Amicus Curiae Brief — Kelo v. New London

No. 04-108

IN THI

Supreme Court of the United States

a

SUSETTE KELO, THELMA BRELESKY, PASQUALE

CRISTOFARO, WILHELMINA AND CHARLES DERY,

JAMES AND LAURA GURETSKY, PATAYA CONSTRUCTION

LIMITED PARTNERSHIP and WILLIAM VON WINKLE,

Petitioners.

i

CITY OF NEW LONDON and

NEW LONDON DEVELOPMENT CORPORATION,

Respondents.

On Writ oF CERTIORARI TO THE

SupREME Court OF CONNECTICUT

BRIEF AMICUS CURIAE OF NEW YORK STATE URBAN

DEVELOPMENT CORPORATION d/b/a EMPIRE STATE

DEVELOPMENT CORPORATION IN OPPOSITION

TO PETITION

Josepu M. Ryan

Joun R. Caso Aro

Susan B. Katip*

JACK KAPLAN

CARTER LEDYARD

& Mirpurn LLP

2 Wall Street

New York, New York 10005

(212) 732-3200

* Counsel of Record Attorneys for Amicus Curtae

TABLE OF CONTENTS

Page

Re Re Oe ae ree l

SEE ee a eS 2

EERE EIS aen On ae Rene Se ea 3

Origin and Early Historic Use of

EEE en eee ae 3

For Centuries, the Power of Eminent

Domain has Been Used in The United

States for Industrial and Commercial

aE PEITTIITTITINITciaclctsieistcepenceiiinterheninseciainsesiietabieiiiineensisanirted 4

The Original World Trade Center ............ccccccccsecccceseesees 14

SU i cinisceectunnes 18

A. Revitalization of Times Square ..............c.ccc00000 18

i

B. The New York Stock

ES Se 21

The Supreme Court Has Historically

Deferred Public Use Determinations to

the Judgment of the Legislature ..............ccccccccsseseceeeeseee 23

UTI Sittin aac 27

TABLE OF AUTHORITIES

FEDERAL CASES

Berman v. Parker, 348 U.S. 26, 75 S. Ct. 98 (1954)............ 24, 25

Boom v. Patterson, 98 U.S. 403 (1879)........cccccccseeeseeeeeeseeeeeeeeeeees 4

Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 104

Feet, a eee 26, 27

Kimball Laundry Co. v. United States, 338 U.S. 1, 69S.

OT 24,n. 8

National Railroad Passenger Corp. v. Boston & Me.

Corp., 503 U.S. 407, 112 S. Ct. 1394 (1992) cece 26

Rindge Co. v. County of Los Angeles, 262 U.S. 700

(BGS) ..0creccceccocersneseesesessenssonsnsessnnsecssnnsensinnnnnnnnnnnnnnnnEn 23-4

STATE CASES

Boston and Roxbury Mill Corp. v. Newman, 29 Mass.

LA UY | ee 9,10

Courtesy Sandwich Shop, Inc. v. Port of New York Au-

thority, 12 N.Y.2d 379, 240 N.Y.S.2d 1 (N.Y.

1963), appeal dismissed 375 U.S. 78 (1963)..........008 16, 17

Fifth Avenue Coach Lines, Inc. v. City of New York, 11

N.Y.2d 342, 229 N.Y.S.2d 400 (1962)......cssccesseseereeeeeeenes 4

In re Fisher, 287 A.D.2d 262, 730 N.Y.S.2d 516 (1"

Diap’t 2OB8 ) ...ccccccccccscoscossecesosenensSeensansnnnnneinnnnnnnnnnnnnEE 23

Great Falls Manufacturing Co. v. Fernald, 47 N.H. 444

(1067) .....00c<scecccccscoscocsenconsensnnnetenesesnieiiiinnnnannnnnnnnnnnnnnEE 10

ii

————— -—-

Kaiser Steel Corp. v. W.S. Ranch Co., 81 N.M. 414, 467

ee 13

Opinion of the Justices to the Governor, 369 N.E.2d 447,

Ee 13,n.4

Rogers v. Bradshaw, 20 Johns. 735 (1823) ................cccccecceeeeeeees 12

Scudder v. Trenton Delaware Falls Co., 1 N.J. Eq. 694

Inna ec eeetrnncertemesnnmesenscenecnsuesqnesensesuesseees 7

Skipwith v. Young, 19 Va. 276 (1816) .0.........ccccccccccccesesecseeseeseenees 7

STATUTES, CONSTITUTIONS AND RULES

40 N.Y. Sess. Laws Ch. 262 (1817) ........cccccccccecseesseeseeneeees li,n.2

Chapter 209 of the Laws of New York 1962, N.Y. Un-

consol. Laws §6601, et seq. (1964) 0.0... eens 14

a 12

ee 12

MASS. CONST., Article LXXX VIII (Amended 1966) ........ 13,n.5

OTHER AUTHORITIES

Andrew Alpern, New York's Architectural Holdouts

ELLE 19

Lawrence Berger, The Public Use Requirement in Emi-

nent Domain, 57 Or. L. Rev. 203 (1978) .................. 6

John F. Hart, The Maryland Mill Act, 1669-1766: Eco-

nomic Policy and the Confiscatory Redistri-

bution of Private Property, 39 AM. J. LEGAL

ce 5

Matthew Harrington, “Public Use” and the Original

Understanding of the So-Called “Takings”

Clause, $3 HASTINGS L. J. 1245(2002) ................. 3,4

Errol E. Meidinger, The “Public Uses” of Eminent Do-

main: History and Policy, \| ENVTL. L. 1,

| 3, 5, 7,9, 12

New York State Canal Corporation, The Erie Canal, A

Brief History,

h*tp://www.canals.state.ny.us/cculture/

h.story (updated June 29, 2004) 2.0000... li,n.2

Parks and Trails New York,

http://www.ptny.org/canalway/history.shtml) .12, n. 3

Lynne Sagalyn, Times Square Roulette (MIT Press 2001)..20, n. 6

Nathan Alexander Sales, Classical Republicanism and

the Fifth Amendmeni's “Public Use” Re-

quirement, 49 DUKE L. J. 339 (1999) .........cccccceees 6,7

TABLE OF APPENDIX

Courtesy Sandwich Shop, Inc. v. The Port of New Authority

(New York Court of Appeals), 12 N.Y.2d 379, 240 N.Y.S.2d |!

(N.Y. 1963), appeal dismissed 375 U.S. 78 (1963) (For want of

a substantial federal question)

INTEREST OF THE AMICUS

New York State Urban Development Corporation d/b/a

Empire State Development Corporation (“ESDC”) respectfully

submits this brief as an amicus curiae. ESDC is a public

benefit corporation and political subdivision of the State of

New York, created by the New York State Legislature in 1968.

ESDC’s primary public purpose is to foster economic

revitalization by creating employment, increasing state and lo-

cal tax revenues, constructing viable commercial, industrial and

residential development, and contributing to urban stabilization

One of ESDC’s most important economic revitalization

tools is its power of eminent domain. Compensated takings are

essential to the assembly of diversely-owned parcels for large-

' ‘This brief is filed with the written consent of all parties; the

requisite consent ‘etters have been filed with the Clerk. No part

of this brief was authored by counsel for any party, and no per-

son or entity other than ESDC or its counsel made a monetary

contribution to the preparation or submission of the brief.

scale economic revitalization projects, particularly in urban ar-

eas, which are densely layered with public infrastructure and

often competing private interests.

At issue on this appeal is whether the Court should dis-

turethe considered decision of the court below that the use of

eminent domain for the purpose of economic revitalization, as

determined by local conditions and public needs, will serve a

public use. ESDC is vitally interested in continuing to under-

take projects in New York which revitalize its economy and

promote an optimally functioning society, particularly in a post-

industrial age and in an increasingly global competitive econ-

omy. Accordingly, ESDC urges this Court to affirm the deci-

sion below.

SUMMARY OF ARGUMENT

Throughout American history, states have used eminent

domain to take non-blighted properties for economic develop-

ment projects. This Court should not disturb those precedents.

ARGUMENT

ORIGIN AND EARLY HISTORIC USE OF EMINENT DOMAIN

The concept of government appropriation of private

property for public use has ancient origins and has evolved with

changing times, conditions and technologies. In 1625, Hugo

Grotius coined the term “eminent domain” to refer to what he

called the government’s “inherent power” to use private prop-

erty for public advantage, where the owner of such property is

compensated at public expense. Matthew Harrington, “Public

Use” and the Original Understanding of the So-Called “Tak-

ings” Clause, 53 HASTINGS L. J. 1245, 1249 (2002).

