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Columbia University Continues to Threaten to Use Eminent Domain to Expand into a Nearby Harlem Neighborhood:

Last year, I blogged about Columbia University's threats to use eminent domain to take over some land it covets in a the nearby Manhattanville neighborhood of Harlem. According to this New York Post article by urban development specialist Julia Vitullo-Martin (hat tip Candace de Russy), the University is continuing its threats:

The expansion of Columbia, already the city's seventh largest private employer, would add another 6,900 premium jobs - high pay, with generous benefits and pensions - to the local economy.

And the 17 acres on which the school hopes to build (bordered by 125th and 133rd streets, and by Broadway and Riverside Drive) are largely underused relative to the rest of Manhattan.

The sticking point is plainly Columbia's demand to get it all. Luisa Henriquez, who lives in a city-owned building on 132nd Street, puts it this way: "Columbia moving in is a bad thing because Columbia isn't willing to share."

"We're not going to take [eminent domain] off the table," says Columbia Executive Vice President Robert Kasdin. "We're going to preserve our right to argue to the state that it's in the public interest that they do it."

Yet even the strongest Harlem supporters of the Manhattanville plan, like realtor Willie Kathryn Suggs, balk. "I don't want them invoking eminent domain for private use. It's not right," says Suggs. "The neighborhood will get safer streets and better restaurants. I want that to happen. But under the rules. If they want more property they should buy it fairly, like anyone else."

And the opponents are ferocious. Manhattanville's largest private property owner, Nick Sprayregen, President of Tuck-It-Away Self-Storage, says that Columbia wants four of his five buildings . . . "My father built this business, which I intend to hand onto my children," he says. "We worked hard for the neighborhood, and intend to be part of its success.

"I won't move," Sprayregen insists. "But Columbia wants it all - 100 percent of everything. They have no desire for nuance, for compromise, for diversity."

The article notes that Columbia plans to argue that the area in question is "blighted." Under New York law eminent domain law, which is perhaps the most hostile to property rights of any in the country, almost any area can be declared blighted - and thereby subject to condemnation - no matter what its condition. As I noted in my original post, just a few years ago a New York appellate court held that Times Square was blighted, thereby permitting the condemnation of some property there for transfer to the New York Times for the purpose of building a new headquarters for the New York Times. Unfortunately, the use of blight standards broad enough to cover virtually any property is far from unique to New York, as I explained in more detail in this August 2006 Legal Times article. The retention of broadly defined blight statutes also undermines many of the reform laws enacted in the wake of Kelo v. City of New London (See my paper on post-Kelo reform, pp. 15-21).

Three other aspects of the Columbia/Harlem situation are symptomatic of broader flaws in eminent domain policy. First, this is just one of many cases where the power of eminent domain is used by wealthy and politically influential interests (in this case Columbia), at the expense of the poor and politically weak (here, the mostly poor and minority residents of Manhattanville). Second, as Columbia's lawyers surely know, even the mere threat of eminent domain often enables powerful interest groups to acquire land at a lower price than the owner would be willing to accept on the open market. For this reason, the misuse of eminent domain for the benefit of powerful interest groups is far more common than we might think if we focus only on takings that are actually carried out. Finally, like many would-be beneficiaries of eminent domain, Columbia claims that it needs to acquire 100% of the area in question and that eminent domain may be the only way to do so. Both claims are dubious, especially the latter. As I explain in some detail in this forthcoming article (pp. 21-29), there are numerous private sector alternatives to condemnation in cases where a developer seeks to acquire land for uses that really are more valuable than those of the present owners.

Perhaps Columbia's planned expansion really would benefit the local economy more than the present uses of the land in question. If so, it is highly likely that those benefits could be achieved without resorting to condemnation or using the threat of eminent domain to intimidate property owners into selling at a low price. And we should also keep in mind the fact that many "blight" and economic development condemnations actually damage local economies far more than they benefit them, as happened in the notorious 1981 Poletown condemnations, and also in Kelo v. City of New London (where some $80 million in public funds has been spent on a development project for little or no return). Once Columbia takes over the condemned land, it will not be under any legal obligation to actually provide the 6900 new jobs and other economic benefits that it is currently touting. As in many previous such cases, the new owner of condemned land could decide that providing the benefits it promised is not in its interest.

Thomas Alan (mail):
Does Columbia, being a prestigious place of learning, get any consideration when it comes to eminent domain?
4.4.2007 9:41pm
Eli Rabett (www):
Given some of the dorms, maybe the neighborhood should try and get Columbia seized by eminent domain. The argument might concentrate some minds.
4.4.2007 9:51pm
Sarah L.:
Interesting claim on the part of Columbia that their seizing this land will help the local economy--Columbia is a tax-exempt entity, so as a rule it would be exempt not only from New York State and New York City income taxes, but also from property taxes.
4.4.2007 9:58pm
Edward A. Hoffman (mail):
Prof. Somin:

I'm not going to argue about the legalities, but I do want to clear up some of the facts about Columbia's plans (which can be seen here).

You refer to "the mostly poor and minority residents of Manhattanville", but the area in question is almost entirely industrial. There are about 125 rental apartments in a few buildings which occupy well under 10% of the land. As far as I know the buildings are all owned by the city, which seems willing to sell them if Columbia can get equivalent or better housing nearby for the residents. Eminent domain will thus likely have nothing to do with whether the residents end up moving.

The ones who don't want to sell are business owners who operate auto repair shops, self-storage facilities and the like. Some may simply be holding out for a better price (admittedly, I have no evidence that this is the case) and thus creating classic holdout problems.

