Can stock exchange condemn and build?

Officials from the New York Stock Exchange have been roaming the Wall Street area and circling their favorite locations. It's no secret the traders must expand or move from their current cramped quarters in the landmarked location at the corner of Broad and Wall streets.

The ticker is currently in the city's court, those familiar with the issues say, and that court centers on Deputy Mayor Randy Levine, who did not return calls.

One site under consideration begins with the empty plot owned by developer Fred Manocherian. He is intrigued by the thought of the New York Stock Exchange wanting the land he bought at 15 William Street for its new home.

"Our property is available," he agrees of the blacktopped plot that can't even be used as a parking lot under current zoning laws. While he's aware that officials have looked at the site, no one has formally approached him.

"We would be amenable to talk to the Exchange to see if they could use the property," he said.

They'd better talk soon, because Manocherian has preliminary plans for very large hotel and is talking to at least two-hotel operators about moving forward.

That site, measuring 139 x 150 and totalling 20,850 square feet, give or take, could also be combined with the triangular 40 Exchange, and perhaps even Bruce Menin's 25 Broad, a/k/a The Exchange rental property, to create a huge building for trading floors and offices.

Menin has not returned calls, and any strong interest by the NYSE in that property would certainly affect his ongoing efforts to rent the approximately 345 apartments that are renting for over $2,000 each.

A new building is always possible at Battery Park City, advises Raquel Ramati, a former director of the urban design group for New York City, who is an architect and urban planner. She points to the Travelers building on Greenwich Street, which is even further north, and the new Mercantile Exchange Building at the waterfront.

But those invested in the core financial district believe a NYSE move to Battery Park City would drive a silver stake in Downtown's heart, which is surrounded by financial services firms and draws tourists and other businesses.

That's one reason the officials are examining other structures around the current Wall and Broad landmarked building that they could knock down and replace with a new exchange.

The entire search is being shepherded by the New York office of Richard Ellis and nurtured by Deputy Mayor Randy Levine. The enterprise is expected to be underwritten with city and state economic development dollars, as well as their condemnation powers.

The law of condemnation comes under the U.S. Constitution's Fifth Amendment, which allows the government to take property for a bona fide public purpose provided there is just compensation to the owner.

"One of the issues in the 42nd Street condemnation was if taking property that would be turned over to another private user is a legitimate public purpose. The answer is 'yes,'" explained Saul P. Morgenstern, a partner with Dewey Ballentine LLP who represented the state during those condemnation actions.

There are even legal cases in upstate New York where the local governments were allowed to take land to use as access for private shopping centers, he said.

If one of the property owners balked and sued to prevent the taking of their building, the outcome may be unpredictable, Morgenstern said. But he thinks the courts are "generous enough" to recognize there are legitimate public purposes that can only be accomplished by working through a public agency to consolidate an economic entity like the Stock Exchange.

The governments could make their case by conducting studies and laying out the public purposes.

Any construction may also require environmental impact studies that would measure the effects of the new project on various aspects of the environment, and these would assess a wide variety of issues, including additional traffic impact and the like.

If there is no opposition, when the government files its condemnation petition, the lawyers will still have to allege a legitimate public purpose in the papers, Morgenstern explained.

"If the legitimate public purpose is to do X, and no one challenges it, it would be exceedingly unlikely for the judge to challenge it on his own," he added.

Meanwhile, any litigation over the valuation of the properties could go on independently of demolition and construction.