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NEW YORK CITY-A four-judge New York Appeals Court panel dismissed a challenge to Forest City Ratner Cos.’ Atlantic Yards project this past Friday, saying the use of eminent domain to take private property to build housing–and in this case–a new basketball arena, does not violate the state’s constitution. The plaintiffs vow to appeal to the state’s highest court.

In one section of its decision, the court wrote “the condemnation does not violate the Public Use Clause of the New York state constitution because it cannot be said that the public benefits which the Atlantic Yards project is expected to yield are incidental or pretextual in comparison to the benefit that will be bestowed upon the project’s private developer.”

Specifically, the challenge was brought by nine tenants and owners of property inside the 22-acre proposed project’s footprint against the New York State Urban Development Corp., a unit of the quasi-governmental agency Empire State Development Corp. ESDC would then condemn the nine properties and transfer ownership to Forest City Ratner, the sole developer of the project.

According to the court documents, the judges said much of the land to be acquired is “substandard, and that the taking [of it] is rationally related to the purpose of remedying these substandard conditions.” They added, “any incidental profit that may inure to Forest City from the remediation of the blighted project site does not undercut the public purpose of the condemnation of the substandard land.”

The dismissal removes yet another legal obstacle in the way of the long-delayed project that has been shrouded by a cloud of controversy. Calling it the development’s 23rd favorable ruling, in a statement, FCRC chair and CEO Bruce Ratner says in a statement that he is thrilled with the decision. He added that he was confident the project will break ground this year, with the intent that the Nets will play ball in the Barclays Center in the 2011-2012 season.

Despite the developer’s optimism, hurdles remain before the project’s initial construction sees fruition. In fact, a lawyer for the plaintiffs says the group will be appealing to the state’s Court of Appeals. And, if that court agrees to hear the case, Atlantic Yards could be in store for many more months of litigation.

Drawing a line in the sand, Matthew Brinckerhoff, lead attorney for the plaintiffs, tells GlobeSt.com that Ratner has not acquired his client’s property yet, and until he does, he cannot build the arena. Anticipating a Court of Appeals decision on whether or not to hear the case by late fall or by the end of the year, Brinckerhoff is optimistic the court will be open to hearing his client’s arguments. GlobeSt.com will have further insight and information on the case and its implications later today.

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