Property Rights Foundation of America®
Founded 1994

The Corruption of Eminent Domain

Robert LoScalzo, Joseph Ardizzone
& Irene Prestigiacomo
Willets Point United, Willets Point, Queens County, New York City

Sixteenth Annual National Conference on
Private Property Rights
October 20, 2012
The Century House, Latham, N.Y.

Introduction by Carol LaGrasse: I would like to introduce the Willets Point speakers with just a few short words, because Robert LoScalzo will do a more thorough job.

I once read that before industrialization wealth creation was by and large essentially a zero sum game. The victors in conquest brought home the spoils of war, leaving one side vanquished and impoverished, deprived of their homeland and their wealth, the victor enjoying what the loser once possessed. Industrialization, it is said, enabled genuine wealth creation. As it has become commonplace, eminent domain, a procedure to transfer true wealth — the possession of the land — from an unempowered group to a powerful group belies that theory. In countless examples of urban redevelopment, poor people and hard working people of ordinary means are forcibly deprived of their homes, their businesses, and community because the powerful and wealthy would prefer to own the land to further their purposes or because the wealthy and those in power would prefer to be spared the proximity, the visual experience of the existence of the poor and ordinary people and their occupations. The Willets Point battle is exemplary of this function of eminent domain.

I'd like to make an aside from my rough notes. Years ago Peter taught me that the outcome of something often tells you the true purpose; so whatever the law is as it's written, never look only at the written law, never look only at the idealism expressed in the proposal or by, say, professors, or justices such as Justice Stevens' writing the Kelo v. New London decision. Look at what happened.

The businesses and property owners of Willets Point are fighting with every legal measure at their disposal but, as in a war, the powerful and the wealthy use all the legal and illegal means in their arsenal, as they are exempt from serious prosecution, bolstered by the authorities with which they are intertwined and the free press, which is one of their tools and partners, their lackeys. However, the businesses and property owners of Willets Point are courageously demonstrating that it is possible under a genuine legal system as ours, in spite of all of its corruption, for the people of a targeted community to win this unbalanced battle.

I'd like to introduce Robert LoScalzo, the spokesperson for Willets Point United, and Joseph Ardizzone, the only resident of Willets Point. I was going to introduce Irene Prestigiacomo but unfortunately she has been taken seriously ill and is not allowed to be in contact with people for their own protection. So thank you very much, Robert and Joseph.

Robert LoScalzo: Thank you very much, Carol. As Carol said, I'm Robert LoScalzo. I'm an independent documentary video producer who became interested in the Willets Point situation and the City's intent to put a development there back in 2007 and so I made contact with the property owners. I've been following their story. I've been documenting it every step of the way and I'm looking forward to someday having a documentary video that can be screened for people that tells the story. But, meanwhile, I'm very well positioned with the information I have to convey the story when the property owners designate me from time to time to explain it to audiences like yourselves. Joe Ardizzone is the sole resident of Willets Point. When I'm finished with what I've got to tell you he'll come up and he wants to talk about the amicus brief which the Property Rights Foundation of America filed in this case. So, this is a very active thing that we're talking about. Also Irene Presti whose picture is up there at the top of that board, right in the middle on the top, as Carol said, couldn't be here today, but she sent remarks which I'll read after Joe. So what I'd like to do is give you an introduction to what this area is, just briefly summarize it, tell you what the points of contention in the eminent domain case turned out to be, and what the status of the project is right now.

As you can see here, Willets Point is located five miles from Manhattan. It's a sixty-two acre triangular district. It's a prime piece of property that is very attractive to the City for redevelopment purposes; but for the same reason that the businesses enjoy operating there now. It's near a confluence of five major highways, and you have a concentration of industrial businesses of the types that you see here: Your food production and distribution, manufacturing, there's a company that repurposes sawdust and recycles it, all kinds of unique businesses that have been there, many of them for seventy or eighty years. Waste transfer stations, metal recycling, construction firms are based out of there; and embedded among those larger businesses are about two hundred automotive services businesses, which is what the district is really known for in the public mind.

Over there, that banner shows that we went around and collected the business cards of the businesses that exist there just to show that there really are two hundred and fifty businesses. We did this because often representatives of the City will try to create the impression that there really isn't that much activity there, but these are businesses that have color printed business cards, telephone numbers, fax lines, everything you're supposed to have to operate any legitimate business. So, that's what that is there and that in tandem with this gives you an impression of the nature of businesses.