As early as 1421, the English Parliament authorized the

taking of privately-owned property for the purpose of repairing

roads and bridges. /d. at 1260. During the 16" Century, Par-

liament authorized compensated takings for the development of

public water and navigation systems. /d. at 1261. A 1514 stat-

ute authorized the City of Canterbury to improve a river, but

required that compensation be paid to anyone whose mill,

bridge or dam was removed. Errol E. Meidinger, The “Public

3

Uses” of Eminent Domain: History and Policy, 11 ENVTL. L. 1,

12 (1980-81).

FOR CENTURIES, THE POWER OF EMINENT DOMAIN

HAS BEEN USED IN THE UNITED STATES FOR

INDUSTRIAL AND COMMERCIAL DEVELOPMENT

Since colonial times, it has been recognized that the

power of eminent domain “appertains to every independent

government. It requires no constitutional recognition; it is an

attribute of sovereignty.” Boom v. Patterson, 98 U.S. 403, 406

(1879). Indeed, eminent domain is “the most ancient of sover-

eign prerogatives ... a power which antedates our State and

Federal Constitutions....” Fifth Avenue Coach Lines, Inc. v.

City of New York, 11 N.Y.2d 342, 229 N.Y.S.2d 400 (1962).

From pre-constitutional times to the present, the history

of compensated takings tells a fascinating story about its appli-

cation in an ever-evolving economy. Before the Constitution,

the power of eminent domain was used by the colonies to pro-

mote industrial development, with early uses including the

building of mills. Harrington, at 1300. From 1667, landowners

directly benefited from the use of eminent domain by virtue of

the so-called Mill Acts. These acts allowed “downstream ripar-

ian owners to dam streams and condemn the flooded property

of upstream owners, rather than negotiate for the rights or be

subject to traditional nuisance remedies.” Meidinger at 15.

The Maryland Mill Act of 1669 authorized the taking

of private land for use as a watermill to be operated by a private

owner. John F. Hart, The Maryland Mill Act, 1669-1766: Eco-

nomic Policy and the Confiscatory Redistribution of Private

Property, 39 AM. J. LEGAL Hist. | (Jan. 1995). That Act was

the Maryland legislature’s effort to diversify the local economy,

which suffered intermittent gluts of its chief cash crop, tobacco.

Id. at 3. The goals of the act were to increase trade and stimu-

late local industries, all for the primary benefit of the general

public, even if specific private enterprises garnered secondary

short-term economic gain. /d. at 5

Pointing to the numerous Mill Acts, scholars have ob-

served that “the founding generation approved the constitution-

ality of takings that did not vest the entire public with rights of

use, but only produced an indirect benefit to the public.” Na-

than Alexander Sales, Classical Republicanism and the Fifth

Amendment's “Public Use” Requirement, 49 DUKE L. J. 339,

374 (1999) (citing Comment, The Public Use Limitation on

Eminent Domain: An Advance Requiem, 58 Yale L. J. 599, 605

(1949) (“No clearer instance of a taking of property for the

benefit of private individuals could be presented, and literal

application of the ‘use by the public’ test would seemingly re-

quire invalidation.”); See also, Lawrence Berger, The Public

Use Requirement in Eminent Domain, 57 Or. L. Rev. 203, 206-

07 (1978) (“Arguing that the Mill Acts signal ‘the early accep-

tance of the broad view that it was the great advantage to the

public which justified the taking, even though a private individ-

ual undoubtedly received a substantial and perhaps greater

benefit, and even though the public had no right to use the

property.’”)). In 1816, the Virginia Supreme Court concurred

with this view, upholding the state’s Mill Act and identifying

6

the public purpose as the benefit to the community conferred by

productive mills. Sales at 374; Skipwith v. Young, 19 Va. 276

(1816).

Shortly after the American Revolution, the power of

eminent domain was also used for the convtruction of dams for

mills, and the flooding of lands for harnessing water power:

Both [roads and flooding lands for water

power] were of course closely linked to eco-

nomic development. Roads were essential to

opening up the ever-expanding interior [of the

United States] and exploiting its re-

sources...Ready water was equally critical to

the development and implementation of new

industrial technologies.

Meidinger at 18, 23.

During the 1800's, the Mill Acts were expanded to a

variety of new, privately-owned manufacturing industries. /d.

at 23. In 1832, landowners challenged New Jersey’s act author-

izing takings to allow a private corporation to build 70 factory

mills along the Delaware River. Scudder v. Trenton Delaware

Falls Co., 1 N.J. Eq. 694 (N.J. 1832). The court rejected the

landowners’ claim that the taking was for private rather than

public use after examining

the objects, the purposes, and the results of the

undertaking ... The water power about to be

created, will be sufficient for the erection of

seventy mills, and factories, and other work

dependent on such power. ... It will be no ex-

periment in a country like ours; and, judging

from the results in other places, we may make a

sufficiently accurate calculation as to the re-

sults here. Take the town of Paterson as an ex-

ample. The water power there is in the hands

of individuals--a company like this. They are

under no obligation to lease or sell any mills or

privileges to the public; and yet see the result

of a few years’ operation. Paterson is now the

manufacturing emporium of the state .... It

has increased the value of property in all that

district of country; opened a market for the

produce of the soil, and given a stimulus to in-

dustry of every kind. May we not hope that a

similar benefit may be experienced here?

* * *

The ever varying condition of society is con-

stantly presenting new objects of public impor-

tance and utility; and what shall be considered

a public use or benefit, may depend somewhat

on the situation and wants of the community

for the time being.

Id. at 728-29 (emphasis supplied).

That same year, the Massachusetts Supreme Court up-

held a similar statute and other states followed suit, all holding

that takings “which contributed to the overall benefit of the

community met the public use test.” Meidinger at 24; Boston

and Roxbury Mill Corp. v. Newman, 29 Mass. 467 (1832). In

Roxbury, the Massachusetts legislature gave a mill corporation

the right to use landowners’ private property for the purpose of

working its mills. Referring to the old mill statutes, the court

noted that mills are described as greatly beneficial to the public

and, if the mills become inoperable, the public good will be

harmed. /d. at 478.

At issue in Roxbury was whether the taking of the land-

owner’s property for use by a private enterprise to operate its

mills was unconstitutional. The landowner sought to distin-

guish the taking of his property for the mills with the taking of

property to build turnpike roads by asserting that the public has

a right to use the roads by paying a toll, whereas the public does

not have the right to use the mill factories. The court disagreed:

9

[I]n regard to the manufacturing establish-

ments, is it nothing to the public that great

numbers of citizens have the means of em-

ployment brought to their homes? And are not

the proprietors obliged to give employment?

They cannot carry their works on without labor,

and who that is disposed to industry and to that

kind of employment, is prevented from its ex-

ercise? This becomes a matter of interest,

which will certainly direct and govern the par-

ties. And it is among the most pleasant consid-

erations attending this branch of the subject,

thai the interest or benefit arising from manu-

facturing establishments is distributed quite as

much, and oftentimes more, among the laborers

and operatives, than among the proprietors of

the works.

Id. at 477.

Upholding a Mill Act which benefited a private com-

pany, New Hampshire’s highest court held that the concept of

public use depends on local industry and the natural resources

of the state. Great Falls Manufacturing Co. v. Fernald, 47

N.H. 444, 460 (1867). The court explained :

The public use may have relation to any pur-

pose ... which subserves the general interest.

The only test and criterion of the admissibility

of the power are that the particular object tends

to promote the general interest in its relation to

any legitimate objects of government.... [T]he

10

use is to be regarded as public, if a general pub-

lic benefit results from it.’

Id. at 456 (citations omitted).

Beginning i 1817 and despite vehement public ridicule

and protestations of economic infeasibility, New York State

willingly paid to take non-blighted private property to permit

the construction of the Erie Canal, as approved by its Legisla-

ture, a taking which even antedated the Takings Clause in New

York State’s Constitution. The purpose of the then highly

speculative project (dubbed “Clinton’s Folly” after Governor

DeWitt Clinton) was, in part, “to promote agriculture, manufac-

tures and commerce” and, in the words of the Governor, to

transform the City of New York into “the granary of the world,

the emporium of commerce, the seat of manufactures, the focus

of great moneyed operations.” The Canal established a trading

* 40 N.Y. Sess. Laws. Ch. 262 (1817); New York State Canal

Corporation, The Erie Canal, A Brief History,

http://www.canals.state.ny.us/cculture/history (updated June 29,

2004).

route to the Midwest, operated by private carriers, which ex-

panded the Nation’s economy, creating jobs and public wealth

along the way. See Meidinger, at 26, n. 91; Rogers v. Brad-

shaw, 20 Johns. 735, 738-39 (N.Y. Ct. of Errors 1823). The

Canal was also an avenue for social reforms, such as women’s

rights and the abolition of slavery.

