Wednesday, October 14, 2009

Profiting from Eminent Domain: Heads I Win, Tails I Win

When I read news stories like the one below I can only think of Sun Tzu and his advice that every battle is won before it is fought.

If you owned land near this project in Brooklyn, you were a winner.

The project was going to get built. The only question was at what cost?

The owners of property in this area reaped a fortune. Let's face it. This area in Brooklyn twenty years ago was a slum, the poster child for economic redevelopment or what they used to call in the 1960s "urban renewal."

You could have bought this land for next to nothing.

Now, with the state committed to building large public projects there the land isn't cheap anymore, especially thanks to the power of eminent domain looming over everything, forcing deals where many would have never happened.

There is an old axiom that says nothing so sharpens the mind as a date with the gallows.

Same is true when eminent domain is lurking about. Quick deals get done and they are often extremely profitable. As I say, it pays to buy the very best land at fair prices, something quite reasonable in situations like this which are really more like merger arbitrage in strategy than outright land banking.

Robert J. Abalos, Esq.

NY court hearing challenge to arena land-taking

ALBANY, N.Y. — Homeowners and businesses resisting the forced sales of their properties for an arena and real estate development in Brooklyn will tell New York's top court that it's unconstitutional for a state agency to order them out.

The Court of Appeals is hearing oral arguments Wednesday afternoon over developer Bruce Ratner's proposed $4.9 billion, 22-acre Atlantic Yards project. The project includes a new arena for the New Jersey Nets, office towers and apartments. Ratner is the Nets' principal owner.

Businesses and homeowners are challenging the Empire State Development Corp.'s power to force them out. They say the state constitution authorizes the use of eminent domain for public purposes, not enriching others.

Lower courts have upheld the project.