What I want to show you is the City has to do an environmental review to justify the eminent domain takeover of the area for development. When they did that, that environmental review done according to the city and state environmental review law, this is what they determined. Listen to the condescending tone of this language and their conclusion about these businesses. "Although the businesses were found to employ many workers and offer products and services valued by certain consumers, these businesses and institutions were determined not to be a substantial economic value to the region or the City as defined under CEQR" [City Environmental Quality Review]. It turns out that the folks who drafted this environmental impact statement are the same people who actually authored the CEQR, as we understand; so when you're actually drafting the definition and then you're going to try to make people fit into it later you can understand why the deck is stacked against the businesses from the beginning. So, Joe, I think we're done with this but I just wanted to say this, I think that it's important to say.

Joe, you could take down the business cards and flip over these boards. What you also have to understand about this area is that the City has deliberately neglected it for probably forty or fifty years, resulting in the conditions that you're going to see here. So not to belabor the point because I think the pictures speak for themselves, but these are the conditions in the City-owned portions of Willets Point. The City is responsible for the maintenance and the upkeep of these roadways and streets and they just don't do it. And when you call the service number and you send e-mails to the Department of Transportation, you receive no response whatsoever and nothing is done. You don't need to fill in these potholes you need to completely grade the street and do whatever you need and put a completely new surface there. And it's been requested for decades — nothing is done. So we think this is one of the indications that the City is teeing up eminent domain. That is, you create a situation like this, which, for all intents and purposes, looks to be blighted and then you leverage that blight in order to say we have no choice but to go in and condemn the area. Never mind the fact that these people are actually there operating their businesses behind those streets. So that is the situation. There aren't any sanitary sewer systems — the people there use cesspools, no roadway maintenance, no snow removal in the winter. So you get this impression of blight.
In 2007, the City announced a comprehensive development plan. It's not the first time that that has happened in the history of the City but that's the version that we're discussing here. When asked at the time, why do you want to do it at this particular moment in time, why is it appropriate to develop the area, Robert Lieber, who was then the president of the Economic Development Corporation told the City Council, today the market is just a flood of capital. So it made sense in 2007 that this would be a project that would be feasible to do and you would have developers looking to come in, sixty-two acres being a large parcel. It's a four billion dollar project. So in 2007 the rationale was there's a flood of capital available that justifies this.

So, the City's plan is to replace all of this, which exists, with this. And, there's a map coming up, I believe, which shows you the size of the property. It's that entire triangle that's on the map on the right hand side. And what I want to emphasize here is that in this, this is provided by the City, this is their artist's rendering of what they intend to do. This to the left it is the New York Mets baseball team Citi Field, which is a newly constructed stadium that I believe opened in 2009. So, directly across 126th Street from this new stadium is where they're proposing to do this four billion dollar development. It seems to me that you don't decide to put this stadium here unless you've been assured that these businesses are not going to be located with the atrocious conditions across the street after the stadium is built. So there has to have been some kind of understanding or meeting of the minds or assurance from the City that if you place the stadium there, the area across the street will be redeveloped. The new stadium didn't need to be placed there: That's not where the prior stadium was located, which was many, many blocks away. They could have demolished the old one and built the new one in its footprint, but they chose not to do that; they put it here as kind of a harbinger of what's to come across the street.

The alleged benefits of doing this development are that you're going to get fifty-five hundred units of housing, a third of which would be affordable, and you're going to get jobs, including "living wage" jobs. The unions stood on the steps of City Hall and announced an historic agreement with the City Administration to include a living wage provision in the request for proposals for the development. Living wage, by the way, would pay retail workers on the site thirty percent, thirty-seven percent, roughly, more than they would otherwise get under minimum wage. This is a very significant thing; the unions touted it to the City Council. They testified that it was a binding agreement that they had in writing. I think you can see where this is going. In about ten minutes or so we'll tell you where things stand today.

They also said the benefit would be that you would remediate the alleged contamination that exists under the sixty-two acres of property due to the longtime use of the property for automotive purposes where fluids can seep into the ground. They also said that you had to do the whole sixty-two acres in one shot. You couldn't just section off a piece and do that because if you clean the section of the property and allowed these businesses to remain in the other non-remediated section you'd have to be concerned about what would happen because the contaminants would still be underground and they would leech back into the portion of the property that you had invested all this money to remediate. And so that was a non-starter, it had to all be done in one shot. Everybody had to vacate the area. These are the pretexts that they used to justify to the City Council that this all has to be done in one shot. They created the impression that eminent domain would be used as a last resort to clear the entire site.