During the late 1800’s, eminent domain spurred indus-

trial growth in other States, even in non-blighted areas. Private

property was taken to enable miners to develop transport facili-

ties. Meidinger at 28. Colorado's constitution still permits tak-

ings for “private ways of necessity, ... reservoirs, drains,

flumes, or ditches on or across the lands of others, for agricul-

tural, mining, milling, domestic or sanitary purposes.” COLO.

CONST. Article Il, §14. Idaho's constitution deems mining and

irrigation to be public uses, as well as “any other use necessary

” See Parks and Trails New York,

http://www.ptny.org/canalway/history.shtml.

12

to the complete development of the material resources of the

state.” IDAHO CONST., Article I, §14. New Mexico permits

any person to exercise condemnation for “the conveyance of

water for beneficial uses”. N.M. Ann. Stat. § 72-1-5 See Kaiser

Steel Corp. v. WS. Ranch Co., 81 N.M. 414, 467 P. 2d 986

(1970).

As the 20" Century progressed, public needs changed.

Worn infrastructure and advancing technologies required new

strategies. Massachusetts, for example, amended its constitu-

tion to provide: “The industrial development of cities and towns

is a public function....”. MASS. CONST., Article LXXXVIII

(Amended 1966).”

* See also, Opinion of the Justices to the Governor, 369 N.E.2d

447, 373 Mass. 904 (1977) (“Reducing unemployment and

stimulating the economy are public purposes.”), MASS. CONST.,

13

THE ORIGINAL WORLD TRADE CENTER

In 1962, New York and New Jersey authorized an am-

bitious project known as the “World Trade Center.” The World

Trade Center enabling legislation provides for a:

facility of commerce ... for the centralized ac-

commodation of functions, activities and ser-

vices for or incidental to the transportation of

persons, the exchange, buying, selling and

transportation of commodities and other prop-

erty in world trade and commerce....

Chapter 209 of the Laws of New York 1962, N.Y. Unconsol.

Laws §6601, ef seg. (1964).

To effectuate the project, the Port of New York Author-

ity (the “Port Authority”), a bi-state authority, in its effort to

assemble 143 parcels with diverse ownership, undertook to

condemn properties in Lower Manhattan. Landowners oppos-

ing the condemnation sought a declaration that the enabling

statute was unconstitutional. As with the Erie Canal, naysayers

abounded.

The Port Authority’s brief to the New York Court of

Appeals discussed the then recent loss of import-export trade in

14

New York, threatening the Port of New York’s status as the

leader in international trade. (A 2-4). The Port Authority cau-

tioned:

(A 1).

Such a threat imperils the economy of the

whole region since one out of every four per-

sons in the area is dependent for his livelihood

directly or indirectly on Port activities....[T]he

New York Port cannot hold its own in the vig-

orous competition with other ports unless it can

offset the disadvantages by continuing its lead-

ership in the back-up services which has been

one of its major special advantages. The World

Trade Center was proposed and authorized to

reverse the trend of the Port’s decline by at-

tracting more shipping.

The purpose of the World Trade Center project was to:

restore the vitality and growth of our declining

Port and thus preserve the economy of the New

York metropolitan area. The technique to be

used is the centralization and coordination in a

single location of the many scattered govern-

mental agencies and private organizations

which must work together to administer the

* References to ESDC’s Appendix are cited as “A _”.

15

movement of world trade through the bi-State

Port.

(A 3).

Thus, “{t}he World Trade Center, as a facility intended

to provide a permanent benefit to the entire economy and not

just a temporary stimulus and edification, presents an a fortiori

example of a public purpose.” (A 22).

The New York Court of Appeals upheld the validity of

the enabling statute, holding that “facilitating the flow of com-

merce and centralizing all activity incident thereto is a public

purpose supporting the condemnation of property for any activ-

ity functionally related to that purpose.” Courtesy Sandwich

Shop, Inc. v. Port of New York Authoruy, 12 N.Y.2d 379, 389,

240 N.Y.S.2d 1, 6 (N.Y. 1963), appeal dismissed 375 U.S. 78

(1963) (for want of a substantial federal question), rehearing

den. 375 U.S. 960.

The court’s opinion described the concept of the World

Trade Center as:

16

—

the gathering together of all business relating to

world trade that is supposed to be the great

convenience held out to those who use Ameri-

can ports and which is supposed to attract trade

with a resultant stimulus to the economic well-

being of the Port of New York.

12 N.Y.2d at 389, 240 N.Y.S.2d at 6.

The court also observed:

Even the centralization of inland trade has sup-

ported the exercise of the power of eminent

domain for the establishment of public markets

wherein private merchants plied their trades.

12 N.Y.2d at 389, 240 N.Y.S.2d at 6.

In the years that followed, the office complex constitut-

ing the World Trade Center became a world symbol of Amer-

ica, particularly as New York City reinforced its position as the

capital of international trade and commerce. The secondary

benefits to the private entities who participated in the project

paled in comparison to the enormous primary public benefit to

the entire metropolitan region.

In 2001, terrorist attacks destroyed all seven office

buildings comprising the World Trade Center. New York, with

17

the assistance of Congress, has undertaken a massive rebuilding

project. As a first step, ESDC recently used its power of emi-

nent domain to permit the expedited rebuilding of 7 World

Trade Center, the first building to be rebuilt. Not only will that

rebuilding restore the City’s economy and spirits, it will also

secondarily assist the privately owned lessee thereof.

Today, ESDC’s subsidiary, Lower Manhattan Devel-

opment Corporation (“LMDC”), is charged with assisting New

York City in recovering from the 2001 terrorist attacks and en-

suring that Lower Manhattan continues as a strong, 21“ century

central business district. LMDC contemplates the use of emi-

nent domain in furtherance of the project.

RECENT ES PROJECTS

A. Revitalization of Times Square

Beginning in 1980 and continuing through 2002, ESDC

successfully revitalized approximately 13 acres of land in the

Times Square area of Manhattan. The project was developed in

response to decades of rampant economic disinvestment in

Times Square by the private sector.

18

As an example, ESDC recently condemned a large un-

derutilized parcel to construct a 50-story plus building, which

will produce an exponential increase in real estate taxes, income

taxes, and sales taxes.

The project would have been inconceivable without

eminent domain because the project site consisted of more than

60 separately owned, small and underutilized lots, and many of

the owners refused to sell their properties except for exorbitant

sums. Despite concerted efforts extending over generations,

various private interests had been unable to assemble large

enough parcels to revitalize the area. There were instances

where even a “hold-up” price proved insufficient. Some own-

ers had simply refused to sell at any price and thus thwarted

assemblages which would benefit the commonweal. See An-

drew Alpern, New York's Architectural Holdouts (1997) (De-

tailing numerous, insoluble and typical holdout problems

throughout New York City despite the use of creative and so-

phisticated techniques). Condemnation permitted ESDC to as-

19

semble sustainable development sites permitting, to date, the

construction by the private sector of six major office towers,

two major hotels, and myriad retail opportunities of enormous

benefit to all New Yorkers. No New York court deemed it a

justiciable issue to undertake an independent economic risk

analysis of the likely success of the project in determining if

those compensated physical takings should proceed.

New York City and other large, densely populated,

older American cities will be enormously disadvantaged if they

are not permitted to use the power of eminent domain for the

commonweal. Without ESDC’s use of compensated takings to

revitalize Times Square, low tax revenues and limited job op-

portunities would have persisted. Now, despite private bene-

fits, the predominant economic and social benefits have accrued

to the public.

, As illustrated by the title to Columbia University’s Lynne Sa-

galyn’s Times Square Roulette (MIT Press 2001), there were

risks. There were greater risks in doing nothing.

20

B. The New York Stock Exchange

In 2001, the New York State Legislature expressly au-

thorized ESDC to use eminent domain to acquire non-blighted

property in Lower Manhattan for the construction of a new,

state-of-the-art securities trading facility for the New York

Stock Exchange (the “NYSE”). See New York Stock Ex-

change Project, 2000 N.Y. Laws Chpt. 590.

The purpose of the project was to retain the NYSE in

the City. The NYSE faced limitations on its ability to expand

and incorporate critical technological upgrades at its existing

facility and its fragmented operations threatened its future abil-

ity to function effectively in its existing location. The Legisla-

ture found that the loss or reduction of the NYSE would ad-

versely impact the economic environment of the City and the

State; that the maintenance and promotion of such markets pro-

” The use of eminent domain was necessary to obtain property

from newly ensconced residential and commercial holdouts.

21

vides significant contributions to the taxing base of the State, to

the economic development of related industries, and to job crea-

tion; and that the presence of such markets in the City enhances

the credibility and prestige of the State and the City as a finan-

cial and commercial center worldwide.

