However, there is rarely a "one size fits all" formula for every situation.  As is often the case, real life can get more complicated than that.  One of the most visible, and controversial examples of the use of eminent domain recently took place on the West Side of Manhattan, just south of Times Square, on the east blockfront of Eighth Avenue between West 40th and 41st streets, the site of the new New York Times headquarters building currently under construction.

The New York Times and Other Examples

What does the assemblage of a site for a publicly traded corporation's headquarters have to do with eminent domain?  Good question, and one that has been increasingly asked by many others as well.  With a diversified stable of newspapers, television and radio stations, and a variety of ancillary businesses (including a partial interest in the Boston Red Sox), the assemblage of a site so that this large, publicly traded corporation can construct its new headquarters hardly seems in the same category as a park or school. 

By way of background, in December 2004, the Times sold its present 714,000-square-foot headquarters building at 229 West 43rd Street, leasing back the building until the end of 2007, when it expects to move into its new 1.54-million-square-foot building being constructed on Eighth Avenue by a partnership of Forest City Ratner Companies and ING Real Estate.  The Times will own and occupy a condominium totaling about 58 percent of the building, or 825,000 square feet. 

Eleven properties on the new site were condemned and acquired by the Empire State Development Corporation (ESDC, formerly the Urban Development Corporation or UDC).  Forest City, ING, and the Times funded its acquisition in the amount of approximately $86 million plus certain additional costs (a reported $26.1 million in other tax breaks were also included in the deal).  As this involved a total taking rather than a partial taking, there was no calculation of the difference in the condemnee's property values. 

Technically, the site was then ground leased to the partnership for 99 years, during which time no fixed rent is payable.  However, the partnership is required to make payments in lieu of real estate taxes ("PILOT"), pay a percentage rent with respect to retail portions of the building, and make certain other payments.  Under the terms of the ground lease, the partnership has an option to purchase the site after 29 years for nominal consideration.  Construction began on the building in August 2004, and is expected to take about three years to complete. 

Although the prior landowners were compensated based upon appraisals prepared by both sides, where was the public purpose that made the site available to the Times? 

The Development Corporation's mandate includes:

Overseeing the revitalization of Lower Manhattan in the wake of September 11; formulating policies and initiatives to promote economic growth in Harlem; redeveloping Times Square, including the condemnation and acquisition of blighted properties and recruitment of prospective tenants; planning and oversight of a mixed-use development on 74.5 acres on the East River in Queens; redeveloping the US Postal Service facility, known as the Farley Building, in connection with the New York City Amtrak Train Station Redevelopment; and promoting economic development and tourism and leveraging private investment in Niagara Falls.

In a case that was appealed all the way to the US Supreme Court (which in February 2003, declined to hear an appeal of a New York state court's decision), it was ultimately ruled that the state (in the form of the ESDC) had the right to condemn the Eighth Avenue site on the basis of it being blighted.  The ESDC argued that it used its condemnation power to improve areas of New York City where the majority of the public benefits.  In other words, the removal of the blight was the public interest part of the equation.  Taking it one step further, commenting on certain parcels that were apparently in better condition than others, the ESDC also opined that even if "isolated pockets" of the block were not blighted, the entire site was.  The owners of some of the parcels unsuccessfully argued that the only alleged "public use" was construction of the new Times headquarters facility.  The ESDC successfully countered that the new building provides valuable economic benefits to the city. 

Until a US Supreme Court ruling known as Berman v. Parker in 1954, public use had been confined to bridges, railroads, highways, etc.  From 1924 to 1968, New York City's own master builder, Robert Moses, condemned thousands of properties to construct the Triborough Bridge and the West Side Highway as well as Long Island's Northern and Southern State parkways (even though he didn't drive!), along with sites for the construction of Shea Stadium in Queens and Lincoln Center on the Upper West Side of Manhattan.  Yet, legend has it that even he was prevented from building a parking lot in Central Park for the privately run Tavern on the Green restaurant.
 
More recently, the concept of eminent domain appears to have been expanded to encompass a far larger scope.  In 1984, the United States Supreme Court ruled that eminent domain can be used for "any project rationally related to a conceivable public purpose."  For example, in a widely watched story presented by the CBS television show 60 Minutes in 2004, the city of Lakewood, Ohio attempted to use eminent domain to condemn 17 apparently structurally sound detached, single-family homes in order to make way for new condominiums and a shopping center.  The city argued that the homes were blighted since they did not meet the municipality's definition of current standards--namely, attached two-car garages and central air conditioning.  The city of Lakewood (whose motto is ironically "the city of homes") argued that it needed to expand its tax base in order to survive.  Still to be resolved is whether tax revenue can be considered a public purpose.

Looking Forward

Another significant case was recently argued in the US Supreme Court in Washington, DC, known as Kelo versus the City of New London, Connecticut.   Consider the following excerpts from opening arguments made in February 2005:

Plaintiff's Attorney (Kelo): "This case is about whether there are any limits on government's eminent domain power under the public use requirement of the Fifth Amendment.  Every home, church, or corner store would produce more tax revenue and jobs if it were a Costco, a shopping mall, or a private office building.  But if that's the justification for the use of eminent domain, then any city can take property anywhere within its borders for any private use that might make more money than what is there now." 

Justice Ginsburg:  "...you are leaving out that New London was in a depressed economic condition, so this is distinguished from the case where the state has no particular reason for wanting this, but the critical fact on the city side, at least, is that this was a depressed community and they wanted to build it up, get more jobs."  ...

Justice Ginsburg:  "But you concede that on the facts, more than tax revenue was at stake.  The community had gone down and down and the town wanted to build it up."

Plaintiff's Attorney (Kelo): "It is a desire to try to improve the economy through tax revenues and jobs.  That is certainly the case.  But that cannot be a justification for the use of eminent domain because if the trickle-down effects of economic development are a justification, then there really is no limit..."

The Supreme Court is expected to hand down its decision in late May or early June.

Among the other locations on citizen's and developer's radar screens is Columbia University's contemplated expansion through the Manhattanville area of West Harlem and Morningside Heights areas of Upper Manhattan.  Columbia, already the city's third-largest land owner, has been adding about a million square feet of space every five years over the last decade, and wants to see much of the neighboring areas rezoned from their current industrial and manufacturing uses to encourage economic development. 

This is part of another important trend: Harvard, which compares unfavorably with its peers in terms of square footage per student, is hoping to acquire land for a new university city in neighboring Allston. Meanwhile, the University of Pennsylvania, the largest employer and landowner in Philadelphia, is attempting to revitalize the city in order to make the surroundings safer for its students.  Despite different objectives, universities continue to play a large role in the growth of cities, and are increasingly likely to gravitate towards the use of eminent domain.  To date, there is no evidence that Columbia will ask the state to use its powers of eminent domain and condemnation.  However, if it does, there will have been plenty of precedents--King Ahab v. Naboth, notwithstanding.

¹The Dictionary of Real Estate Appraisal, Fourth Edition, 2002, Appraisal Institute, Chicago, page 95.