Taking private property to build an urban sports arena: a valid exercise of eminent domain powers?

• Author: D'Orazio, Giovanna

1. INTRODUCTION

   On January 21, 2004, real estate developer Bruce C. Ratner, together with several partners, purchased the New Jersey Nets basketball franchise for $300 million dollars. (1) Mr. Ratner, through his real estate development company, Forest City Ratner Companies, proposes to bring the New Jersey Nets to Brooklyn, New York. He is planning a $3.5 billion dollar development project to construct an 800,000 square foot basketball arena along with a commercial and residential complex in Brooklyn's Atlantic Yards. (2)

   This proposal has given rise to significant eminent domain issues because it requires the condemnation of private property to be used by a private party in a location that has been described as "the crossroad of three handsome neighborhoods where brownstones routinely sell for $1.5 million, restaurants long ago went gourmet, and affordable housing disappears at an alarming rate." (3) There has been significant public outcry against Mr. Ratner's proposal by Brooklyn residents who challenge the constitutionality of the proposed condemnations as being for private rather than public use and who do not want to see the character of their neighborhood changed and commercialized by this redevelopment project. (4)

   This article discusses the eminent domain issues arising from this proposal, with a focus on the law in New York. Part II presents an overview of eminent domain law in New York State including what meets the constitutional "public use" requirement. Other issues discussed in Part II include whether the Atlantic Yards area of Brooklyn would qualify as substandard such that this project would fall into the urban renewal context, in which case, the benefit that will accrue to the private real estate developer and sports franchise would be virtually irrelevant. Conversely, if the area is not substandard, it must be determined whether building an arena in Brooklyn serves some other valid public purpose dominant to the private benefit that would accrue. Part III compares the law of eminent domain in New York to that of other states and further evaluates the level of protection New York offers to property owners. Part IV discusses countervailing considerations including environmental conservation issues and an inquiry into the character of the neighborhood and aesthetics. Part V discusses possible remedies available to Brooklyn residents in opposing this proposal including statutory and constitutional challenges and related standing issues.

2. OVERVIEW: THE LAW OF EMINENT DOMAIN IN NEW YORK STATE

   1. The Public Use Requirement

      The New York State Constitution includes a takings clause providing that "[p]rivate property shall not be taken for public use without just compensation." (5) New York courts have broadly held that the power of eminent domain applies to the government's purpose of protecting the "health, safety, and general welfare of the public," (6) and accordingly, courts have held that a host of uses of private property are "public uses." (7) Courts also defer to the legislature and to state and municipal agencies in determining what constitutes a public use. (8)

      1. Public Use vs. Public Purpose

         Further broadening the concept of public use in New York, courts and the legislature do not seem to make a distinction between public use and public purpose or benefit despite the plain language of the New York State Constitution which specifies public use alone. (9) Section 204 of the New York Eminent Domain Procedure Law requires the condemnor of private property to specify "the public use, benefit or purpose to be served by the proposed public project." (10) Moreover, most New York Court of Appeals cases interchange the terms use, benefit, and purpose without making a distinction between them. (11) Historically, however, this was not always the case.

      2. Historical Distinctions Between Public Use and Public Purpose.

         The takings clause was first inserted into the New York State Constitution in 1821. (12) There is no indication of the legislative intent behind introducing this clause into the constitution; however, it has been recognized that though the language was based on the Fifth Amendment to the United States Constitution, its inclusion merely codified existing New York state law. (13) A review of several early eminent domain cases indicates that through the 1920s New York adhered to a strict interpretation of the constitutional public use requirement and made a distinction between public use and, among other things, public benefits, purposes, interests, and improvements.

         In 1837, the Court for the Correction of Errors of New York distinguished public use and public interest in a specific use of private property. (14) The court found a public use justifying the exercise of eminent domain to be one in which there was a "necessity, or at least an evident utility on the part of the public." (15) The court illustrated the public use/public interest distinction by comparing a privately owned railroad (16) and a turnpike: each individual is permitted to use public roads to his or her own benefit; however, railways are only available to their proprietors and only they may profit from the railways. (17) Although the court recognized the value of railways to the general public, (18) it cautioned that:

         When we depart from the natural import of the term "public use," and substitute for the simple idea of a public possession and occupation that of public utility, public interest, common benefit, general advantage or convenience, or that still more indefinite term public improvement, is there any limitation which can be set to the exertion of legislative will in the appropriation of private property? The moment the mode of its use is disregarded, and we permit ourselves to be governed by speculations, upon the benefits that may result to localities from the use which a man or set of men propose to make of the property of another, that moment we are afloat without any certain principle to guide us. (19) Similarly, in 1888, the Court of Appeals stated that "[t]he expressions 'public interest' and 'public use' are not synonomous." (20) Examples of public uses included "providing public ways" such as railroads, turnpikes, and canals; building public parks; and those instances where "the government is supplying its own needs, or is furnishing facilities for its citizens in regard to ... matters of public necessity, which, on account of their peculiar character, and the difficulty--perhaps impossibility--of making provision for them otherwise." (21) The court acknowledged that it is easier to define public use by what it is not than by what it is. (22) In this case, the court held that an attempt to take private property to build a private railroad that would serve only tourists visiting Niagara Falls was not sufficient to justify condemnation. (23)

         The Court of Appeals further articulated this distinction in 1892 in In re Mayor of New York. (24) In this dispute over land to be taken for use as a wharf, the court stated that there is a difference between what is in the public interest and what is properly considered a public use and that eminent domain may only be used in the case of a public use. (25) The court required that for a use to be public "the public must ... have the right to resort to the land or property for the use for which it was acquired, independently of the mere will or caprice of any private person or corporation in whom the title to the property would vest upon condemnation." (26) In other words, if the public could not use the land but for "the arbitrary will of the company," then the use was not public. (27) Here, the court held that the wharf was a public use because it would allow commercial shippers to "fulfill[] their obligations to the general public" by creating a mechanism through which they could make use of New York's ports. (28)

         Finally, in Holmes Electric Protective Co. v. Williams, a case involving a dispute over the placement of power lines for use by a privately owned burglar alarm company, Justices Andrews and Cardozo, in their respective concurring and dissenting opinions, addressed the definition of public use. (29) Justice Andrews stated that in order for a use to be public, '"[i]t must be for the benefit and advantage of all the public and in which all have a right to share--a use which the public have a right to freely enter upon under terms common to all. Public use necessarily implies the right of use by the public.'" (30) Further, it "must be one in which the public has a right to share impartially and one generally recognized by the settled practice as a fit purpose for the exercise of the power of condemnation." (31) Similarly, Justice Cardozo argued against the exercise of eminent domain in this situation because the burglar alarm company was "organized for the conveyance of a particular form of intelligence to a particular member of the public, i.e., to itself, in aid of a particular and private business." (32) Because the company was operated for a private purpose, the taking could not be for a public use despite its possible public utility. (33)

         The New York State Constitutional Convention Committee of 1938 also considered the public use requirement in its Problems Relating to Bill of Rights and General Welfare. (34) The Committee noted that while takings of private property must be for a public use to be a valid exercise of eminent domain,

         [t]he term 'public use' as used in connection with the right of eminent domain, is not easily defined. The Legislature has no right to take the property of one individual and pass it over to another, unless the use to which it is to be applied is for the public benefit.... It is doubtless true that in order to make the use public, a duty must devolve upon the person or corporation holding the property to furnish the public with the use intended. The term implies the 'use of many' or 'by the public' but it may...