There is an eminent domain flavored brouhaha brewing in Boston. It seems that Vornado Realty Trust, the big time New York developer, bought the Filene’s building in Boston in order to redevelop its site. So far, so good – no eminent domain was involved.
So Vornado set out to do the job, when – whammo! – the recession hit and progress on the new building came to a halt. There matters might have rested, at least for a while, except that Steven Roth, Vornado’s CEO, made a speech in New York, in which he bragged about how his company once stopped work on one of his buildings in New York in the hope that the city would be displeased with the resulting blight and come up with some cash. It didn’t happen, but as the poet put it, “the moving finger writes, and having writ moves on” and you can’t rewrite history. The story about that speech was picked up by Boston’s mayor who flew into a high dudgeon, and demanded that Vornado resume work post haste, or else the city would use its power of eminent domain to take the building, and to. . . What?
Just exactly what the city would do with a partially built, multi-story structure wrapped in plastic, nobody explained. Evidently, all concerned have been so impressed with Kelo v. New London’s carte blanche issued to private-to-private takings, that no one, it would seem, has reflected that even under the loosey-goosey Kelo standards of what constitutes “public use,” there has to be some semblance of a public benefit of some sort. And what might that be here? Blight removal? Maybe, but as far as we know there have been no findings of blight by the Boston city council, and let’s be serious – if every building venture that comes a cropper were said to be a sufficient basis for exercising the power of eminent domain, the courts might not buy it. Remember that state courts are not bound by the Kelo decision; the U.S. Supreme Court was explicit that states are free to set more stringent standards of review of decisions to condemn than the minimal federal constitutional standards. Several states have taken the Supreme Court up on its invitation and have disapproved private-to-private takings.
Besides, we wonder if Hizzoner is mindful that you can’t just take property by eminent domain – you have to pay “just compensation” for it. So it may not be full or truly just compensation, but condemnors do have to pay it, and neither the mayoral outburst nor any press reports that we have seen, had anything to say about funding such an acquisition.
So selling the Massachusetts Supreme Court on the idea that a city may go into the real estate business by taking the unfinished structure of an unsuccessful private developer, without any municipal plans to do so may be an uphill fight.
And even if the city were to take the unfinished structure, what would it do with it? Are we to take it that where a truly top-notch developer like Vornado finds its construction efforts stymied by the recession, the city would just waltz in and do the job that Vornado couldn’t? Not likely. Among other things that would require further expenditures of large sums of scarce public funds, and then what? Vornado obviously stopped work because it figures that in the current economic climate completing the building and renting it out would not pencil out. So how would a city do it?
So we’ll just have to wait and see how it all plays out. In the meantime, like St. Louis, Detroit, Minneapolis, and Los Angeles before it, Boston now has the makings for its very own “hole in the ground,” i.e., an unfinished major construction project that is just sitting there, and gives every indication of continuing to do so for some time into the future.
For a writeup of this story, see Christina S.N. Lewis, Mayor Battles Vornado in Boston, Wall Street Journal, April 14, 2010, at p. B1.