Owners’ Counsel of America Files Amicus Brief in Support of Property Owner in Supreme Court Eminent Domain Case

Owners’ Counsel of America recently filed an amicus brief in support of the petitioner/property owners in River Center LLC v.Dormitory Auth. of the State of New York (11-922) urging the United States Supreme Court to grant review and correct the eminent domain decision by the Appellate Division of the New York Supreme Court.

The case involves one of the largest condemnations of private property in the history of New York City – the taking of the unused development rights of an entire city block located in the area of the Lincoln Center for the Performing Arts. At issue are important questions about the Just Compensation Clause of the Fifth Amendment which limits the government’s power of eminent domain by requiring that “just compensation” be paid to an owner if private property is taken for public use.

The petitioner in River Center filed a Petition for Writ of Certiorari seeking review of the New York courts, which denied the landowner and developer the right to present evidence concerning the value of land taken by the Dormitory Authority of the State of New York. The petitioner had the intention of developing the property into a multi-use commercial, retail, and residential complex. Its plans and ability to do so, however, were severely restricted by the Dormitory Authority’s strategic interference over 19 months to deny the re-zoning of the property and delay construction. When the property was eventually condemned by the Dormitory Authority in 2001, the intended development had not yet broken ground.

The petition presents three questions for the Court to consider:

Questions Presented

1. Whether the Fifth Amendment permits a state to deny compensation to an owner for loss of the reasonably probable development potential of a condemned development site taken through eminent domain proceedings, unless the property owner can show that development will come to fruition in the near future.

2. Whether, in awarding just compensation under the Fifth Amendment, a state may exclude damages resulting from deliberate governmental interference with a development project that delays development and suppresses the property’s value at the time of the taking over what it would otherwise have been.

3. Whether the Fifth Amendment permits a court in a condemnation proceeding to restrict evidence of value to the testimony of appraisers and to exclude or ignore otherwise competent testimony of property value (a) from the property’s owner, and (b) from third parties able to provide market-based evidence of value, such as financing proposals and offers to lease and buy.

Robert H. Thomas of Damon Key Leong Kupchak Hastert in Honolulu prepared and filed the amicus brief on behalf of OCA. [Disclosure: Mr. Thomas is a condemnation, land use and appellate attorney and the Hawaii member of OCA.] “This is a very important case,” he said. “As a result of the Supreme Court’s decision in the infamous Kelo case, the public’s attention in eminent domain has been on the power of the government to take property for redevelopment and other uses that are not clearly “public.” But the question of how compensation is determined once property is taken is also critical, and the Supreme Court should focus its attention on this case.”

The New York courts concluded that an owner whose property is taken by eminent domain must have specific plans that will “come to fruition” in the immediate future. The Owners’ Counsel of America brief argues that all evidence of value must be considered by a reviewing court, and it cannot disregard evidence that a potential buyer of the property would consider important in assessing value.

The New York court also rejected evidence that the Dormitory Authority depressed the value of the property in anticipation of the condemnation. Thomas said, “a court disregarding those facts is outrageous.” He also noted that “Manhattan is the most expensive real estate market in the nation and what happens there has wide impact, so this case takes on an added importance.”

The brief also argues that the Fifth Amendment protects the right of both a property owner and developer to testify about the property’s value. Owners’ Counsel implores the Court’s review of this case to emphasize the constraints that the Just Compensation Clause places on the eminent domain power and to safeguard the rights of private property owners.

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