Court ruling leaves door open for developers.

The U.S. Supreme Court decision allowing governments to seize property from private landowners for non-public ventures leaves the "door wide open" for development's like Bruce Ratner's Atlantic Yards project, according to real estate experts.

In a 5 to 4 decision this week, the Supreme Court upheld the rights of state and local governments use of eminent domain as part of a project aimed at economic development.

"Economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized," said Justice John Paul Stevens in the majority opinion. "Just as we decline to second guess the city's considered judgments about the efficacy of its development plan, we also decline to second-guess the city's determination as to what lands it needs to acquire in order to effectuate the project."

As long as landowners are justly compensated for their land, according to the decision, governments may now condemn land for the sake of urban renewal.

"Right now, the door is wide open for development, as long as you (landowners) get paid," said R. Randy Lee, CEO of Leewood Real Estate Group. "Large or small economic development will not have to withstand government scrutiny."

The U.S. Constitution generally limits the use of eminent domain to government projects such as roads or public buildings, or to what used to be known as slum clearance. Local governments, however, have increasingly found it convenient to use eminent domain to clear land for private development that will enhance the tax base.

Such is the case of Bruce Ratner's $2.5 billion 24-acre, mixed-use project called Brooklyn Atlantic Yards that will require 13 acres of site to be acquired through eminent domain, or through the threat of eminent domain, whereby private property will be condemned, seized and transferred, by the government, to a private developer.

"A redevelopment plan, like Bruce Ratner's in Brooklyn, will be difficult to challenge in court," said Peter J. Herzberg, partner, Pitney Hardin LLP. "The Supreme Courts decision strengthens the public/private relationship and protects that relationship."

Landowners in the way of economic development will now have less legal clout.

The dissenting decision was written by Justice Sandra Day O'Connor. "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has the license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result."

Those opposed to projects like Ratner's will now look to the state to determine how eminent domain is to be used.

"If Ratner uses eminent domain, it will be up to him to make the case that the neighborhood is blighted, which it patently is not, or the project makes economic sense, which is pure fantasy," said Daniel Goldstein, spokesperson for Develop Don't Destroy Brooklyn. "The Court has made a federalist decision, which means it is now Albany's responsibility to curb and restrict New York's abusive eminent domain laws; here in Brooklyn, and all over the state, where private corporate powers are benefiting off the backs of everyday citizens."

The high court's decision has put no restrictions on what may be determined a public use, as long as it benefits the public in some way.

"The case supports a very broad view of 'public use'," said Michael Sahn, of Sahn Ward & Baker, PLLC. "If a governmental body can justify a development plan as having a positive impact on taxes, employment and the public welfare, and that it is part of an integrated, development plan, then this case will afford the basis for implementing such plans by using the eminent domain power."

"The definition of public use is blurred. For example a Wal-Mart being built in an area can now be viewed the same as building a roadway," said Herzberg.

Added Lee, "At some point in time, public benefit became interchangeable with public use."

In a free market place, where the demand for developable land far outweighs its supply, government's role in private development has evolved to create a broader use of eminent domain, said Sahn.

"Overall, I think developers and governmental officials are more keenly aware of the development potential of land that may be under or poorly developed, or which could yield higher returns and benefits if it was re-developed," Sahn explained. "This is particularly true along waterfront areas where there is great potential for growth in the re-use of property. There is also less vacant land in prime locations. Governments seem willing to assist in the process, and use the eminent domain power as a tool to achieve a particular result in a way the private marketplace could not."

The case before the Supreme Court was Kelo v. City of New London, where the City of New London planned a development project over a 90-acre neighborhood of small homes, requiring the seizure of 15 properties from unwilling sellers.

The city offered the property to a private developer under a 99-year lease at $1 a year, to develop a waterfront hotel and conference center, office space for high-technology research and development, retail space and 80 new homes.

"The Court simply got the law wrong today, and our Constitution and country will suffer as a result," said Scott Bullock, senior attorney for the Institute for Justice that brought the case to the Supreme Court. "With today's ruling, the poor and middle class will be most vulnerable to eminent domain abuse by government and its corporate allies. The 5-4 split and the nearly equal division among state supreme courts shows just how divided the courts really are. This will not be the last word."