Jack Peters

January 22, 2010

Over the past two months, two New York appellate courts have rendered high-profile—and divergent—decisions about when a state agency may clear an allegedly blighted neighborhood for the benefit of a private party.

On November 24, the Court of Appeals, which is New York's highest court, rendered the first decision, Matter of Goldstein v. New York State Urban Development Corp., which concerned the Atlantic Yards, a planned 22-acre Brooklyn development that would include multiple residential buildings and new stadium for the New Jersey Nets. The case arose after the Empire State Development Corporation (ESDC), which is an independent New York State agency that has the power of eminent domain, ruled that the neighborhood where developers planned to build the Atlantic Yards was blighted, which allowed EDSC to condemn it. Several residents sued to prevent the condemnation, arguing both that the use of eminent domain did not serve a public use and that ESDC had unfairly ruled the neighborhood blighted.

The Court rejected both claims. The Court first dismissed the public-use argument, noting that since Matter of New York City Housing Authority v. Muller, 1 N.E.2d 153 (N.Y. 1936), the clearing of a blighted neighborhood has been recognized as a public use under the New York Constitution's takings clause. The court next rejected the argument that ESDC had unfairly ruled the neighborhood blighted, holding that courts may not replace their judgment as to blight for a state agency's, and a court can only prevent redevelopment if "it would be irrational and baseless to call [the neighborhood] substandard or insanitary."

Nine days later, on December 3, the Appellate Division, First Department, one of New York's intermediate courts of appeal, rendered the second decision, Matter of Kaur v. New York State Urban Development Corp., an emphatic opinion concerning Columbia University's planned expansion into the Manhattanville neighborhood of Harlem. Columbia began purchasing property in Manhattanville in 2002, with ESDC's knowledge, and with the intent to redevelop the property. Over the next six years, Columbia continued to acquire property and worked with ESDC to formulate a plan to redevelop the 17-acre area, including commissioning several studies to determine whether the area was blighted. In an earlier ruling, the Appellate Division held that those studies were biased, forcing ESDC to commission a new study, which reached the same conclusion, after which the ESDC ruled the area blighted.

Several landowners in the area challenged the ESDC's ruling in the Appellate Division, arguing that there was no public use and that the area was not, in fact, blighted. The divided court agreed, three judges to two, and thoroughly excoriated the ESDC, going so far as to call the ESDC's blight ruling "mere sophistry," little more than a front to transfer private property to Columbia.

The court explained this denunciation in its two principal holdings: First, the court held that it is not a public use to condemn property and then transfer it to a private educational institution, such as Columbia. The court rejected the argument that Columbia's expansion served the public use of education, instead characterizing the expansion as benefitting a private, tax-exempt institution rather than the public.

Second, the court held that ESDC's blight ruling was meritless and biased, as the ruling was based on a 2008 study, at which time Columbia already owned a significant portion of the allegedly blighted property in the neighborhood. The court reasoned that it is unfair to call a neighborhood blighted when one owner has been holding a significant portion of the property in the neighborhood unused for several years, thus allowing the property to deteriorate, and that same owner will be the beneficiary of the use of eminent domain, as is the case for Columbia.

The Appellate Division's decision stands in stark contrast to the decision of the Court of Appeals, with the Appellate Division seemingly imposing its standard of blight onto ESDC, rather than using the Court of Appeals' standard, that a court may only prevent redevelopment if "it would be irrational and baseless to call it substandard or insanitary." Thus, unsurprisingly, ESDC has already appealed to the Court of Appeals as of right—as a party may do when there are two or more dissenting Appellate Division judges, or the holding affects the construction of a state constitutional provision—and, given the divergent outcomes of these two cases, it seems likely that the Court of Appeals will reverse and maintain its broad definition of blight.

New York is one of only seven states whose legislatures did not tighten the use of eminent domain after the Supreme Court's decision Kelo v. City of New London, 545 U.S. 469 (2005), which expanded the meaning of public use.

Sources:

Matter of Goldstein v. New York State Urban Development Corp., No. 178, 2009 N.Y. LEXIS 4090 (November 24, 2009).

Matter of Kaur v. New York State Urban Development Corp., No. 777778, 2009 N.Y. App. Div. LEXIS 8799 (December 3, 2009).

N.Y. Const. art I, § 7.

Terry Pristin, Lessons on Limits of Eminent Domain at Columbia, N.Y. Times, January 20, 2010, at B6.

Charles V. Bagli, Ruling Lets Atlantic Yards Seize Land, N.Y. Times, November 25, 2009, at A1.

Kim Kirschenbaum, Senator Perkins Calls for Eminent Domain Reform, Columbia Spectator, January 19, 2010, available at http://www.columbiaspectator.com/2010/01/19/senator-perkins-calls-eminent-domain-reform.

Kim Kirschenbaum, State Appeals Anti-Eminent Domain Ruling, Columbia Spectator, January 19, 2010, available at http://www.columbiaspectator.com/2010/01/19/state-appeals-anti-eminent-domain-ruling.

Jacob Sullum, Big Blighters: How Developers Use "Blight" as a Pretext to Get the Land They Covet, Reason Foundation, December 9, 2009, http://reason.org/news/show/big-blighters.