Columbia wants all of the land because it plans to build a large underground complex which would contain parking, loading docks, athletic facilities, support services, etc. This complex will literally underlie the entire area except for one historic building which the university plans to leave in place. But if several scattered buildings remain standing, it won't be possible to build this part of the campus. There's not much point in building a garage, for example, if you don't know whether you'll be able to build the access ramps.

The university expects to build out the site over 25 or 30 years, but it will build the underground complex piece by piece. Each section will be built at the same time as the building above it. But it's nearly impossible to plan such a development without knowing whether and/or when the space earmarked for portions of it will become available. Eventually, some future owner will be willing to sell these properties. But by then it may be too late to build what the university plans to build.

Readers unfamiliar with Manhattan may not realize how hard it is to buy land there. There literally may never be another 17-acre development anywhere in Manhattan because there will inevitably be dozens of buildings on that much land and because aggregating so many parcels will not be feasible.

Columbia is starved for space in a way no other university even approaches. By building what it can underground, it will maximize the use of the land and minimize the need to buy out other property owners nearby.

As for the point that Columbia "will not be under any legal obligation to actually provide the 6900 new jobs and other economic benefits that it is currently touting", its own self-interest is a pretty good assurance. Columbia knows it will have a very hard time buying land in the future, so it has a strong incentive to maximize its use of any land it can get. It's not plausible, for example, that Columbia will choose to build five-story buildings where the plans call for twenty stories. This need to maximize the land's untility is why the university wants to build underground -- and thus why it may ask the state to help via eminent domain.

As I said, I'm writing to address the facts rather than the law. I am not endorsing the use of eminent domain. I just want to make sure the context in which it's being discussed is clearer.
4.4.2007 10:00pm
Brian G (mail) (www):
Another fine example of "Do as I say and not as I do" liberalism at work. They'll make sure that the Harlem residents don't get fair market value I am sure as well.
4.4.2007 10:29pm
Sarah L.:
Aha, thanks for the link to the actual proposal. Stores in the buildings would mitigate the tax issue--not just because of sales tax, and income tax generated by those stores, but also because the buildings aren't exempt from property tax to the extent they're used for nonexempt purposes.
4.4.2007 10:38pm
Edward A. Hoffman (mail):
Keep in mind that generating property taxes is not the only way to help the local economy. Generating jobs is another. In addition to the people it employs directly, any large univerisity helps create a number of jobs in the private sector. Educating more New Yorkers would also be helpful to the economy.
4.4.2007 10:55pm
otto (mail):
"at the expense of the poor and politically weak"

Like Nick Sprayregen?
4.4.2007 10:56pm
Malvolio:
The ones who don't want to sell are business owners who operate auto repair shops, self-storage facilities and the like. Some may simply be holding out for a better price (admittedly, I have no evidence that this is the case) and thus creating classic holdout problems.

Columbia wants all of the land because...
... because it would benefit Columbia.

Nick Sprayregen wants to keep his property (or get a better price for it) because it would benefit Nick Sprayregen and Columbia wants to take it because doing that would benefit Columbia.

Roughly the same could be said of the money in Mr Sprayregen's wallet, or for that matter, one of his kidneys. Pretty much any piece of property would enjoyed by a new owner if mysteriously transfered from its current one. Of course, if property often bounced from person to person, the notion of property would be pretty thoroughly destroyed.

So why do we contemplate this particular piece of theft -- and theft it is, have no doubt. After all, Sprayregen would take some price; he would certainly sell out for, say, a trillion dollars, and he would not voluntarily sell for what he is being offered. The difference between what he would take and what he is given is simply forcibly extracted from him.

And why? Why is this theft permitted? Because Columbia is powerful and Sprayregen is not.

Refresh my memory, why do we have a government?
4.4.2007 11:16pm
Ellen1910 (mail):
As a newbie (lurker) on this blog I was wondering what the regulars' views of these issues are:

1. Does Columbia University perform a public function to the benefit of NYC?

2. If so, does that fact distinguish its situation from that of the developer in Kelo?

3. Do Columbia's plans increase the value of the lands under threat of condemnation?

4. If so, who should receive the benefit of that increase?
And if the private property owner, why him and not the public?
4.4.2007 11:18pm
Ilya Somin:
You refer to "the mostly poor and minority residents of Manhattanville", but the area in question is almost entirely industrial. There are about 125 rental apartments in a few buildings which occupy well under 10% of the land.

125 apartments means that there may well be several hundred people living there. That is not a small number, even if the apartments take up under 10% of the land.

Columbia wants all of the land because it plans to build a large underground complex which would contain parking, loading docks, athletic facilities, support services, etc. This complex will literally underlie the entire area except for one historic building which the university plans to leave in place.

If they can leave one building in place, they might also be able to build their complex while leaving a few others in place as well, and build around them. Alternatively, they can purchase the subsurface rights to those buildings, while leaving the aboveground facilities intact.

As for the point that Columbia "will not be under any legal obligation to actually provide the 6900 new jobs and other economic benefits that it is currently touting", its own self-interest is a pretty good assurance. Columbia knows it will have a very hard time buying land in the future, so it has a strong incentive to maximize its use of any land it can get.

Maximizing the benefits of the land to Columbia is not the same thing as maximizing the economic benefits to the community. It may well be that the optimal use of the land from Columbia's point of view is to employ a lot less than 6900 people, or otherwise use the land in ways that have few benefits for the community as a whole.

Readers unfamiliar with Manhattan may not realize how hard it is to buy land there. There literally may never be another 17-acre development anywhere in Manhattan because there will inevitably be dozens of buildings on that much land and because aggregating so many parcels will not be feasible.

