New York's fight over blight: the role of economic underutilization in Kaur.

• Author: Piper, Kaitlyn L.

Introduction I. Blight Condemnations A. "Public Use" Under the Fifth Amendment of the United States Constitution B. "Public Use" in New York 1. The Evolution of "Public Use" 2. Relevant New York Eminent Domain Statutory Law C. Removal of Blight as a "Public Use" II. Economic Underutilization's Relationship to Blight A. Who Determines Whether There is a "Public Use"? 1. United States Supreme Court: Leave it to the Legislature! 2. New York Courts: We Will Not Interfere! B. Economic Underutilization in the Eminent Domain Context 1. Economic Underutilization as a Factor Used to Determine Blight a. Federal Courts b. New York Courts 2. The Problem with Using Economic Underutilization Alone to Determine Blight C. Societal Effects of Blight Condemnations Based on Economic Underutilization 1. Does the Political Majority Know What's Best? 2. Government and Private Developers Working Together to Redistribute Property 3. Effects on Poor and Minority Populations 4. Is Eminent Domain Efficient? D. Kaur: How Two New York State Courts Could Come to Drastically Different Conclusions 1. The Appellate Division's Decision 2. Reversed by the New York Court of Appeals III. New York Must Limit the Extent to Which Economic Underutilization can be Used to Determine Blight A. Kaur ... Worse Than Goldstein? 1. The Columbia Project Exhibits "Impermissible Favoritism" Toward Columbia and Provides Only Incidental Public Benefits 2. The Failure to Address the Issue of Economic Underutilization Undercuts the Decision B. Legislative Changes are Necessary to Help Prevent Future Eminent Domain Abuse C. Supporting Stricter Judicial Scrutiny of Blight Determinations Conclusion INTRODUCTION

Where have the courts permitted the state to kick people out of their homes in order to build a sports stadium and expand a private university by taking land from existing home and business owners? In the great state of New York. In two recent decisions, the New York Court of Appeals (1) further eroded the community's protection against eminent domain abuse by permitting the state to use eminent domain to take private property to build a stadium for the New Jersey Nets basketball team in Brooklyn, (2) and permitting the state to take private property to expand Columbia University in Manhattan. (3) Eminent domain is "[t]he inherent power of a governmental entity to take privately owned property, esp[ecially] land, and convert it to public use, subject to reasonable compensation for the taking." (4) Although eminent domain abuse is particularly rampant in New York, it is certainly not unique to the Empire State. (5)

All over the United States, state and local governments are using eminent domain to force the transfer of property from one private owner to another. (6) Although the government may claim that its taking of the property is for the purpose of eradicating blight, often the real purpose is to transfer the property to a private party that will use it in a way the government deems more favorable. (7) The assertion that an area or property is blighted is merely a label that is a necessary legal prerequisite for the government to take the land. (8) The forced taking of property from unwilling property owners for the purpose of transferring it to a private party who will make "better" economic use of the property is the essence of eminent domain abuse. (9)

One of the purposes for which New York and other states purportedly use their eminent domain power is to eradicate blight. (10) The statutory definition of blight varies from state to state and is often broad and imprecise. (11) In general, to establish that a property is blighted, the condemning authority must show that it is characterized by "one or more factors that are detrimental to the safety, health, morals, or welfare of the community." (12) This allows states to use a variety of factors to justify condemning a broad range of properties in order to eradicate blight and improve the community. New York courts are guided by the language in Yonkers Community Development Agency v. Morris, which states that many factors can constitute blight, including "irregularity of the plots, inadequacy of the streets, diversity of land ownership making assemblage of property difficult, incompatibility of the existing mixture of residential and industrial property, overcrowding, the incidence of crime, lack of sanitation, the drain an area makes on municipal services, fire hazards, traffic congestion, and pollution." (13)