This global marketplace is now as much an instrument

of commerce as were the factory water mills of the 18” and 19"

Centuries. New York has become “the focus of great moneyed

operations” as envisioned by the 1817 legislation creating the

Erie Canal. The importance of the securities industry in New

York City is illustrated by the large number of firms and em-

ployees engaged in securities exchange, the substantial amount

of office space occupied by these firms, and the volume of tax

revenues generated by these firms, all of which generate eco-

nomic benefits for the City, State and country.

ESDC contemplated the use of its eminent domain

power to assemble the several complexly-owned parcels neces-

sary for the creation of a large trading floor for the NYSE. Al-

22

though the state appellate court upheld the use of condemnation

for the non-blighted NYSE project site, unfortunately, shortly

before the decision issued, the 2001 terrorist attacks and the

resulting drain on State and City resources meant that the pro-

ject could not proceed. Jn re Fisher, 287 A.D.2d 262, 730

N.Y.S.2d 516 (1" Dep’t 2001) (Upholding condemnation for

economic development).

THE SUPREME COURT HAS HISTORICALLY DEFERRED PUBLIC

USE DETERMINATIONS TO THE

JUDGMENT OF THE LEGISLATURE

In 1923, this Court held that the determination of what

constitutes a public use “is influenced by local conditions; and

this Court, while enforcing the Fourteenth Amendment, should

keep in view the diversity of such conditions and regard with

great respect the judgments of state courts upon what should be

deemed public uses in any State.” Rindge Co. v. County of Los

Angeles, 262 U.S. 700, 705-06 (1923). In Rindge, the Court

focused on whether the taking was a legitimate exercise of the

government’s police power, thereby implicating the Fourteenth

23

Amendment’s Due Process Clause, rather than the Takings

Clause, which focuses solely on the issue of compensation.

Three decades later, the Court rejected a challenge to

the condemnation of a non-blighted parcel for the purpose of

urban redevelopment in the District of Columbia. Berman vy.

Parker, 348 U.S. 26, 75 S. Ct. 98 (1954). The Court made clear

that:

when the legislature has spoken, the public in-

terest has been declared in terms well-nigh

conclusive. In such cases the legislature, not

the judiciary, is the main guardian of the public

needs to be served by social legislation.... This

principle admits of no exception merely be-

cause the power of eminent domain is involved.

* See Kimball Laundry Co. v. United States, 338 U.S. 1, 5, 69 S.

Ct. 1434, 1437 (1949) (In the context of compensation, Justice

Frankfurter, writing for the majority, explained that given “the

liability of all property to condemnation for the common good,

loss to the owner of nontransferable values deriving from his

unique need for property or idiosyncratic attachment to it, like

loss due to an exercise of the police power, is properly treated

as part of the burden of common citizenship.”). This Court has

never equated condemnees’ subjective losses with unconstitu-

tionality.

24

Berman, 348 U.S. at 33, 75 S. Ct. at 102. The Court

defined “[t}he concept of public welfare [as] broad and inclu-

sive. The values it represents are spiritual as well as physical,

aesthetic as well as monetary.” 348 U.S. at 33, 75 S. Ct. at 102-

03. It may include beautification and the creation of a healthy,

spacious, clean, well-balanced and carefully patrolled area. 348

U.S. at 33, 75 S. Ct. at 102-03. As in Rindge, the Berman Court

held that once the legislature is deemed to have the authority to

carry out a project, “the right to realize it through the exercise

of eminent domain is clear.” 348 U.S. at 33, 75 S. Ct. at 103.

“The question of whether a use is public is determined by look-

ing at whether the government can legitimately exercise the

police power in respect of that use, and that question cannot be

answered by looking at the Takings Clause, as Berman makes

clear.” Edward J. Sullivan and Nicholas Cropp, Sources of

‘Public Use’ Limitations -- Taking or Due Process, ZONING

AND PLANNING LAW REPORT (Sept. 30, 2004) at 3.

25

In Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 104

S. Ct. 2321 (1984), the Court held with “no trouble” that a

state’s use of eminent domain is a “classic exercise” of its po-

lice powers and may be used to effect property transfers from

oligopolist landowners t< ‘« sees in an effort to reduce inflated

land prices. In so holding, the Court made clear that “the ‘pub-

lic use’ requirement is thus coterminous with the scope of a

sovereign’s police powers.” Indeed, “where the exercise of the

eminent domain power is rationally related to a conceivable

public purpose, [this] Court has never held a compensated tak-

ing to be proscribed by the Public Use Clause.” 467 U.S. at

241, 104 S. Ct. at 2329. See also National Railroad Passenger

Corp. v. Boston & Me. Corp., 503 U.S. 407, 422, 112 S. Ct.

1394, 1404 (1992) (“[T]}he public use requirement of the Tak-

ings Clause is coterminous with the regulatory power....”) Ina

compensated taking context, the Midkiff Court concluded that it

would not substitute its judgment for that of the legislature

“unless the use be palpably without reasonable foundation ...

26

because, in our system of government, legislatures are better

able to assess what public purposes should be advanced by an

exercise of the taking power....” 467 U.S. at 244, n. 7, 104 S.

Ct. at 2331, 0.7.

The holdings of these cases and the early 19" Century

decisions discussed above should not be overturned. They were

correct when they were decided and they are correct now.

CONCLUSION

Throughout the history of this country, compensated

takings have been used to promote economic, commercial, and

” Petitioners and some amici curiae contend that there is a crisis

in eminent domain law and that Midkiff must be overturned.

This contention, however, is based upon an analysis of news

and magazine articles by petitioners’ counsel, the Institute for

Justice. Such news articles are notoriously self-serving, fre-

quently misstate facts, and are generated for strategic purposes.

In 2003 and 2004, the Institute for Justice contributed to 46

news and magazine articles out of the 385 published on the sub-

ject of public use in condemnation. Dec. 29, 2004 Westlaw

search of ALLNEWS database for (“Institute for Justice”,

“Public Use”, or “Dana Berliner”) and “Eminent Domain” in

headline or lead paragraph.

27

industrial revitalization by maximizing local resources, assem-

bling diversely-owned or landlocked parcels, and creating and

sustaining employment opportunities, all for the primary benefit

of the public. Consistent with the principles of federalism and

judicial economy, this Court has always afforded due deference

to the respective state legislatures’ use of compensated takings

for the purpose of economic revitalization as a legitimate exer-

cise of their government's police powers. This Court has simi-

larly deferred to state judiciaries in reviewing public use chal-

lenges to compensated physical takings. For centuries, what

constitutes a permissible public use of eminent domain under

the Constitution has been an elastic concept, reshaped to ac-

commodate local conditions and ever-changing social and eco-

nomic circumstances.

Amicus ESDC urges the Court to continue to permit lo-

cal governments and states to use condemnation as a vital tool

for the purpose of economic revitalization. Accordingly, ESDC

respectfully requests that the Court affirm the March 9, 2004

decision of the Supreme Court of Connecticut.

Dated: New York, New York

January 19, 2005

CARTER LEDYARD & MILBURN

LLP

By:

Joseph M. Ryan

John R. Casolaro

Susan B. Kalib*

Jack Kaplan

2 Wall Street

New York, New York 10005

Tel. (212) 732-3200

Fax (212) 732-3232

*Counsel of Record Attorneys for Amicus Curiae

Appendix

STATE OF NEW YORK

COURT OF APPEALS

Courtesy Sandwich Shop, Inc.

v.

The Port of New Authority

Excerpts from the brief of

Port Authority Appellants

(March 4, 1963)

**

With the Port of New York suffering a severe decline in

its share of the Nation’s import-export general cargo, a threat

has grown to the Port’s leadership. Such a threat imperils the

economy of the whole region since one out of every four per-

sons in the area is dependent for his livelihood directly or indi-

rectly on Port activities....[T]he New York Port cannot hold its

own in the vigorous competition with other ports unless it can

offset the disadvantages by continuing its leadership in the

back-up services which has been one of its major special advan-

tages. The World Trade Conter wes proposed and authorized to

—_—

A-l

reverse the trend of the Port’s decline by attracting more ship-

ping.

POINT Il

The purpose of the Legislatures in authorizing the

World Trade Center is preservation of the status of the Por.

of New York. This constitutes a vital public purpose,

While the Appellate Division majority found the Act

invalid for exceeding the World Trade Center concept, it found

that “There is no question but that the creation of a world trade

center, in concept, is a public purpose.”

On oral argument Respondents’ counsel was equivocal

on this point. When asked by counsel whether he would con-

cede that the World Trade Center concept represented a public

use, he said “No.” On his own argument, however, he expressly

said “a world trade center can be a public use” but argued that a

72 story trade center building would necessarily represent a pri-

vate real estate venture.