As I explain in this article, private developers in many big-city environments routinely use secret assembly and other market techniques to assemble property for development projects, even in crowded urban areas. That is how Harvard has done many expansions in crowded Cambridge and Boston (also discussed in my article).

The ones who don't want to sell are business owners who operate auto repair shops, self-storage facilities and the like. Some may simply be holding out for a better price (admittedly, I have no evidence that this is the case) and thus creating classic holdout problems.

Even if that is the case, Columbia didn't have to resort to eminent domain to deal with holdouts. If it really does value the land more than the current owners do, it could have prevented holdouts by using secret assembly or precommitment contracts, as many developers (and universities) do routinely (see above).

The university expects to build out the site over 25 or 30 years, but it will build the underground complex piece by piece.

If the university's project will not be complete for several decades, that greatly reduces any economic benefits that it might create for the community, and further undermines the argument that there is a public interest in condemning the property and transferring it to Columbia.
4.4.2007 11:24pm
Ilya Somin:
"at the expense of the poor and politically weak"

Like Nick Sprayregen?


Sprayregen is hardly typical of the people in the area. Moreover, the owner of 5 Harlem buildings, though well off compared to the average person, is still poor and politically weak compared to Columbia University.
4.4.2007 11:26pm
Nick Kasoff (www):
We have similar problems here in Missouri, though on a much smaller scale, because land just isn't as scarce here as it is in Manhattan. Obviously, Columbia isn't going to build a campus with an auto repair shop in the middle. So it seems to me they have a choice: delay expansion and slowly acquire surrounding land as it is available, or expand elsewhere. New Jersey isn't very far away, and I'm sure they would welcome Columbia expansion there.
4.4.2007 11:28pm
Mark Seecof (mail):
This is one case where the "facts" (of Columbia's plans) are nearly irrelevant, and any invitation to discuss them purely diversionary. It doesn't matter how nice Columbia's plans are--the question is whether the government should expropriate current landowners to benefit Columbia.

I surmise that Columbia's administration wants to take the land all at once (by eminent domain, or through sales extorted by threats of seizure) for two main reasons: first, so the current administrators can accomplish "something big" during their time in office (acquiring the land piece by piece over years would not produce impressive ribbon-cuttings or self-congratulatory items on the CV); and second--more importantly--to capture big profits for Columbia.

If Columbia acquired land--and expanded onto it--piecemeal, then owners of nearby lots would gain. For example, an owner who could lease out, say, space for a deli "across the street" from a Columbia facility would profit from the rent, and the value of his property would increase so that if and when he were ready to sell out to Columbia, Columbia would pay more for his land.

By taking a whole bunch of property all at once, Columbia intends to capture those prospective rents and gains for itself.

Now, someone might point out that the increased value of each lot in the piecemeal purchase scenario depends on Columbia's actions. Why, he might ask, should Columbia not capture all profits which result from its own activity?

Answer: because it takes two to tango. One of the big "inputs" to Columbia's (proposed) profitable activity is land. Land is a major part of the capital investment required to produce the expected gains. The current owners of the land invested in it back at a time when Columbia was unwilling to do so (at least, unwilling to bid more than the current owners did). Now those landowners are in a position to realize some profits on their investments. If the current landowners are to provide capital to Columbia's project, they are entitled to share in the resulting profits.

Consider another source of capital for Columbia, selling bonds (how do you think Columbia plans to pay for new buildings?). Suppose the government forced everyone in New York City to buy--at par--a Columbia bond paying 0% (zero percent) interest. Would that be okay by you? No? So you think (a) people who provide capital should share in the profits made by using it, (b) people should be free to choose their own investments, or (c) both (a) and (b).

Columbia could buy or lease all of the land it wants (over time, of course) by paying for it with a fair (that is, market clearing) share of the profits to be made. But Columbia doesn't want to share any profits with investors whose capital is tied up in land. Columbia wants the government to confiscate nearby landowners' investments and give them to Columbia.

This is a ripoff pure and simple. It is obviously unconstitutional (though, as we all know, the Supreme Court refuses (e.g., recently in Kelo) to enforce the Constitution). It is also immoral, and people who favor it because they admire Columbia and disdain to respect nearby landowners are un-American.

