In Eminent Domain Appeal, Yards Plaintiffs Face Skeptical Court: Brooklyn NY Downtown Star, 10/18/07

By Norman Oder

The biggest challenge to the $4 billion Atlantic Yards arena-plus-towers project has always been the federal eminent domain lawsuit organized by Develop Don’t Destroy Brooklyn. While the plaintiffs - 14 residential and commercial tenants and property owners - may have gained some traction in an appeals court on October 9, they still have a tough road ahead.

In June, U.S. District Judge Nicholas Garaufis dismissed the case, ruling the public purposes associated with the project - among them subsidized housing, blight removal, new transit facilities, and a sports facility - trumped any inquiry into whether the project is, as plaintiffs charge, a sweetheart deal.

Garaufis, in fact, did not even address the plaintiffs’ claim that the use of eminent domain for Atlantic Yards differed significantly from previous cases, like the U.S. Supreme Court’s 2005 Kelo v. New London decision, because in Brooklyn case city and state officials publicly backed a developer before calling for any bids or trying to independently determine the outline of the area slated for redevelopment.

More than 60 people, mainly project opponents, listened closely as three judges of the Second Circuit Court of Appeals heard the case in a Lower Manhattan courtroom. The judges were skeptical but engaged, letting the argument extend for an hour-well more than the initial time allotted.

Plaintiffs’ attorney Matthew Brinckerhoff relied on Kelo, which upheld eminent domain because the city “carefully formulated a development plan.” He also cited Justice Anthony Kennedy’s non-binding concurrence, which cited “evidence that respondents reviewed a variety of development plans and chose a private developer from a group of applicants rather than picking out a particular transferee beforehand.”

In court papers and outside the courtroom, Brinckerhoff also pointed to an obvious contemporaneous example: the city’s solicitation of multiple bids for the Metropolitan Transportation Authority’s Hudson Yards site. In the Brooklyn case, the MTA put its 8.5-acre Vanderbilt Yard up for sale 18 months after Atlantic Yards was announced, and the entire 22-acre site was never put up for bid.

Arguing the appeal, Brinckerhoff didn’t get far before he was interrupted by Judge Robert A. Katzmann, who suggested that Atlantic Yards would include “classic cases of direct public use,” cited in Kelo, “that would foreclose much of your argument.”

Brinckerhoff responded that, in this case, the blight determination was made years after the decision to have Forest City Ratner develop this project.

Judge Edward Korman asked if there was “any dispute” that some 62 percent of the project site was blighted, given that land stretching from the north side of Pacific Street is part of the Atlantic Terminal Urban Renewal Area, or ATURA. (It was established in 1968 during very different times, but reaffirmed by the City Council ten times, most recently in 2004.)

Brinckerhoff pointed out that his clients’ properties - on the south side of Pacific Street and the north side of Dean Street in Prospect Heights - are all outside ATURA. “Does that matter?” Katzmann asked. “Does there have to be a lot-by-lot determination?”

Brinckerhoff said no, as long as the sequence was legitimate. In the Supreme Court’s Berman v. Parker case, he pointed out, the circumstances were “radically different,” as a legislative finding that the area was in need of renewal was followed by a request for proposals.

In Brooklyn, however, there was no legislative determination, citing the role of the Empire State Development Corporation (ESDC), an “unelected body.” The ESDC is a defendant, along with Forest City Ratner, former Governor George Pataki, Mayor Mike Bloomberg, and other city officials.

Korman cut him off, asking how this affected the question of public use or public purpose.

“It lessens the deference owed to decision makers,” Brinckerhoff replied. “The sequence gives a powerful inference,” he said, “that the taking was motivated to benefit a specific developer.” Forest City Ratner was the only developer considered, he said, and the after-the-fact blight study concerned only the footprint that Forest City Ratner had identified.

Katzmann asked if there was any specific relationship between the developer and public officials. Brinckerhoff noted that Pataki went to law school with Bruce Ratner, that Ratner was known as a past contributor to Pataki, and there were reports that they were friends. Still, he said, there was no need for evidence of a quid pro quo.

The plaintiffs aim merely to proceed with discovery, to gain pre-trial information through documents, depositions, and interrogatories. Katzmann asked how much discovery the plaintiffs sought.

Brinckerhoff was cautious, as if not wanting to suggest a fishing expedition. “Presumably rather limited,” he said.

Katzmann asked what the plaintiffs want to find out.

“To explain these anomalies” regarding the sequence, Brinckerhoff said.

Korman asked Brinckerhoff what, in the best case scenario, he wished to find.

“There’s every possibility,” Brinckerhoff responded, that there are documents “that make it clear the government was uninterested” in other developers and projects, and that the governor and mayor had relationships with Bruce Ratner that led them to favor him.”

(As for the city’s motive, part of it was answered by Andrew Alper, then president of the New York City Economic Development Corporation, who testified at a May 4, 2004, City Council hearing, “The developer came to us with what we thought was actually a very clever plan. It is not only bringing a sports team back to Brooklyn, but to do it in a way that provided dramatic economic development catalyst in terms of housing, retail, commercial jobs, construction jobs, permanent jobs.

