Goldstein - no longer the last man standing in the way of Atlantic Yards eminent domain

On Wednesday, April 21, one of the last remaining property owners opposing the proposed Atlantic Yards project in Brooklyn, Daniel Goldstein, reached a negotiated settlement with the Empire State Development Corporation (ESDC) and project's developer, Forest City Ratner, to leave his home.  Goldstein appeared in court on Wednesday morning with his attorney Michael Rikon, OCA New York Member, for a hearing concerning eviction proceedings initiated by the ESDC, the state authority that condemned his home via eminent domain in March.  He left the courthouse with a Court-negotiated settlement and a deadline to move.  (See ABC7 video "Last Atlantic Yards holdout agrees to leave.")

Goldstein has been both the face and name associated with the grassroots, community-based opposition to this redevelopment project as well as the legal actions against the use of eminent domain for the project.  As NY Observer reporter, Elliot Brown noted in his April 21, 2010 article, "Mr. Goldstein and other residents proved effective in holding up the project for at least a year more than Forest City ever expected with a string of lawsuits. The use of eminent domain was challenged in federal and state courts--an unusual approach that added months onto the process."  The project will be delayed no longer as Goldstein agreed to leave his home by May 7th and two remaining business owners agreed to vacate by June 30th.

Reports indicate that Goldstein accepted a settlement of $3 million from the Empire State Development Corporation, the state-run, public authority with the power to take property by eminent domain for public purpose/use, which some describe as the "arm" of developer Forest City Ratner.  John Brennan, staff writer with NorthJersey.com, explained, "The offer [settlement] is almost six times the amount offered to Goldstein at the start of several hours of separate negotiations Thursday among Goldstein, New York State officials and Forest City Enterprises executives."  The settlement is also nearly six times the fair market value of $510,000 that the ESDC originally offered to Mr. Goldstein, who originally purchased his condo for $590,000.  However, this settlement is far from ordinary with respect to that which a property owner would generally negotiate in a eminent domain action.  However, Goldstein's opposition to and multiple legal battles waged against the project, the ESDC and the developer are also far from ordinary. 

Since the news of this settlement hit on Wednesday, there have been commentaries from both sides of the fence particularly with respect to how outsiders view the settlement amount and their opinions regarding Mr. Goldstein and his family for accepting it.  We have to agree with OCA Hawaii Member, Robert Thomas, who blogs at inversecondemnation.com. 

To characterize Goldstein as "folding" or as a sellout is to imply that he presently has options other than to go down in a blaze of righteous glory. To suggest he was bought is the height of cynicism. He pretty much lost at every step, but continued his uphill struggle long after most people of less stout fabric would've folded up and quit. Yet he went forward, with nothing more than the hope that the courts might listen. These comments also overlook the personal, financial, and emotional toll a battle like this can take.

(See Robert's full post here.)

Professor Gideon Kanner offers another thought on his blog here.

The moral also seems to be that sometimes it may be cheaper to pay off a determined holdout, than to go to the mat with him. It would be interesting to learn what this caper has cost both the city and the redeveloper, considering the cost of litigation and delay,

For additional reports and commentary visit  NoLandGrab and Norman Oder's "Atlantic Yards Report" here, here and here.

"Most condemned property in America" in court today

Left:  The Jennings Family farm house, built in 1810, sits near the banks of the New River and is nestled under VDOT's I-77 overpass that spans the New River in Max Meadows, Virginia.  It's hard to imagine that the bridge at one time did not exist and that this family home once enjoyed peaceful and private times without the noise and debris of passing interstate traffic.

Photo credit: Jeanna Duerscherl, The Roanoke Times
 
Last month we posted "Virginia farm may be 'most condemned property in America'" about Edd Jennings and his family's 300 acres farm that has been condemned for easements and other public uses by state agencies and utility companies on 10 different occassions since the 1970s.  Today Edd Jennings, who is part owner of the property with his brother, Gordon, and attorney Joe Waldo (Disclosure: Joe Waldo is OCA's Virginia member) are in Wythe County Circuit Court arguing their claims of inverse condemnation against the Virginia Department of Transportation (VDOT).