(The next question, of course, will be "what about assembly problems? What about holdout troublemakers?" There are three answers. One is: the literature is full of schemes (e.g., various option devices) to minimize such problems--none of which has Columbia tried, since they don't confiscate landowners' profits. Two, nobody holds out forever. Three, "so what?" Remember, the question here is not "how should government act to maximize Columbia's profits?" The question is: how should government act to treat every citizen justly, and by doing so, promote the economy (and so the welfare) of the country over the long run? When government confiscates small holders' investments to benefit big entities it discourages small investments. But in the long run those small investments are essential--remember, mighty oaks from tiny acorns grow. To abandon the rule of law now just to confiscate a few profits from a few landowners in Harlem is to eat the seed corn. And teaching the people to regard government as a kind of captive wolf, to be used by whoever holds its chain to terrify and savage lesser folk, destroys the social compact--and replaces it with a vicious competition to hold that chain. (Economists call it "rent-seeking."))
4.4.2007 11:41pm
Edward A. Hoffman (mail):
Ilya Somin wrote:
125 apartments means that there may well be several hundred people living there. That is not a small number, even if the apartments take up under 10% of the land.
I think you missed part of my point. The owner of the apartment buildings seems willing to sell them. That means eminent domain won't be involved in the transfer of those buildings. If any properties are taken via eminent domain they will be commercial.
If they can leave one building in place, they might also be able to build their complex while leaving a few others in place as well, and build around them. Alternatively, they can purchase the subsurface rights to those buildings, while leaving the aboveground facilities intact.
The one building Columbia plans to leave in place is historic (it's where much of the early work in the Manhattan Project took place; it may even be landmarked) and no one wants to see it go. It's also quite large and sturdy, as it used to be an Studebaker automobile factory. Other buildings in the area are smaller and probably would not survive if Columbia tried to build under them.
Maximizing the benefits of the land to Columbia is not the same thing as maximizing the economic benefits to the community. It may well be that the optimal use of the land from Columbia's point of view is to employ a lot less than 6900 people, or otherwise use the land in ways that have few benefits for the community as a whole.
True, but the 6,900 figure was derived from an analysis of what Columbia actually wants to build. You seem to think it's the maximum number that the site could support, but there's no reason to believe that's where the number came from.
As I explain in this article, private developers in many big-city environments routinely use secret assembly and other market techniques to assemble property for development projects, even in crowded urban areas. That is how Harvard has done many expansions in crowded Cambridge and Boston (also discussed in my article).
Politics matter, unfortunately, and Columbia is still dealing with backlash from its efforts to expand in 1968. Buying land secretly would have made it nearly impossible to get the approvals and zoning variances any significant expansion would have entailed. The fact that Columbia didn't buy the land secretly and instead dealt openly with the neighbors is one of the few things the protestors are happy about.
Even if that is the case, Columbia didn't have to resort to eminent domain to deal with holdouts. If it really does value the land more than the current owners do, it could have prevented holdouts by using secret assembly or precommitment contracts, as many developers (and universities) do routinely (see above).
As you say, see above.
If the university's project will not be complete for several decades, that greatly reduces any economic benefits that it might create for the community, and further undermines the argument that there is a public interest in condemning the property and transferring it to Columbia.
That would only be true if it planned to demolish all the buildings now and let the land sit vacant until it's ready to build. In reality, Columbia plans to keep the current businesses in place until it's ready to knock down the buildings they're in. In fact, Columbia just leased out the commercial space in one of the first buildings it will tear down in order to prevent it from sitting empty for even a couple of years.
4.4.2007 11:52pm
Russ (mail):
Mr. Hoffman,

You miss most of the point. If Columbia wants the land, they should try to buy it. If the current owners do not want to sell, it is despicable that Columbia would try to invoke eminent domain to obtain what does not5 belong to them.

Eminent domain was intended for public use, and the fact that a new owner might - and I do stress the word might - be better for the community, does not qualify. Our black robed masters on SCOTUS might currently disagree, but even they are fallible.

Private property is a basic right of freedom. Columbia, through eminent domain, is trying to do its part to help destroy that freedom.
4.5.2007 12:01am
Edward A. Hoffman (mail):
Mark Seecof wrote:
"...to capture big profits for Columbia."
It's a non-profit institution, Mark.
If Columbia acquired land--and expanded onto it--piecemeal, then owners of nearby lots would gain. For example, an owner who could lease out, say, space for a deli "across the street" from a Columbia facility would profit from the rent, and the value of his property would increase so that if and when he were ready to sell out to Columbia, Columbia would pay more for his land.

By taking a whole bunch of property all at once, Columbia intends to capture those prospective rents and gains for itself.
As I said in my previous post, Columbia plans to let the current businesses remain where they are until it's ready to build on their sites. It thus demonstratbly is not trying to capture the advantages you describe.
It is obviously unconstitutional (though, as we all know, the Supreme Court refuses (e.g., recently in Kelo) to enforce the Constitution). It is also immoral, and people who favor it because they admire Columbia and disdain to respect nearby landowners are un-American.
It is seldom useful to argue with people who believe that anyone who disagrees with them is immoral and un-American, or that an issue on which the Supreme Court split 5-4 has an obvious answer that the (un-American and immoral) majority didn't see. If your posts continue in this vein I hope no one will respond to them.
4.5.2007 12:01am
Edward A. Hoffman (mail):
Russ wrote:
Mr. Hoffman,

You miss most of the point.
No, I don't. I clearly stated -- twice -- that all I was doing was clarifying the facts and that I was not taking a position on the use of eminent domain. My post was about what is, not what ought to be.
4.5.2007 12:05am
Sarah L.:
"Non-profit institution" doesn't mean that Columbia doesn't try to maximize profits! It doesn't even mean that net annual income must be zero (i.e., that losses must balance out gains). It does mean, among other things, that profits aren't allowed to inure to the benefit of individuals. This type of confusion is why some prefer the term "tax-exempt."
4.5.2007 12:19am
JohnAnnArbor:

In reality, Columbia plans to keep the current businesses in place until it's ready to knock down the buildings they're in.

Boy, that sounds like fun. So the current get to operate their businesses as long as Columbia lets them, then, when the whim moves the University, it swats the inconvenient businesses aside.
4.5.2007 12:23am
JohnAnnArbor:
Hey, Columbia's near the river, right? Well, then, in honor of Manhatten's original colonists, Columbia should go for a Dutch solution: reclaim land from the river.
4.5.2007 12:27am
Joe Bingham (mail):
Does this remind anyone else of a Bible story?
4.5.2007 12:28am
Edward A. Hoffman (mail):
"Non-profit institution" doesn't mean that Columbia doesn't try to maximize profits!

Believe it or not, there are a lot of retail spaces in buildings Columbia already owns near its campus yet it doesn't try to maximize the rent it can collect on them. It makes sure the neighborhood has the services the students, faculty, staff and neighbors want, even though that often means collecting below-market rates.

