Let Twin Towers Lessee Build, Get on With Life

Los Angeles Daily Journal

You could call this column an open letter to Justice Anthony Kennedy. On January 7, 2002, the U.S. Supreme Court heard oral argument in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 687 (2002). The central issue in the case was whether government – without compensation – could compel property owners to refrain from making any use of their land for years so that the land use regulatory agencies involved could take additional time pondering what they, as planners, would permit to be developed (or not) on the property.

The case involved owners of quarter-acre, single-family zoned lots in the mountains surrounding Lake Tahoe. At the time of the argument, they had been subjected to an official development moratorium of nearly three years, and an actual one of closer to twenty.

The Tahoe-Sierra oral argument took place four months after the attack on the World Trade Center devastated lower Manhattan. Setting aside (if that is possible) the other consequences of 9/11, the tragedy presented (in land use terms) issues about a 16-acre development site in the heart of New York City. Even in the context of a Supreme Court argument about Lake Tahoe – about as different a site as could be imagined – the New York City situation took center stage almost immediately.

With 9/11 weighing heavily on everyone’s mind, Justice Kennedy posited the following: “Suppose that – we’ll have to play with the facts a little bit, it’s a hypothetical case, but that within a month from now the World Trade Center is ready to be constructed and New York says – and the owner wants to rebuild highrises for office only, and the city says, wait a minute, this is so important to the whole city, we need a year to think about it, a year in addition to the usual zoning process. A taking?”

I am confident that when Justice Kennedy asked me that question, he thought that a year was more than ample time to get the planning in order and get construction under way, and that therefore it really wasn’t asking too much to have the property owner hold off for a year on such a major project with so many possible impacts.

The importance of the Court’s perception of a one-year delay as ample time to do the planning would become evident in the Court’s eventual opinion, which concluded that “it may well be true that any moratorium that lasts for more than one year should be viewed with special skepticism.” Plainly, the majority agreed with Justice Kennedy that such breathing space would provide ample time in most cases – even cases as extreme as Ground Zero.

But it was not to be. Time has confirmed at least three unfortunate realities undercutting Justice Kennedy’s hypothetical. First, there are multiple government agencies involved. Unless you’ve been on the moon, you must be aware that we are now four and a half years downstream from 9/11/01, and all interested government agencies – state and local – are still squabbling about what should be done on the site and by whom. They evidently feel under no pressure to reach a consensus.

Second, in addition to the government agencies, there is a dispute between those who believe the property ought to be developed in traditionally brash New York style and those who believe that all or part of the site should be preserved as a memorial to the victims.

Third, and in this context most important, there is a private individual involved. Although the site is governmentally owned, it was leased (when it still had the twin towers on it) to a developer named Larry Silverstein. Whatever the matter may be on a theoretical level, both Mr. Silverstein’s life and the life of his lease are ticking away with each passing year.

Time is money – in this instance, a lot of it. As master lessee of the World Trade Center site, Mr. Silverstein is obligated to pay rent each month – regardless of what is on the site. His rent has been about $140,000,000 each year, which apparently made sense for two giant, fully occupied Manhattan office towers. However, for the last four and a half years, he has been paying rent for an enormous excavation that produces no return.

And there isn’t even a construction plan yet. Because of the differing viewpoints, the nation has watched as a bewildering array of proposals has been vetted. The lessee (as Justice Kennedy accurately posited) wanted to restore his office buildings and get on with life. But the various other interests threw open the door for other suggestions. Those ranged from the bland (some of the critics were so horrified that they said the designs looked like “Albany,” which apparently is a really nasty architectural epithet in New York City) to the futuristic.

The Governor, the Mayor, Mr. Silverstein and others have evidently talked endlessly, but to no conclusion. (See, e.g., Charles V. Bagli, “At Ground Zero, No End to a Dispute That’s Years Old and 1,776 Feet High,” New York Times, Feb. 19, 2006.)

A large part of the reason for the endless planning palaver can be laid at the U.S. Supreme Court’s door. That Court has recently embraced the concept of planning to an extreme degree. In the Tahoe-Sierra case, it upheld the validity of an uncompensated, multi-year freeze on development to allow planners time to plan. (Fifty-five of the original plaintiffs in that suit died before the Supreme Court eventually decided their case.) In Kelo v. City of New London, 125 S. Ct. 2655 (2005), the Court abjectly deferred to a city’s decision to condemn modest homes (that were inoffensive except that they were not producing much in the way of taxes) so the area could be redeveloped commercially. The Court gave the city the benefit of any doubt because of the asserted planning process.

The problem is that the Court’s view of planning is na├»ve at best. The lingering malaise surrounding Ground Zero is illustrative. The idea that a year (in addition to what the Court called the “usual zoning process”) would be plenty of time for the city’s planners to agree with the leaseholder on the proper path for use and development was woefully off target.

A prime reason for the extreme delay is the result in Tahoe-Sierra. The deference accorded to planners in that opinion, coupled with the refusal to provide a meaningful remedy to property owners who are not dealt with fairly and promptly, led to results that should have been all too predictable.

What has happened in New York is gridlock – an entire herd of deer caught in the headlights. Each government agency has its own idea about how the site should be used. The victims’ families, likewise. Architects from all over the country who submitted wildly varying concepts for re-use of the site have had their say. And then there is Mr. Silverstein. He just wants to build and rent office space like he was doing before.

The reason there is no movement is that there is no incentive for those with the regulatory power over the property to approve something and move on. After Tahoe-Sierra, regulators feel they have little to fear from extensive delay. Given the opportunity, the Supreme Court refused to provide a financial incentive for those who restrain land use. In consequence, they have left the ultimate decision on use mired in a morass of contradictory interests and plain old local politics.

Recently, the matter has taken an intriguing twist. An op-ed piece in The New York Times urged the City to exercise its power of eminent domain to take Mr. Silverstein’s interest and move forward with its own plan at its own pace. (Dennis Smith, “Take Back the Towers,” New York Times, April 5, 2006.)

Eminent domain (ironically, how the World Trade Center site was originally acquired) would bring matters full circle – back to where they were at the time Justice Kennedy posed his question during the Tahoe-Sierra oral argument, and where it should have been all along. For if the Supreme Court had agreed with the Tahoe-Sierra lot owners and told government planners that they could not delay productive use of private land for years on end without paying compensation, then one of two things would have happened promptly. Either redevelopment plans would have been swiftly approved or the property would have been condemned and paid for.

As it is, although the City could (under the Supreme Court’s expansive decision in Kelo) condemn the site and buy it, where is the incentive to do so? The way things are, Mr. Silverstein can be kept dangling for years without any government liability, while his life and his lease are ticking away day by day. There is little to prod anyone into action.

The Supreme Court knew this twenty years ago. In a case holding that a temporary moratorium on development could require compensation, the Court concluded that “many of the provisions of the Constitution are designed to limit the flexibility and freedom of governmental authorities, and the Just Compensation Clause of the Fifth Amendment is one of them.” (First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 321 [1987].) Just so. That reality seemed to go unnoticed in Justice Kennedy’s question and in the Tahoe-Sierra opinion. The result is the ongoing World Trade Center mess that shows no sign of coming to an end.

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