Using eminent domain for economic gain under fire; could affect plans for Triangle
By Jack "Miles" Ventimiglia
Cities across the nation feel tremors from a case that could limit their use of public power for private gain.
"It's the shot heard round the world," said Bert Gall, attorney with the Institute for Justice, Washington.
Some cities use the legal sledgehammer of eminent domain as an economic development tool rather than for traditional public uses, such as building an interstate or clearing a slum, Gall said.
Several Northland cities use eminent domain for development. Kansas City seized private Platte County land in 1996, for example, for future rather than imminent business development near Kansas City International Airport. Now Liberty threatens to condemn Triangle business properties – including Crossley Ford – if owners refuse to sell their land to make way for planned retail development.
Ron Kincaid, owner of Kincaid Auto Service, said that next to losing his business, the worst thing about having the threat of condemnation hanging over his head is having no clue when the hammer might fall, and then having 90 days to clear out.
"All we've heard is silence. I assume that means they're just going to kick us out without saying anything to us," Kincaid said.
The city has condemned no Triangle property and is preparing official "offer letters" for property owners, Liberty attorney for the Triangle, Chris Williams, said Friday.
"The council passed the ordinance authorizing condemnation, but the acquisition process is really just getting started," Williams said.
A new decision shakes the legal foundation many cities rely on when using eminent domain for development. The decision targets a landmark 1981 Michigan Supreme Court ruling that allowed Detroit to seize houses and businesses in the Poletown neighborhood to make way for a Cadillac plant. Law schools and texts cite Poletown as a top eminent domain case, and cities across the nation use the decision to justify taking private land for development, Gall said.
"Poletown is the granddaddy of all eminent domain cases concerning economic development," Gall said. "The (land) was turned over just on speculation that it would create more jobs, it would create more taxes. ... You ended up destroying this whole neighborhood and the project ... ended up being a flop and did not create all the jobs and the revenue the city thought they were going to get."
Against this legal backdrop, the Michigan Supreme Court – the same court that established the precedent – gutted the Poletown decision July 30. The lead opinion in the Wayne County, Mich., case targets the Poletown decision: "Poletown's 'economic benefit' rationale would validate practically any exercise of eminent domain on behalf of a private entity. After all, if one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, 'megastore' or the like."
Eminent domain serves the public when an area would not develop without government intervention, St. Louis attorney Stanley Wallach said. Wallach, the Missouri Bar Association's Eminent Domain Law Committee chairman, said the problem is that government or developers may abuse the authority.
"Where do you draw the line?" Wallach asked.
The U.S. Supreme Court may answer that question.
The court is considering whether to review the Connecticut Supreme Court's 4-3 ruling upholding eminent domain – a ruling the state court based in part on the 1981 Poletown decision.
If the High Court declines to hear the Connecticut case, cities such as Liberty can continue using eminent domain for development. But Gall said chances are good that the High Court will hear the Connecticut case of Kelo v. New London.
"We're optimistic that the Supreme Court is going to take a look at what happens when 'public use' has been interpreted all over the board by a number of different states," Gall said. "When you've got constitutional rights that are being protected in some states but violated in other states ... that is generally something the Supreme Court is very interested in taking a look at."
At Crossley Ford, Todd Crossley said the Supreme Court should review the matter. The court's decision could affect whether the $40 million-per-year Ford dealership leaves Liberty or stays.
"(Eminent domain) makes sense when you're putting in roads and bridges, but to take private property from one citizen and give it to another citizen – just because they're going to make more money with it – doesn't seem right to me," Crossley said.
If the High Court supports the Connecticut decision, using eminent domain for development is unlikely to change in Missouri, which is described as having "one of the worst records on eminent domain abuse in the country" by the Institute for Justice. The institute's Castle Coalition states that Missouri courts "approve nearly every condemnation, no matter how private the purpose or how unnecessary the condemnation. Missouri law and practice desperately need reform to stem the tide of eminent domain abuse."
Kincaid said his personal experience in the Triangle is that the way eminent domain laws are applied, no one's house is safe.
"They could do that with my house," Kincaid said. "My house was built in '61. Hell, they come in there and say, 'If we had a new $300,000 house built on this site we could get more property tax off it so we're going to take your property.'"
Kincaid's idea about using government power to take houses is occurring in the Triangle, where Liberty plans to take the Rev. Marion Hunderdosse's house and church. Taking houses is the basis for the Connecticut case, with the city of New London ready to demolish waterfront residences to make way for office buildings.
A High Court reversal of the Connecticut decision could set Liberty Triangle development on its ear.
"Even if they just limit (the decision to Connecticut) ... it may very well send people in 'Jeff City' scrambling to make our laws compliant if they're deemed to be in conflict with that ruling," the Missouri Bar's Wallach said.
The city's attorney, Williams, said he is aware but not concerned that the Supreme Court could take up the Connecticut case.
"There are so many 'what ifs' that I don't know that the city could take any different approach than what it's taking now," Williams said. "You've got to rely on the law the way it is today and continue with the program."
Gall said there is a strong case for the Supreme Court to rein in eminent domain.
"The Fifth Amendment is very clear. It talks about public use ... about bridges, roads, courthouses," Gall said. "It's a very persuasive argument and a 'plain meaning' argument that would appeal to some of the conservative justices that are on the court."
Gall said the High Court might not decide whether to hear the case until fall and a ruling from that point could take months.
Waiting is not an option, Crossley said. Missouri's eminent domain laws give cities all the time they need, but rush property owners into moving.
"We'd have 90 days to object and then another 30 days to file a court date, so within 120 days we could be out," Crossley said.
