Property Rights Foundation of America®

Speech from the Ninth Annual National Conference
on Private Property Rights
(2005)

Eminent Domain — New York State Legislative Reform

Jim Malatras
Legislative Director to Assemblyman Richard Brodsky
October 22, 2005

It is an honor that you have invited me back to speak on behalf of Assemblyman Brodsky's eminent domain reform effort. I've gotten to know and speak with many of you on our collective effort to reform eminent domain laws this past year, and it has been an absolute pleasure to work with you. As always, I'd like to extend my warmest gratitude to Carol LaGrasse who has been a champion for your causes. While we don't agree on everything I deeply respect her passion for justice and especially enjoy our conversations and principled debates.

Last year I spoke about our successful effort to reform New York's eminent domain notification process. This year I would like to continue our conversation. Specifically, I want to explore two questions:

1. What are we overlooking in the effort to reform eminent domain laws? and

2. What are the tactical changes we must make to give citizens a fighting chance to contest condemnation proceedings?

Lost, I believe, in the current debate are core problems that unless changed, will not lead to fair and equitable administration of eminent domain law. In essence, I want to focus on the Assemblyman's continued effort to change the rules of engagement to provide citizens a fair process when fighting condemnation proceedings.

First, let me briefly provide you with some context and our office's perspective. We believe that eminent domain is an important government function. Eminent domain has been used for many years and for many important projects—schools, hospitals, parks, the Erie Canal and the New York State Thruway Authority—that benefit the common good.

Many of you, I'm sure, disagree with the Assemblyman and me on various issues including the need and importance of eminent domain. However, I want to emphasize what I said last year—more important than ideology and party identification is this: what is the right thing to do to reform the system and most important, what will work?

Primarily, I would like to reserve my time with you this afternoon to focus on two key problems with New York eminent domain law. The first is to briefly discuss our effort to reform New York's eminent domain process. However, I want to focus on another key area that is often overlooked when we speak of eminent domain reform and that is the role of public authorities. I will then spend some time distinguishing our approach from other approaches in the context of the recent Supreme Court decision.

New York: Hopelessly Rigged?
First, what many overlook in the current reform effort is the absence of process reform. The Institute for Justice derides New York's eminent domain process as being hopelessly rigged and calls New York one of the worst states when it comes to eminent domain abuse. While I cannot adequately compare New York to other states, it is clear that citizens are disadvantaged when fighting condemnation proceedings.

That is why Assemblyman Brodsky introduced the Eminent Domain Reform Act—the EDRA. The EDRA will fundamentally change New York's eminent domain process by broadening procedural protections to citizens including increasing compensation to citizens to dissuade bad projects, requiring comprehensive planning, increasing public participation, establishing a commission of experts to examine the appropriate constitutional and legal standard for judicial review in eminent domain cases, increasing the time that citizens may seek judicial review and giving the power back to local governments to make condemnation decisions.

Let me highlight three problems and our solutions to those problems that will hopefully level the playing field.

Technical Impediments—Judicial Review
First:
The first problem is technical impediments. Assemblyman Brodsky's bill increases the timeframe by which a citizen may appeal the government's decision to take property. Currently in New York, citizens only have thirty days to appeal a condemnation proceeding. This is far too short amount of time. Often citizens' claims are rejected simply because they miss the thirty-day deadline. Therefore, our proposal would significantly increase the right of citizens to seek judicial redress.

Compensation as a Deterrent
Second: With the new breed of condemnation projects, current compensatory frameworks are not successful in deterring unnecessary projects. Assemblyman would also increase compensation to affected individuals. As many scholars' note, compensation is the best deterrent in all condemnation proceedings. Increased compensation will help deter unjustifiable cases.

Information Control
Third: Condemnors are often successful in takings cases due to the lack of real transparency. Citizens are often kept in the dark and unaware of what is actually happening in condemnation projects. Citizens simply cannot fight something they don't know. Such information control, gives condemnors significant leveraging power. To facilitate greater transparency the Assemblyman would require a comprehensive economic development plan as well as a homeowner impact statement. Both would be subject to public hearings and participation and would lead to increased power and influence of the citizenry.