In the 1970s VDOT condemned portions of the family's land to construct the I-77 overpass (pictured above). Recently, VDOT made improvements to the I-77 bridge, which VDOT performed without requesting an additional easement on the Jennings property, such as a temporary construction easement or other negotiated use.  However, Jennings' inverse condemnation complaint alleges that the repair project itself caused damaged property which amounts to an inverse taking.

Circuit Court Judge Joey Showalter ruled against VDOT's motion to dismiss in 2009 and will hear testimony today and tomorrow regarding the property owners claims of inverse condemnation, arguing that private property was taken for public use without payment of just compensation. If Judge Showalter rules in favor of the property owners, the case will move forward to a valuation trial.  Virginia law provides that a jury shall determine the amount of just compensation in an eminent domain/inverse condemnation action.  It will be

See Peace cut to pieces: Wythe Co. landowner seeks justice in eminent domain case for more background on the history of condemnations of the Jennings property and additional images of what eminent domain looks like to these property owners.

Cert petition filed for SCOTUS review of the "Undivided Fee Rule" in eminent domain

A new Petition for Writ of Certiorari has been filed with the United States Supreme Court requesting review of a Wisconsin eminent domain case, City of Milwaukee Post No. 2874 Veterans of Foreign Wars v. Redevelopment Agency, 768 N.W.2d 749 (Wis. 2009), in which the application of the "undivided fee rule" (also referred to as the "unit rule") resulted in the award of $0 as "just compensation." (SCOTUS Docket No 09-1204.)


The Petition, filed on behalf of the VFW by Michael Berger and Gideon Kanner of Manatt, Phelps and Phillips in Los Angeles, challenges the rule's constitutionality, arguing that its application in this case deprived the VFW of a valuable leasehold interest in violation of the Constitutional guarantee of just compensation as set forth in the Fifth and Fourteenth Amendments. (Disclosure: Both Mr. Berger and Prof. Kanner are OCA Members.)

In a condemnation action, the application of the undivided fee rule requires that in the instance where multiple parties (e.g. fee owner and lessees) have an ownership interest in a property taken by eminent domain, the court may only calculate valuation as if the property had one single ownership interest and may not consider the value of separate interests, such as valuable long-term leases.

In the instant case, the VFW owned a long-term lease in a building located within the footprint of a redevelopment area in Milwaukee. The lease was for 99 years at the annual rate of $1 per year and provided for a renewable second term of 99 years. Additionally, under the lease, the VFW paid no utilities and no costs for upkeep or renovation, rather the owner was responsible for all utilities and costs. The property and building were acquired by the Redevelopment Authority using eminent domain. In valuing the property for the purpose of paying the property owner and VFW just compensation, it was concluded that the building was in such disrepair that the cost of asbestos remediation and demolition outweighed the fair market value of the property. Therefore, the owner and VFW were awarded nothing despite the undisputed fact that the VFW's leasehold interest had significant value. Under the undivided fee rule, the VFW's interest could not be worth more that the fair market value minus demolition and related costs of the property, and therefore, no award of compensation was due.

Prof. Gideon Kanner points out in his blog that similar to the former-Kelo property and neighborhood in New London, the site of the former VFW lodge in Milwaukee remains vacant. (See Former Hotel Site Remains a Vacant Lot, Tom Daykin, Milwaukee Journal Sentinel.)

Robert Thomas (OCA Hawaii Member) summed this issue up well in his blog:

When is a lease that everyone agrees is worth more than a million dollars totally worthless? When it's an eminent domain case and the court applies the "undivided fee" rule, that's when.

