By: Richard Braun, RulingSports.com Intern (Twitter: @RicBraun)
Whenever a new stadium is approved to be built or remodeled for a team, such as what has recently been approved in Minneapolis for the Vikings and in San Francisco for the Warriors, the controversy typically revolves around how these facilities are financed. The Brooklyn Nets, however, face a different series of legal issues as they prepare to move into their new home, the Barclay’s Center.
Back in 2003, real estate developer Forest City Ratner proposed the Atlantic Yards project – a multi-billion dollar plan to develop the Vanderbilt Yard and Prospect Heights, a neighborhood just outside downtown Brooklyn. Headed by then-Nets owner Bruce Ratner, the plan would come to include the future home of the Nets, the Barclays Center. About half of the proposed area was already owned by the city, but various private parties owned the remaining half. To acquire control of the remaining half, the state declared the area blighted and seized the property using eminent domain.
The modern formulation of the limitations of eminent domain can be traced back to the 2005 Supreme Court Case Kelo v. City of New London. The 5th Amendment of the United States Constitution states that private property cannot be taken for public use without just compensation. The Kelo ruling loosened the “public use” requirement, meaning that the land must be used by the public, for simply a “public purpose.” In writing the majority opinion, Supreme Court Justice Stevens allowed “public purpose” to include economic development and the removal of blight, but the Court mostly wanted state legislatures to determine on their own the full extent of their eminent domain power. In dissent, Justice O’Connor, while stating different public uses that the Court has allowed in the past, said that “the sovereign may transfer private property to private parties, often common carriers, who make the property available for the public’s use—such as with a railroad, a public utility, or a stadium.” (emphasis added) What O’Connor is saying any building that is open for the public counts as a public purpose, and that includes stadiums. This passage in the Kelo dissent specifically outlined the authority New York had to seize private land for Ratner’s Atlantic Yards project and the Barclays Center.
In order to comply with the law as stated by Kelo, the private land still needed to be classified as blighted, and the Empire State Development Corporation (ESDC) in 2006 came to the conclusion that the area was indeed blighted. In their study, the ESDC claimed that it was highly unlikely that blighted conditions on the project site would be removed without public action. This assertion has been met with a great deal of skepticism, and eventually the land owners took Ratner and the State of New York to court over what they considered an unconstitutional taking, in violation of the Fifth Amendment. The New York Court of Appeals, however, followed the holdings from Kelo and other cases in upholding the State’s ability to seize private land for the Atlantic Yards project, even if not all of the property being seized was blighted. The property owners also sought to stop the taking by claiming that the actual motivation behind the approval of Atlantic Yards was for the private gain of Forest City Ratner, not any public purpose. The Court disagreed, holding that eminent domain was just a means to an end, the end being the public purpose.
In the wake of the Kelo decision, 43 states imposed new limitations on their eminent domain laws. New York was not one of them, and as a result it was next to impossible for the residents in the proposed Atlantic Yards area to mount a successful challenge to the State’s eminent domain power. The Court ruled that any property that was underdeveloped was subject to eminent domain. However, this is a ruling that can apply to just about any piece of property. Further, the New York Court of Appeals was very deferential to the ESDC in their decision, even though the ESDC is an agency appointed by the State that is comprised entirely of unelected officials. As a result, Ratner secured the legal victories he needed in order to begin building the Barclays Center, which is scheduled to open in time for the 2012-13 NBA season.
The use of eminent domain does not receive the same amount of press as public stadium financing, but it is a popular tool for securing land for new stadiums. Its use is more liberal in New York than in other states, but just about every state can seize private property for a new stadium if the property meets that state’s definition of blight. And unlike public financing, which is typically voted on either by a legislature or public referendum, the public has little recourse in the event of a taking.