The World Trade Center has a simple, practical public

A-2

objective—liberating the New York Pc.t’s world trade from the

waste, the costly delays, the inefficiencies which stem from the

existing helter-skelter pattern of offices and agencies concerned

with moving cargo through the Port. The purpose is, by curing

these evils, to restore the vitality and growth of our declining

Port and thus preserve the economy of the New York metro-

politan area. The technique to be used is the centralization and

coordination in a single location of the many scattered govern-

mental agencies and private organizations which must work to-

gether to administer the movement of world trade through the

bi-State Port.

(1) The decline of the Port of New York.

The Port of New York is not guaranteed leadership by

any law of economics, science or nature. The Port has been the

nation’s principal gateway of trade with the rest of the world.

But the east and gulf coasts offer many competitive gateways.

New York is a great metropolitan area because it has a

great port. This is not a great port merely because it serves a

A-3

great metropolitan area.

Whereas ten years ago this Port handled about 33% of

the nation’s general cargo, today it handles only about 21%-—the

Port has suffered a major decline in its share of the Nation’s

general cargo, which is the kind of cargo which contributes

most to a port’s economic well-being.

The Port is only managing to hold on to the absolute

tonnage it handled ten years ago. It has not enjoyed its share in

the growth of foreign trade being generated by the country as a

whole. The competitor ports have absorbed the growth almost

entirely and our Port is suffering a decline in relative impor-

tance.

These are the basic concerns which culminated in the

agreement of the two States embodied in the Act. The account

we shall give in this brief of the reason for authorizing the

World Trade Center and the exposition of what the World

Trade Center concept truly is are paraphrases of the 1961 and

1962 Reports to the Legislatures.

A-4

(2) The critical importance of the Port to the economy.

In this Port District of New York and northern New

Jersey, world trade is the very life blood of the local economy.

It was reported to the Legislatures that direct port activities cre-

ate 430,000 jobs in the Port District which pay over two billion

dollars in wages each year. Each of these 430,000 jobs creates

an economic condition in ancillary services equal to additional

jobs for a total of 1.3 million jobs representing an annual pay

check of over six billion dollars. Adding the job-holders’ de-

pendents produces the total of over three million persons and a

ratio of one out of every four persons dependent directly or in-

directly on the movement of international trade throughout the

tri-State Port.

(3) Port development is traditionally a public responsibility.

In making their findings, the Legislatures and Gover-

nors were merely following views uniformly held by the Courts

of this State since the end of the past century when they came to

appraise the public importance of retaining and promoting the

A-5

commerce of the Port of New York. Compare Judge Andrews’

statement in Ferguson v. Ross, 126 N.Y. 459, 465 (1891),

where he said :

“The citizens of New York city may possibly

have a greater stake in the matter than citizens

in other localities, but the destruction or serious

impairment of the harbor of New York would

directly affect the prosperity of the state.”

A year later, in Matter of Mayor of the City of New

York, 135 N.Y. 253 (1892), this Court upheld the condemnation

of land for wharves and piers as a taking for a public use though

the City intended to lease them to private companies to the ex-

clusion of all others. The Court said (p. 262):

“ _. The state itself owed a duty to its own citizens to pro-

vide adequate means for the carrying on of the commerce

which was sure to come to the one great seaport within its

borders.”

As stated in Commissioner v. Ten Eyck, 76 F. 2d 515,

517 (2nd Cir. 1935):

“Port and harbor developments have long been regarded as

governmental functions in providing for the welfare and

prosperity of the people.”

(4) The Port problem today.

We mentioned at the outset the freight rate discrimina-

tions and other factors making it impossible for the Port of New

York to compete merely on the basis of freight costs.

How then has the Port of New York retained even its

declining share of the Nation’s world trade? The answer lies in

the fact that our Port has generated many advantages which can

counteract such disadvantages as we have listed. One of the

principal offsetting advantages of the Port of New York has

been the range and completeness of its Port services, particu-

larly those services that support and back up the direct berthing,

loading, unloading and haulage of cargo. These have given the

American exporter or importer confidence that here at New

York he will have available the public services, administrative

help and the wide range of financial and marketing resources

that are essential to the flow of world commerce.

Since the shipper will tend to use only that port which

he believes will produce the lowest net cost to him, our Port can

A-7

maintain its position and reverse the trend against it only if we

can continue to provide more and better back-up port services

than the competing ports.

In past centuries a port might have been viewed as lim-

ited to wharves, docks, piers and other terminal facilities solely

for the physical transit of cargo and passengers. But today it

must be deemed to include the numerous and complicated gov-

ernmental and administrative services necessary for their move-

ment.

If at the Port of New York such shipping services are

not adequate or efficient, the Port lacks modern and efficient

port facilities, even though it might possess the finest piers,

docks and wharves.

The States are at another crossroads such as confronted

them in 1922 when Alfred E. Smith, as a Port Authority Com-

missioner recommending adoption of the Comprehensive Plan

to implement the Port Compact he had sponsored as Governor,

said: -

A-8

“We can sit here and talk engineering figures for

a year. We can draw plans for five years, but if

there isn’t a healthy vigorous determination on

the part of localities and organizations and peo-

ple generally in the port district to make some

change in the old-fashioned, worn-out, dilapi-

dated ways of doing business in this port, the

figures would amount to nothing.” Bard, The

Port of New York Authority (p. 47, 1942).

For decades the very size of the Port of New York gen-

erated the specialization and variety of services which permitted

the Port not only to compete but to grow. But the growth of

other ports in recent years, while we have remained static in our

tonnage, is permitting them in ever increasing degree to match

the advantages which have produced our premier position.

In other words, our Port is losing its ability to provide

services which are superior as the ability of other ports to

match our services has been increasing.

The other ports are missing no opportunity to capture

trade from the Port of New York. There are today, in this, our

own Port, offices of fifteen other United States ports, each of

which conducts a competitive program aimed at diverting trade

A-9

from New York.

If New York stands still in what it offers as it tries to at-

tract world trade, there is only one logical conclusion as to what

the future holds. The Port will move from a period of holding

its own to a period in which it will lose not only proportionately

but absolutely much of its cargo to its competitors at an accel-

erating rate. The end must be that this Port will be reduced from

the Nation’s gateway to a mere local port, handling only cargo

with local origins or destinations.

And so the Legislatures determined that if the Port of

New York is to be successful in resisting the present crosion of

its status, it cannot stand still. Even with the vitalized pier pro-

gram conducted by the Port Authority and the City of New

York, the decline of this Port’s relative position has persisted.

The danger of losing the superiority in services has grown. The

result is increasing danger of the erosion of one of the major

foundation stones on which the economy of the New York

metropolitan region rests.

A-10

(5) The legislative remedy — The basic World Trade Center

concept.

The Legislatures’ approach is to capitalize on and in-

crease the Port’s leadership in back-up port services. Recogniz-

ing the waste, the costly delays and the inefficiences which

stem from the haphazard distribution of port service offices and

agencies in the bi-State Port, they have authorized the World

Trade Center in an effort to remove these clogs by centralizing

the world trade community of the Port.

Respondents chose to ignore the realities of world trade

when they suggested in the Appellate Division that the legisla-

tive purpose is merely to effect “a small saving in messenger

service between various offices”. Let us analyze what is hap-

pening to the Port while this messenger is finding his way

through the City’s congested arteries from, let us say, the Cus-

tom House to a foreign consulate on upper Fifth Avenue. As he

is held up in trying to feed the document he carries into the ad-

ministrative processes of the foreign consulate, the cargo which

the document describes can miss being loaded on a freighter or

A-11

the cargo may depart with invalid documentation causing finan-

cial penalty.

Multiply these example thousands of times and the im-

mensity of the problem emerges.

The costs at which the Legislatures are aiming are not

the piddling messenger costs which the Respondents deride.

They are the prohibitive and cumulative costs which result from

delays in the chain of administrative processing of 30,000,000

documents a year in the “scattered locations” to which the Leg-

islatures referred (§1(6)). To ignore the problem any longer is

to build up a situation where more and more shippers with a

choice of ports will decide to try another port for the next ship-

ment and perhaps to give up using the Port of New York alto-

gether. To expedite this processing is to make for an efficient

port just as truly do modern piers.

What we are judging, then, is a modern port facility to

keep pace with the needs of the two States’ great port in its con-

tinuing and urgent effort to attract and maintain its proper share

A-12

of world commerce.

The reasoning which has always impelled Courts to

recognize port facilities as a public use applies with full

strength to the World Trade Center, a port facility for which the

two States have now found a vital public need.

