April 1, 2006: April Fools Day is the perfect time to kick off a series about
the follies of eminent domain abuse. Aka EDA. Eminent domain,
also called "taking" or "condemnation", is the right of
government to seize private property in the name of what
the U. S. Constitution calls "public use". Public use has
traditionally been narrowly defined. Think construction of
schools, parks, bridges, etc. Yet in the current United States
of Real Estate, eminent domain has become a popular redevelopment
tool wielded by local governments and private developers.
A practice widely referred to as "eminent domain abuse".
EDA got a boost in June, 2005, when the U.S. Supreme Court,
delivered its decision re Kelo v. New London. The Connecticut
city of New London had condemned the low income neighborhood of
Fort Trumbull, in order to make way for an upscale development
project. The city's idea of "public use" was a projected rise
in property tax revenues, and enhancement of nearby property
values. The Supreme Court, in a close ruling, let this definition
of public use stand. Though the Court's decision has tended to be
seen as a ruling on the constitutionality of EDA, it was in fact,
a ruling in favor of letting local governments define public use.
The EDA hot potato was tossed back into local laps.
Eminent domain at the service of development is vastly unpopular
with the American people. Yet many politicians (particularly
municipal ones) have come to rely on EDA. Major projects are
pending that depend on it. Battles are raging at community levels
across the nation and legislators are rushing to hammer out anti
EDA laws. Many of those laws will have loopholes through which
an army of bulldozers will roll. More individuals and communities
will resist. Thanks to the Supreme Court's non-ruling as to what
constitutes "public use", the EDA wars will be with us for
That's the national stage. Meanwhile, on myriad homefronts,
EDA's follies are colored by local facts of life.
O Buh Albany!
Park South in Albany, New York is a small, basically blue collar
neighborhood with a big institutional neighbor. University
Heights is a conglom of legal and medical facilities and
colleges. Due to proximity, and the property holdings of one
of its members, University Heights is considered a stakeholder
in the revitalized future of Park South. Which does need a fix
up, due largely to the toll taken by slumlords and drug crime.
Despite the presence of drug dealers in Park South, people
disabled by addictions who live in the neighborhood have one
major advantage. Potential salvation is just a short walk away,
since a number of nearby medical facilities offer rehab programs.
As for Park South's slumlords, the biggest one owns housing all
over Albany. In Park South, 18 of his multi-family buildings are
crammed onto a few blocks. Others are scattered throughout the
neighborhood. Many (though not all) of the slumlord's tenants are
Section 8. A HUD voucher program that delivers rent payments
directly into the hands of landlords. Section 8 is income
adjusted; if a tenant's income goes down, HUD pays a larger share
of the rent. In Albany, the Albany Housing Authority (AHA),
administers the program. In advertising aimed at landlords, the
AHA claims to run criminal checks on all Section 8 tenants.
In the small (9 city blocks) neighborhood of Park South, the concentration of
buildings owned by the slumlord had a major impact. Property values sank.
Many long time homeowners, businesses, and tenants left. Those
who remained complained to city hall for more than 10 years
about drug trade, violence, neglected buildings, and related
issues such as 24/7 noise and garbage strewn streets. The
response from Albany Mayor Jerry Jennings was perceived as
wimpy wimpy wimpy.
The big guy had his reasons. That pesky slumlord was too legally
tough to dislodge with anything so simple as a perfect storm of
building and public nuisance violations. (Though this approach
recently closed down one of his buildings in another
neighborhood.) Besides, drug trade in Albany was the fault of
Mayor Rudy Giuliani in New York City. Crime fightin' Rudy had
chased/shipped NYC's addicts and dealers upstate. Into programs
and housing which profited people in and around Albany. Many of
whom hob-nobbed with Jennings in his official capacity.
But why look back on the bad? Mayor Jennings eventually got on
the stick, mustered his quasi-public local development forces,
and decided to revitalize Park South by bulldozing and rebuilding
it. Property owners who didn't want to sell would answer to
eminent domain. Though the scorched earth plan was never
officially announced, it was chortled by various city officials
in conversations with residents who'd done a lot of complaining.
And the Albany Common Council, at the behest of the Jennings
administration, declared Park South an official urban renewal
area. Which flung wide the door for the use of eminent domain.
The official Park South Plan, as put forth by the Jennings
administration and the quasi-public forces of local development,
was primarily a vision of student and rental housing. The vision
to be actualized by a private developer, with an unspecified
amount of assistance from public funds and private investment.
Though Park South is already choc-a-bloc with renters, the new
rental housing would be better than the old. And student housing
would meet the needs of the stakeholders in University Heights,
as would new facilities for one of its medical entities.
