Eminent domain foes argue land seizure being abused to help private companies — Toledo (OH) Blade, 11/28/04

Advocates say action needed to improve blighted areas, add jobs

By Christopher D Kirkpatrick

If you were king and a small business stood in the way of landing a bigger business with hundreds of new jobs for your subjects, what would you do?

Would you champion the small-business owner's property rights, or seize the land against the owner's objections in exchange for a fair market price?

Governments more and more are choosing the latter in the name of economic development, in the name of jobs, and in the name of addressing what they consider urban blight. This kingly power is called eminent domain, the authority of most governmental bodies to take property for "public use."

But the use of eminent domain, especially when the land is being taken for a private business and not a highway or other public purpose, has come under fire across the country. Several lawsuits are pending before the U.S. Supreme Court, which is set to look at the issue in the spring.

Critics say that in taking property for a private business, such as a casino, it's never a sure thing. One day, they argue, that business could declare bankruptcy. On the other hand, the business could thrive and bring scores of jobs to depressed areas, like Toledo.

It's an economic development gamble, and Herman Blankenship, co-owner of Kim's Auto & Truck Service in Toledo, says his back feels like the craps table on which the city's leaders have rolled the dice.

In 1999, Toledo decided it would "condemn" and buy Kim's Auto at 3708 Stickney Ave. under its eminent domain authority. The city also condemned 15 other businesses and 83 homes in the working-class area to pave the way for construction at DaimlerChrysler AG's Toledo North Assembly plant and for future plans. The action was deemed necessary to retain more than 2,000 jobs. The site is slated to be used by Jeep for a truck entrance for a new plant's independent suppliers.

"When you're paying taxes and you have a business, the city is supposed to protect you," Mr. Blankenship said.

Mr. Blankenship and his wife, Kim, sued, and their case was championed by Ralph Nader, a longtime consumer advocate and independent presidential candidate who raised the issue as he campaigned in Toledo in the fall.

To the Blankenships, Mr. Nader, and others, using eminent domain on behalf of private business just seems un-American. To others, however, it's applying tourniquets to Rust Belt arteries hemorrhaging factory jobs.

"If a community cannot reinvest in itself, it's going to wither and die," said Ned Hill, a Cleveland State University professor of economic development.

The Blankenships sued after turning down $104,000 offered by a jury as just compensation for their one-third acre along Stickney Avenue at I-75. Denied a stay by the Ohio Supreme Court, the shop was demolished. The Blankenships appealed to the U.S. Supreme Court in June.

Their case, which contends Toledo abused its authority, is one of four similar cases before the U.S. Supreme Court, which has decided to take up one out of New London, Conn.

The high court's decision also could affect Toledo's plans to give park property and perhaps take private property to clear the way for ProMedica Health System's expansion of its Toledo Hospital, another private concern. The high court could change the rules on the use of eminent domain across the country.

Some, including Mr. Nader, say eminent domain for private use is on the rise. Ohio and Michigan are among the worst offenders, says the Institute for Justice, a nonprofit group that has provided backing for several of the suits.

Ohio was the third most active state when it came to taking or threatening to take property under eminent domain between 1998 and 2002, the group claimed. Michigan was fourth, largely because Detroit used eminent domain more than any other city in the nation during that time.

Maryland and California were by far the No. 1 and No. 2 states, respectively, in use or threatened use of eminent domain, the institute reported.

In Ohio, at least 90 properties, including Kim's Auto, have been "condemned" because of eminent domain. And the group said another 330 properties have been threatened with eminent domain for the benefit of 13 private projects.

In Michigan, home to controversial casino projects, 138 eminent domain cases have been filed, and 178 other properties have been threatened for eight private concerns, the group said. There have been about 10,000 seizures nationwide.

"The only people who are for this kind of abuse are those in power. If you see Democrats in power, they are for it; Republicans in power, they support it. If the developers win [in the U.S. Supreme Court case], the whole notion of private property goes out of the window," said John Kramer, vice president for communications for the Institute of Justice.

