Some properties with faulty conditions or unresolved violations are owned by Vornado Realty Trust, the neighborhood’s largest landowner, which the state has said will develop some of the new towers. Vornado, a public company that is among the city’s largest owners of offices, has accumulated more than a dozen properties in the area over the last 20 years, holding onto them in anticipation of a larger redevelopment.
Of the eight sites that would be redeveloped, Vornado owns four of them and a share of another. The sites could give rise to some of the tallest buildings in the city.
In fairness, it is not yet clear to what extent eminent domain will be used in this case. But the redevelopment plan put forward by the state government is likely to require the demolition of numerous existing structures, including a variety of businesses and a 150-year-old Catholic Church.
This is far from the first time New York has used its blight statute to authorize dubious uses of eminent domain, including in situations where private parties who owned some of the “blighted” property stood to benefit. In a 2011 article, I went over two state Court of Appeals decisions that upheld even more abusive land grabs (the Court of Appeals is New York’s highest court). Sadly, little has changed since that time.
Both the New York state constitution and the Fifth Amendment federal constitutions only permit the use of eminent domain to take property for a “public use.” But the state Court of Appeals has interpreted that to permit the taking of “blighted” property for transfer to private interests under the state’s incredibly broad definition of blight. For its part, the US Supreme Court has ruled—in misguided decisions likeBerman v. Parker (1954) and Kelo v. City of New London (2005)—that virtually any potential public benefit qualifies as a “public use.”
In addition to harming local property owners, such condemnations often actually destroy more economic value than they create. Among other things, rendering property rights insecure undermines incentives to invest, and thereby impedes longterm economic development. I go over these dangers in detail in my book The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain.
In this case, some beneficial development may occur because—as the Times notes—the “blight” designation can enable the state to get around local restrictions on the height and type of new buildings that can be constructed. Building restrictions are indeed a serious problem curtailing valuable development in New York and elsewhere. But the right approach to this problem is simply to abolish or at least loosen the restrictions without simultaneously authorizing the use of eminent domain.
In the aftermath of the US Supreme Court’s controversial decision in Kelo v. New London (2005), many states enacted eminent domain reform laws to curb the taking of property for private development. Some of these laws were effective, others much less so. New York was one of only five states that made no changes at all. It continues to have what may be the most permissive eminent domain law in the entire country.
In 2020, the New York Court of Appeals added to its terrible record in this area by upholding the use of eminent domain to seize property for a pipeline that may never get built. That and the same court’s blight precedents bode ill for a recently filed lawsuit (also noted in the Times article) challenging the legality of the Penn Central blight designation.
It’s possible that the New York Court will rethink its ultra-permissive approach to public use, or that the state legislature will address the problem, as urged by two dissenting judges in the pipeline case. It is also possible that the federal Supreme Court will overrule or limit Kelo v. City of New London, thereby potentially curbing abusive “blight” and “economic development” takings that transfer property to private interests. Last year, three Supreme Court justices signaled an interest in doing just that. But until one of these things happens, New York’s expansive blight designations will continue to facilitate eminent domain abuse.