If the question is asked how far the Legislatures may go

in providing new port facilities in meeting their duty to preserve

the Port, this Court has already answered in upholding port fa-

cilities as a public use:

“... The only standard by which to judge of

the extent of the duty consists in the necessities

of the business. If a permanent pier and an ex-

clusive right to its use be a necessity of those

large steamship lines, without which business

cannot be properly transacted, and in the ab-

sence of which steamers will be sent across the

river to New Jersey or to some other port, then

the duty rests with the state or municipality to

furnish such quarters for a fair compensation or

else the state is bound to permit the steamship

companies to obtain such accommodations from

private owners. Having undertaken the duty im-

posed upon it by the state to provide such ac- —-__-

commodations as the interests of commerce

fairly require, all appropriate acts by the city

done in the performance of that duty are for a

public purpose.” Matter of Mayor of the City of

A-13

New York, 135 N.Y. 253, 263 (1892). (Emphasis

added.)

By this Court’s “standard by which to judge of the ex-

tent of the duty” the “necessities” of today dictate a holding that

the basic World Trade Center concept is directed to the identi-

cal public purpose of providing adequate cargo handling facili-

ties. Many other cases uniformly hold that the improvement of

a port is a public use.'

We cannot emphasize too strongly that the basic World

Trade Center concept is not only to provide “accommodation”

of the port community, but its centralization.

The Respondents have utterly missed this distinction

when they dismiss the legislative purpose as merely an attempt

to take their property for the use of some customs broker who

would lease space in the World Trade Center. The two states

have no interest in merely accommodating this customs broker.

' The application of this doctrine to The Port of New York Au-

thority appears in Port of New York Authority v. City of New-

ark, 20 N.J. 386 (1956); Commissioner v. Ten Eyck, 76 F.2d

515, 518 (1935); cf Commissioner v. Shamberg’s Estate, 144

A-14

The facility contemplated is not for him or any of its tenants as

such. It is to achieve the advantages to all the public of central-

izing his services and the services of his counterparts and all of

the other port administrative services to the end of providing an

efficient port capable of survival and growth.

The States can expect that each customs broker, just

like each bus line in a public union terminal will, in time, rec-

ognize that the centralized facility is the place in which the pub-

lic will expect to find that type of service. It is not the tenant’s

purpose which is being served, but the purpose of the State it-

self.

Furthermore, the basic tenants are govern-mental agen-

cies and public utilities and other businesses affected with a

public interest. Steamship lines and airlines are common carri-

ers; freight forwarders are also common carriers under the In-

terstate Commerce, Shipping and Federal Aviation Acts;’ and

F.2d 998, 1005 (2 Cir. 1944); cert. den., 323 U.S. 792 (1944).

? 49 U.S.C. §1002(a) (5) ; 46 U.S.C. §841 ; 46 C.F.R. §510.2;

49 U.S.C. 425; 14 C.F.R. §296.2.

A-15

customs brokers are for the most part freight forwarders and

therefore common carriers and are, in any event, engaged in a

highly regulated business related to freight carriage and affected

with a public interest.’ While the centralization function does

not stop with this nucleus, it does not extend beyond the port

community. But, as we have seen in Point I, the Act delineates

the hallmarks of the basic concept which permit judges in future

condemnation cases to measure whether the statutory power or

the constitutional test of public use have been exceeded.

The Legislatures certainly intended to centralize in the

World Trade Center not only all of the back-up services of the

Port but also to include “a central locale for exhibiting and oth-

erwise promoting the exchange and buying and selling of com-

modities, and property in world trade and commerce, [which]

will materially assist in preserving for the two States and the

people thereof the material and other benefits of a prosperous

> 19 U.S.C. §1641; 19 C.F.R. §31. See Union Broker-age Co. v.

Jensen, 322 U. S. 202 (1943) for a description of customs bro-

A-16

port community.” §1(7).

Government studies indicate that the bulk of export

trade of the United States is done by less than 5 of all manufac-

turing firms and accounts for only about 4% of the Gross Na-

tional Product. One of the reasons for these small percentages is

the relative difficulty which any American firm faces in enter-

ing foreign markets. These markets are distant, there are cul-

tural and language barriers, there are monetary problems and

legal problems and monumental problems of red tape. Re-

ciprocal problems face the potential foreign customer coming

here to buy in the American market and the foreign merchant

coming here to sell.

One of the purposes of the World Trade Center is to

provide services that can minimize these barriers.

First of all, the overseas importer or exporter arriving in

New York would not have to search around the commercial

labyrinth of Manhattan to seek out assistance. He would know

kers’ services and regulation.

A-17

before-hand that the World Trade Center had an in-formation

service which could supply him with names of suppliers and

other international contacts, arrange introductions and smooth

his way. He would know that there existed in the Center a

World Trade Institute that would provide him with multi-

lingual secretarial service, a library with research facilities and

space for conferences on world trade.

The American exporter would, of course, maintain

headquarters for the exhibition of his goods and negotiation

with his prospective foreign customer. Permanent exhibition

space for goods offered in world trade by both American and

foreign manufacturers would be available in much the manner

of a permanent public world’s fair.

The World Trade Center would offer prospective im-

porters and exporters from both here and abroad a one-stop fa-

cility. It would make it possible for an individual to complete an

import and export transaction entirely within its walls, com-

mencing with viewing the exhibited commodities and ending

A-18

- ——_—_—~« —

with the administrative services. This means a business man on

buying trips from Great Britain, Israel, Brazil, India or any

other nation would be able to conclude his transaction in one,

or, at the most, several days.

Other ports have begun to recognize the need. A public

world trade center exists in San Francisco. A public world trade

center exists in Houston. Florida has not only authorized a pub-

lic world trade center in Miami, but its highest Court has ap-

proved it as a public purpose.

On June 20, 1962, the Supreme Court of Florida upheld

the public purpose of the Inter-American Cultural and Trade

Center to be provided under various Florida statutes by an Au-

thority which is denominated a public corporation and agency

of the State of Florida. State v. Inter-American Center Author-

ity, 143 So. 2d 1 (Sup. Ct. Fla., 1962). The determination of

public purpose was made in various connections, principal

among which was the state constitutional provision prohibiting

use of public funds primarily for the benefit of private parties.

A-19

The nature of the proposed Center was explained more fully in

a 1955 opinion of the Florida Supreme Court which is followed

in the 1962 opinion. State v. Inter-American. Center Authority,

84 So. 2d 9 (Sup. Ct. Fla., 1955).

The Court quoted and adopted the report of the Author-

ity’s consultants that “the functional purpose of the proposed

Center is to increase trade and strengthen cultural relations

among the nations of the Western Hemisphere. This objective is

to be accomplished mainly through industrial, commercial,

educational and cultural exhibits of countries of the Western

Hemisphere and other nations.” The Court rejected as in-

applicable its own prior decision holding that it did not consti-

tute a public use to acquire land for the purpose of leasing it

solely for industrial development by private developers.’

* This best distinguishes the industrial development cases

Respondents cited below, like Hogue v. Port of Seattle, 54

Wash. 2d 799, 341 P. 2d 171 (1959), to disestablish the public

use of the present World Trade Center. The various States

have split on the question of industrial development as a public

use. In New York certain property may be taken to establish

an industrial development for blight prevention. Cannata v.

A-20

New York, even with its relative decline, is still the

leading port and. therefore, still has the greatest opportunity to

employ the traditional concept of a permanent public fair or

market place for world trade to enhance its position. Most of the

overseas prospective buyers will reach the Port of New York

first. The idea is to meet all theirneeds in this Port and to attract

them to ship through it.

The provision of this centralized accommodation of a

permanent market place with exhibition and related facilities for

goods moving in world trade clearly fits the public purpose tests

of the cases dealing with public fairs and markets.

In dealing with the 1939 World’s Fair, the Court af-

firmed, without opinion. an Appellate Division decision which

cited Bush Terminal Co. v. City of New York in rejecting a me-

City of New York, 11 N.Y.2d 210 (1962), app. dism. 371 U.S.

4 (1962).

A-21

chanics lien on World’s Fair property. John Kennedy & Co.

Inc. v. New York World's Fair 1939 Inc., 288 N.Y. 494 (1940).

The Second Department said 260 App. Div. 386, 389 (1940):

“It would seem that under the authorities, the

World’s Fair is of such a nature that it is a

‘public purpose.’ The Fair has the sponsorship,

in different degrees, of the city, State and Fed-

eral Governments. It includes exhibits of art,

science, business, states and nations, and educa-

tional and recreational facilities. .. . any surplus

resulting is to be turned over to the city and the

State for public purposes.”