“So, they came to us, we did not come to them,” he continued. “And it is not really up to us then to go out and find to try to a better deal. I think that would discourage developers from coming to us, if every time they came to us we went out and tried to shop their idea to somebody else. So we are actively shopping, but not for another sports arena franchise for Brooklyn.”)

Brinckerhoff told the judges that “the notion that a stadium is a public use is just wrong.” A stadium “is a private, money-making enterprise,” he said, not different from a hotel that offers public access.

Katzmann acknowledged that courts might want to say something “about the wisdom of a policy, but we’re constrained.”

Brinckerhoff reminded him that courts play a role in policing eminent domain when it seems to be motivated to benefit a specific private individual.

“There’s no explanation,” he said, for why an MTA spokesman, shortly after the project was announced, said that the property was going to go to Forest City Ratner, before later issuing an RFP.

“We have this area in Downtown Brooklyn,” Korman said, making the common error of not locating the project in Prospect Heights. “Somebody submits a proposal similar to Ratner. It goes through the hoops...” What if it benefits a private party?

“That in itself is not a problem,” Brinckerhoff responded. “It’s when the private party has driven the process.”

But what about a mixed motive, Korman asked, to benefit the public and the developer?

The previous cases, Brinckerhoff responded, differ significantly in the sequence: “All we’re asking for is that this case can be remanded so the public can know this particular decision was legitimate.”

ESDC attorney Preeta Bansal declared “the analysis of this matter begins and ends with Kelo,” contending that the “multiple public purposes” made it an open and shut case.

What about the after-the-fact blight study to which Brinckerhoff alluded, asked Katzmann.

Bansal focused on the ATURA designation, renewed in 2004. “It’s undisputed that the project would alleviate blight” in 63 percent of the site. “That is enough to basically to end the case,” she said.

Citing the benefits, she noted that it would “create a publicly owned sports arena.”
Publicly owned? asked Katzmann.

“And then leased” to a private entity, Bansal acknowledged. Several people in the crowd snickered, knowing that the lease would be for $1.

She cited the planned Urban Room, “a nice entrance to the subway” and transit improvements “that Brooklyn has been trying to do for decades.”

“What if the process is tainted?” Katzmann asked.

The constitutional analysis, Bansal said, does not depend on the sequence. Bansal then gave a hypothetical worst-case scenario in which a smoking-gun memo or video showed that a public official stated, “I want to do this for Bruce Ratner.”

It would not make a difference, she said, to the dismay of some onlookers. “The fact that there might be illicit motive,” she said, even if it’s the principal motive, if it results in public use, “that’s the end of the inquiry.” She said the issue was whether public officials could have rationally concluded there was some public purpose.

Katzmann tried to drill down to an inflection point. What if an area was 20 percent blighted, or 50 percent, or 80 percent - how much blight would be needed to assume that decision-makers acted rationally?

There’s no clear line of demarcation, Bansal said, suggesting the court’s inquiry would be “fact-specific. But we’re not close,” given the ATURA finding. “I don’t think this case is anywhere near the line.”

With respect to the sequence, she added, the “New York legislature has made a considered judgment that private enterprise-initiated projects...are to be favored.”

(Actually, when the ESDC, then called the Urban Development Corporation, was established in 1968, the effort to encourage “maximum” private participation in project was hardly focused on developments like Atlantic Yards, but instead intended to get the private sector to finally invest in low- and middle-income subsidized housing.)

Few developers can do these kinds of projects, she added, not mentioning the Hudson Yards example. “The fact that a private developer came to the city is of no constitutional moment.”

“Your adversary,” Katzmann said, “suggested that other developers could have done it for less money, and were not considered.”

That, Bansal declared, was not a federal issue. “Perhaps they have a claim under state law.”

Given brief time for rebuttal, Brinckerhoff, responding to Bansal’s hypothetical about how the presence of some public use trumps private benefit, asserted, “There’s no question that Kelo prohibits that fact pattern.”

Korman, trying to characterize Brinckerhoff’s argument, said, “you conclude we should reverse so the public will know the manner in which this project was developed.”

He added, “Is this lawsuit a pretext?”

Brinckerhoff said it was so “my clients can know, when their homes are taken,” that the process is legitimate. (He left out how some simply oppose Atlantic Yards.)

Before the day’s proceedings began, Korman announced that he had received an Atlantic Yards mailer “some years ago” and responded in the affirmative, expressing support for the project, but without any eye to any legal case. He said he’d recuse himself upon request.

The plaintiffs made no move to do so - Korman has a distinguished reputation - but as the argument wore on and Korman asked some tough questions, they might have had second thoughts.

It was unclear how long the court will take to rule. Also pending since May is a decision on a lawsuit filed in state court challenging the environmental impact statement for the project.

Brooklyn NY Downtown Star: http://www.brooklyndowntownstar.com