When The New York Times and Forest City Ratner Companies open their grand new office building on Eighth Avenue, it won’t have a Taco Bell, McDonald’s, Wendy’s, or Nathan’s, because they are specifically forbidden under terms of a land deal with the state. But a Starbucks or Cosi would be just fine.
The lease, which is on file with the Securities and Exchange Commission, also bars renting space in the 52-story building for “a school or classroom or juvenile or adult day care or drop-in center.” It forbids “medical uses, including without limitation, hospital, medical, or dental offices, agencies, or clinics.” It gives the New York Times Company “the sole and absolute discretion” to reject United Nations or foreign-government offices, including any “considered controversial” or that are potentially the focus of demonstrations. It bans any “employment agency (other than executive-search firms) or job training center” and auction houses, “provided, however, the foregoing shall not apply to high-end auction houses specializing in art and historical artifacts.” Discount stores are forbidden. And the deal bars “a welfare or social-services office, homeless shelter or homeless assistance center, court or court-related facility.”
In fact, any government office is excluded from the building if it would attract people who arrive “without appointment.”
Lease restrictions that exclude the public may not be unusual in luxury office buildings, but there is an irony in this case. The Pataki administration, acting on behalf of the New York Times Company, condemned the property for a so-called “public purpose.” This is the standard the Fifth Amendment sets for the state to invoke the immense power of eminent domain.
At one time, “public purpose” usually meant a highway, bridge, or utility serviceï¿½something the public was actually allowed to use. But now it’s routine for the courts to declare it a “public purpose” for the state to seize privately owned land so that another private owner can erect a very private office building where the public can’t even buy an inexpensive taco. In this case, the services many New Yorkers most needï¿½health, education, job placementï¿½are officially locked out of a building that will be heavily subsidized by city taxpayers. And, it should be noted, this is a site with unique public access, located across the street from the Port Authority Bus Terminal and upstairs from the city’s subway crossroads.
“Our new building will be an attractive and welcome addition to Times Square for all New Yorkers to enjoy,” Times spokesperson Toby Usnik said in an e-mail interview after the company was asked if it had any comment on these provisions in its deal with Forest City and the Empire State Development Corporation. “We have worked with our partner, Forest City Ratner Companies, to define general categories of tenants that will complement our new building, including food and retail establishments with broad appeal. These are common types of establishments that New Yorkers and visitors alike now expect to find when visiting the new Times Square.”
Such notions of a “public purpose” could well change as a result of outrage across the political spectrum over the U.S. Supreme Court’s 5-4 ruling on June 23 that allowed the city of New London, Connecticut, to seize homes for private development. While the court ruled in favor of condemnation (and in 2003, also declined to hear a case against the Times project), the majority was troubled enough by the apparent unfairness to note that states can restrict the power of eminent domain, and that many have done so.
This has spurred a move across party lines in Albany and other statehouses to limit government’s ability to coerce land deals for private developers. Assemblyman Richard Brodsky, a Westchester Democrat, proposed a bill, for example, to make condemnations more costly for the private developer and create a commission to review the “public purpose” standard. The bill would provide for displaced renters to be paid one and a half times their annual rent; property owners also would be compensated at one and a half times the market value of their property, according to Jim Malatras, legislative director for Brodsky, who chairs the Assembly’s Committee on Corporations, Authorities and Commissions.
It comes too late to help the owners of the 16-story office building, student dormitory, business school, hat shop, and fabric store bulldozed to make way for the Times headquarters. And the Brodsky bill doesn’t quite come to grips with the key issue: Exactly what “public purpose” should allow government the right to take your home or the place where you work? But it’s a start.
One yardstick for deciding this tricky question can be found in a concurring opinion Justice Anthony Kennedy issued when he cast the swing vote in favor of the bulldozers in the New London case. He wrote that deals “intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits,” should be forbidden.
Condemnation of private property for private development in New York City is often done as part of a no-bid deal that favors politically powerful businessesï¿½companies that are major campaign contributors, hire politically connected lobbyists, or in the case of the Times, are media companies with enormous clout.
David Reiss, a professor at Brooklyn Law School and expert on eminent domain, said some condemnations in New York City might have failed the test Kennedy set in the New London case. “The Kennedy concurrence implies that sweetheart deals made in back rooms might not pass constitutional muster,” Reiss said, “and as many development deals in New York are conducted in back rooms, it raises concerns that they would not be constitutional under Kennedy’s view.”
If Kennedy is to be taken at his word, it follows that special steps should be taken to avoid favoring the politically connected when the state’s power is used to condemn land for a private developer. That could mean requiring competitive bidding, timely release of all records, and City Council approval for any condemnation and related tax breaks. That would replace the no-bid deals, secrecy, and “three men in a room” approval process marking such projects as the Times building (which was quietly approved by the Public Authorities Control Board).
In the Times deal, the city and state made a no-bid pact despite prior plans to seek competitive bids for the choice midtown site the newspaper company wanted. The Times also got tens of millions of dollars in city subsidies based on what it said were the high costs of keeping 750 workers based in the city instead of New Jerseyï¿½costs that, it was clear at the time, were vastly overestimated by Times executives, as the Voice has reported (“The Paper of Wreckage,” June 17, 2002). The Times got these subsidies even though, as previously reported, another developer, Gary Barnett, said he would build a 50-story office tower without heavy tax breaks. Barnettï¿½who made headlines recently by competing with Forest City Ratner Companies to build in downtown Brooklynï¿½even owned part of the site.
The question remains: Would the Times deal with a favored developer have passed Kennedy’s test?
“The Supreme Court was in fact asked to take cert [hear an appeal] in our case and refused,” said Usnik, the Times spokesperson.
“Presumably that was because the justices did not see a constitutional problem in the condemnation.”
Further, he said in an e-mail, New York courts found that the Times building benefited the public by replacing urban blight in Times Square. These are not the minor or “pretextual” benefits that Kennedy was concerned about, Usnik said. (You weren’t aware that booming Times Square is still blighted?)
But is that enough of a “public use” for the state to seize one privately owned office building to replace it with a more exclusive one that someone else owns? Reiss, the Brooklyn Law professor, suggested that the standard should be “substantial use by the general public.” It would be interesting to see that applied to an office building that bars all employment offices except for executive-search firms.
But any change in New York’s eminent-domain law will have to overcome strong opposition. The Bloomberg administration made New York the only city to come to New London’s aid with an amicus brief, arguing that jobs can be created if city officials are free to determine what a “public use” is. What it means is that unless your household employs more people than, say, a basketball arena, you’re unprotected.
See you in Starbucks.