NY judge orders Port Chester to pay $3 million for property taken by eminent domain

On Friday, New York State Supreme Court Judge John R. LaCava issued an opinion in the eminent domain case known as In Re Matter of Village of Port Chester v. Village of Port Chester, 2010 NY Slip Op 50532(U),  Supreme Court, Westchester County (Decided April 2, 2010), ordering the Village of Port Chester to pay the property owners $3,062,000.00, plus interest, for the taking of their commercial properties.  (Disclosure: Michael Rikon, OCA New York Member, represented Messrs. Didden and Bologna as well as their businesses in the New York State Court condemnation action.)  This case might be more recognizable by the names of the business partners - Bart A. Didden and Domenick D. Bologna - who individually and collectively owned the properties prior to Port Chester's seizure by condemnation in 2004 and challenged the condemnation in federal court in Didden v. Village of Port Chester. 

Business partners Didden and Bologna acquired and assembled their commercial properties in downtown Port Chester with the hopes to develop their contiguous parcels.  For years the partners pursued various opportunities to develop their land and continued to acquire additional parcels adjacent to their assembled properties for this purpose.

In 1999 following a lengthy environmental review process and in keeping with New York's Eminent Domain Procedure Law, the village officially published public notice of its intent to establish an "urban renewal project" in an area of downtown near the waterfront.  The village held the necessary public meetings and published its "Determination and Findings" specifying the public benefit of the urban renewal project.

Port Chester's published findings stated that the public purpose of the redevelopment project required the condemnation of private property within the project footprint "for the purpose of clearing and reconstructing this area to enhance public access to the waterfront, protect and encourage water dependant uses, promote the development of mixed use and commercial retail uses on the waterfront, remediate environmental problems, and have a positive impact on the existing and continued development of the Village waterfront and downtown business areas." Port Chester then began acquiring the parcels in the project footprint in three phases.

In 2003, a broker approached Didden and Bologna on behalf of CVS about locating a pharmacy on their property.  While negotiating with the national pharmacy chain, the partners began to submit the required plans for Village approval.  The Village Board of Trustees approved the plan in the summer of 2003 and the Planning Commission granted preliminary approval in November 2003.  As the properties were zoned General Business and preliminary approval had been granted, the partners faced no further procedural hurdles.  However, the Mayor's office requested that Didden and Bologna meet with the Village's "preferred developer," G & S Investors (G & S), before further action would be taken with respect to their proposed plan.

On November 5, 2003, Didden, Bologna and their attorney met with the developer, Greg Wasser, and his attorney at the developer's office.  During the meeting, the developer advised the partners that the developer would require either a lump sum payment of $800,000.00 or a 50% interest in the partner's CVS project to allow it to move forward,  or alternatively, the parcels would be taken by eminent domain.  The partners rejected this offer, called it "extortion," and adjourned the meeting.  The following day, November 6, 2003, the Village of Port Chester initiated eminent domain proceedings to acquire two of the parcels.  

Didden and Bologna challenged the condemnation in U.S. District Court in January 2004 on the basis that the taking was not for a "public use" as guaranteed by the Fifth Amendment and sought injunctive relief to stay the condemnation as well as monetary relief.  Their argument was simple: Extortion for the benefit of a private party is not a public use.  The federal court found in favor of  the village and its preferred developer.  In 2006, U.S. Supreme Court Justice Sonia Sotomayor, then a federal court judge, was on the appellate panel that affirmed the lower court's findings and upheld the taking in Didden v. Village of Port Chester.  (See our previous post here.)   

The partners petitioned the U.S. Supreme Court for a writ of certiorari but the Court did not grant review.  The Institute for Justice filed the petition for writ of certiorari to the Supreme Court on behalf of Didden.  (Disclosure: IJ senior attorney Dana Berliner is a member of OCA.)  Throughout the legal battle, the partners continued to pursue the approval for the CVS project and were granted final site plan approval in February 2004.

Judge LaCava's April 2, 2010 opinion awards just compensation to the property owners for the taking of their properties and for "consequential damages."  Since Port Chester has made an advance payment of $975,000.00, the remainder plus approximately $600,000.00 in accrued interest remains due to partners Didden and Bologna.  Although, the Village of Port Chester is responsible for paying just compensation, in reality its preferred developer, G & S, will foot the bill.  (See Port Chester ordered to pay $3 million in land case.)