The Role of Public Authorities
Say for instance that we make all of the procedural changes I mentioned above. Clearly the system would be more equitable. However, one of the biggest areas of eminent domain law overlooked by activists and policy makers is the role of public authorities in the process. In New York, as was the case in New London, Ct., condemnation decisions are often made through quasi-public development agencies or authorities. For the past several years Assemblyman Brodsky has uncovered numerous problems in the public authority system. Assemblyman Brodsky's work into investigating public authorities reveals that there is a fundamental problem with public authorities—they have public missions but are isolated from traditional democratic pressure, and therefore lack accountability to the people. They exist in a profoundly insulated institutional culture where they act as shadow governments based often on private interests, instead of their designed purpose of serving the public good.

Most public authorities or public benefit corporations have the power of eminent domain to fulfill their public missions, and can condemn property without approval of elected officials or through traditional democratic channels. Statewide entities such as the Empire State Development Corporation ("ESDC") and local Industrial Development Agencies ("IDAs") condemn property for economic development projects.

Robert Moses, who dramatically altered the landscape of New York, saw endless opportunity for greater power by using public authorities for his advantage. As his biographer Robert Caro said:

"A public authority, he [Moses] had learned, possessed not only the powers of a large private corporation but some of the powers of a sovereign state: the power of eminent domain that permitted the seizure of private property, for example, and the power to establish and enforce rules and regulations for the use of its facilities that was in reality nothing less than the power to govern its domain by its own laws."

As Caro summarized about a public authority's power, "They had [public authorities], in fact, some powers that sovereign statesat least the sovereign state of New Yorkdid not."

Let me support my claim with some preliminary facts. Dana Berliner's, "Public Power, Private Gain," which is a state-by-state survey examining the use of eminent domain, illustrates my point. Ms. Berliner cites various examples of eminent domain abuse all over New York from East Harlem to Ithaca. Ms. Berliner highlights twelve cases of eminent domain abuse. Of those twelve examples, seven centered upon the use of eminent domain by public authorities. Thus, in over fifty percent of the time where Ms. Berliner cites abuse, public authorities are directly involved.

What's more telling, though, is in which cases citizens were able to successfully, or, at least stand a fighting chance to contest the taking. In every example Ms. Berliner cites where a public authority invoked its statutory power to condemn property, the authority won. In the other cases where an elected governmental body condemned property the results were mixed.

This illustrates the essential problem. Even with the serious deficiencies in New York's eminent domain law, when traditional elected bodies condemn property, citizens have a fighting chance because they can apply traditional democratic pressure. However, when public authorities condemn, citizens do not stand much of a chance because of the structural constitution of these entities.

Therefore, even with definitional or constitutional changes, without fundamental reform of public authorities, abuse, or alleged abuse, will not be stopped. That is why the key provisions of the Assemblyman Brodsky's act focus on public authorities. To reiterate: now, when public authorities condemn property, local governments cannot veto or override the authority's decision. Simply stated, public authorities have no obligation to listen to local governments or citizens.

Therefore, we propose that all takings cases be subject to local approval to reintroduce the democratic process back to eminent domain law.

The Definitional Concern
Finally, I would like to take a moment to discuss some key concerns we have with certain proposals in New York. Many legislative solutions have been introduced to counter the Supreme Court's decision in New London. The core idea of this approach would be to limit the definition of public use.

The most typical response to the New London decision has been to limit public use to traditional public uses such as parks, etc. or blight. In other words, this approach attempts to eliminate private-to-private transfers except when mitigating blight. There are several problems with this approach as currently construed. By limiting a taking to blight or some other similar vocabulary, eminent domain abuse will not be stopped. Under such a prohibition, economic development is simply called something else; namely blight!

There is also a problematic tone to this approach. Proposals which purport to change the constitutional standard in eminent domain cases, or permit eminent domain to go forward only in cases of blight would in essence justify private-to-private transfers in largely poor communities, while protecting more affluent communities. While this may not be the current intention, it is the practical outcome. This is why Assemblyman Brodsky proposes to convene a commission to carefully consider these issues before moving forward with an unworkable and potentially divisive solution.

The recent eminent domain ruling has roused the ire of many people. It is understandable; but the core challenge remains—what does one do to fix the system? In the end without significant reform to the process and to public authorities, frankly, all other changes will not be effective. A key rule of engagement when seeking change to level the proverbial battlefield is making the fight fair. Right now it is not. Citizens are significantly limited because often the governmental entity—public authorities—do not have to engage the citizens and when they do the process is so hopelessly one-sided it is often an effort in futility. In that end we will continue to push for commonsense policy that strikes the balance between the needs of society and individual liberties. I thank you for our continued dialogue. I look forward to our collective effort to see through workable and commonsense reform.

Thanks.

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