New York’s top court ruled this week that the state is within its right to seize privately held land required for the $4.9 billion Atlantic Yards project to proceed.
The Court of Appeals’ 6-1 decision found that the Empire State Development Corporation’s (ESDC) determination of blight in the project area is sound enough to allow taking the land, which is expected to be part of Forest City Ratner Companies’ massive 22-acre site that includes an arena for the New Jersey Nets basketball team.
In the case, the plaintiffs argued that the seizure of the land is unconstitutional, as it will only enrich the coffers of private interests as opposed to benefitting the general public, thought to be a prerequisite for eminent domain, the state’s use of its power to clear private land for a public purpose.
But the court ruled that the state constitution “accords government broad power to take and clear substandard and insanitary conditions for redevelopment.” Yes, Chief Judge Jonathan Lippman reasoned for the majority, conditions at the site do not approach the “dire circumstances” of urban slum. “We, however, have never required that a finding of blight by a legislatively designated public benefit corporation [ESDC] be based upon conditions replacing those to which the court and the constitutional convention responded in the midst of the Great Depression,” Lippman wrote in the Nov. 24 decision.
Moreover, Lippman ruled, it is not unconstitutional to seize land and build market rate housing and an arena, which the plaintiffs contend offers little public benefit. “While the creation of low income housing is a generally worthy objective, it is not constitutionally required as an element of a land use improvement project that does not entail substantial slum clearance,” he wrote. To hold otherwise would in many cases arbitrarily tether land use improvement to the creation of low rent housing.”
FCRC Chairman and CEO Bruce Ratner cheered the decision, calling the project “a significant public benefit for the people of Brooklyn and the entire city.”
Ratner said the hope is to have the entire project, which includes the basketball arena and 16 office and residential towers, complete in 10 years, but has admitted the job could take at least 25 years to be completed. In the modified general project plan approved in September, the ESDC approved Ratner’s acquisition of the eight-acre site above the railyards at the corner of Atlantic and Flatbush avenues, while the remaining 14 acres — where the majority of the below market rate housing and open space is contemplated — would be built eventually.
Ratner vowed construction activity on the yards will continue, with the intent that the struggling Nets will play ball in the Barclays Center in the 2011-2012 season. “Our commitment to the entire project is as strong today as when we started six years ago. Today, however, this project is even more important given the need for jobs and economic development,” Ratner said in a statement. The developer vowed construction activity on the yards will continue, with the intent that the Nets will play ball in the Barclays Center in the 2011-2012 season. If construction on the arena doesn’t begin by the year’s end, Ratner will lose out on $700 million of low cost tax free debt.
The project still requires financing, and Forest City plans to begin marketing roughly $700 million of bonds to fund the arena project next week. The ESDC told this paper that it has tentatively secured investment grade ratings for the bonds, and the agency in ongoing discussions with rating agencies and bond insurers. In addition to the investment grade rating, the agency said it anticipates there will be taxable bonds as well. ESDC spokesperson Warner Johnston said his agency is as “committed as ever” to seeing the completion of this project.
Ratner said the arena and larger development are expected to create 16,924 union construction jobs and over 8,000 permanent jobs, with tax revenues generated for the city and state during the construction period exceeding $240 million, and after construction reach approximately $70 million a year.
While the plaintiffs conceded that the decision was a gut punch to their chances of thwarting the project, their attorney said he will file a new lawsuit next week — one he expects will be a knockout punch.
Matt Brinckerhoff, the attorney for the tenants and homeowners, said the court based its decision on ESDC data from 2006 which has no bearing on the project as it stands today. Specifically, he said, the modified plan approved in September relies on subsidies that are uncertain; the railyard will now be diminished in capacity and not increased; and the Independent Budget Office revised analysis of the project found the project would cost the city $39.5 million more in spending over its first 30 years than it would generate in tax revenues.
The new suit will seek compel the ESDC to issue new or amended public use findings. “I believe my clients properties can’t be taken on the world that existed three years ago, it has to be based on present day reality.” Brinckerhoff said. “Whatever you think of the legitimacy of the decision, those facts no longer exist,” he said.
Develop Don’t Destroy Brooklyn spokesperson and lead plaintiff Daniel Goldstein said he remains confident. “Obviously, this is a big disappointment, but the fight is far from over,” he said, noting four outstanding lawsuits, three of which he said could foil the project outright. “We are going to make every attempt to stop the state from stealing our properties,” he said, calling the ESDC’s blight finding “a pretext for getting 22 acres in Ratner’s hands.”
In a dissent, Judge Robert Smith said the majority “is much too deferential to the self-serving determination by ESDC that petitioners live in a ‘blighted’ area, and are accordingly subject to having their homes seized and turned over to a private developer.”
“Under the 19th century understanding of public use, the taking at issue in this case would certainly not be permitted. It might be possible to debate whether a sports stadium open to the public is a ‘public use’ in the traditional sense, but the renting of commercial and residential space by a private developer clearly is not,” Smith wrote.