As this project moved through the approvals process in 2008, while that was going on, the City reached out to some of the owners of the largest properties, the largest businesses, some of which have a hundred employees. They made what I would describe as "sweetheart deals" where they exempted these businesses from eminent domain essentially by saying if the day comes when we require your property let's agree on what a price will be, and we'll have a sliding scale so that the amount will go up every year. You'll have security; you'll know what it is. The City will try to find relocation sites for you. They made these deals with these select businesses and it's my belief that they did this because they cherry-picked the businesses that they thought had the deepest pockets and the brain power to oppose the project and to expose it for what it was. So if you made deals with those people, the City probably figured all you have left is a couple of owners of autobody shops; that's what they like to characterize the area as being. So they underestimated what would happen if they cherry-picked the biggest businesses, took care of them and left two hundred or so that they didn't deal with.

Challenging Eminent Domain

So, this eminent domain, this project, really is the poster child for the disproportionate effect on the poor, the weak, described by U.S. Supreme Court Justice Clarence Thomas within his dissenting opinion in the Kelo case, if you read that. In my opinion it's a racially discriminatory project because most of the businesses here are operated by people of Latino and Hispanic descent, and that's the community that they serve, and the businesses would be eradicated under the plan.

I also want to say that when the approvals were wending their ways through the City Council there was an allegation that there was illegal lobbying that was being done by a consortium of developers. They constituted themselves as what appeared to be a not-for-profit legitimate group and then they approached all the City Council people and said, we want to make this happen. During one of the public hearings a City Council member asked the Deputy Mayor if firms that were members of that entity doing the lobbying would be prohibited from bidding on the project. It was already obvious that there was a problem with the legality of this even at that early date. The answer was "I don't know, we have to check with the lawyers." So hang on to that idea because that, too, comes back into play in the present day circumstances. One of the prime financiers of that entity that financed the lobbying that turns out to be illegal was the New York Mets baseball team which is owned by the Wilpons who also own the development firm, Sterling Equities. Keep this tucked away in your mind, it's going to come back later.

So, in 2011, having the approvals in hand, the City announces its eminent domain action. They had curtailed the project by that point to a Phase 1 area which is the dark gray and the light gray on the map on the right. It is the area directly across the street from Citi Field. So, they kind of realized that under economic circumstances and because they didn't have certain regulatory approvals in place for the whole thing they would have to limit it that way.

I would like to give you the time line. The eminent domain was announced in early 2011. In March 2011 there was a public hearing. By May of 2011 the Determination and Findings were issued by the City, where they basically just confirm, we didn't hear anything at the public hearing that dissuades us from condemning you. Then on June 2, 2011, Willets Point United filed the petition starting the legal challenge and sought to annul the Determination and Findings. On December 14, 2011, the Property Rights Foundation of America provided an amicus brief in support of Willets Point United on the matter. I would like to briefly summarize for you what some of the points of contention turned out to be as this case played out.

The argument was made that there's no public use, there's no specific development plan. That is, the City said, we have a general idea that we want to do, what you see in this artwork, but no developer has come up with a blueprint for anybody to approve or evaluate. So if there's no specific idea you can't evaluate whether there's a public use because you need to know what the particular use of any property is going to be. No developer at that time had agreed to be responsible for the project; in fact, the City hadn't even issued a request for proposals. So, basically it was speculation that the City hopes to develop the area. And to use eminent domain it seems to us that the standard has to be a little higher than the City speculating that it would be able to do something.

There are also indications that development is impossible on the site. Financial obstacles: they claim that you have to raise the entire site by seven feet because it is below the flood plain. All this tremendously bids up the cost of doing anything on the property.

Due process violations: Not to take up too much time with this in great detail, but there was a failure to provide notice, especially to tenant businesses operating on City-owned property. The City provided notices to the property owners but not directly to the tenant businesses, of which there are over 135 in that Phase 1. Those people are entitled to compensation under eminent domain for the loss of their trade fixtures if they have modifications they've made that they can't get out of there and take to the new place. So these notices didn't go out.

There was no Spanish language interpreter at the eminent domain public hearing, even though the City is well aware that most of these businesses are operated by Spanish-speaking individuals who may not be able to speak English so those people (a) could not understand what was being said at the hearing, and (b) when they came to the microphone to speak and did it in Spanish, the stenographer took her hands off of the machine and there was no record made of anything these people said. So, you have these telltale signs that the City had made some mistakes, technically, in the way that they were moving forward.