The World Trade Center, as a facility intended to pro-

vide a permanent benefit to the entire economy and not just a

temporary stimulus and edification presents an a fortiori exam-

ple of a public purpose.

The Coliseum on Columbus Circle in New York City is

a public exhibit hall, owned by the Triborough Bridge & Tun-

nel Authority. The site was condemned for slum removal pur-

poses. In Kaskel v. Impellitteri, 306 N. Y. 73 (1933). Judges

Van Voorhis and Fuld, while dissenting from the majority hold-

ing that the site was properly taken for slum removal, neverthe-

A-22

less concluded in a dictum that the Coliseum is for a “public

purpose.” (p. S5)

A public fair with provision for exhibits and exhibition

facilities is hardly a new idea in this State. A State Fair was

called for by Ch. 346, Laws of New York 1900 and it is today a

duty of the State Department of Agriculture and Markets to

hold such a State Fair annually. Agriculture and Markets Law

§16 (28); §31. Since Ch. 870, Laws of New York 1939, this

State has had an Industrial Exhibit Authority for “a state or in-

terstate or international industrial exhibition in connection and

cooperation with the annual state fair.” Public Authorities Law

§§ 1653-4.

Public markets similarly have a traditional acceptance

as a public use in this State. Their history, going back to 1686,

was traced in Matter of Cooper, 28 Hun 515 (1883), app. dism.

93 N.Y. 507 (1853). The philosophy of the 1962 Legislatures is

not better expressed than in this 1883 Court decision. At page

525 the Court said:

A-23

. . The learned counsel for the appellant, ...

seems to think that because all persons for the

sale of commodities would not be admitted to

the market, it is not a public market for a public

use. But this is a grave error. It is a market for

the concentration of a particular kind of produce,

a centralization of it so to speak, and a benefit to

the public, who know that in a particular locality

they can find the articles designated to be sold

there.”

Times have changed, the problem is greater, the solu-

tion requires a greater effort and the subject of the fair and mar-

ket place under inquiry is the more significant one of world

trade rather than local produce. The public purpose persists. It

has already been so held for an International Trade Mart in Mi-

ami, State v. City of Miami, 76 So.2d 294, 297 (Sup. Ct. Fla..

1954).

Here the public purpose is fortified because it joins to-

gether the public purposes of port preservation and develop-

ment, public markets and public fairs.

(6) The effectiveness and wisdom of the remedy are for leg-

islative determination.

While it is true, of course, that the question of public

A-24

use is ultimately a judicial one, controlling weight is nor-

mally given to legislative and gubernatorial findings and con-

clusions such as those in the present case. In fact, the United

States Supreme Court has said:

“... when the legislature has spoken, the public

interest has been declared in terms well-nigh

conclusive. In such cases the legislature not the

judiciary, is the main guardian of the public

needs .. . Berman. v. Parker, 348 U. S. 26, 32

(1954) (Emphasis added.)

The 1962 Act itself contains extensive declarations,

findings, and conclusions of the two States all of which estab-

lish that effectuation of the World Trade Center will constitute a

governmental and public use within the meaning of our state

and federal Constitutions. Typically, §10 recites the States’

agreement that effectuation of both the World Trade Center and

the Hudson Tubes railroad:

“ . . will be in all respects for the benefit of the

people of the states of New York and New Jer-

sey, for the increase of their commerce and

prosperity and for the improvement of their

health and living conditions; and the port author-

ity and any subsidiary corporation incorporated

for any of the purposes of this act shall be re-

A-25

project

garded as performing an essential governmental ing our manufacturers to exhibit their products

function in undertaking the effectuation thereof, in such permanent trade fairs.” (Emphasis

and in carrying out the provisions of law relating added.)

thereto.”

There is nothing to the Respondents’ suggestion that

The Legislatures determined that the effectuation of the

the States have any burden to prove to the Court’s satisfaction

that the World Trade Center will in fact halt the decline of the

“ .. . by the port authority has the single object

of preserving, and is part of a unified plan to aid Port’s relative economic position. This Court has said

in the preservation of, the economic well-being

of the northern New Jersey-New York metro- “ “Where the question of what the facts establish

politan area and is found and determined to be in is a fairly-debatable one, we accept and carry

the public interest.” (§1 (9)) into effect the opinion of the legislature’. . . . In

other words, was the legislative choice without

Section 14 declares that property required for the pur- rational basis?” Lincoln. Bldg. Associates v.

Barr. | N.Y.2d 413, 415, 418 (1956).

poses of the Act is “required for a public use.”

The Legislatures recited their belief that realization of

The Senate Commerce Committee Report (No. 744,

their purpose “will materially assist in preserving for the two

1961) on the proposed United States Foreign Commerce Act

states and the people thereof the material and other benefits of a

declares (p. 10):

prosperous port community.” (§1 (7)) The Governor, in his

“ .. there has been expressed a need for perma-

nent exhibits of our products both overseas and message of approval, said that “The Center will be an essential

in the United States. The Department of Com-

merce has already made a start in this direction and effective factor in attracting and retaining for the Port of

by opening its center in London. The plan of the

Port of New York Authority to establish a per- New York its proper share of world commerce.” (McK. Sess.

manent trade center in our Nation s largest city

is, similarly, an admirable project. The De- Laws 1962, p. 3613).

partment of Commerce should take an active

lead in fostering such centers, and in encourag- We recognize, of course, that the Court is not abso-

A-26 A-27

lutely bound by these legislative findings. But they cannot be

rebutted merely by the Respondents’ questioning whether the

legislative remedy of a World Trade Center is wise and will

actually work to correct the existing evil. Certainly as this Court

said in People v. Nebbia, 262 N. Y. 259, 265 (1933) :

“The legislative declaration of facts ... was enti-

tled to great respect and was confirmed by

common knowledge.”

This Court’s holding was affirmed by the United States

Supreme Court which said:

“The legislature is primarily the judge of the ne-

cessity of such an enactment ... .” 291 U.S.

502, 537-8 (1934).

The same rule was clearly set forth by Chief Judge

Lehman in upholding mortgage moratorium legislation in East

New York Savings Bank v. Hahn, 293 N. Y. 622, 627 (1944),

aff'd, 326 U. S. 230 (1945):

“ .., the legislative findings are entitled to great

weight and the legislative remedy will not be

stricken down unless its invalidity is clearly es-

tablished.”

In Lincoln Bldg. Associates v. Barr, | N.Y¥.2d 413, 415

A-28

(1956), this Court said that:

“A legislative enactment carries with it a strong

presumption of constitutionality, i.e., it is pre-

sumed to be supported by facts known to the

Legislature.

}

+++

“Nor may courts substitute their judgment for

that of the Legislature so long as there can be

discovered ‘any state of facts either known or

which could reasonably be assumed” to afford

support of the legislative decision to act.”

(Emphasis added.)

See also DeVeau v. Braisted. 5 N.Y.2d 236, 241-2

(1959), aff'd.363 U.S. 144 (1960).

Remembering that the Act cannot be invalidated unless

there are no “facts either known or which could reasonably be

assumed” and unless the determination is “without rational ba-

sis,” how can the Legislatures be called irrational in making the

determinations underlying this Act? By the same token, the

public use cannot be destroyed because of the architectural

treatment of the structures to accommodate the functions, ac-

tivities or services to be centrally accommodated. Whether one

tall building will serve the public use better than two low fiat

A-29

buildings is an administrative determination of detail, without

constitutional significance.

(7) The appropriateness of a public agency to administer

the program.

The States have found that the Port Authority “is the

proper agency to act in their behalf” to effectuate this public

facility. (§1(8))°

The basic reason, as reported to the Legislatures, is that

a private company must have the objective of maximum profit

and derive a maxi-mum economic return on its investment in

every square foot of land and structure. The World Trade Cen-

ter concept cannot possibly be accomplished with such an ap-

proach.

To begin with, the United States Government requires

hundreds of thousands of square feet of expensive land and

structures in the Center to accommodate its customs space. The

* It is legally immaterial, of course, whether or not only a public

agency could accomplish this public purpose, Cf. New York

City Housing Authority v. Muller, 270 N.Y. 333 (1936); Can-

nata v. City of New York, 11 N.Y.2d 210 (1962), app. dism.,

A-30

Federal Government has obvious economic advantages in con-

structing its own accommodations which no private developer

enjoys. The Government therefore would not expect to pay over

the years as much rent as an ordinary private business would

pay for the same space. A public agency like the Port Authority

can narrow the gap between a private developer’s cost base and

the theoretical cost base of the Federal Government itself. It can

do so even within the confines of its statutory and contractual

responsibilities to support its own facilities without burden to

the taxpayers. |

Furthermore, the whole concept of the World Trade

Center is to centralize as many tenants of the world trade com-

munity as possible, even though their individual space require-

ments may not be large. A private developer procures maxi-

mum economic advantage by having as few ten-ants as possible

with large individual holdings, instead of a multitude of smaller

tenancies. Again, the World Trade Information Service could be

371 U.S. 4 (1962).

A-31

provided only by a public agency because it cannot be expected

to furnish a substantial financial return and would simply be a

wasteful use of equivalent space in private-ownership.

