“Let There Be Blight: Blight Condemnations in New York After Goldstein and Kaur” by Ilya Somin

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February 3rd, 2012

The New York Court of Appeals’ two recent blight condemnation decisions are the most widely publicized and controversial property rights rulings since the Supreme Court decided Kelo v. City of New London.[1]  In Kaur v. New York State Urban Development Corp.,[2] and Goldstein v. New York State Urban Development Corp.,[3] the Court of Appeals set new lows in allowing extremely dubious “blight” condemnations.  The court ruled that such condemnations are permissible under the state constitution’s Public Use Clause, which permits private property to be condemned only for a “public use.”[4]  It also adopted an extremely narrow approach to interpreting what qualifies as an unconstitutional “pretextual taking.”[5]

This Article analyzes these aspects of Kaur and Goldstein, and argues that the New York Court of Appeals erred badly, by allowing highly abusive blight condemnations and defining pretextual takings so narrowly as to essentially read the concept out of existence.

Part I briefly describes the background of the two cases.  Goldstein arose as a result of an effort by influential developer Bruce Ratner to acquire land in Brooklyn for his Atlantic Yards development project, which includes a stadium for the New Jersey Nets basketball franchise and mostly market rate and high-income housing that he plans to build.[6]  Kaur resulted from Columbia University’s attempts to expand into the Manhattanville neighborhood of West Harlem.[7]  When some of the landowners refused to sell, Ratner and the University successfully lobbied the government to declare the land they sought to be blighted and use eminent domain to transfer it to them.[8]

Part II addresses the issue of blight condemnation.  Goldstein and Kaur both applied an extraordinarily broad definition of “blight” that included any area where there is “economic underdevelopment” or “stagnation.”[9]  Almost any property can be described as underdeveloped relative to some other potential use of the land.  In addition, the court ruled that even if the property somehow falls outside this definition, state judges can only strike down a condemnation if “there is no room for reasonable difference of opinion as to whether an area is blighted.”[10]  But with just about any area, there is at least some room for “reasonable” difference of opinion on the question of whether it is stagnant or underdeveloped.

In adopting an extremely broad definition of blight, the Court of Appeals was roughly in line with many other states that define blight expansively.[11]  Even so, this definition is at odds with the text of the New York Constitution, which allows blight condemnations only in “substandard and insanitary areas [sic].”[12]

Moreover, the court broke dubious new ground in three other crucial respects.  First, it chose to uphold the condemnations despite evidence suggesting that the studies the government relied on to prove the presence of “blight” were deliberately rigged to produce a predetermined result.[13]  Second, it dismissed as unimportant the fact that the firm which conducted the studies had a serious conflict of interest in that it had previously been on the payroll of Ratner and Columbia—the private parties that stood to benefit from the blight condemnations.[14]  Finally, the court refused to give any weight to extensive evidence indicating that Ratner and Columbia had themselves created or allowed most of the “blighted” conditions subsequently used to justify the condemnations to develop.[15]  Both separately and in combination, these three elements of the court’s approach are extremely troubling.  They open the door to serious abuses of the blight condemnation process on behalf of politically influential private interests.

Part III discusses Goldstein and Kaur’s treatment of the federal constitutional standard for “pretextual” takings.  In Kelo and earlier decisions, federal courts made clear that “pretextual” takings remain unconstitutional despite the Supreme Court’s otherwise highly deferential posture on “public use” issues.[16]  Unfortunately, the Supreme Court has been extremely unclear as to what constitutes a “pretextual taking.”[17]  As a result, both state courts and lower federal courts have taken widely differing approaches to the issue.[18]

Nevertheless, Kaur and Goldstein are outliers in this area, deferring to the government more than any other court that has addressed the question since Kelo.  In Goldstein, the property owners’ federal pretext claim had already been rejected by the Second Circuit.[19]  I therefore analyze the federal decision in that case, as well as the state decision.

State and federal courts have identified four possible indications of a pretextual condemnation: the magnitude of the expected public benefits of the taking; the extent of the planning process that led to it; whether or not the taking has an identifiable private beneficiary whose identity was known in advance; and evidence of the intentions of the condemning authorities.[20]  In Kaur and Goldstein, all four of these factors were present.  Yet the New York Court of Appeals in Kaur dismissed the property owners’ pretextual takings claims out of hand.  The Second Circuit did much the same in Goldstein.  With one possible exception,[21] these were the most extreme pro-government pretext rulings of the post-Kelo era.  They open the door to a wide range of pretextual condemnations.

