Localities await Supreme Court ruling on eminent domain — The (Hampton Roads VA) Virginian-Pilot, 10/18/04

By Battinto Batts

The city has a plan to redevelop riverfront land as the site for a hotel, a health club and offices.

The development could bring millions in additional tax revenue and enhance the city’s tourism market.

But there is a hitch. The city can’t get the people who own and live on the land to sell. So the city is trying to take the property through the use of eminent domain, the constitutional power that enables municipalities to acquire private land for the public good.

This scenario in New London, Conn., is similar to what has played out in localities across the country, including in Hampton Roads. The eminent domain process often forces municipal governments and the landowners into court to battle over whether the land can be acquired as well as a fair price for it.

The landowners in New London have taken their fight to the U.S. Supreme Court. The landowners argue the taking of their property and giving it to a private developer does not fall under the public good requirement of eminent domain.

The high court agreed late last month to hear the case this term, which ends in early summer 2005.

Opinions vary about whether the ruling will have any effect in Hampton Roads, which has had a couple of high-profile eminent-domain cases recently.

“The writ granted by the Supreme Court to hear the New London case is going to make the housing authority in Norfolk and other condemning authorities very cautious when they take property from one private owner only to transfer the use of that property to another private individual,” said Norfolk attorney Joseph T. Waldo.

Waldo, whose firm, Waldo & Lyle, has made a living representing landowners, believes eminent domain has been abused by cities. He represents the owners of Downtown Used Auto Parts, which is fighting plans by the Norfolk Redevelopment and Housing Authority to condemn its property for a parking lot expansion of the nearby Mid-Atlantic Coca-Cola bottling plant.

“What started out truly as slum clearance by housing authorities has turned out to be a land grab by city governments and other condemning authorities,” Waldo said. “They need to do whatever they can to expand their tax base, but this is America. This is the United States.”

Sandy Cherry, a Richmond attorney who has represented the Virginia Department of Transportation and Norfolk Southern in condemnation cases, doesn’t believe the Connecticut case will have an impact here.

“Virginia follows a pretty conservative rule with public use. It’s called the predominant use test,” Cherry said. “Some other states construe any public benefit to be public use. Virginia’s courts have a stricter standard. It doesn’t mean the use has to be 100 percent by the public, but the public has to have control and the public use must dominate over the private use.

The right of municipalities to acquire land for public use is spelled out in the Fifth Amendment of the Constitution. The Founding Fathers saw the potential need to compel private landowners to sell their property to a governmental body when needed for such things as roads or a public building.

The constitution states “nor shall private property be taken for public use without just compensation.”

States have used that provision to remove blight from communities by creating redevelopment areas and allowing development authorities to acquire depressed properties.

Connecticut is one of several states that allow condemnations for private business development if it will result in increased tax revenue, regardless of the condition of the property.

The case, Kelo v. New London, challenges what constitutes public use and whether it is appropriate to take land from a private owner and give it to developer.

In a 4-3 decision earlier this year, the Connecticut Supreme Court ruled in favor of New London.

In Virginia, like other states, municipalities typically first determine a parcel of land and any existing structure on it are blighted. The municipality drafts a redevelopment plan for the property and then approaches the landowner with an offer to buy it.

If the two sides can’t reach agreement, the governmental body has the right to invoke eminent domain.

Kathy Warren, director of development for the Portsmouth Redevelopment and Housing Authority, is watching the Supreme Court case closely.

“It would be detrimental to the city if we didn’t have it,” Warren said of eminent domain, which she likened to a last-resort trump card to be used when all else fails.

“But it is a very powerful and helpful tool to us,” she added.

Eminent domain cases often are pushed by housing authorities, and occasionally municipal and other governmental units are forced to use it.

Typically, it is a lengthy and often expensive process.

“For the city itself it’s very rare,” said G. Timothy Oksman, city attorney for Portsmouth. “In the vast majority of cases we are able to successfully negotiate the acquisition. We find that advantageous in most circumstances. Not only because of not having to spend litigation costs but because if a case gets caught up in litigation it can take a long time to get resolved.”

The threat of eminent domain can often help speed up negotiations, Warren said “It has assisted us in just getting the attention of the landlord to get them to improve the property or sell the property,” Warren said. “They may not return your phone calls. But once you step in with a possible condemnation, then you get their attention.”

The hope is to achieve an outcome that is beneficial to all parties involved, she continued. “Our goal with any type of acquisition is to create a win-win. As a government agency we are trying to improve properties and neighborhoods.”

Waldo doesn’t question the need for eminent domain, he thinks the benchmark of a public use has been distorted and that property owners get hurt.

Although the courts sometimes side with the property owners and say they should be paid more for their land than offered, those settlements don’t cover the cost of litigation, the loss of business or relocation, Waldo said.

“It’s going on everywhere, every day all over Virginia,” he said. “Many property owners are afraid of taking on the government. They believe in the adage, 'You can’t beat City Hall.’”

The Supreme Court case, he said, will give other landowners the courage to fight.

The Virginian-Pilot: www.PilotOnline.com