Finally, on the most optimistic cost estimates, the

World Trade Center would be in the red for years. We reported

to the Legislatures that we would expect that it would not be-

come self-supporting until the tenth year after the commence-

ment of its construction. Perhaps private investors can be found

who would willingly assume a ten year moratorium on any re-

turn and would contribute in addition to their original invest-

ment operating and debt service losses that would be incurred

over a decade, all in the expectation of a fairly meager return

judged by the standards of the private investment market. We

doubt it and the Legislatures doubted it, and they were not will-

ing to wait any more than they were willing to wait for slum

clearance or urban renewal to be accomplished exclusively by

private developers looking for profit alone.

A-32

—

(8) The World Trade Center is no less a public use because

space therein would be leased to public and private ten-

ants.

Respondents contend that condemnation for World

Trade Center purposes would not be for a public use since the

Act contemplates the leasing of space to the persons who would

be centrally accommodated. Respondents therefore characterize

the facility as only a “real estate business.”

Respondents’ assertion is almost identical to that made

and rejected in Bush Terminal Co. et al. v. City of New York,

282 N. Y. 306 (1940). There as here, it was contended :

“The Port Authority is purely and simply the

landlord. Similar space for the institution of an

Inland terminal by the carriers jointly might well

be arranged with the owner, for instance, of the

Chrysler Building or the Empire State Building

or of any other building within the City of New

York.” (Appellants’ Brief in Bush, p. 32).

In Bush, as in the present case, the leasing of the facil-

ity by the Port Authority was the very public purpose which the

Legislature had authorized the Port Authority to effectuate.

The New Jersey Supreme Court has recently expressly

A-33

Stated that a study of the Bush opinion “leads us to accept its

basic principle,” although it found the building in question tax-

able under the particular statutory definition. Borough of Moo-

nachie v. Port of New York Authority. 38 N. J. 414 (1962).

In Matter of Mayor of the City of New York, supra, this

Court sustained the condemnation of land for marine terminal

improvements against a challenge that, because the City in-

tended to lease them to private companies for exclusive use, the

taking was not for a public use. This Court said (135 N. Y. at

pp. 263-4) :

“Land which is thus taken is taken for a public

use, although some portion of all the land actu-

ally used may be thereafter in the discretion of

the city, divided off and placed in the exclusive

possession of a lessee for the sole purpose of us-

ing it in the trans-action of the necessary busi-

ness connected with the loading and unloading

of passengers and cargoes of ships and steam-

ers.”

This Court has said:

“The modern city functions in the public interest

as proprietor and operator of many activities

formerly and in some instances still carried on

by private enterprise.” New Fork City Housing

A-34

Authority v. Muller, supra, 270 N Y. 333, 342

(1936).

See also Berman v. Parker. 348 U.S. 26, 33-4 (1954).

To this day almost all New York City and Port Author-

ity piers are leased for the exclusive use of individual private

companies. Public airports, public markets, public bus and truck

terminals, public fairs and public housing almost universally

include space and structures leased to private persons for their

exclusive use.

We know ‘hat in asking the Court to appraise the basic

World Trade Center concept we bear the burden of the fact that

a World Trade Center may look like an ordinary private office

building, such as a real estate venturer might build. By the same

token, a public housing facility looks exactly like a private

apartment house. And the State Office Building in Albany looks

like a private office building. So does the Port Authority’s

Inland Terminal Building, upheld by this Court in Bush Termi-

nal Co. v. City of New York, 282 N. Y. 306 (1940), supra. Pub-

lic purpose is not destroyed by such external similarities.

A-35

Respondents habitually make a related statement—that

the World Trade Center has no other purpose than to produce

surpluses to offset the anticipated deficits of the Hudson Tubes.

This is simply not true and there is not a word in the record

which supports it. If the suggestion is that the Port Authority

has a secret intent to exceed the legislative authorization then,

aside from the falsity of the charge, it is utterly ramatastel at

this point in judging the constitutionality of the legislative de-

termination. If it is meant that the Legislatures had an ulterior

motive in authorizing a facility which is properly classed as a

public purpose, then, aside from its falsity, it should be ob-

served that the motive of the Legislatures is legally immaterial.

As stated in New Orleans v. Warner, 175 U.S. 120, 145 (1899),

“from the case of Fletcher v. Peck to the present time, we have

uniformly refused to in-quire into the motives of legislative

bodies.”

If such unsupported and false accusations are to be al-

lowed to raise questions as to the constitutionality of the statute,

A-36

then the presumption of constitutionality has been repudiated.

“While this presumption is rebuttable, unconstitutionality must

be demonstrated beyond a reasonable doubt.” Wiggins v. Town

of Somers. 4 N. Y. 2d 215, 218 (1958). (Emphasis added.)

When the Legislature makes a finding and lists the statute’s

objectives, “mere disagreement may not cast doubt on the stat-

ute’s validity.” New York State Thruway Authority v. Ashley, 10

N.Y. 2d 151, 156 (1961).

(9) While the concept of public use is expanding to meet

the public need, the World Trade Center meets the

most traditional test of a public use.

Our Courts have always held that the concept of public

use tends to be co-extensive with the public need in changing

times to meet current public problems which can only be met

effectively by use of the eminent domain power. New York City

Housing Authority v. Muller, 270 N.Y. 133, 340 (1936).

The most recent and authoritative discussion of the

problem is the recent decision of the Court of Appeals in Can-

nata v. City of New York, 11 N. Y. 2d 210 (1962), app. dism.

A-37

371 U. S. 4 (1962). That case concerned the constitutionality of

a Statute authorizing New York City to condemn predominantly

vacant property for sale to private industrial developers if the

property would merely “tend to arrest the sound growth of the

community” even though the property was itself “without tan-

gible physical blight” and might not even “tend to create slums

and blight areas.”

In that case the owners of homes which were neither

substandard nor unsanitary sought a declaratory judgment that

the act was unconstitutional as applied to them. Chief Judge

Desmond writing for the Court said that

“an area does not have to be a ‘slum’ to make its

redevelopment a public use nor is public use ne-

gated by a plan to turn a predominantly vacant,

poorly developed and organized area into a site

for new industrial buildings.” (p. 215)

We cite Cannata at this point not because we rest our

claim on slum clearance or urban renew-al grounds.° We cite it

® The present Act (§7) would permit the Port Author-ity, for

World Trade Center purposes, to cooperate with the City of

New York, if the City selected the Hudson Tubes-World Trade

A-38

because it is the latest case on the law of public use and reflects

acceptance of a public use concept much broader than is re-

quired to encompass the World Trade Center.

In Cannata, unlike this case, the property taken did not

end up in public ownership but was sold outright to private per-

sons. There no facility resulted, to continue to operate in the

public service, but rather an “industrial park” of private facto-

ries. And none of the occupants were, in Cannata governmental

agencies nor public utilities, whereas the principal occupants of

the World Trade Center would be Federal, State, local and for-

eign governmental agencies and common carriers and other

regulated businesses affected with a public interest.

In Cannata the determination and selection of site lim-

its was not even made by the Legislature itself, as in this case,

Center area for urban renewal purposes. In view of the sub-

standard, deteriorated condition of the area the urban renewal

approach to land acquisition will receive active consideration. If

the statutory standards are met condemnation of this area for the

conceded public purpose of urban renewal would, of course be

beyond challenge on constitutional grounds. Kaskel v. Jmpellit-

teri, 306 N. Y. 73 (1953).

A-39

but under delegated authority to local agencies with only a set

of standards to govern the delegation.

The trend of the cases in this State, culminating in the

Cannata case, has been an ever broadening view of what con-

stitutes a public use for which property may be taken by a pub-

lic agency.

In this case, however, we are not asking the Court to

advance the public use concept. Our principal cases are an 1883

case afinouncing that public markets constitute a public use

(Matter of Cooper, 28 Hun 515, app. dism. 93 N.Y. 507). and

an 1892 case which said that it was a public use to accommo-

date the necessities of oceanborne commerce using the Port of

New York (Matter of Mayor. 135 N. Y. 253). In both these

cases, the City was to be a landlord and, we suppose, was a

“real estate venturer” in one sense of the term, But in both, this

Court discerned the true public purpose, ignored the surface

similarity to private operations and permitted the Legislature to

discharge its responsibility to promote the general welfare.

A-40