Another major issue is that they were trying to leverage self-created blight. And evidentially there's no controlling precedent as to a speculative taking in a situation where a municipality puts the blighted conditions there and then leverages that to say, now we need to use eminent domain. So that's a unique argument in this case.

And there are also numerous changes when they segmented the project and they went back on their word that they had to do the whole thing, the whole sixty-two acres at once to avoid recontamination. They had not analyzed what happens if you just split off a portion. And so the lack of that analysis created a situation where, never minding the eminent domain, you just didn't have the environmental review that you would need to do that. So relative to other instances of condemnation in New York State, the City may have been in a relatively weak position.

The oral argument in the case was scheduled for May 7th, 2012, which was a Monday. The Wednesday before, counsel for Willets Point United gets a call from the City's attorney: "Would you consent to abandoning this case if we were to drop the eminent domain action and not see you in court on Monday? Would you agree to sign a stipulation to that effect and we withdraw and you don't press the issue?" So, of course, with that opportunity they said "yes" and the case was dropped, the papers were signed, and that is the status of the eminent domain now. Why did that happen? Is it that the City did not want to risk an adverse decision with precedents that could make it more difficult for the City to do this kind of thing in the future?

The Corrupt Process

But there were two other things that at the time we didn't know about. One of them is that the state attorney general finally concluded a three-year investigation started under Andrew Cuomo before he became governor, concluded under Eric Schneiderman on July third. It occurs to me you release news like this on July third right before the Fourth of July holiday but you don't necessarily want anybody to report about it. But it was picked up over the next few days, and this is from the New York Daily News indicating that the EDC and [former Borough President] Claire Shulman's local development corporation, which is the consortium of lobbyists, I'm sorry, "developers," that came together and lobbied in favor of the project that that, in fact, was a violation of the law. Nobody's been sanctioned, nobody's been held to account. They're going to restructure the EDC, Claire Shulman's organization continues with business as usual and, in fact, she's just received a $1.5 million dollar state grant of taxpayer funds to do environmental studies on the other side of the Flushing River.

But the fact is that if you're a property owner and there's a City project that implicates your future ability to continue owning the property, under the state law you are entitled to a legislative process by the City Council that should have been free and clear of any local development corporation showing up and lobbying. You are entitled to that. These folks didn't get that. They got lobbyists of that type representing the developers masquerading as a not-for-profit charity that violated state law, and were found a couple of years later to have violated state law. So, it seems to us that the approvals to do the project and to use the eminent domain, which is kind of bound up in the whole project, are tainted by this illegal lobbying. Now, what are we going to do about this? The City had refused to rescind the approvals. They want to leave that urban renewal plan in place and in effect they intend to rely on that to come back and try again. So, they're reconfiguring their plan. And that brings me to the second and last point of where we stand today.

Shortly after the eminent domain case was abandoned by the City, on June fourteenth this year, Mayor Bloomberg has a press conference with the developers in attendance and announces, "OK, we've got a new version of this project that we're going to do. First of all we're pleased to say that we've selected as the developers of the site, Sterling Equities, which is owned by the owners of the New York Mets which have the stadium across the street from the site." They had a request for proposals the previous year. We've made Freedom of Information Law requests asking to see the proposals. They refused to show any other proposals or any proposals at all. They furthermore refused to even identify who the developers are who bid on the RFP [Request for Proposal]. They just come and say we have selected and designated Sterling Equities and the Related Companies, which is well known in New York; they partnered up to do this project.

But they've again reconfigured it so drastically. What you see on the extreme right, (the right of Citi Field which is in the middle) is the development that was proposed in 2008 and that the Council approved. What they're now more interested in developing is this parkland property to the left of Citi Field in the picture. They want to put a 1.4 million square foot shopping mall there. Some of that property is now used as a parking lot for Citi Field. When they put the shopping mall there, they propose to move the parking over to Willets Point. This gives them the pretext to still come after the Willets Point property and to say, we have a use now, a public use, which they will say, for that Willets Point property.

So, as it stands now — they have announced this as of June fourteenth — they've started a public review process. They recognize that they need a fresh environmental impact statement that they can't do, so they're doing a supplement. They're still relying on the approvals from 2008 to a certain degree and they are saying that they want to use this parkland and they still intend to build the entire sixty-two acre Willets Point development some day. But the troubling things about this are: What about the housing that was promised as one of the linchpins of the original development. Well, now that's delayed until 2025. Reportedly, with an opt-out clause so that if the developer chooses not to build housing they will pay a penalty and then there isn't going to be any housing. So that was the reason to approve the project and it's perhaps not happening. The living wage provision is very quietly omitted from the RFP. You look through a hundred-page RFP or you do a search in a computer for the words "living wage," it isn't there. They dropped it. The unions are surprisingly silent about that. Also the remediation, you're only getting remediation of a partial site to start because they're going to do the Phase 1 area, which they originally said was not feasible and not the best way to do it.

