| National Law Journal 12/21/98 By Gideon Kanner NYSE Land Grab Try: Greed Is Still Good |
The Fifth Amendment's 'public use' limitation an the eminent domain power may be
enshrined in the Constitution, but when it comes to the courts, it has all the substance of
cotton candy. To most judges, "public use" is just about anything that the condemning
agencies declare that it is.
As reported in the Wall Street Journal recently, private, proflt making developments such
as shopping malls. car dealerships, racetracks and gambling casinos are these days
routinely built on land forcibly taken from its former owners in the name of "public use."
Oh sure, the courts talk a good game about how private benefits in such cases are
"merely incidental" to a greater public purpose, but in reality, it ain't necessarily so.
These days, it takes an extraordinary court to permit the condemnees so much as a
hearing on this issue, see: City of Jamestown v. Leepers, 552 N.W2d 365 (N.[). 1996).
Private pursuit of wealth is readily confused with public benefit, with scant regard for the
fact that redevelopment projects usually do not create wealth, but rather shift it around
from one place to another. If a new mail goes to one location, that only means that it
won't go to another; it's a a zero-sum game played with public money at public risk for
private gain, as ably explained in Regus v. (City of Baldwin Park, 139 Cal. Rptr. 196
(Cal.App. 1977).
New York courts have been particularly insensitive to condemnees' pleas that their
property is really being taken for private, rather than public, projects. Courtesy Sandwich
Shop Inc. v Port of New York Authority. 190 N.E.2d 402 (N.Y. 1963), is an egregious
example. There the court approved condemnation of land for the World Trade Center
office buildings, but it denied compensation for the condemnees' business that was
destroyed in the process. And in Yonkers Redevelopment Agency v. Morris. 335 N.F..2d
327 (N.Y. 1975), the city makes no bones about the fact that it was taking the unfortunate
Mr. Morris' land simply to accommodate the private expansion plan of the Otis Elevator
Co. Their Lordships didn't even consider it necessary to provide Mr. Morris with a hearing
on whether the city's dominant purpose was public or private. At least in that particular
case, poetic justice was eventually done, no thanks to the courts, when Otis Elevator, a
few years later, decided that it would in any case close its Yonkers, N.Y., plant and left the
city holding the bag, City of Yonkers v. Otis Elevator Co., 844 F.2d 42 (2d Cir. 1988).
A Tart Taste of Apple
Now, another such private caper is in the offing in the Big Apple. This one is fraught with
staggering moral implications. The New York Stock Exchange has outgrown its
headquarters, and the city of New York is anxious not to lose that revenue-generating
trophy enterprise to New Jersey. And so the city proposes to pop some $900 million in
cash and tax breaks to condemn some privately owned Wall Street-area office buildings,
then demolish them and turn over the land to the stock exchange for its new
headquarters. Unlike the usual redevelopment window dressing, there is no suggestion
here that the buildings targeted for condemnation are "blighted." Quite to the contrary,
they are in fine shape, and one has just been renovated at a cost of $100 million.
Moreover, there has been no indication that the prospective condemnees will be
indemnified. All they us likely to get is the usual "fair market value," so defined as to
exclude a host of incidental losses.
Do as You Would Be Done By
According to the New York Times, the stock exchange's management has pondered the
city's offer and, - suprise, surprise has decided to put money ahead of principle by
accepting the deal, thus providing us with a distressing moral spectacle. The Wall Street
types claim to be the paladins of free enterprise and are ever ready to oppose any
governmental intrusion into the workings of the free markets. You can always count on
them to run full-page newspaper advertisements exhordng us to cherish private
enterprise and individual responsibility, free of government intervention. Yet, here they
are, about to join in a costly governmental caper that, with blithe disregard for all that,
means to expropriate their neighbors' property in order to butter their own already very
well-buttered bread and, in the process,
further erode an important constitutional guarantee.
Slice it any way you want, but what's afoot here is hypocrisy. There they are, the high
priests of private enterprise, lining up at the public trough. They are ready to dip in, in
pursuit of their economic self interest and at the expense of their neighbors, who will get
no compensation for their displaced or destroyed businesses. Worse, if this caper runs
true to form, the condemnees also stand to be subjected to gratuitous judicial lectures
that not all losses inflicted on them by the exercise of the sovereign power of eminent
domain are compensable, the phoney justification being that if owners of the taken land
are indemnified for their loses, the the municipal world as we knew it will come crashing
down into hopeless insolvency. What piffle.
Phony Justification
At least when the taking is for a real Public use-a hospital, a park or a court-house, an
argument can be made, however tenuously, that achievement of the public use may call
for a minor civic sacrifice on the part of the displaced condemnees (though even then, it
is difficult to see why the public that benefit, from the new project should not make good
the losses it inflicts on the individual in the process). But when the taking avowedly
enriches municipally favored Wall Street naboh, these lame excuses simply don't cut it,
even on their own deficient premise. The true purpose of the Just Compensation clause
is to ensure that private property is not taken at all unless the taking is for a public, not for
a private, benefit. And when a public purpose is indeed being served, the cost of
bettering the Pubhc-condition should aways be fairly borne by the benefited public.
enshrined in the Constitution, but when it comes to the courts, it has all the substance of
cotton candy. To most judges, "public use" is just about anything that the condemning
agencies declare that it is.
