Eminent domain for private sports stadiums: fair ball or foul?

• Author: Weinberg, Philip

1. INTRODUCTION II. ANOTHER TRAGIC WEST SIDE STORY? III. GOVERNMENT INVOLVEMENT IN SPORTS STADIUMS IV. IS ACQUIRING LAND FOR PRIVATE STADIUMS A PUBLIC USE? V. CITY AID FOR PRIVATE STADIUMS: A SOUND INVESTMENT? VI. CONCLUSION I. INTRODUCTION

   "Bread and circuses" have been the traditional offerings of government to restive urban citizens since the days of the Caesars. Today's American governors and mayors have lately begun to follow this path, allotting public funds and using the eminent domain power to acquire land for sports stadiums subsequently conveyed to profit-making business enterprises. Diverting public moneys for these uses might be legally and economically dubious at any time, but to do so when public schools, health, and transportation are perennially deprived of adequate resources seems especially wrong-headed. In particular, the use of the eminent domain power for these purposes, I submit, violates the "public use" mandate of the Constitution.

   This Essay first describes two current battlegrounds concerning this issue--the proposals to build partially government-financed private stadiums on Manhattan's midtown West Side and in downtown Brooklyn. It then briefly explores the history of government financing and promotion of sports stadiums in the United States, which started in the 1920s and has gathered momentum in recent years. The Essay next examines whether exercising the power of eminent domain for private stadiums is a public use under the Constitution, and finally, whether municipal funding of private stadiums is beneficial or harmful to large but financially deprived cities.

2. ANOTHER TRAGIC WEST SIDE STORY?

   The City of New York has long thirsted to place a major sports stadium on the West Side of Manhattan. In the 1990s Mayor Rudolph Giuliani brandished plans to move Yankee Stadium from its historic Bronx location to the area between Penn Station and the Hudson River. This foundered on the Yankees' management's insistence that the city foot most of the bill, as well as resentment over the team abandoning the Bronx. (1) Under current Mayor Michael Bloomberg, a proposal has been advanced to build a stadium for the National Football League's New York Jets (now in New Jersey), tied in with plans to enlarge the Javits Convention Center. (2) The city characterizes the stadium as a "multi-use facility" for "sports, exhibition, and entertainment events," including NCAA games, soccer matches, and concerts, in addition to Jets football. (3) The current plan envisages a 75,000-seat sports stadium that could be "reconfigured" into a hall or convention facility adjacent to the existing convention center and possibly used in the 2012 Olympics, should New York host the Games. (4) The city anticipates that the Jets will pay for the multi-use facility, except for its roof and the platform over the rail yards below it--its floor, in effect--which the Metropolitan Transportation Authority is to pay for. (5)

   Opponents of the project have voiced concern over the facility's impacts on the area--particularly the increased traffic, poorer air quality, heightened noise, and potential land-use restrictions--together with its cost. Some are skeptical about the plan for the Jets to shoulder much of the expense, estimated at $1.4 billion. (6) According to the proposal, the Jets are to contribute $800 million and the city and state $300 million each. (7)

   Proponents of the West Side stadium contend it will create employment--18,000 construction workers and 6,700 permanent employees, (8) Mayor Bloomberg has enthusiastically embraced it as "the centerpiece of the city's bid for the 2012 Olympics." (9) As noted, the overall proposal, priced at $2.8 billion, includes expanding the Javits Convention Center and extending the subway to reach these structures several long blocks west of the nearest existing mass transit.

   West Side residents and their local elected officials appear hostile to the stadium, though they favor the subway improvements. Indeed, a poll of New Yorkers in March 2004 showed that 60 percent opposed and only 33 percent favored the stadium, while over 80 percent supported the Javits Center and transit proposals. (10) The City's Independent Budget Office has voiced concern over the City's reliance on short-term borrowing to finance its portion of the project at higher interest rates than conventional municipal bonds. (11) Similarly, the prestigious Regional Plan Association opposes the stadium, predicting it will result in "walling off the district from the river and creating both auto and pedestrian congestion ... deterring the long-term development of the district." (12) It favors high-density residential development over the rail yards. (13)

   The entire project, encompassing the stadium, convention center expansion, and subway extension, is the subject of environmental review under the City Environmental Quality Review process, (14) based on New York's State Environmental Quality Review Act, (15) and a final generic environmental impact statement (FGEIS) has been jointly prepared by the City Planning Commission and Metropolitan Transportation Authority (MTA). (16) A suit to enjoin this process, alleging the FGEIS fails to properly weigh traffic, transit, and related impacts, has been dismissed as unripe. The court ruled the project's opponents may seek judicial review if the proposal is approved. (17)

   Most recently, the MTA received offers for the air rights atop its rail yards in amounts far in excess of the Jets' offer. (18) In great need of funds for maintenance and improvements, the MTA can hardly spurn opportunities to obtain hundreds of millions more for its air rights and indeed is probably obliged to deal with the bidder that "will provide maximum available financial benefits, consistent with other defined objectives and requirements." (19)

   The plans for Brooklyn encompass large-scale development by the Forest City Ratner Corporation. The Ratner Corporation seeks to use the eminent domain power of New York State's Empire State Development Corporation to acquire enough land for a basketball arena for the National Basketball Association's New Jersey Nets, owned by Bruce Ratner, along with 4,500 new apartments and 2.4 million square feet of office and retail space. The project would be built in part over the Long Island Rail Road terminal on Brooklyn's Atlantic Avenue, but would require the condemnation of private residences now occupied by more than 140 families. (20) Here, too, locals and their elected officials mostly oppose the project. Representative Major Owens advocates building the arena at the former Brooklyn Navy Yard, already owned by the city. (21) The Mayor supports this development as well as the West Side's, again tying it into the city's bid for the 2012 Olympic Games. (22)

3. GOVERNMENT INVOLVEMENT IN SPORTS STADIUMS

   Sports stadiums were not always viewed as a subject for government promotion and sponsorship. Nearly all the historically well-known stadiums--Yankee Stadium, the Polo Grounds, Fenway Park, Comiskey Park, Wrigley Field--were built with private funds by the teams themselves. (23) The Los Angeles Coliseum, Chicago's Soldier Field, and a few other municipally owned stadiums were exceptions, uncontroversial at the time. (24) After World War II, when sports, especially professional football, became big business, this picture changed. A watershed moment was the Brooklyn Dodgers' 1958 move to Los Angeles after the City of New York turned down their demand for a municipally financed stadium. (25) Los Angeles provided a new stadium, and San Francisco followed suit, enticing the New York Giants. (26)

   Since then, most new major-league stadiums have been municipally financed as cities--especially in the South and West--vied for teams. (27) To further this process, the Internal Revenue Code renders municipal bonds to finance stadiums tax-exempt even though they were to benefit a "private activity," by defining that term to exempt many stadiums. (28) This was plainly an end-run around the very reason municipal bonds are tax exempt: the "public purpose" of financing roads, schools, sewage plants, and other clearly public endeavors. (29) An attempt, sponsored by New York's...