8/11/2004

Wayne v. Hathcock and Philadelphia's Neighborhood Transformation Initiative

Alan Krigman has written a "letter to the editor" of the Philadelphia Daily News discussing the implications of this case on the city's Neighborhood Transformation Initiative. The text of the letter, as submitted (and not yet published), is as follows:

Many low- and moderate-income Philadelphia residents have been rightly worried about the city's use of eminent domain. This legal principle lets a government body acquire real estate "for public use" at what is essentially fair market value, even if the owner doesn't want to sell. Eminent domain is important in Philadelphia today principally because of the Neighborhood Transformation Initiative. At issue are viable buildings or vacant lots in nominally blighted areas at prices that may, indeed, represent fair market value but aren't enough for the owners to buy comparable replacements.

The trend during the past several decades has been to define "public use" increasingly broadly. Interpretations of this phrase such as "for public benefit" or "for the greater good," have often been accepted. A decision just rendered by the Michigan Supreme Court may now halt that trend.

In the case at hand, Wayne County wanted to take land and sell it to a developer who would build a high-tech industrial park. The County argued that a "public purpose" would be served through greater real estate tax revenues and job creation. The Court agreed that the facility would provide a public benefit, but found that the project was not a "public use" and therefore violated the specific conditions for "takings" in the Michigan Constitution — conditions which appear in identical form in the US and most state, including Pennsylvania's, Constitutions as well.

This decision will force government entities to substantiate the public use requirement of eminent domain. This may be impossible in some Neighborhood Transformation Initiative situations when property is turned over to a private developer. However, people who believe they can now keep their homes in areas identified for Neighborhood Transformation Initiative revitalization should bear two caveats in mind. First, the Michigan Court specifically allowed condemnation of property so blighted that it threatened health and safety, recognizing that the protection afforded by seizure and demolition is a public use, regardless of its subsequent disposition. Second, if the property is taken for purposes such as parks or schools, or is to be developed and ownership retained by a government agency such as the Philadelphia Housing Authority, or by a tightly regulated utility, the public use requirement is satisfied.