Besides, Columbia is not planning to eventually sell the land or to rent out a large fraction of the space in its buildings. Instead it plans to use these facilities itself. If a developer bought the land it would make sense to presume that profit was the motive. That presumption makes no sense here.
4.5.2007 12:29am
Ilya Somin:
125 apartments means that there may well be several hundred people living there. That is not a small number, even if the apartments take up under 10% of the land.


I think you missed part of my point. The owner of the apartment buildings seems willing to sell them. That means eminent domain won't be involved in the transfer of those buildings. If any properties are taken via eminent domain they will be commercial.

Even if they are willing to sell, that may be because of the threat of eminent domain, as discussed in my original post. We may never know whether they would have been willing to sell absent coercive threats.


If they can leave one building in place, they might also be able to build their complex while leaving a few others in place as well, and build around them. Alternatively, they can purchase the subsurface rights to those buildings, while leaving the aboveground facilities intact.



The one building Columbia plans to leave in place is historic (it's where much of the early work in the Manhattan Project took place; it may even be landmarked) and no one wants to see it go. It's also quite large and sturdy, as it used to be an Studebaker automobile factory. Other buildings in the area are smaller and probably would not survive if Columbia tried to build under them.


If that is the case, Columbia could buy the subsurface rights, and then pay the existing owners to sell their lots voluntarily, or give them enough money to strengthen the foundations of their buildings enough to withsstand the impact of the new underground facility.

Maximizing the benefits of the land to Columbia is not the same thing as maximizing the economic benefits to the community. It may well be that the optimal use of the land from Columbia's point of view is to employ a lot less than 6900 people, or otherwise use the land in ways that have few benefits for the community as a whole.



True, but the 6,900 figure was derived from an analysis of what Columbia actually wants to build. You seem to think it's the maximum number that the site could support, but there's no reason to believe that's where the number came from.


Whether or not that is the maximum number the site could support is utterly irrelevant. The key question is whether Columbia will end up employing that many and otherwise provide the economic benefits it claims will result from its project. Most likely, Columbia will do whatever maximizes its own institutional self-interest and that may well involve using the property in ways that provide much less economic benefit to the community than it currently promises.

As I explain in this article, private developers in many big-city environments routinely use secret assembly and other market techniques to assemble property for development projects, even in crowded urban areas. That is how Harvard has done many expansions in crowded Cambridge and Boston (also discussed in my article).



Politics matter, unfortunately, and Columbia is still dealing with backlash from its efforts to expand in 1968. Buying land secretly would have made it nearly impossible to get the approvals and zoning variances any significant expansion would have entailed. The fact that Columbia didn't buy the land secretly and instead dealt openly with the neighbors is one of the few things the protestors are happy about.


Columbia could have bought the land first, and gotten the approvals and variances later. It surely has sufficient political clout to be confident of getting them. As for the protestors being "happy" with Columbia's openness, I suspect that there would be a lot fewer unhappy protestors if the Columbia had acquired the land by voluntary purchase, even secretly. Moreover, precommitment contracts do not require secrecy, and are an alternative noncoercive way of dealing with holdouts.

If the university's project will not be complete for several decades, that greatly reduces any economic benefits that it might create for the community, and further undermines the argument that there is a public interest in condemning the property and transferring it to Columbia.


That would only be true if it planned to demolish all the buildings now and let the land sit vacant until it's ready to build. In reality, Columbia plans to keep the current businesses in place until it's ready to knock down the buildings they're in. In fact, Columbia just leased out the commercial space in one of the first buildings it will tear down in order to prevent it from sitting empty for even a couple of years.

Businesses whose owners know they will be shut down in a few years (if not sooner) are unlikely to generate as much economic activity as ones that are more permanent. In any event, during the time that the land is still being used for the same purposes as before, there will be no NET benefits from the Columbia project. The latter (if there ever are any) will be well in the future, and ordinary time discounting suggests that they are therefore less valuable than the University claims.
4.5.2007 12:30am
Edward A. Hoffman (mail):
I'm going to step back since I have already posted more than I really wanted to. First, though, I want to reply to Prof. Sonin.
Even if they are willing to sell, that may be because of the threat of eminent domain, as discussed in my original post. We may never know whether they would have been willing to sell absent coercive threats.
Again, you misinterpreted my post. The buildings are owned by the government, which has no reason to fear eminent domain and which could go fifteen rounds in court with the university if it wanted to. Eminent domain is simply not a factor in the availability of those buildings.
Whether or not that is the maximum number the site could support is utterly irrelevant. The key question is whether Columbia will end up employing that many and otherwise provide the economic benefits it claims will result from its project. Most likely, Columbia will do whatever maximizes its own institutional self-interest and that may well involve using the property in ways that provide much less economic benefit to the community than it currently promises.
At the risk of sounding like a broken record, you have misread what I wrote. The figure of 6,900 jobs is based upon the presumption that Columbia will indeed do whatever maximizes its own self-interest. If Columbia does what it wants, 6,900 jobs are expected to result. Your argument only works if the figure of 6,900 jobs was based upon something other than what Columbia would do in order to maximize its own interests.
In any event, during the time that the land is still being used for the same purposes as before, there will be no NET benefits from the Columbia project. The latter (if there ever are any) will be well in the future, and ordinary time discounting suggests that they are therefore less valuable than the University claims.
Now you're presuming that the entire parcel will sit idle for a while before being developed completely. Columbia will build gradually. Not every piece of land will produce benefits in the near term, but some pieces will.
4.5.2007 12:49am
David M. Nieporent (www):
True, but the 6,900 figure was derived from an analysis of what Columbia actually wants to build.
But businesses and governments routinely vastly overestimate the economic benefits of their plans when they're trying to sell them to politicians and the public. There's little reason to believe it will really generate that many jobs, just because they have an "analysis" in hand which says so.