One of the contemporary problems of condemning properties for the purpose of eradicating blight is that some states consider certain purely economic conditions to be factors that can be used to determine that an area is blighted. (14) Some examples of these economic factors are stagnant property values, high business vacancy rates, and an excess of liquor stores or adult-oriented businesses. (15) One of the more controversial economic factors commonly used to determine blight is economic underutilization. (16)

In 2009, two different New York state courts that considered condemnation actions based on blighted properties came to two markedly different conclusions. (17) In Goldstein v. New York State Urban Development Corp., the New York Court of Appeals stated that "economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose." (18) Nine days later, in Kaur v. New York State Urban Development Corp., the Appellate Division, First Department, called for an end to "eminent domain takings solely based on underutilization." (19) Seeking reversal of the Appellate Division's decision in light of the recent Goldstein decision, the Empire State Development Corporation (ESDC) (20) appealed the Kaur decision to the New York Court of Appeals. (21) Although the Kaur decision was promptly overturned, (22) the stark contrast between the views of the Court of Appeals and the Appellate Division highlights the ongoing controversy over eminent domain abuse in New York. (23) Despite having the perfect opportunity to set limits on the extent to which economic factors may provide the basis for blight determinations, the Court of Appeals flatly dismissed the Appellate Division's arguments because they were "unsupported by the record." (24) By avoiding the issue of allowing economic underutilization alone to render a property blighted, (25) the Court of Appeals failed to address a controversy that has led to the introduction of eminent domain reform in the New York legislature. (26)

Part I of this Note describes the background of eminent domain and, in particular, the elimination of blight as a qualifying public use. It summarizes the history of the "public use" requirement in the federal and state context and how economic underutilization fits into the analysis. Part II examines the problem of permitting economic underutilization to be used as evidence in determining whether an area is blighted, as well as the role that economic underutilization played in the outcome of Kaur. Part III argues that New York needs to limit the extent to which a blight determination can be based on economic underutilization. It contends that the legislature should address Kaur and the issue of economic underutilization by restricting the statutory definition of blight.

1. BLIGHT CONDEMNATIONS

   1. "Public Use" Under the Fifth Amendment of the United States Constitution

      According to the Fifth Amendment, there are two limits on the federal government's power to take land: first, the taking must be for a "public use," and second, "just compensation" must be paid. (27) At the outset, public use was interpreted to mean that the government could only take private property when the project would directly benefit the public. (28) However, public use is an evolving concept that has changed with the times, and now is often interpreted to mean "public purpose." (29) In 1916, in Mount Vernon-Woodbury Cotton Duck Co. v. Alabama Interstate Power Co., the United States Supreme Court permitted Alabama to use eminent domain to manufacture, supply, and sell energy to the public. (30) The Court found that providing energy qualified as a public purpose and rejected the "use by the general public" test as it applied to state takings. (31) In a series of later decisions, the Court rejected a narrow interpretation of public use and instead adopted a broad interpretation that permitted almost any condemnation project that benefitted the public in some way to qualify. (32)

      The Court embraced a broad view of public use in Berman v. Parker and allowed eminent domain to be used to redevelop property in order to remove blight. (33) The Court specifically found that the removal of blight qualified as a public use. (34) Additionally, the Court embraced the concept of urban renewal as a public use. (35) It emphasized the importance of not only eliminating slums, but also preventing them from being created in the future. (36) This signaled a departure from earlier cases where condemnation was exercised as a response to an area that was already considered a slum. (37)

      In Hawaii Housing Authority v. Midkiff the Supreme Court upheld Hawaii's Land Reform Act of 1967, which provided for the taking and transfer of title and real property from lessors to lessees for the purpose of reducing the concentration of land ownership. (38) The Court stated that it was not necessary for the entire community, or even a considerable portion of the community, to benefit from an improvement in order for it to constitute a public use. (39) Similarly, in 2005, the Court held that an economic development plan that used eminent domain to transfer land that was not blighted to private redevelopers satisfied the public use requirement of the Fifth Amendment. (40)

   2. "Public Use" in New York

      1. The Evolution of "Public Use"

         The New York Constitution provides some of the framework for New York's eminent domain powers...