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New York to use eminent domain to build a basketball stadium

New York to use eminent domain to build a basketball stadium

Courtesy of Edward Harrison at Credit Writedowns

The New York State Court of Appeals has ruled that the Atlantic Yards basketball project can go forward as planned, dislocating the residents in the Brooklyn, NY area where the stadium is to be built.  In essence, the decision means the state can evict you from your own home, seize your property, and give you what it believes is a fair price without your consent to build a sports arena.  The power of the state is breathtaking.

The Wall Street Journal reports:

New York’s highest court ruled that it is lawful for the state to seize private land for use by private developers, clearing a hurdle for a new basketball arena and marking a victory for local governments hoping to spur development.

Tuesday’s 6-1 ruling by the New York State Court of Appeals allows the contentious $4.9 billion, 22-acre Atlantic Yards project in Brooklyn to proceed. The project, being developed by Forest City Ratner Cos., could eventually include office towers and apartments as well as an arena for the NBA’s New Jersey Nets.

The decision is a blow to private-property owners who have argued that they are defenseless in protecting their ownership rights once a government deems their land necessary for eminent domain, or the "public good." But it boosts developers and government entities in New York that have sought to boost local economies by offering incentives for private developers.

The court’s decision echoes one handed down by the U.S. Supreme Court in 2005, when the justices found it was constitutional for a New London, Conn., economic-development corporation to seize private homes and businesses to build a research campus for Pfizer Inc. That decision, Kelo v. City of New London, Conn., set off a firestorm of protest, prompting many lawmakers around the country to amend laws to prevent governments from seizing private land in some cases. New York, however, didn’t change its constitution.

In Tuesday’s decision, the New York appeals-court judges ruled that the constitution allows the state entity to seize the downtown Brooklyn land to improve blighted conditions. The land owners had argued that the area was a stable neighborhood, and wasn’t blighted.

But the court ruled that if the definition of blight is to be changed in New York, it would be a matter for the legislature, not the courts.

The lone dissenter in the case, Judge Robert S. Smith, wrote: "It might be possible to debate whether a sports stadium open to the public is a ‘public use’ in the traditional sense, but the renting of commercial and residential space by a private developer clearly is not."

The decision, based on the eminent domain doctrine, is predicated on the greater good theory where your property rights are trumped by the larger public interest.

Below, the Wall Street Journal’s Stephen Moore discusses why he is opposed to the New York state seizing private land for this basketball arena.

The U.S. Supreme Court decision mentioned above in favor of eminent domain in Kelo v. City of New London, Conn set this decision up.  In essence, if a state or local government deems a private project – funded by private monies and profiting private enterprises – to be in the public interest, it can seize your property to allow this project to occur.  In the New London case, residents were evicted to make way for a luxury hotel and up-scale condos, from which private developers profit handsomely.

Kelo was an outrageous example of cronyism, whereby government can abuse its power to enrich specific private interests. If you recall, in a recent post on the role of government, I said that those looking for small government:

see government as a parasite which, while necessary in small measure, always and everywhere raises the specter of despotism and cronyism. In this view, government must be kept as small (and as local) as possible because it feeds on society and on power to usurp property and wealth for its own use and that of its cronies.

Both this case and Kelo are textbook examples of why some favor small government.  But , realistically, small government is no panacea for cronyism. Increased checks and balances could be helpful here – one reason it is disturbing that the judicial branch of government, rather than acting as a check on state power is now adding to it.

In this poor economic environment, eminent domain for private projects is even more of a threat because of the lure of tax revenue. If a cash-strapped municipality wants to avoid bankruptcy, it will be susceptible to private interests with these kinds of offers.

Expect to see a lot more of these eminent domain projects unless laws are passed to stop this abuse of state power.

 


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