Overall, Goldstein and Kaur probably rank among the most dubious blight condemnation decisions in American history.  They make it easier than ever for well-connected interest groups to use blight condemnations to transfer property to themselves at the expense of those with less political influence.

[Please download the attached PDF file to see the full document]

        [1].  545 U.S. 469 (2005).  For my critique of Kelo, see Ilya Somin, Controlling the Grasping Hand: Economic Development Takings After Kelo, 15 Sup. Ct. Econ. Rev. 183, 227-44 (2007) [hereinafter Somin, Grasping Hand].

        [2].  933 N.E.2d 721 (N.Y. 2010), cert. denied sub nom. Tuck-It-Away, Inc. v. N.Y. State Urban Dev. Corp., 131 S. Ct. 822 (2010).

        [3].  921 N.E.2d 164 (N.Y. 2009).

        [4].  N.Y. Const. art. I, § 7, cl. (a).

        [5].  See Kelo, 545 U.S. at 478 (noting that the government is not “allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit”); id. at 477 (explaining that  “pretextual takings,” where the official rationale for the taking is a pretext “for the purpose of conferring a private benefit on a particular private party,” are unconstitutional).

        [6].  See Goldstein, 921 N.E.2d at 166.

        [7].  See Kaur, 933 N.E.2d at 724-25.

        [8].  See id.; Goldstein, 921 N.E.2d at 166.

        [9].  See Goldstein, 921 N.E.2d at 172 (quoting Yonkers Cmty. Dev. Agency v. Morris, 335 N.E.2d 327, 331 (N.Y. 1975)).

      [10].  Id.

      [11].  See Colin Gordon, Blighting the Way: Urban Renewal, Economic Development, and the Elusive Definition of Blight, 31 Fordham Urb. L.J. 305, 307 (2004); Ilya Somin, Blight Sweet Blight, Legal Times, Aug. 14, 2006, at 42 [hereinafter Somin, Blight Sweet Blight]; see also Ilya Somin, The Limits of Backlash: Assessing the Political Response to Kelo, 93 Minn. L. Rev. 2100, 2120-30 (2009) [hereinafter Somin, Limits of Backlash] (describing how highly permissive blight condemnation laws have persisted in many states even in the aftermath of recent reform efforts).

      [12].  N.Y. Const. art. XVIII, §§ 1, 9.

      [13].  See Goldstein, 921 N.E.2d at 189-90 (Smith, J., dissenting).

      [14].  See Kaur v. N.Y. State Urban Dev. Corp., 933 N.E.2d 721, 726 (N.Y. 2010), cert. denied sub nom. Tuck-It-Away, Inc. v. N.Y. State Urban Dev. Corp., 131 S. Ct. 822 (2010).

      [15].  See discussion infra Part II.C.

      [16].  Kelo v. City of New London, 545 U.S. 469, 477-78 (2005).  For citations to pre-Kelo federal decisions striking down pretextual takings, see Ilya Somin, Introduction: The Judicial Reaction to Kelo, 4 Albany Gov’t L. Rev. 1, 26 n.143 (2011) (symposium on eminent domain in the United States) [hereinafter Somin, Judicial Reaction].

      [17].  See Daniel B. Kelly, Pretextual Takings: Of Private Developers, Local Governments, and Impermissible Favoritism, 17 Sup. Ct. Econ. Rev. 173, 174-75, 185 (2009) (noting this lack of clarity); Somin, Judicial Reaction, supra note 16, at 24.

      [18].  See Somin, Judicial Reaction, supra note 16, at 25-35 (describing different approaches to this issue adopted by various courts).

      [19].  See Goldstein v. Pataki, 516 F.3d 50 (2d Cir. 2008).  The Second Circuit applied similarly extreme deference in an unpublished 2006 decision, Didden v. Village of Port Chester, 173 F. App’x 931 (2d Cir. 2006), which later became briefly famous because future Supreme Court Justice Sonia Sotomayor served on the panel as a Second Circuit Judge at the time.  For discussions of Didden, see Judge Sonia Sotomayor’s Record on Constitutional Property Rights: Testimony Hearing Before the S. Comm. on the Judiciary, 111th Cong. (2009) (statement of Ilya Somin, Assistant Professor of Law, George Mason University), available at http://www.law.gmu.edu/assets/files/news/2009/Somin_TestimonySotomayor.
pdf; Somin, Judicial Reaction, supra note 16, at 31-34.

      [20].  See Kelly, supra note 17, at 184-99; Somin, Judicial Reaction, supra note 16, at 24-25.

      [21].  See supra note 19.