As reported in the Wall Street Journal recently, private, proflt making developments such
as shopping malls. car dealerships, racetracks and gambling casinos are these days
routinely built on land forcibly taken from its former owners in the name of "public use."
Oh sure, the courts talk a good game about how private benefits in such cases are
"merely incidental" to a greater public purpose, but in reality, it ain't necessarily so.
These days, it takes an extraordinary court to permit the condemnees so much as a
hearing on this issue, see: City of Jamestown v. Leepers, 552 N.W2d 365 (N.[). 1996).
Private pursuit of wealth is readily confused with public benefit, with scant regard for the
fact that redevelopment projects usually do not create wealth, but rather shift it around
from one place to another. If a new mail goes to one location, that only means that it
won't go to another; it's a a zero-sum game played with public money at public risk for
private gain, as ably explained in Regus v. (City of Baldwin Park, 139 Cal. Rptr. 196
(Cal.App. 1977).
New York courts have been particularly insensitive to condemnees' pleas that their
property is really being taken for private, rather than public, projects. Courtesy Sandwich
Shop Inc. v Port of New York Authority. 190 N.E.2d 402 (N.Y. 1963), is an egregious
example. There the court approved condemnation of land for the World Trade Center
office buildings, but it denied compensation for the condemnees' business that was
destroyed in the process. And in Yonkers Redevelopment Agency v. Morris. 335 N.F..2d
327 (N.Y. 1975), the city makes no bones about the fact that it was taking the unfortunate
Mr. Morris' land simply to accommodate the private expansion plan of the Otis Elevator
Co. Their Lordships didn't even consider it necessary to provide Mr. Morris with a hearing
on whether the city's dominant purpose was public or private. At least in that particular
case, poetic justice was eventually done, no thanks to the courts, when Otis Elevator, a
few years later, decided that it would in any case close its Yonkers, N.Y., plant and left the
city holding the bag, City of Yonkers v. Otis Elevator Co., 844 F.2d 42 (2d Cir. 1988).
A Tart Taste of Apple
Now, another such private caper is in the offing in the Big Apple. This one is fraught with
staggering moral implications. The New York Stock Exchange has outgrown its
headquarters, and the city of New York is anxious not to lose that revenue-generating
trophy enterprise to New Jersey. And so the city proposes to pop some $900 million in
cash and tax breaks to condemn some privately owned Wall Street-area office buildings,
then demolish them and turn over the land to the stock exchange for its new
headquarters. Unlike the usual redevelopment window dressing, there is no suggestion
here that the buildings targeted for condemnation are "blighted." Quite to the contrary,
they are in fine shape, and one has just been renovated at a cost of $100 million.
Moreover, there has been no indication that the prospective condemnees will be
indemnified. All they us likely to get is the usual "fair market value," so defined as to
exclude a host of incidental losses.
Do as You Would Be Done By
According to the New York Times, the stock exchange's management has pondered the
city's offer and, - suprise, surprise has decided to put money ahead of principle by
accepting the deal, thus providing us with a distressing moral spectacle. The Wall Street
types claim to be the paladins of free enterprise and are ever ready to oppose any
governmental intrusion into the workings of the free markets. You can always count on
them to run full-page newspaper advertisements exhordng us to cherish private
enterprise and individual responsibility, free of government intervention. Yet, here they
are, about to join in a costly governmental caper that, with blithe disregard for all that,
means to expropriate their neighbors' property in order to butter their own already very
well-buttered bread and, in the process,
further erode an important constitutional guarantee.
Slice it any way you want, but what's afoot here is hypocrisy. There they are, the high
priests of private enterprise, lining up at the public trough. They are ready to dip in, in
pursuit of their economic self interest and at the expense of their neighbors, who will get
no compensation for their displaced or destroyed businesses. Worse, if this caper runs
true to form, the condemnees also stand to be subjected to gratuitous judicial lectures
that not all losses inflicted on them by the exercise of the sovereign power of eminent
domain are compensable, the phoney justification being that if owners of the taken land
are indemnified for their loses, the the municipal world as we knew it will come crashing
down into hopeless insolvency. What piffle.
Phony Justification
At least when the taking is for a real Public use-a hospital, a park or a court-house, an
argument can be made, however tenuously, that achievement of the public use may call
for a minor civic sacrifice on the part of the displaced condemnees (though even then, it
is difficult to see why the public that benefit, from the new project should not make good
the losses it inflicts on the individual in the process). But when the taking avowedly
enriches municipally favored Wall Street naboh, these lame excuses simply don't cut it,
even on their own deficient premise. The true purpose of the Just Compensation clause
is to ensure that private property is not taken at all unless the taking is for a public, not for
a private, benefit. And when a public purpose is indeed being served, the cost of
bettering the Pubhc-condition should aways be fairly borne by the benefited public.
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