STATEMENT OF BOB WIEBOLDT, EXECUTIVE VICE PRESIDENT,
LONG ISLAND BUILDERS INSTITUTE

N.Y.S. SENATE COMMITTEE ON COMMERCE, ECONOMIC DEVELOPMENT DEVELOPMENT AND SMALL BUSINESS
OCTOBER 19, 2005
SUFFOLK COUNTY COMMUNITY COLLEGE
BRENTWOOD, N.Y.

I am Robert Wieboldt, Executive Vice president of the Long Island Builders Institute. I thank you for the invitation to testify. I bring some thirty three years of involvement in state and local land development policy issues to the table, mostly representing private sector interests.

After the recent ruling by the US Supreme Court in Kelo et. al. v. City of New London, the issue of use of eminent domain to take property that may remain in the hands of another private party for a “public” purpose is one of the more significant public policy issues facing state and local decision makers. I have seen several introductions in the legislature and much media coverage and discussions at the county and local government level.

On Long Island, the issue comes into play as we emphasize Smart Growth in revitalizing our traditional main street, downtown areas, that have long been passed over, in favor of strip commercial development. A statutory guidance permitting the use of eminent domain in these traditional re-development situations would be useful. Important to this guidance would be a workable definition of blight.

The issue also comes into play on Long Island in the context of an especially aggressive open space acquisition programs.

Open space acquisition is funded on our five eastern Suffolk towns by a real property transfer tax, which does not permit the use of eminent domain. Everywhere in Suffolk County, open space acquisition is funded by a sales tax and bond issues. The county has never used eminent domain for this purpose. Several towns have also enacted bond issues for the purpose. But, there was no explicit authorization for use of eminent domain, nor did any intent to use eminent domain appear in any town’s supporting information or in the media.

We have recently seen the threat of eminent domain come into play in agricultural preservation in the town of Brookhaven. Desiring to create a farm belt, the town has proposed to take private property from a residential sub- divider and lease it to a farmer to keep it in agricultural production.

We have also seen “out parcels” within the context of a developer’s application be targeted for eminent domain as part of an open space set-aside within a development.

The recent U.S. Supreme Ct. decision in the Kelo case has created a nationwide storm of protest as citizens wake up to the power of government to seize their land. The city of New London was permitted to seize private lands and homes to transfer ownership to a private business, in order for the city to get more tax revenue. In outrage, bills are moving to restrict eminent domain in Congress, more than a dozen state legislatures, including New York, and here in Suffolk County.

LIBI represents six hundred members with interests in land and land development in Nassau and Suffolk Counties. We have supported several bond open space bond issues, opposed the use of at transfer tax in favor of further bonding, and remained neutral on a Town of Brookhaven bond issue presented to voters last November. We offered our support last year, if the town included a transfer of development rights provision, similar to the one incorporated in the 2004 Suffolk County bond issue, which we supported heavily with advertising.

The proposed uses of eminent domain in hearings rescheduled for tonight, represent a fundamental change in direction that in several ways is wrong headed, completely disrespectful of private property rights, misuses public open space funds, and generates unnecessary opposition to open space acquisition. A simple lack of patience with free market negotiations and a failure to offer creative planning solutions are behind these discussions.

Municipalities may have the power, but must they use it, and must they use it now rather than later, after all alternatives are exhausted. Therein lies the need for State regulation.

Landowners in a voluntary program are able to negotiate for a fair price for their interest. Value is determined in real estate by a willing seller and a willing buyer. Negotiations have no end other than an agreement.

Resorting to eminent domain changes the scenario from fair to tyrannical. An offer is made on a “ Take our offer or we will condemn.” basis. Negotiations end in an eminent domain proceeding, which is the equivalent of war. The public incurs legal expenses for condemnation far in excess of normal transaction costs. The price paid is determined by a court. That price, often awarded years later, can be based on future values, investment expectations, likelihood of government action improving value, etc. The acquisition cost and transaction cost may be higher, meaning less land is preserved.

In the Brookhaven agricultural case a clear pattern exists of denial of due process of an as-of – right subdivision application. We see this as a patent attempt to reduce the owner’s value, prior to a taking of his property. Negotiations for acquisition were pitiful, with minimal contact with the owner’s attorney, a low- ball offer and no serious attempts to find a planning solution, to offer transfer of development rights and purchase of the fee or to determine the alternatives the owner would consider. The planning alternatives of re-subdivision and transfer of development have not been proposed to save the reasonably priced homes lost.

Town open space acquisition plans contemplate tens of thousands of parcels as eligible for acquisition, many to preserve agricultural activity. Below market lease charges may be the only way to continue a farm use. Of interest in the context of Kelo, is the dissent of Justice O’Conner, who argues that there is a clear implication that the Majority was only approving the scheme for a higher use and increased valuation of property. If correct, a lower intensity use like agriculture over residential may not be sanctioned.

The Kelo decision focused on the seeming right of government to trample private property rights at its whim, for whatever scheme it was interested in pursuing in transferring ownership from one private party to another. In a Brookhaven case involving the condemnation of out parcels, these were first designated usable only as open space within the development, also restricting property value. Protecting the private property owner from planning actions that diminish value prior to the taking are an area of legitimate state concern.

The Court in Kelo suggested a plan be developed before use of eminent domain uses. The quality of that plan, the level of true public involvement and opportunity to comment, the adequacy of notice, etc. are legitimate areas of State interest.

Further, the only way to evaluate the economic and environmental impact of the proposed eminent domain uses is requiring use of the SEQRA process. Only through preparation of an EIS can all reasonable alternatives be examined.

Requiring findings that all reasonable alternatives be examined is the best way to protect private property and to ensure municipalities are less likely to misbehave. The power eminent domain places in a municipality’s hands is so great that restraints must be imposed.

LIBI appreciates the invitation to testify and we are willing to participate in any legislative drafting undertaken by the committee.