Kelo outcome shows Atlantic Yards risk
The outcome of New York's embattled eminent domain development projects is called into question by the economic development project which made them possible.
The Pfizer research facility at the center of the Kelo v. New London Supreme Court decision is closing, taking over 1,400 jobs with it. The 5-4 Kelo decision allowed New London, CT to use eminent domain to condemn private property for the "public purpose" of commercial development near a new Pfizer research facility. The city, which gave Pfizer a property tax break of 80% for the first ten years, spent $80 million preparing the seized property to build the condominiums and hotels they promised to draw Pfizer into town. Development was supposed to bring 3,000 jobs to the area.
What New London didn't do, and should have, was get a contractual obligation for the company to stay put in return for the money, because they clearly don't feel any non-contractual obligation.
Pfizer spokesman Liz Power says the company had no stake in the outcome of the Kelo case. Their operations are being consolidated at a Pfizer facility in Groton (ironically, Suzanne Kelo, the plaintiff in the eminent domain case, moved to Groton after she was thrown out of her home). The New London facility will be empty before the tax break sunsets. New London heard about it when the rest of us did.
Here in New York, the Bloomberg administration is fighting to seize properties in downtown Brooklyn and Willet's Point, Queens for economic development. In the case of the Atlantic Yards proposal in Brooklyn, the city is offering seized land and $700 million in subsidies to developer Bruce Ratner to build apartments and a basketball arena.
Ratner already doesn't feel any particular obligation to the taxpayers providing his windfall (or the current residents being offered below-market value for their condemned properties). Last week, he told business paper Crains NY, not generally a hotbed of anti-development sentiment, that he didn't feel a need to share building plans with the public: "Why should people get to see plans? This isn't a public project."
It's particularly striking that Ratner feels free to show such an intransigent attitude at this point, when he's facing multiple lawsuits challenging the city's actions on his behalf and a looming Dec. 31 deadline to break ground or lose the tax-free status for the project's bonds he's relying on to finish the project. Even if he manages to jump those hurdles, the Independent Budget Office says that revenues on the project won't cover debt service, much less the subsidies.
Complicating matters even more, Ratner is battling with bond rating agencies which don't want to give the project's bonds the investment-grade rating the project is relying on. If he does manage to talk them around, he's got to market the bonds, sell them, complete the legalities with the city and the MTA, and break ground in the next six weeks.
On the other hand, he has been working the refs pretty hard. He spent almost a million dollars on lobbying for the plan last year. He also has a friend in City Hall and an affluent partner, either of whom could cover his nut in an emergency out of petty cash.
All the same, given the outcome of the New London experiment in protecting corporations from the free hand of the market, perhaps the city should think twice about fighting to subsidize someone who feels comfortable telling us to go fuck ourselves before he gets his hands on our money.
Past Voice Ratner coverage is here.