Whatever Happened to Exactions in New York?


           Because the construction of major sports stadiums often involves land acquisition through eminent domain, the subject has been of interest to us. See our earlier posts, The Free Lunch – Literally, November 30, 2008, and Update on the Misadventures of New York Yankees, and the Fate of the Celebrated Not-So-Free Lunch, January 15, 2009.

         We now revisit that subject because we just came across a New York Times article that provides its readers with additional data. Charles V. Bagli, As Stadiums Rise, So Do Costs to Taxpayers, N.Y. Times, November 5, 2008). We know you’ll be shocked — shocked! — as we were, but the cost to the City of New York (for the new Yankee Stadium) “has jumped to about $458 million from $281 million [estimated] in 2005.” Surprise, surprise. In addition, the city will provide the needed infrastructure at its own cost – that’s parks, garages and transportation improvements. On top of that the State of New York is chipping in another $201 million.  “The city is also spending about $35 million for roadwork and sewer connections for the stadium and $30 million more on design and planning, items that were not mentioned when the project was announced in 2005.” Fancy that!

          Then there is the new Mets stadium for which the public fisc is getting hit for $221.8 million in site preparation, pilings and mass transit improvements. “The deal also allowed the Mets to keep revenue generated by garages, money that in the past went the city.”

          As we contemplate all that, a thought comes to mind. Usually, when someone wants to build a new project, even a small one, the municipal regulators demand exactions in the form, of land dedications to the city or the payment of “in lieu” fees. Why? Because they say that when a developer builds a project that imposes burdens on public facilities around it, it would be unfair, don’t you see, that the city should bear the cost of the burdens that the new private project imposes on public resources or on the surrounding community. Never mind that the developer pays higher taxes as the value of his property rises as a result of the improvement.

         In reality, as the U.S. Supreme Court had occasion to observe in the Nollan case, absent a rational nexus between the impact of the project and the demanded exaction, such demands for land can be an out-and-out plan of extortion. In the subsequent Dollan case the Court added the requirement that to be valid, the exaction must be roughly proportional to the burdens imposed on public resources by the private development.

         So summoning all the meager intellectual resource at our command, it seems plain that the construction of these stadiums imposes severe burdens on the surrounding public resources, and would thus justify the imposition of exactions even under the limits of the Nollan-Dolan rule. But strangely enough, none are imposed in this case and instead the governmemt is pumping copious amounts of the taxpayers’ money into those deals, providing all sorts of infrastructure gratis.

         So any way you slice it, it would appear that there is one “law” for the poor schmuck who wants to build a house (Nollan) or improve a family plumbing store (Dolan), and another, much more generous “law” for the high-profile gazillionaires putting up professional sports stadiums.

         What’s wrong with this picture?

Postscript. By coincidence, an issue raising the constitutionality of monetary exactions imposed without an individualized determination of their propriety, is pending on a petition for certiorari before the U.S. Supreme Court. For the opinion below see Joy Builders, Inc. v. Town of Clarkston, 11 N.Y.3d 863 (2008). For commentary on that case, see the post of March 24, 2009, on the blog inversecondemnation.com entitled New Cert Petition – Dolan Proportionality And Individualized Determination Applies to In-Lieu Fees.