Is the acquisition of private property for affordable housing a public use?

New York City Mayor Bill de Blasio announced plans to acquire privately owned residential buildings and convert them into affordable housing in an effort to reduce the City’s homeless problem. The City is currently paying property owners to house homeless people in apartments in the buildings that the City wants to acquire. The City’s plan is to acquire the buildings and transfer them to nonprofit companies that will convert all of the apartments in the buildings into affordable units. The homeless people will stay in the affordable units. If the City is unable to purchase the buildings from the owners, then it will use eminent domain to accomplish the acquisitions. The City’s plan raises the question whether the acquisition of private property for affordable housing is a public use.

The United States and New York Constitutions require that there be a public use in order for the City to use its power of eminent domain. US Const, 5th Amdt; NY Const, art I, § 7. In Kelo v City of New London, Conn., 545 US 469 [2005], Justice O’Connor, in her dissenting opinion, explained that prior to the Court’s opinion in Kelo, there were three categories of takings that complied with the public use requirement:

• When the sovereign transfers private property to public ownership—such as for a road, a hospital, or a military base;
• When the sovereign transfers private property to private parties, often common carriers, who make the property available for the public use—such as with a railroad, a public utility, or a stadium; and
• Takings that serve a public purpose even if the property is destined for subsequent private use. These takings have been allowed in certain circumstances to meet certain exigencies.

The first two categories are straightforward. The third category refers to Berman v Parker, 348 US 26 [1954] and Hawaii Housing Authority v Midkiff, 467 US 229 [1984]. In Berman, the court allowed eminent domain to be used for urban renewal to eliminate slums and blighted areas. In Hawaii Housing Authority, the court allowed eminent domain to be used to redistribute land when there was highly concentrated land ownership resulting from land oligopoly. The Kelo decision upheld the use of eminent domain for a proposed economic development plan, but it left it up to the States to impose stricter public use requirements than the federal standard. Many States did just that and passed legislation precluding the use of eminent domain for economic development. New York was not one of those States.

What qualifies as a “public purpose” or “public use” is broadly defined as encompassing virtually any project that may confer upon the public a benefit, utility, or advantage. Syracuse University v Project Orange Associates Services Corp., 71 AD3d 1432 [4th Dept 2010], appeal dismissed, lv denied. 14 NY3d 924 [2010]. The use of eminent domain will be allowed if a public use or benefit is rationally related to a conceivable public purpose. See West 41^st Street Realty LLC v New York State Urban Development Corp., 298 AD2d 1 [1^st Dept 2002]. Article XVIII of the New York State Constitution has a provision for housing accommodations for low income people. Section 9 of that article permits to the use of eminent domain to effectuate the purpose of the article.

We believe it is very likely that the City will be permitted to use eminent domain to acquire private property in an effort to reduce homelessness given the broad definition of public use and the Constitutional provision recognizing that eminent domain can be used for housing accommodations for low income people.  It is hard to imagine that the City’s plan will be deemed unconstitutional when New York courts have recently allowed eminent domain to be used for an urban development plan that included the construction of a privately-owned sports arena, and when the use of eminent domain was allowed to acquire property for a new privately-owed university campus. See Matter of Goldstein v NY State Urban Dev. Corp., 13 NY3d 511 [2009], rearg denied 14 NY3d 756 [2010]; Matter of Kaur v NY State Urban Dev. Corp., 15 NY3d 235 [2010], cert denied Tuck-It-Away, Inc. v NY State Urban Dev. Corp., 562 US 1108 [2010].