State’s highest court hears Yards case

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If the seven judges of New York State’s highest court have any sympathy towards a small group of landowners suing to block the condemnation of their properties so Bruce Ratner can build a basketball arena, they had a funny way of showing it on Wednesday.

Almost half of the oral arguments before the Court of Appeals — whose verdict will either pave the way for Atlantic Yards or send it back to the drawing board — was consumed by a debate over whether the property owners missed a deadline for filing their appeal in the first place.

And when they weren’t persistently questioning plaintiffs’ lawyer Matt Brinckerhoff on the issue of whether they should be hearing the case at all, they peppered him with questions about his central argument: that the Empire State Development Corporation misused its condemnation power to transfer privately owned properties to Ratner with a flawed belief that the Atlantic Yards project will spur economic development and, therefore, has enough of a public benefit to justify the use of eminent domain.

Indeed, Brinckerhoff hadn’t even finished a sentence before Chief Judge Jonathan Lippman cut him off, pointedly reminding Brinckerhoff that state and federal courts have expanded the use of eminent domain over the years to include economic development as a rationale.

But Brinckerhoff parried back that such a ruling has never reached the state’s highest court.

“There are no opinions [by the Court of Appeals] that hold that economic development by itself is sufficient justificat­ion” to condemn properties, he said.

Brinckerhoff did appear to have the support of Judge Robert Smith, who wondered how the state determined which area would be considered “blighted” so that properties could be condemned. Smith asked whether many lots in the project site are not actually blighted, but merely considered as blight because larger buildings could be constructed on them, but have not been.

“Yes, any time that your home is not built out to the maximum under the zoning, it is subject to being declared blighted,” said Brinckerhoff, taking advantage of the judge’s softball. “And that means it can be taken and given to a preferred developer.”

Brinckerhoff was so consumed by answering the judges’ questions that he never even got to present the most crucial portion of his argument, namely that a clause in the state Constitution forbids eminent domain on a project unless “the occupancy of any such project [is] restricted to persons of low income.”

That portion of the debate occurred during the time for oral arguments allotted to ESDC lawyer Philip Karmel — but only after Karmel consumed half of his time to argue that the plaintiffs had missed the deadline for filing.

When Karmel began arguing the case on the merits, he, too, was cut off by questions about whether the site is truly blighted.

First, Karmel argued that the condemnation of a few properties in the project site were justified because half of the project site has been declared blighted since the 1960s.

But Smith asked about the other half.

“Have you gerrymandered the area to fit what the developer wanted to build on rather than taken an area of real blight?” he asked.

When Karmel said no, the judge persisted. “Suppose I’m a developer and I want to develop on an area that is half blighted and half not, and I go to government and say, ‘I want you to condemn this even though half is not blighted.’ Is that sufficient?”

It depends, Karmel said, on the reason for the development itself. To bolster that part of his case, he cited the 1951 case of Denihan v. O’Dwyer in which an insurance company wanted the state to use its eminent domain power so the company could build a parking lot and a small park. The court ruled against the taking of private property because “the use is not ‘public’ where the public benefit is only incidental to the private.”

Atlantic Yards, however, has a much larger public benefit in the form of a publicly owned arena, public open space, a partially renovated rail yard and thousands of units of affordable housing.

The mention of affordable housing prompted Judge Lippman to grill Karmel about Brinckerhoff’s reading of Article 18, Section 6 of the state constitution — the one that bars public money for the project unless the housing created is entirely reserved for low-income tenants.

Lippman repeatedly questioned Karmel about the hundreds of millions in public money that will subsidize the developer, but Karmel answered that only $100 million in state money is being spent for infrastructure around the proposed basketball arena, not for the construction of housing.

As a result, Article 18 does not apply, he said.

Lippman wasn’t convinced.

“But the majority of this project is market-rate housing,” he said.

“That’s not the purpose of the project,” Karmel said.

“Isn’t market-rate housing the largest part of this project?” Lippman asked.

“It is a significant portion,” Karmel replied, then focused on the language of the clause to suggest that in the constitution, the word “project” only refers to a low-income housing project, not a mixed-use project like Atlantic Yards.

“That’s kind of a simplistic view of it,” Lippman retorted.

Later, he reiterated his position that eminent domain can so easily be abused.

“Is it the law of New York that if I own a perfectly nice house in an area that the State of New York thinks could be more dynamic and economically vibrant, that is enough to take the house?”

“Yes,” Karmel said, citing the experience when the World Trade Center was built three decades ago.

Sensing an opening, Brinckerhoff used his brief rebuttal allotment to bring up the Denihan case as well, citing it as evidence that the state must make an honest analysis of whether the public benefit of a project like Atlantic Yards is actually greater than the private benefit to the developer.

No such analysis was made in this case, he said.

He also argued that Karmel’s reading of Article 18, Section 6 — that its requirement for low-income residents does not apply to all public money, but only money allocated for low-income projects — “effectively writes Section 6 out of the Constituti­on.”

More than 50 project opponents journeyed to Albany for the 2 pm hearing. Several supporters of the project — including the Rev. Herbert Daughtry — were also on hand.

Daniel Goldstein, one of the property owners on the case, said he thought the hearing “went great.”

“The judges — at least the ones who spoke — understand our argument and I think they are skeptical about blight and the market-rate housing,” said Goldstein, whose Pacific Street building is one of the ones slated to be seized and turned over Ratner to make room for the basketball arena.

The plaintiffs’ case against the use of eminent domain has not fared well so far. In May, the Appellate Division, the state’s second-highest court, shot down the argument that eminent domain could not be used because Atlantic Yards had an insufficient “public benefit.”

“It cannot be said that the public benefits which the Atlantic Yards project is expected to yield are incidental,” Justice Randall Eng wrote in his decision, referring to benefits of the overall project that include the proposed basketball arena and development over the scar-like rail yard.

Minutes after the hearing, the ESDC put out a statement.

“We expect that the Court of Appeals will recognize the many substantial public benefits of the Atlantic Yards project, and that the court will affirm the Appellate Division’s prior unanimous dismissal of this case,” the statement said.

A ruling is “virtually certain” to come down in November, Brinckerhoff said.

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