You seem to think that just because Columbia says, "We want this land for a use which will generate 6,900 jobs," that this means (a) they want this land for a use which will generate 6,900 jobs, and (b) that the planned use will actually generate 6,900 jobs. (Do you think GM didn't want to be economically successful in Poletown and generate lots of jobs? Of course it did. The project just happened to turn out not to match up with projections.)

The point is, if they don't generate 6,900 jobs, the legitimate owners of the land don't get their property back. Columbia isn't getting the land conditioned on actually generating those jobs.

It's a non-profit institution, Mark.
Non-profit means that shareholders don't get paid dividends, Edward. It doesn't mean the institution doesn't try to bring in as much money as possible. Have you checked the endowments of some of the elite universities lately?

As I said in my previous post, Columbia plans to let the current businesses remain where they are until it's ready to build on their sites. It thus demonstratbly is not trying to capture the advantages you describe.
Edward, for a business to be successful, it has to continue to invest in itself. Not too many people are going to invest in a business that has a known shelf-life of only a few years. Good luck trying to, e.g., get a loan from a bank when your business may be evicted at any moment.

That's not to mention that few buildings can go for 10, 15, 20 years without upkeep. How much money do you think Columbia, as landlord, is going to put into maintaining the existing buildings to keep them economically viable for the current businesses, given that it plans to tear down the buildings in a few years?

To the extent people are under the illusion we live in a free country, this is the most surreal part of the argument (though it's not your fault):
Politics matter, unfortunately, and Columbia is still dealing with backlash from its efforts to expand in 1968. Buying land secretly would have made it nearly impossible to get the approvals and zoning variances any significant expansion would have entailed.
In other words, the justification for the government seizing private property is because the government makes it impossible to use one's private property as one wishes. So one government intrusion into property rights necessitates the next.
4.5.2007 1:25am
Joe Bingham (mail):
The answer to my question is the Columbia reminds me of King Ahab. Not a compliment.
4.5.2007 1:28am
Truth Seeker:
Edward A. Hoffman wrote:
Mark Seecof wrote:
"...to capture big profits for Columbia."
It's a non-profit institution, Mark.


You don't understand non-profit, Edward. It just means private individuals don't pocket the money as shareholders. Nonprofits can make huge profits and their employees can make outrageous salaries. How much does the president of Columbia make? How about other officers? Their attorneys? I bet they'd get big bonuses or raises or other perks if this goes through.
4.5.2007 1:31am
Eli Rabett (www):
The same theater went on when Columbia wanted to build a gym on the east side of the campus
4.5.2007 2:02am
b. (mail):
I haven't the nerve to touch the substantive here issue with a ten-foot pole. I WILL say, however, that, as a resident of central Harlem (east and slightly north of the area under consideration) for several year, this portion of Manhattanville is most definitely blighted.

And blighted in a way that makes even the surface of the moon look habitable.
4.5.2007 7:05am
Jeff_M (mail):
Can anybody point me to a explanation or good definition of "precommitment contracts"? Googling didn't yield much.
4.5.2007 7:42am
logicnazi (mail) (www):
I'm generally skeptical of the power of the government to take value from private individuals. However, I think many of the commenters who are so opposed to the use of eminent domain in situations like this are being unrealistic about what can be accomplished without it. Now it may be that the benefits of being secure in your property are worth paying the price in terms of inefficiency and loss of city universities but we should acknowledge that this is a real price we are paying.

First of all it should be clear to anyone who has enjoyed the benefits of a college campus that there are real benefits to the control of contiguous areas of land. You simply couldn't create the sort of atmosphere you see on a college campus if the area was dotted with auto repair yards and other privately owned buildings (don't care if this is what columbia is really doing here it could have been). Whether you think these are important goals or not universities care about them and if they think they will be unable to accomplish them once the area develops they will be inclined to locate themselves out in the hicks like Cornell and UIUC.

Secondly, this is ultimately all about money. Of course with unlimited funds you could do pretty much anything. If columbia had enough money they could (like a James bond villain) create a massive underground city with hundreds of floors beneath their current campus. Saying (as Ilya has) that Columbia could build under these other holdouts is besides the point. Building under other structures would massively raise the price. Besides it's quite likely that at least one of the building owners in question might refuse to sell these rights and we end up back in the same situation. Unless of course you support eminent domain for underground rights.

The fact that some other universities in other places have purchased land in other fashions doesn't really prove much. They may have had to pay a massive premium on these properties and as I pointed out above this is all ultimately about money. Besides having visited both Harvard and Columbia I can attest that they are hardly in similar situations. The land around Columbia is occupied in a denser manner and the nature of the area makes it less desirable for them to have disconnected campuses as Harvard does.

Also I hardly see the practical relevance of Columbia's status as a private institution. Perhaps one wants to distinguish private and public institutions in the law to prevent abuse but as a practical matter Columbia provides pretty much the same social benefits that state universities provide and likely with greater efficiency. Sure private universities tend to cost more for students to attend but they also offer more financial aid (often ending up as or more cheap for the truly poor).

In short if you think giving up the benefits of allowing private city universities to expand is a cost worth the benefits of keeping the use of eminent domain in check that's fine. However, it seems the same costs and benefits are at play in this case as they would be if the city was going to use eminent domain to build a library or a park. If you think Columbia should be able to gather the land in other fashions you should have the same view about the city doing so.
4.5.2007 9:03am
logicnazi (mail) (www):
Also I want to emphasize the importance of Edward Hoffman's point about acquiring zoning rights and other city permissions. I like the pure private property model where each man is (relatively) free to decide how to use his own property but this isn't the model we have in cities anymore.

