Cities watch eminent domain case — The Business Journal of Kansas City, 10/31/04

U.S. Supreme Court ruling could hinder urban redevelopment

By Jim Davis

Area economic development officials anxiously await a U.S. Supreme Court ruling on what they consider to be one of their most important tools — eminent domain.

The practice lets municipalities take property from owners with whom they can't otherwise negotiate a deal.

Jim Devine, CEO of the Lee's Summit Economic Development Council, said the court's decision could curtail municipalities' ability to assemble land for projects that will produce jobs and taxes.

Although Lee's Summit hasn't used eminent domain to assist private developers, Devine said the threat of condemnation sped negotiations to buy property for the SummitWoods Crossing shopping center. Lee's Summit used eminent domain to acquire ground for a new City Hall, which will open in 2006.

"It's a tool without which we can't do our jobs," Devine said.

Kansas City has been more active in its use of eminent domain. Last month, Jackson County Circuit Judge Edith Messina ruled that the city could condemn the former Jones Store Co. building south of 12th Street between Walnut and Main streets to make way for Kansas City Live, a proposed downtown entertainment district.

Earlier this year, the city used eminent domain to finish assembling property for H&R Block Inc.'s headquarters, which is under construction southeast of 13th and Main streets.

Andi Udris, CEO of the Economic Development Corp. of Kansas City, said eminent domain "absolutely has been critical" to the city's sweeping strategy to revitalize Downtown. But Udris said the Supreme Court's decision won't affect the city's ability to condemn property that has been determined to be blighted. This finding already had been made Downtown.

The court will rule on whether cities can use eminent domain to seize property that isn't blighted. The case involves an attempt by New London, Conn., to take property for a development the city contends it needs to generate more taxes.

Udris said this attempt is more aggressive than Kansas City's stance on eminent domain. The city doesn't attempt to take property that isn't blighted, he said. A blight determination already has been made for the site of the Sprint Center arena, which is to be built northeast of Grand Boulevard and Truman Road.

But a national economic development leader said the blight requirement is cumbersome and adds complexity to cities' efforts to assemble property.

Jeff Finkle, CEO of the International Economic Development Council in Washington, said that having to find blight to use eminent domain adds another step to redevelopment efforts.

The Supreme Court will rule on a narrow issue, Finkle said, but he cautioned that a ruling in favor of property owners could have a wider effect that would limit eminent domain's use.

"There's always a danger that you're going to lose something you had before," he said. "What we had before was the ability to use eminent domain to clear slums and blight."

A Kansas City-area commercial development expert said the Supreme Court will interpret the U.S. Constitution's Fifth Amendment, which lets governments take private property for public uses provided that sellers receive what's determined to be fair compensation.

Kevin Nunnink, a managing director of Integra Realty Resources Inc. in Westwood, said he expects the court to require cities to make a blight finding before pursuing condemnation. This requirement would counter the direction taken by a growing number of state courts, Nunnink said.

The crucial issue becomes how blight is defined, he said. If the court allows latitude in this interpretation, he said the effect on Kansas City's use of tax increment financing and other public incentives would be minimal. Imposing more rigorous standards could prove more debilitating.

"That would be devastating to inner cities," he said. "It would encourage suburban sprawl."

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