"Government should not operate as a real estate agent on steroids," he said.

Critics, such as Mr. Hill, say the institute's study is unscientific and amounts to a crude tally taken from press clippings.

What is 'public use'?
The Supreme Court decision could hinge on the Fifth Amendment definition of eminent domain, which says land can be taken only for a "public use" and that the evicted owner must be given "just compensation."

Court rulings have stretched the definition of "public use," adding urban blight and job creation to the original goals of acquiring land for highways, public schools, and the like. Ohio law says eminent domain in the name of economic development cannot be used solely to expand the tax base. It must create jobs and the positive effect must happen in a reasonable amount of time.

Among the most egregious examples of abuse of eminent domain, the institute and other critics say, occurred in Lakewood, Ohio, where the city council deemed a neighborhood of 200 homes to be "urban blight" to make way for a condominium and retail development with a movie theater.

In Mesa, Ariz., the city wants to remove Randy Bailey's Brake Repair Shop to make way for a larger, more valuable Ace Hardware store.

In New London, the city has condemned private homes on a 90-acre tract to make way for a waterfront hotel and conference center, and mixed-use development of offices and residential units. The project is designed to build upon pharmaceutical goliath Pfizer's decision to open a research facility in the area.

The Connecticut Supreme Court said New London had a valid public use, claiming the redevelopment would raise the tax base and create thousands of jobs. But an appeal to the highest court on behalf of seven property owners said they seek "to stop the use of eminent domain to take away their most sacred and important of possessions: their homes."

Out with the old
Some academics, the National League of Cities, chambers of commerce, and the city of Toledo, say eminent domain power equals progress. And in recent years, they argue, it is necessary for turning around Rust Belt cities and downtowns like Toledo's.

Eminent domain as an economic development tool is critical, Mr. Hill, the Cleveland State professor, said.

The basic justification for private-use eminent domain is to create jobs and to cure urban blight. Determining what constitutes blight is at the heart of most of the pending court challenges.

Some like Mr. Hill and Barb Herring, Toledo's law director, say blight is not always about falling-down houses.

"If it were left to the Institute of Justice, it would have to be a slum and falling apart, which is the best thing to promote sprawl since exit ramps," Mr. Hill said. "[Blight] condemns neighborhoods. So where's the point of no return? Does it have to be something as desperate as East Cleveland [before a city acts]?"

Ms. Herring said the city condemned Kim's Auto and the 83 homes in a faithful and fair way.

"I think [the Jeep] project was a very important one to benefit the city. It was determined that it was blighted as an area and there was a need for improvement," she said.

Because Toledo already had an established urban renewal plan, the city - unlike New London - acted properly, she said.

"It's different. Even aside from the economic development purpose we have, there's also a need to improve the area," she said of the old working-class neighborhood.

Mr. Kramer and others say the Fifth Amendment, the portion of the Constitution designed to protect people and property from government intrusion, is clear: The expanded definition of "public use," which has been snowballing over the past 50 years, is unconstitutional, he said.

The Founding Fathers wanted to assure private property rights after having freed the colonies from monarchical rule, he said.

"They had seen in the old world how people with political and financial influence could use the king's power to take property," he said.

It's important not to confuse the tool of eminent domain with poor economic development strategies, Mr. Hill said.

Portside, a collection of shops and restaurants under one roof along downtown Toledo's waterfront that ultimately failed, is a classic example of poor strategy, he said.

Downtown should first be about living. It should be viewed as a neighborhood that needs to be repopulated, he said.

"Portside was absolute lunacy, but it was a development strategy. So don't blame the tool for the strategy; that's a bit unhinged," Mr. Hill said of the project that failed in 1990. COSI Toledo, a hands-on science and industry museum for children and adults, now occupies that site.

Conversely, Society Hill in Philadelphia, which has become a crown jewel of urban renewal and has been credited with battling so-called "white flight," thrives today, he pointed out.

