Eminent Domain Law

Atlantic Yards Condemnation Upheld

Matter of Goldstein v. New York State Urban Development Corp.

NYLJ 11/25/09, p. 25, col. 3

Court of Appeals

(4-2-1 decision; majority opinion by Chief Judge Lippman; concurring opinion by Read, J; dissenting opinion by Smith, J.)

In a challenge by landowners to condemnation of their property to permit construction of the Atlantic Yards project, landowners appealed from an Appellate Division order upholding the condemnation. The Court of Appeals affirmed, holding that whether the disputed property was subject to blight was a matter of legislative determination.

To develop the Atlantic Yards project in Brooklyn, the developer, Forest City Ratner, needed to acquire all of the land within the project's boundaries. Because not all landowners within those boundaries were willing to sell, the developer convinced a public entity, the Empire State Development Corp. (ESDC) to exercise its eminent domain power to acquire the necessary parcels. Some of the areas within the project boundaries were clearly blighted, but the parcels in the southern part of the project area did not suffer from the slum conditions that traditionally have justified exercise of the eminent domain power. Nevertheless, a study prepared for the ESDC indicated that the area as a whole was “characterized by blighted conditions.” Based on the study, the ESDC condemned the parcels owned by petitioner landowner, prompting them to bring this proceeding. The ESDC contended both that the challenge was time-barred and that the condemnation violated the state constitution because it was not for public use. The Appellate Division rejected ESDC's time-bar contention, but held that the blight findings were sufficient to justify the condemnation on the merits. Landowners appealed.

The Court of Appeals majority, like the Appellate Division, reached the merits and concluded that the ESDC's blight findings supported the condemnation determination. Although Chief Judge Lippman's opinion conceded that the conditions in the disputed area did not approach the dire circumstances of slum dwelling, and that there were reasonable grounds for difference about whether the area was blighted, the majority concluded that determining whether the project was a public undertaking should largely be a legislative, not judicial, undertaking. The majority did not foreclose a hypothetical case in which the legislative determination of blight might be baseless, but concluded that this was not such a case.

Judge Read, concurring for herself and Judge Pigott, would not have reached the merits, and would have concluded instead that the landowners' challenge was time-barred. Judge Smith, dissenting, argued that the whole point of the public use limitation is “to prevent takings even when a state agency deems them desirable. To let the agency itself determine when the public use requirement is satisfied is to make the agency a judge in its own cause.” Because he concluded that the area owned by landowners was not blighted, he would have held the exercise of eminent domain invalid under the state constitution.

COMMENT

(See article on page 1.)

Inadequate Basis for Blight

In re Kaur v. New York State Urban Development Corp.

NYLJ 12/4/09, p. 25, col. 3

AppDiv, First Dept.

(3-2 decision; Plurality opinion by Catterson, J; concurring opinion by Richter, J; dissenting opinion by Tom, J.)

In two proceedings, Manhattanville landowners challenged a determination that condemnation of their land for use by Columbia University constitutes a civic project pursuant to the Urban Development Corporation act. The Appellate Division annulled the determination, holding that there was inadequate evidence to establish the conclusion that the neighborhood was blighted, and that the applicable statute does not authorize condemnation to benefit a private university.

Beginning in 2004, Columbia officials met with officials of the Empire State Development Corporation (ESDC) to discuss Columbia's plan to expand into the Manhattanville area. Columbia began acquiring land in the area by purchase. Meanwhile, multiple consultants for the ESDC and other municipal entities concluded that the subject area was blighted. The ESDC ultimately authorized acquisition of property within the area, concluding that the project qualified both as a Land Use Improvement Project and a Civic Project. Landowners, owners of self-storage facilities and gasoline stations designated for condemnation, challenged these determinations.

In annulling the ESDC's determinations, the Appellate Division plurality concluded that the record did not support the conclusion that this project was designed to correct blighted conditions in the neighborhood. The plurality noted that the municipal entities did not endeavor to develop a comprehensive plan to address the alleged blight in the area; instead, the only plan considered was the plan to facilitate Columbia's expansion. Moreover, the plurality concluded that the evidence of blight relied upon by the ESDC ' particularly alleged “underutilization of land in the area ' was too subjective to constitute adequate support for a blight determination. The plurality then held that, in the absence of explicit legislative authorization, there was no basis for concluding that expansion of a private university constituted a civic purpose justifying exercise of the eminent domain power.