Living in berkeley I am constantly amazed at the cost members of the community can impose on the university for doing perfectly legal things that they dislike. The number of technicalities and unfavorable interpretations of rules that can be marshalled against a project that a sizeable fraction of the populace or the city council doesn't like is amazing.

Also people's positions tend to crystalize and they will (irrationally) be far more supportive of your project if they are informed from the beginning than if you spring it on them once almost accomplished. It might make more sense to object to the use of eminent domain than to giving permits after property has been acquired secretly but that isn't the way it will work in the real world.

For instance berkeley (and my recollection from caltech says private universities as well) are required to publish their long range plan. If they tried to secretly start a new project the influential members of the community would feel betrayed and would try to show the university it couldn't just go around ignoring them. On the other hand if they were approached at the beginning and successfully wooed to support the project their sympathies lie with the university and they will see the project as their baby and resent property owners who hold out.

I would like to live in a world where private property was truly private and the university could just assemble property secretly and build as it wished but this isn't the world we live in. The citizens of towns with universities in them tend to feel that they should have the right to tell the university what it can and can't do just because it affects them. Once you have this sort of attitude it makes it almost as hard for a university to simply acquire the property in secret as it does for a government project. Given this I can't unequivocally reject the use of eminent domain in these sorts of circumstances.

If we could restrict eminent domain as part of a package that stopped communities from exercising such invasive control over universities and other local landowners then I could support it.
4.5.2007 10:04am
Mark Seecof:
Mr. Hoffman,

My colleagues and our gracious host have already answered your most flip, disingenuous, and, shall we say, unsophisticated responses to various comments, including mine. I thank them.

However, I'd like to point out that even if Columbia does subsidize the rent for some of its current retail tenants that only means it is effectively using them as subcontractors to provide amenities to Columbia's customers/ stakeholders--which still amounts to "maximizing Columbia's profits." There is no charity involved.

As for your remark that "it is seldom useful to argue with people who believe that anyone who disagrees with them is immoral and un-American," I suspect you misunderstood me. I don't believe anyone who disagrees with me is immoral. I believe that anyone who wishes to use government power to advance Columbia's interests at the expense of its neighbors is immoral. (Feel free to argue Columbia's superior moral claim to real property in Harlem--I'm sure we would all like to read your analysis.)

(Although immorality doesn't require hypocrisy, the two often go together. Suppose the city proposed to take some of Columbia's land by eminent domain to provide a site for a Super Wal-Mart in Harlem. Studies might show that the store would employ hundreds of people and would benefit city residents by many millions of dollars every year (mainly through lower prices for the groceries and household goods they buy). Would you approve? Why not?)

(Congratulations, by the way, on getting everyone to hare off after Columbia's plans. As I wrote before, those are really beside the point. Even you concede the private character of Columbia's plans, so the real question is whether we should approve Columbia's rent-seeking behaviour (or the government corruption which enables it).)
4.5.2007 12:24pm
Mark Seecof:
logicnazi makes a good point-- Columbia in some ways resembles a common- carrier (a term I will use for brevity here to include all private entities providing a truly public service), and many people think such entities should be aided with eminent domain. (Even I think that, with some reservations.) I suggest that however attractive Columbia's campus may be, Columbia does not deserve common- carrier status. Common carriers must serve all customers without invidious discrimination. Columbia goes to the opposite extreme (in fact, Columbia is openly, even boastfully racist and sexist, and bigoted in other ways). Of course many public colleges and universities behave in a similar fashion--but as we just saw in Michigan, the people have some hope of reining them in through the democratic process. A private institution like Columbia would claim (and note well, I would respect this claim) to have a First Amendment right to choose its students and so-forth.

As for this being "ultimately all about money," I agree. This is about whether Columbia should be allowed to take money from its neighbors. You may think Columbia deserves the money more, but I really don't think you can make a principled case for that. The Manhattanville area may be ugly now, but lots of land is ugly before development (whether naturally ugly, or ugly with decayed urban development). I can't see why we should abrogate the rights of owners who invested in ugly land rather than pretty.
4.5.2007 12:26pm
blackrock:
Eminent domain, and its enablement of large-scale, thick-grained development, creates one of those policy spaces where liberals and libertarians converge.

As noted in the initial post, eminent domain is often used by the politically powerful to hurt the politically weak. In addition, eminent domain frequently leads to thick-grained development, or at least thicker-grained development than the market would normally allow.

The Columbia plan would create a large block of single ownership. While it may mix uses, it cannot create the sort of chaotic mix that liberals (in the Jane Jacobs mold) value. I took a great class with Bob Ellickson at Yale detailing that school's development. Yale never had eminent domain power, and the result is that much of the school is mixed in with the surrounding city. (Yale was able to voluntarily purchase large chunks of the city, so the central campus is still fairly isolated). That setup appeals to liberals like me much more than the Columbia setup, and it protects property rights to boot.
4.5.2007 12:28pm
gideon kanner (mail):
Just about everything has been said here so I won't replow that ground. But unless I missed something, no one is talking about the scandal of condemning business properties but denying the business owners any compensation for the value of their businesses (as opposed to real estate) damaged or destroyed by the taking, even though in some cases those are worth more than the real estate. Also, there is the problem of precondemnation blight that affects the targeted properties while the planning and political infighting goes on.