To create the red-brick district of upper-middle-class living, about 1,000 families were evicted from the 1950s to the 1970s. Businesses did not survive; it was a civic-sanctioned amputation to save the whole body. Others saw their homes bulldozed. Some say the condemnations saved Philadelphia. Others still wince.

Eminent domain has to be a power of last resort, Mr. Hill said. And voters need to hold elected representatives responsible for the poor decisions they make, which includes not being creative, he said.

For example, every city seems to want to build a convention center, he said. But it doesn't work for every situation.

"The lemming-like behavior [is] to chase everyone else and believe there has to be a convention center, aquarium, waterfront mall, a science museum. Rather than thinking hard and doing the very different blocking and tackling [needed] to turn around a city [such as] change your bureaucracy so you can get a building permit out. Your unions need to be flexible, work past 5 o'clock. But it's easier going for the silver- bullet panaceas," he said.

On the issue of the hospital expansion, Mr. Hill and others believes Toledo must support expansion or suffer the loss of jobs and prestige.

"What has been the trend - to shut down the urban location and go suburban. A city doesn't support the hospital at its own risk. Don't support it and it does what everybody else does and it goes to the 'burbs. And it leaves an aging piece of property," he said.

Jeff Finkle, president and CEO of the International Economic Development Council, a Washington-based industry group representing those involved with economic development, agreed that some eminent development cases are egregious.

"I would have a hard time defending the New London example," he said.

But he argued that certain groups, like the Institute of Justice, would kill urban renewal altogether and doom cities like Toledo to perpetual urban blight. He said the Lakewood example also revolves around the definition of blight, which he claimed some misunderstand.

Sometimes individual homes are in good condition, but the neighborhood as a whole is in trouble, Mr. Finkle and Toledo's Ms. Herring said.

"In the Lakewood case, individual houses weren't blighted. But the neighborhood itself had a Quonset hut and the large apartment buildings were not well-maintained, so it met the legal definition. But it sure did not meet the public relations definition," Mr. Finkle said.

"Elected representatives have to make the decisions. I guarantee you that there is democracy in progress and if people don't like what they see, then vote them out. And that's exactly what they did in Lakewood," he said. "It's not willy-nilly. It's not some bureaucrat making the decision saying that he is going to take your house."

King of his yard
Mr. Blankenship, a large man with a mustache and ruddy nose, wears the mechanic part well in blue jeans and a sweatshirt. His black-and-white dog lay semi-comatose in the middle of the business' cramped trailer.

On his desk sit his feelings about the way the city of Toledo has treated Kim's Auto. It's a jar of Vaseline, with a hand-written, misspelled note taped to the side that reads "city of Toledo small business package."

He and wife Kim's cell phone numbers are blocked at Mayor Jack Ford's home, Mr. Blankenship said. On his last night at his old location, when he was evicted, he said he tried to call the mayor's house - unsuccessfully. The call would not go through.

Mr. Blankenship borrowed a cell phone from a documentary filmmaker who was there to record the eviction, and the call went through. The person who answered on the other end told Mr. Blankenship the mayor could not come to the phone.

"I wanted to talk to the mayor and ask him to convince me that I'm wrong," he said. "I called his office so many times that I sent his secretary flowers. I called him at home to tell him I would be out of there at midnight the night I was evicted because I wanted him to know that I was doing my part because I knew he was so concerned. We invited him to all the protests, but he wanted nothing to do with it."

The sarcasm and petroleum jelly prop shield a deeply felt conviction, newly formed from the experience, he said.

"When you buy a piece of property, it should be yours. If you want it, you should pay for it," he said in the trailer sitting across from the old site where he used to operate his business.

Mr. Blankenship now runs Kim's Auto from the trailer and in an open-air side yard. The estimate to build a new shop is now about $500,000, he said. Without a garage, he claimed his scaled-down operations have resulted in a drop in receipts from $300,000 to about $100,000 a year.

If he were king, Mr. Blankenship said private companies who want someone's property would have to buy the land directly from the owners rather than use the muscle of government.

After all, he said, "it's their land."

The Toledo Blade: www.toledoblade.com