Justice Richter, concurring, relied on procedural defects in the approval process ' particularly ESDC's decision to close the agency record before disclosing potentially relevant documents to petitioners ' for her conclusion that ESDC's determination should be annulled. She would not have reached the statutory or constitutional issues discussed by the plurality. Justice Tom, dissenting for himself and Justice Renwick, concluded that ESDC's determination that providing educational facilities served a public purpose was not irrational. He also held that the agency's blight studies, while subject to different interpretations, were not irrational, and were entitled to deference by the court. As a result, he would have upheld ESDC's determination.

Compensation for Fixtures

Matter of West Bushwick Urban Renewal Area

NYLJ 10/28/09, p. 28, col. 1

AppDiv, Second Dept.

(Opinion by Dickerson, J.)

In a condemnation proceeding, landowners appealed from Supreme Court's grant of the city's motion to dismiss their claims for compensation for trade fixtures. The Appellate Division affirmed, holding that because the trade fixtures were inconsistent with the property's highest and best use, landowners were not entitled to compensation for the fixtures.

At the time the city instituted the condemnation proceeding, one landowner's parcel was improved with an industrial building, while the other parcel was vacant. The appraisers for each of the partes agreed that the highest and best use of the properties was for mixed commercial and residential use. If the properties were put to that highest and best use, certain fixtures located on the property ' largely gates, fencing, and paving ' would have to be removed. When landowners sought compensation for these trade fixtures, the city moved to dismiss. The city moved to dismiss, arguing that it would be illogical to award landowners compensation for fixtures that would have to be removed in order to achieve the highest and best use of the land. Supreme Court granted the city's motion, and landowners appealed.

In affirming, the Appellate Division held that when an improvement is inconsistent with the highest and best use of the land, the landowner is not entitled to compensation for the improvement. Only when the land and fixtures are owned by separate parties may the land and fixtures be valued separately.

Atlantic Yards Condemnation Upheld

Matter of Goldstein v. New York State Urban Development Corp.

NYLJ 11/25/09, p. 25, col. 3

Court of Appeals

(4-2-1 decision; majority opinion by Chief Judge Lippman; concurring opinion by Read, J; dissenting opinion by Smith, J.)

In a challenge by landowners to condemnation of their property to permit construction of the Atlantic Yards project, landowners appealed from an Appellate Division order upholding the condemnation. The Court of Appeals affirmed, holding that whether the disputed property was subject to blight was a matter of legislative determination.

To develop the Atlantic Yards project in Brooklyn, the developer, Forest City Ratner, needed to acquire all of the land within the project's boundaries. Because not all landowners within those boundaries were willing to sell, the developer convinced a public entity, the Empire State Development Corp. (ESDC) to exercise its eminent domain power to acquire the necessary parcels. Some of the areas within the project boundaries were clearly blighted, but the parcels in the southern part of the project area did not suffer from the slum conditions that traditionally have justified exercise of the eminent domain power. Nevertheless, a study prepared for the ESDC indicated that the area as a whole was “characterized by blighted conditions.” Based on the study, the ESDC condemned the parcels owned by petitioner landowner, prompting them to bring this proceeding. The ESDC contended both that the challenge was time-barred and that the condemnation violated the state constitution because it was not for public use. The Appellate Division rejected ESDC's time-bar contention, but held that the blight findings were sufficient to justify the condemnation on the merits. Landowners appealed.

The Court of Appeals majority, like the Appellate Division, reached the merits and concluded that the ESDC's blight findings supported the condemnation determination. Although Chief Judge Lippman's opinion conceded that the conditions in the disputed area did not approach the dire circumstances of slum dwelling, and that there were reasonable grounds for difference about whether the area was blighted, the majority concluded that determining whether the project was a public undertaking should largely be a legislative, not judicial, undertaking. The majority did not foreclose a hypothetical case in which the legislative determination of blight might be baseless, but concluded that this was not such a case.