An appeal would not prevent the city from demolishing the dealership and turning the land into a shopping center.
The Crossley family bought property and plans to rebuild just across Interstate 35 from Liberty, in Kansas City-North, Crossley said.
The city is unlikely to speed the land acquisition process to hedge against a possible, negative Supreme Court ruling, Williams said.
"To some extent the city's ability to acquire the property depends on making sure you have the funds available," Williams said.
Wallach said no Missouri community is likely to halt eminent domain activity while the Connecticut case is pending.
"The light's still green. Typically judicial opinions look forward and don't try to undo things that have already happened. You can imagine the nightmare scenario if somehow the High Court were to say, 'Tear down all those malls and give the property back to people.' I don't think that's going to happen," Wallach said. "But what happens if you're halfway through the process? ...
"It may throw a monkey wrench into that work."
Some business owners in the Liberty Triangle hold pond scum in higher regard than city officials.
By Jack "Miles" Ventimiglia
They say their businesses are threatened with condemnation, that prices they have been offered for their land are ridiculous and they have no idea when a city employee might knock at their doors to say they have 90 days to get out. Under the circumstances, their contempt for city leaders is understandable.
City officials, on the other hand, have a clear and excellent vision for the Triangle. Instead of a patchwork of assorted types of businesses, they see major retail outlets such as Lowe's generating millions in sales tax revenue - money needed by all Liberty residents to provide for city services, such as streets and sewers. They are looking at "the big picture" for the community's greater benefit.
There may be no way to make everyone on both sides happy, but one thing is certain - a lack of effort generates only a lack of results.
Several Triangle business owners said they not only wish to stay in Liberty, they would like to hire more employees and to expand if only they could find a location. If the city wants more sales tax revenue – a fundamental reason for developing the Triangle – then why stop at replacing businesses when the city could also keep the businesses it already has? Triangle business owners have asked that question, but say the city has not provided them an answer. City officials have not offered any type of relocation plan or help. Feelings in the Triangle run pretty hot against the city.
For the moment, the city has the upper hand. Missouri law gives almost absolute power to communities to declare land "blighted" and to seize that land for development reasons. Under such circumstances, city leaders could get downright arrogant if they chose to, and the business owners say they have.
But the high hand Liberty held at the start of the process to develop the Triangle is no longer a sure winner. The courts are beginning to cast a cold stare in the direction of communities that use the public power of eminent domain for private gain. Time could be against the Liberty's leaders.
Time is a factor because developing the Triangle fully could take several years. This means the city may not act to seize some of the Triangle property until 2006. In the meantime, the U.S. Supreme Court could step in, and though such intervention would be indirect, the outcome could gut Triangle development plans.
The Supreme Court is considering whether to take up a Connecticut development case. The case involves some perfectly fine sea front houses the city of New London wants to demolish to make room for office buildings.
If the court does not take up the case, Liberty city officials have nothing to worry about. But if the court does decide a review is needed, all bets are off.
One possible outcome is the court could uphold the loose definitions states have been using to interpret blight any way they choose if the end result is more money for government. But an attorney with the Institute for Justice in Washington, Bert Gall, said the Supreme Court is conservative in its interpretations of the Constitution and is not likely to support government's tax greed as justification for taking private property from one person to give that property to another.
Instead, Gall said, the Constitution's plain language is most likely to appeal to the justices and if that happens then Connecticut, Missouri and other states that use eminent domain for building development may lose their tool.
Again, there is no certainty that the Supreme Court will hear the Connecticut case and there is no certainty how the court will rule. Still, some questions Liberty leaders should be asking themselves are:
- What happens if the court does rule?
- What if the finding is that most cases of eminent domain for development are unconstitutional?
- What happens if the ruling comes while Liberty is only partly through the $62 million Triangle redevelopment plan?
By Jack "Miles" Ventimiglia The founding fathers wrote that the government could not take private property except to provide public-owned facilities or infrastructure, said Bert Gall, attorney with the Institute for Justice, Washington. "That's pretty much how courts interpreted the 'public use' requirement up until the (1950s)," Gall said. "At that point, we started getting into the whole urban development craze." Urban development focused on cleaning city slums. Over time various state-level courts loosened the interpretation to let their local governments take property for economic reasons, such as increasing tax revenue or creating jobs. Increasing sales tax revenue is a leading reason why Liberty City Council supports the Liberty Triangle development. Mayor Steve Hawkins said the city would use condemnation if necessary to remove business owners who refused to sell to the developer. Local government has great power to employ eminent domain for economic purposes, St. Louis attorney Stanley Wallach said. Wallach, the Missouri Bar Association's Eminent Domain Law Committee chairman, said individuals have had no luck resisting that power. "In Missouri, the challenges have gone nowhere in the state court system, because the courts view it as a legislative decision and the legislature has invested the 'local legislatures' with virtually absolute discretion to declare something blighted as long as they follow the procedures," Wallach said. "If the federal courts step in and say it's a federal Constitution issue, it will make life very interesting." Whether the U.S. Supreme Court will step in remains unclear. Between 1998 and 2002, cases of government using or threatening to use eminent domain to take private property for development skyrocketed to more than 10,000, Gall said. Many cities cite the Michigan Supreme Court's 1981 Poletown ruling to justify their actions. "Cases like Poletown are responsible for that because they opened the floodgate," Gall said. "When a power like that is available to be abused, local governments and developers are going to abuse it." The Michigan Supreme Court last month rejected its own Poletown decision to rule against using eminent domain for development. Different uses of eminent domain for development between states - including Michigan and Missouri - increases the likelihood that the U.S. Supreme Court will review the matter, Gall said.
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