The Truth About Times Square

April 1, 2009

Boosters of eminent domain abuse often point to New York City’s Times Square as the best example of the glitzy success that can be achieved through eminent domain for private gain. But the government official who headed up that project and who directed the use of eminent domain there has just published a report with the Institute for Justice in which he states, without equivocation, that eminent domain actually caused Times Square to further decline. Only when government got out of the way to let in true private development, he writes, did Times Square grow into the success story that it is today.

William J. Stern served as chairman and chief executive of New York State’s Urban Development Corporation under Governor Mario Cuomo, and oversaw the joint city/state effort to redevelop Times Square in the early 1980s. In The Truth About Times Square, Stern exposes how Times Square was really reborn: despite decades-long efforts to implement a government-conceived development plan on 42nd Street, officials failed. None of the government’s plans ever came to fruition, and it is only when officials got out of the way that private investment flooded the area. According to Stern, “Our extravagant plans actually retarded development. The changes in Times Square occurred despite government, not because of it.”

More Perspectives on eminent domain abuse available online.

Times Square in 1989, left. By this time, the number of lawsuits brought against the 42nd Street Project reached 40, and two anchor tenants had dropped out. Right, Times Square in 2007, flourishing after decades of failed projects and unfulfilled promises.

The Truth About Times Square is the fifth installment of Perspectives on Eminent Domain Abuse, our series of independently authored reports that examine eminent domain abuse from the vantage point of noted national experts.

Stern provides a behind-the-scenes account of the government’s tumultuous planning to completely remake Times Square. The 42nd Street Development Project envisioned four giant office towers, a 2.4-million-square-foot merchandise mart and a luxury hotel. The massive plan relied on the use of eminent domain to condemn the 13-acre area of mom-and-pop shops interspersed with pornography peddlers.

After receiving approval for the project, Stern began seeing “the negative implications of government-directed projects like this—the influence peddling, cronyism and corruption, especially when eminent domain is involved.” Stern shares how The New York Times, a private company, unscrupulously used its influence to become a key player in the development of Times Square. As it happens, the Times was able to use its connections once again to influence the state to condemn an entire city block in Times Square in 2001 for its third and latest headquarters move.

The controversial plan provoked heated confrontation between the city and state, and the government and the community. By the mid-1980s, the plan was falling apart as major tenants dropped out and developers balked. But officials continued to pursue the condemnations, and by 1989, the number of lawsuits brought against the project by property owners reached 40. After years in court, the state was granted approval to seize the massive area and the project collapsed.

Meanwhile, on the heels of the condemnations and lawsuits, the stalled plans and broken promises, Stern notes that something surprising happened: Times Square started to revive on its own, as Viacom, the Walt Disney Company, AMC, Madame Tussaud’s Wax Museum and other attractions flooded in. Stern compares this influx of private investment with the 42nd Street of the 1980s, when the government was the key player and nothing was built. During that time, the area just north of 42nd Street—still in Times Square but outside of the project area—saw nearly a dozen private developments announced or completed.

Stern concludes that “Times Square succeeded for reasons that had little to do with our building and condemnation schemes and everything to do with government policy that allowed the market to do its work, the way development occurs every day nationwide.” Stern and his colleagues’ grand plans for 42nd Street are not responsible for the Times Square of today. “The Great White Way” was restored to its original glory only when the government got out of the way.

Christina Walsh is the Institute’s director of community organization.

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