A New York appellate court last week harshly rejected the state’s effort to take property from businesses in upper Manhattan and give it to Columbia University for its campus expansion, calling it a “scheme” hatched by the university and the state and labeling their arguments in favor of invoking eminent domain, the government power to seize private property, as “mere sophistry.”
Yet for decades the state has confiscated private property on the slimmest of pretexts, often vastly underpaying, and in the process ruined businesses and lives. The Institute for Justice, an Arlington, Va.-based, public-interest group, recently called New York one of the worst eminent-domain abusers in the country.
Only the state Legislature can fix this problem with a new law to rein in these abuses.
The “takings clause” in the Fifth Amendment to the US Constitution allows governments to seize private property for the “public good.” That right was long exercised mostly when government needed land to build essential infrastructure projects like new roads. But in the 1950s and 1960s, a new kind of takings gathered momentum as states and cities began using eminent domain law to declare whole areas as blighted and in need of renewal.
New York City politicians and bureaucrats of that era worked furiously to remake the landscape by tossing people out of their homes and storefronts. In East Harlem alone, authorities took possession of and then razed 1,000 small businesses to make way for a dozen public-housing developments.
In most cases, these businesses received little in the way of compensation; the majority simply disappeared. In 1957, New York Times reporters went in search of those displaced by government. They found Ramon Caro, who’d operated a restaurant in East Harlem until the government seized it and was now working as a dishwasher because the amount awarded to him wasn’t enough to open a new restaurant.
Others with the wherewithal to reopen often faced steep drops in business. As Harry Schichman, who ran a repair shop in East Harlem that he relocated in 1957, told the Times after the move: “Carfare I don’t even make.”
Little has changed, especially in the case of businesses that don’t own their own locations. For them, eminent domain is often a death knell because the state pays little in takings cases. To take one recent example, many of the estimated 55 businesses the city displaced to make way for the New York Times tower on Eighth Avenue between 40th and 41st streets either never reopened or relocated and have since succumbed.
One casualty was a Theater District institution, Arnold Hatters, which had been in business for 44 years. After closing in June, owner Mark Rubin said in an online posting: “I’m positive if I was still in the old location, I’d be weathering this economy. Instead, with three kids and a mortgage, I’m writing the first resume of my life.”
Yet, in the case of the Times building, the government argued vigorously in court against claims by the merchants that their original locations were a boon to their businesses, even disputing claims of how much street traffic the merchants enjoyed.
Unfortunately, the problem has only gotten worse since the US Supreme Court’s 2005 ruling in the Kelo case that state and local governments have the right to seize property and transfer it to other private owners for the sake of new developments that potentially create jobs and more tax revenue. Politicians around the country have been invoking eminent domain as a way to clear land and build their favorite megaprojects.
In New York, Mayor Bloomberg has proposed displacing businesses in a 62-acre tract in Queens known as Willets Point in order to make way for a proposed retail and subsidized housing project. In Patchogue, authorities used the threat of eminent domain to persuade business- and residential-property owners to sell land on which a private developer then built subsidized housing. In Schenectady, officials began the condemnation process this summer for a historic building that government wants to seize and tear down to replace with a retail project.
Even the owners of property that Columbia is eyeing aren’t safe: Columbia will almost certainly appeal to New York’s highest court, which last month upheld the state’s right to take properties in Brooklyn for the Atlantic Yards project. Around the country, state legislators have responded to Kelo with legislation limiting what officials can do. New York’s is one of the few legislatures that hasn’t acted, but the need is clear.
Reform would include:
* A stricter definition of “blight” land so that officials can’t declare even a thriving neighborhood to be devastated just so they can seize property in it.
* A ban on government taking property from one private citizen to transfer to another private citizen for redevelopment merely to enhance the value of the land.
We should all shudder at the notion that state or local officials could one day seize our property simply because they think someone else could make it more valuable.
Steven Malanga is senior editor of the Manhattan Institute’s City Journal.