court also rejected the argument that determinations made by a public benefit corporation are entitled to less deference than determinations made by other governmental bodies.

Petitioners had conceded that much of the ATURA was blighted, and that condemnation of that area was within the ESDC's authority. But petitioners contended that the ESDC had used the blight in the ATURA as an excuse to condemn non-blighted properties in the area contiguous to the ATURA. The court's response was two-fold. First, as noted, the court concluded that deference to the ESDC's agency was warranted, and so long as there is a “difference of opinion” the agency's position should prevail. Second, even if some of the area was not blighted, the ESDC was entitled to condemn contiguous areas that were not blighted. The court relied on Kaskel v. Impellitteri, 306 NY 73, in which the Court of Appeals upheld the condemnation of part of the Columbus Circle area to permit construction of the now-defunct Coliseum. In that case, the court wrote:

It is not seriously contended by anyone that ' every single building [within the are condemned] must be below civilized standards. The statute (and the Constitution), like other similar laws, contemplates that clearing and redevelopment will be of an entire area, not of a separate parcel, and surely, such statutes would not be very useful if limited to areas where every single building is substandard.” 306 NY at 79-80.

That language, in the Appellate Division's view, was equally applicable to the community group's challenge to the Atlantic Yards condemnation. The court did not indicate whether a government entity could use blight on a single block as a justification to condemn a square mile surrounding the blighted block. On the principle of deference embraced by the court, judicial scrutiny might be inappropriate even in that case. And the court noted that “there has been no case in which the condition of an area has been deemed sufficiently at odds with an agency blight finding to raise a factual issue as to whether the agency exceeded its authority in making the finding.” Even Justice Catterson, who rejected the motion that “a perfunctory 'blight' study performed years after the conception of a vast development project should serve as the rational basis for a determination that a neighborhood is indeed blighted,” nevertheless concurred in result, emphasizing that he could not conclude, as a matter of law, that the ESDC did not have sufficient evidence to find “blight.”

In light of Don't Destroy (Brooklyn), then, any group or individual that challenges a blight-based condemnation faces a nearly insurmountable burden.

Stewart E. Sterk is Editor-in-Chief of this newsletter.

Last year, the Second Circuit faced a constitutional challenge to condemnation of private land for purposes of building the Atlantic Yards Arena Redevelopment Project. In that case, the court held that the federal constitution did not prevent condemnation, because the proposed project was rationally related to several classic public uses, including relief of blight and provision of a sporting arena. Goldstein v. Pataki , 516 F.3d 50. At the end of February, however, the First Department faced another challenge to the Atlantic Yards condemnation ' this one a statutory challenge to the authority of the Empire State Development Corporation (ESDC) to condemn some of the private land. In Matter of Don't Destroy (Brooklyn) v. Urban Development Corp., the First Department rejected that challenge as well, suggesting in effect that the statutory power granted to the ESDC is co-extensive with its constitutional power.

The Project

The Atlantic Yards project is designed to sit atop the rail yards adjacent to the Long Island Railroad's Atlantic Terminal, and is to encompass a total of 22 acres, including blocks adjacent to the rail yards. Included in the project will be 16 high-rise structures and a sports arena. The mixed-use design includes 6,430 residential units, together with significant commercial space.

Although Forest City Ratner, the developer of the project, purchased some of the land proposed for the project, the ESDC sought to acquire the remainder of the land by condemnation. Much of the land has been designated, since 1968, as the Atlantic Terminal Urban Renewal Area (ATURA). There is little dispute that the ATURA land is blighted, and little opposition to condemnation of that land, much of which sits atop the subgrade rail yards. The principal dispute is over three blocks not within ATURA. Many of the owners of this land contend that their parcels are not blighted, and have opposed condemnation.

The Role of the ESDC

The Urban Development Corporation Act gives the Urban Development Corporation condemnation authority, but also requires that the Corporation make specified findings before undertaking the “acquisition, construction, reconstruction, rehabilitation or improvement of a project.” Unconsolidated Laws, ch. 252, sec. 10. In this case, the Urban Development Corporation, doing business as ESDC, determined that the Atlantic Yards project qualifies as a “land use improvement project” and as a “civic project.” Before embarking on a land use improvement project, the ESDC must find, and did find, the project “is located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area.” Before embarking on a “civic project,” the ESDC must find, and did find, a need for an “educational, cultural, recreational, community, municipal, public service or other civic facility to be included in the project.” In this action, a community group challenged both of those findings, and therefore the validity of the ESDC's condemnation. (The group also challenged the environmental review process surrounding the project, in part due to failure to address the risk of terrorist attack, but that challenge, which proved unsuccessful, is beyond the scope of this article).

The gist of petitioner's challenge to condemnation of the land outside the original ATURA is that those blocks were not and are not located in a “substandard or insanitary area,” and were not in danger of becoming such an area. As a result, petitioners contended, the condemnation exceeded ESDC's statutory authority.

Appellate Division Response

In response, however, the Appellate Division majority concluded that the ESDC's determination that the area might be or become “substandard and insanitary” was entitled to deference. The court concluded that the same reasons the Supreme Court has offered for holding that legislative determinations of blight are entitled to deference when landowners raise federal constitutional claims should also apply when landowners raise a challenge to the statutory predicate for the condemnation. The court held that the UDCA was meant to be construed liberally “so as not to unduly constrict the governmental prerogative to take measures directed at improving the urban environment.” And the court also rejected the argument that determinations made by a public benefit corporation are entitled to less deference than determinations made by other governmental bodies.

Petitioners had conceded that much of the ATURA was blighted, and that condemnation of that area was within the ESDC's authority. But petitioners contended that the ESDC had used the blight in the ATURA as an excuse to condemn non-blighted properties in the area contiguous to the ATURA. The court's response was two-fold. First, as noted, the court concluded that deference to the ESDC's agency was warranted, and so long as there is a “difference of opinion” the agency's position should prevail. Second, even if some of the area was not blighted, the ESDC was entitled to condemn contiguous areas that were not blighted. The court relied on Kaskel v. Impellitteri , 306 NY 73, in which the Court of Appeals upheld the condemnation of part of the Columbus Circle area to permit construction of the now-defunct Coliseum. In that case, the court wrote:

It is not seriously contended by anyone that ' every single building [within the are condemned] must be below civilized standards. The statute (and the Constitution), like other similar laws, contemplates that clearing and redevelopment will be of an entire area, not of a separate parcel, and surely, such statutes would not be very useful if limited to areas where every single building is substandard.” 306 NY at 79-80.

That language, in the Appellate Division's view, was equally applicable to the community group's challenge to the Atlantic Yards condemnation. The court did not indicate whether a government entity could use blight on a single block as a justification to condemn a square mile surrounding the blighted block. On the principle of deference embraced by the court, judicial scrutiny might be inappropriate even in that case. And the court noted that “there has been no case in which the condition of an area has been deemed sufficiently at odds with an agency blight finding to raise a factual issue as to whether the agency exceeded its authority in making the finding.” Even Justice Catterson, who rejected the motion that “a perfunctory 'blight' study performed years after the conception of a vast development project should serve as the rational basis for a determination that a neighborhood is indeed blighted,” nevertheless concurred in result, emphasizing that he could not conclude, as a matter of law, that the ESDC did not have sufficient evidence to find “blight.”

In light of Don't Destroy (Brooklyn), then, any group or individual that challenges a blight-based condemnation faces a nearly insurmountable burden.

Stewart E. Sterk is Editor-in-Chief of this newsletter.