Judge Read, concurring for herself and Judge Pigott, would not have reached the merits, and would have concluded instead that the landowners' challenge was time-barred. Judge Smith, dissenting, argued that the whole point of the public use limitation is “to prevent takings even when a state agency deems them desirable. To let the agency itself determine when the public use requirement is satisfied is to make the agency a judge in its own cause.” Because he concluded that the area owned by landowners was not blighted, he would have held the exercise of eminent domain invalid under the state constitution.

COMMENT

(See article on page 1.)

Inadequate Basis for Blight

In re Kaur v. New York State Urban Development Corp.

NYLJ 12/4/09, p. 25, col. 3

AppDiv, First Dept.

(3-2 decision; Plurality opinion by Catterson, J; concurring opinion by Richter, J; dissenting opinion by Tom, J.)

In two proceedings, Manhattanville landowners challenged a determination that condemnation of their land for use by Columbia University constitutes a civic project pursuant to the Urban Development Corporation act. The Appellate Division annulled the determination, holding that there was inadequate evidence to establish the conclusion that the neighborhood was blighted, and that the applicable statute does not authorize condemnation to benefit a private university.

Beginning in 2004, Columbia officials met with officials of the Empire State Development Corporation (ESDC) to discuss Columbia's plan to expand into the Manhattanville area. Columbia began acquiring land in the area by purchase. Meanwhile, multiple consultants for the ESDC and other municipal entities concluded that the subject area was blighted. The ESDC ultimately authorized acquisition of property within the area, concluding that the project qualified both as a Land Use Improvement Project and a Civic Project. Landowners, owners of self-storage facilities and gasoline stations designated for condemnation, challenged these determinations.

In annulling the ESDC's determinations, the Appellate Division plurality concluded that the record did not support the conclusion that this project was designed to correct blighted conditions in the neighborhood. The plurality noted that the municipal entities did not endeavor to develop a comprehensive plan to address the alleged blight in the area; instead, the only plan considered was the plan to facilitate Columbia's expansion. Moreover, the plurality concluded that the evidence of blight relied upon by the ESDC ' particularly alleged “underutilization of land in the area ' was too subjective to constitute adequate support for a blight determination. The plurality then held that, in the absence of explicit legislative authorization, there was no basis for concluding that expansion of a private university constituted a civic purpose justifying exercise of the eminent domain power.

Justice Richter, concurring, relied on procedural defects in the approval process ' particularly ESDC's decision to close the agency record before disclosing potentially relevant documents to petitioners ' for her conclusion that ESDC's determination should be annulled. She would not have reached the statutory or constitutional issues discussed by the plurality. Justice Tom, dissenting for himself and Justice Renwick, concluded that ESDC's determination that providing educational facilities served a public purpose was not irrational. He also held that the agency's blight studies, while subject to different interpretations, were not irrational, and were entitled to deference by the court. As a result, he would have upheld ESDC's determination.

Compensation for Fixtures

Matter of West Bushwick Urban Renewal Area

NYLJ 10/28/09, p. 28, col. 1

AppDiv, Second Dept.

(Opinion by Dickerson, J.)

In a condemnation proceeding, landowners appealed from Supreme Court's grant of the city's motion to dismiss their claims for compensation for trade fixtures. The Appellate Division affirmed, holding that because the trade fixtures were inconsistent with the property's highest and best use, landowners were not entitled to compensation for the fixtures.

At the time the city instituted the condemnation proceeding, one landowner's parcel was improved with an industrial building, while the other parcel was vacant. The appraisers for each of the partes agreed that the highest and best use of the properties was for mixed commercial and residential use. If the properties were put to that highest and best use, certain fixtures located on the property ' largely gates, fencing, and paving ' would have to be removed. When landowners sought compensation for these trade fixtures, the city moved to dismiss. The city moved to dismiss, arguing that it would be illogical to award landowners compensation for fixtures that would have to be removed in order to achieve the highest and best use of the land. Supreme Court granted the city's motion, and landowners appealed.

In affirming, the Appellate Division held that when an improvement is inconsistent with the highest and best use of the land, the landowner is not entitled to compensation for the improvement. Only when the land and fixtures are owned by separate parties may the land and fixtures be valued separately.