Many Park South residents objected to the eminent domain aspect
of the plan. They wanted change-- but didn't want land grabs
or whole scale bulldozing. BBL Development Group, the Albany
based company who seemed the likely preferred developer for the
project, got spooked by the public outcry and pulled out of the
running. (Thankfully this didn't affect their belief in Mayor
Jennings' political positions; BBL continues to be counted among
his supporters in the development community.) WinnDevelopment
then stepped up to the plate. WinnDevelopment is one of the
WinnCompanies. Winn develops, acquires, and manages multi-family
and mixed income properties throughout the United States. They're
heavily into affordable housing and have been expanding their
holdings in New York State. WinnCompanies is based in Boston,
as is WinnDevelopment. The latter has a regional office in
Rochester, New York.
Apparently, WinnDevelopment's project developer has been
courteous in her dealings with Park South residents and
responsive to neighborhood input. Winn seems inclined to an in-fill approach to redevelopment, rather than kill-to-cure. Winn
doesn't have a rep for EDA, and have stated they won't use eminent
domain on owner occupied properties. However, they haven't
ruled out using it on non-owner occupied property-- but only
Does this mean that Park South's most prominent slumlord will be
forced to accept buy-outs for his buildings? At the kind of rock
bottom values his properties helped establish?
According to the 03/26 Albany Business Review, a deal with Mister
Slumlord for the 18 multi-family buildings that cluster on a few
blocks in Park South, has already been struck. It doesn't sound
cheap. Winn will be asking state taxpayers for nearly 2 million
dollars in affordable housing loans. Which will be combined
with almost one million dollars worth of affordable housing tax credits. (Presumably from the federal government, from whence
affordable housing tax credits flow.) WinnDevelopment's project
manager says the combo of government loans and tax credits will
generate equity loans from private sources. In the Business
Review's words, "...raising the total price tag of the purchase
and renovations (of the 18 buildings) to an eye-popping $10
million, or a little over half-million per building." Another
quote: "A check of city records show the properties..are
generally assessed at about $50,000."
If Winn's application to proceed is approved by the state
Division of Housing and Community Renewal (the decision will
be made by August) it will be interesting to see how that
projected half million per building breaks down between
acquisition and renovation, which financial institutions
supply the equity loans, and whether those loans are sold as
investments. Also of interest is how other, non-occupying
property owners are treated. Hopefully, Park South's more
responsible landlords won't be the ones to receive the cheap-o
offers the threat of eminent domain so often facilitates.
One last quote from the Albany Business Review. When reeling
with "sticker shock" re the 10 million dollar price tag for
compensating, and renovating the properties of, the slumlord
who did so much to drive Park South into the ground, it's
important to remember the words of Andrew Harvey, economist at
the New York State Public Service Commission and President of
the Park South Neighborhood Association: "Even though it sounds
outrageous on the face of it, without that we may not be able
to bring this community back."
Pondering this bit of economic wisdom may help quell the thought that if Albany Mayor
Jerry Jennings had broken out the building codes, nuisance
violations, or possibly some HUD enforcement, ten years ago,
Park South's most prominent slumlord might now be living in
someone else's affordable housing. And the threat of EDA would
never have been raised and held over the heads of the good
people of Park South.
Upcoming EDA Follies:
Ratapolis: In Brooklyn, Develop Don't Destroy (DDD) rassles the
Empire State Development Corporation (ESDC) over a case of
conflict of interest./Ho Ho Hoboken: New Jersey does EDA like
nobody else. And more often./Get A New Plan Stan: News from New
London, Connecticut. Aka EDA Central. An upside down American
flag in the devastated neighborhood of Fort Trumbull says it all.
Carola Von Hoffmannstahl-Solomonoff
"Imagine landlords face severe penalties if they tolerate crack
dealing from their buildings."
Number 11 of 20 "imagines" presented on an agenda by
the Park South Walk & Watch, for a Park South Neighborhood
Association meeting 09/25/02.
Sources include but are not limited to:
"Park South Project spurs interest, hope," Michael Demasi, The
Business Review (Albany), 03/26/06
"Apartment Dispute Back in Court", Brian Nearing, Albany Times
"Developer withdraws Park South bid," Brian Nearing, Albany Times
The CDARPO News, Capital District Association of Rental Property
"Park South Redevelopment Plan, Implementation Action Steps,"
Design Collective 03/30/04
By-Laws of the Capital District Association of Rental Property
Owners, Inc. 2004
Transcript, Park South Neighborhood Association (PSNA) Meeting,
WinnCompanies Website, http://www.winnco.com/
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