Apart from the fact that "just compensation" is neither just nor compensation even under the best of circumstances, it is common that precondemnation blight drives out tenants, provides disincentives to maintenance and repair of the targeted buildings, and often drives the targeted owners to the wall, forcing them to settle for unreasonably low amounts. All this happens even without bad faith on the pert of the condemnor, though at times it's done deliberately to force thw owners to come to terms. In some cases they lose their properties by foreclosure or even by tax sale. THAT is the real scandal.
Also, it is a virtual certainty that Columbia will not produce 6900 NEW jobs or anything like it. Any bets?
4.5.2007 3:24pm
eddie (mail):
The compensation issue has never been fully addressed. To me one of the real problems with Kelo is that without a governmental purpose, the condemned must be treated differently regarding compensation and should be treated more as a joint venturist with the party receiving the benefit of the condemnation.

More importantly, is that no one has even thought to address how the development would affect the community at large, e.g. traffic. Columbia is certainly not developing the property to improve the living of the current residents of the neighborhood. (It is fairly well established that town/gown relationships are never really balanced.) So is the benefit to society merely "trickle down". And what will happen to the current beneficial amenities that already exist in this "blighted area?" Will the Fairway warehouse superstore close because of increased rents?

The real issue is why should this non-individual be receiving the benefits from a government that far outstrip any benefit give to the people as individuals.

I have also not seen any mention in the Columbia "development plan" or any mention by the government of a more broad plan for the neighborhood of public amenities. If the neighborhood is blighted, and some of the buildings are actually own by the City, then why hasn't any master plan been adopted for the development. And if Columbia has a master plan, then why hasn't the City required that a certain portion of the development be strictly for non-University public uses (e.g. parks, housing, etc.)?

It used to be de riquer if you wanted to get something from the government, especially real estate, then you entered into a fairly restrictive and explicit development agreement which was filed against the property and "ran with the land." Part of such a plan could require that a certain number of jobs be provided by the developer.

As I see it this is simply a give away.
4.5.2007 5:58pm
gideon kanner (mail):
Not so fast, Fast Eddie:
Careful about those joint ventures. Redevelopment projects fail regularly, or at least fail to deliver the promised benefits, so I woud be very careful about making condemnees "joint veturists" -- lovely when the project works, disastroust when it fails. And fail they do. See Redevelopment Wrecks: 20 Failed Projects Involving Eminent Domain abuse, Castle Coalition (2007). And those 20 do not include some of my favorites, including some nine-figure disasters where property was condemned for [non-redevelopment] uses which did not materialize -- e.g. the 17,500-acre, $100 million (that's in 1970s dollars) "Intercontinental" Los Angels Airport in Palmdale, or the $217 million Belmont Educational Center in downtown Los Angeles that was built on an abandoned oil field that seeps methane and is thus unfit for use a a school. The Big Dig in Boston (estimate: $2.6 billion, cost so far: $14 billion and counting). Gravina Island bridge anyone?
4.5.2007 8:46pm
Gordo:
Pardon my naivete, but isn't the point of eminent domain to provide the expropriated property owner "fair market value" for his or her property? So Mr. Speyregen or any other property owner is not being ripped off.

My question is whether Columbia, a private university, should have the benefit of eminent domain. Kelo would say "yes," but I didn't agree with the Kelo decision - although on narrower grounds than many. As I would have decided Kelo differently, I would have to think hard about whether Columbia qualifies as some sort of "quasi=public" entity because of its non-profit educational mission.

My comment is that it seems to me that some of the commenters want to abolish eminent domain entirely, even for public purposes. I suppose that's a valid policy argument, but the Constitution clearly allows the City of New York, if it chose, to condemn Mr. Speyregen's property and other Manhattanville properties, for, say, a road, or a new police station. To argue otherwise is not only contrary to the Constitution, it's a big step into Ayn Rand fantasy-land, IMHO.
4.6.2007 2:28am
Scaldis Noel:
Hypothetical:
Mr. Speyregen wants to expand his business and expects the government to take Columbia's land by eminent domain and sell it to him so that he can develop it for his own use. Under Kelo jurisprudence, would he have a legitimate argument that the tax revenue benefits to the city would be providing a public benefit? What would make his claim to Columbia's land any less valid than Columbia's claim to his, other than the whims of the government officials deciding whose plan they like better (or whose political clout is bigger and pockets are deeper)?
4.6.2007 9:40am
Gideon Kanner (mail):
Gordo makes the common mistake of assuming that fair market value is just compensation. It isn't and the Supreme Court has conceded that repeatedly, even as it recognizes explicitlly the shortcomings of its measure of compensation.

First, the definition of FMV assumes a voluntary transaction which necessarily ignores various externalities, some positive and some negative, that motivate the seller to sell and the buyer to buy in a voluntary transaction. I.e., no rational sellers would voluntarily sell their land at a price that would leave them undercompensated (and in some cases impoverished). Second, axionatically, FMV excludes a variety of economic (and usually conceded) collateral losses suffered by the condemnee but judicially deemed to be noncompensable - the prime example being loss of business goodwill and other business losses. Third, (except in Florida) it fails to reimburse the condemnee for attorneys and appraisers fees, and other expenses of litigation, and thus inherently diminishes even the limited, theoretically payable "just" compensation. Remember that unlike in tort law, there are no general or emotional damages in eminent domain so every nickel comes out of te condemnees' "hard" economic damages. Also, the collateral source rule does not apply (it can't apply because there are no collateral sources to pursue here). Finally, condemnors routinely undervalue property that is targeted for condemnation, so in order to receive realistic allowable compensation the condemnees have to spend their own money to demonstrate the inadequacy of the condemnor's offers, and are thus never made whole.

To make things worse, in takings of an owner's entite holding (total take) it costs the condemnor nothing (except for transactional costs) because the condemnor exchanges one asset (money) for another asset (land) at the latter's judicially determined FMV, so its balance sheet is unchanged.

Welcome to my world, guys
4.9.2007 2:32pm