Its Official – New York Can Take Your Property

The New York Court of Appeals ruled in favor of the state in the matter of Atlantic Yards and eminent domain questions yesterday, ruling that the state acted within the law in seizing private property on the Atlantic Yards development in Brooklyn. The Atlantic Yards Project has been mired in lawsuits and other issues  – not least of which is the question mark as to whether the project will be anything like the original proposal.

But, the court ruled 6 to 1 in favor of the state being able to exercise eminent domain to take property from private individuals and businesses.

I am in two minds – mainly because this is actually a private development rather than something the state is going to be working on and the original proposal made substantial promises that have already been broken. The Nets basketball team is being sold off to a Russian billionaire; the expanded railroad yard has been severely contracted; Frank Gehry is no longer the lead architect and the likelihood of needing substantial amounts of new apartments (which were supposedly ear marked for fire fighters, teachers etc) seems a long way off. New York – like most real estate markets in the US, is suffering from a serious over supply of luxury condominiums.

But the clock is ticking on the tax-free bond status of the project and I suspect that is the deciding factor here. The developer needs to have started work on the basketball stadium before 2009 is out or lose the tax free status. A development of this magnitude would almost certainly not have gone ahead in today’s market, but this one has been in the works for some time. I gather there are numerous hurdles still to overcome and there is substantial opposition from several pressure groups. Still – as the saying goes – “You can’t fight city hall.” The question of financing still remains though, and of course another slew of law suits.

It really does throw a big question over the use of eminent domain though. Always a contentious issue – this is the largest I can think of where the profits all went to private hands and I can see this battle going on for some time. In writing this, I have now decided I am not in two minds. It is not acceptable that the state uses eminent domain to take property that is then given over to a private developer. No matter the size of the development or the convenient timing.