And the last thing is that the City originally said that they were going to recoup the cost of acquiring the Willets Point property from these folks, which just for the Phase 1 area alone we estimate is at least two hundred million dollars worth of property in that twenty-three-acre stretch. They now say that that property is to be given to the owners of Sterling Equities, which is the owners of the New York Mets who own the stadium across the street, given free and clear because we need to spur this kind of economic activity in New York City. So, they've completely backtracked on what the alleged purpose of the project was. No one is being held to account for the illegal lobbying and the approvals that rely on that lobbying remain in effect. They continue to rely on those and that is where it stands. They're also building a mall on parkland which raises issues of its own. And all of this is to aggrandize the owners of the New York Mets baseball team. So, that, in a nutshell, is what has happened.

Joe Ardizzone would like to come up and say a couple of words about the amicus brief briefly and then I've got a statement from Irene to read and then we're done.

Joseph Ardizzone: My name is Joseph Ardizzone, I was born and raised at Willets Point Boulevard. I love living there and care most of all for the children of the future and to get eminent domain out of their own property. I want to thank everyone here for being here. Property Rights has been a great effort to help us in this fight. We fought fearlessly and all the time, we never gave up, and we took every advantage that we possibly could. I want to thank Carol LaGrasse for all her efforts and everyone else here, including for the amicus brief which was brought forth by the lawyers John Marwell, Jeremy Marwell and David Hawkins. I want to thank them all from the bottom of my heart and from everybody from Willets Point area. I wish to thank you all. Especially Carol LaGrasse's efforts in this matter.

LoScalzo reads Irene Prestigiacomo's statement: This is a statement provided by Irene Presti, whose picture is there. "Good morning, Carol, Peter, ladies and gentlemen. This morning I would like to again thank Carol and Peter LaGrasse for their invitation to speak with you and their continuing efforts on our behalf. I am unfortunately unable to be here in person due to a bout with bronchitis. I will take no personal offense at you're collective sigh of relief that I am not here, coughing and sneezing and thus spreading this reprehensible bug to all of you.

"Willets Point United has come a long way since its inception in 2007 in its fight to keep EDC, Mayor Bloomberg's personal real estate acquisition agent, from effectively taking our personal property and giving it to Fred Wilpon, the owners of the Mets baseball team. Sadly, some property owners have fallen victim to the unrelenting pressure, scare tactics and harassment by myriad agencies all under Bloomberg's direct orders and have already lost their properties. There are, however, many of us still united in our cause for just and legal representation of our constitutional rights. My property, fortunately, is not in the Phase 1 development plan of EDC but it is only a short reprieve. The City is continuing its onslaught of Willets Point United in the hopes that we, too, will fall. Guess what? We are not going to let up in our pursuit to stop their corrupt and blatant abuse of their power to steal personal property from their owners. If justice prevails, we will continue to be successful.

"Thank you for your kind attention and continued support. Sincerely, Irene Prestigiacomo."

LoScalzo: So, thank you all very much. We appreciate that.

Carol LaGrasse: There's so much betrayal at so many levels. I wanted to show you a New York Times article that just came out called "An Avenue of Vice." It's about all the prostitution on Roosevelt Avenue which is quite a distance to the west (the part where the stores are), from Willets Point. And the part that was most interesting to me is a quotation by the state senator José Peralta, in this article. He speaks of "the long-held plan to develop Willets Point's industrial area at the eastern terminus," "of Roosevelt Avenue's 'Avenue of Vice,'" as the New York Times called it. "He hoped that this vision of the future," his words, vision of the future, "would draw bigger stores and national chains to the area and would replace disreputable industries the way the anchors, the new stores that anchored Times Square helped revitalize that area." So you can really count on your state senator here, that's José Peralta.

And also I have a new opportunity developing within the American Society of Civil Engineers. One of my good friends is on the Committee on Ethical Practices. At various required continuing education courses, where I always select the ethics courses, I always bring up the fact that engineers carry out these redevelopment plans and never consider the people that are displaced. To my mind that's a really important civil engineering ethical question. So, what with this friend of mine now on the committee maybe I'll find an entry on that ethics committee as well.

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