News Eminent Domain Ruling Could Change Outlook of Ardmore Project

by Richard Ilgenfritz

What does Poletown have to do with our town? For residents in Ardmore and Bryn Mawr fighting development plans, a court's decision to overturn the 23-year-old Poletown eminent domain case in Detroit could make all the difference in the world.

Last month, the Michigan Supreme Court overturned a 1981 ruling known throughout the world of eminent domain law as Poletown. In the Poletown case, the city of Detroit invoked eminent domain to condemn an entire neighborhood. The property was then turned over to General Motors. The automobile manufacturer used the site to build a new factory.

The city argued that using the land for the factory would increase jobs and tax revenues for Detroit. That benefit, Detroit attorneys argued, would satisfy the requirements that eminent domain only be invoked to serve a public need.

Detroit ultimately won permission to use eminent domain, and the neighborhood was demolished. More than 1,000 homes were torn down and thousands of residents were displaced.

Recently, a Michigan court overturned the Poletown decision, finding that the promise of economic development did not justify using eminent domain to transfer property from one private party to another.

Glenn Zeitz, the attorney representing seven Ardmore businesses that are located within the recently approved redevelopment zone, said the Michigan case would be important as the redevelopment fight in Ardmore moves forward.

"Poletown has been the case that set the precedent for eminent domain cases," Zeitz said. The Poletown case has been cited in eminent domain cases throughout the country.

For years, eminent domain was used to clear the way for large public projects such as highways and parks. But after the Poletown decision, eminent domain began to be more commonly used by municipalities to turn the land over to private developers to build factories, stadiums, apartments and shopping centers.

The question at issue in Poletown and other similar cases is whether economic development is a public good in the same sense that a highway is.

"This decision says that the new economic benefit does not outweigh property rights. So basically this is a clear victory for property rights," Zeitz said.
Lower Merion Commissioner Jim Ettelson said although the case has been cited in Pennsylvania, he believes Ardmore is different.

"In Ardmore we would hate to rely on that decision. [Montgomery County Planning Commission] has said we are on firm ground," Ettelson said. Ettelson also believes there are other differences between the Poletown case and Ardmore.

"One of the biggest differences is what we are attempting to do in Ardmore. This is really for public parking and revitalization. That is a lot different than condemning the property for a private corporation," Ettelson added.

But Lower Merion's plans do call for the construction of new apartment buildings and commercial real estate, which presumably will be owned by private businesses. It is also possible that the public parking developed under the rubric of revitalization will be administered by private, for-profit businesses.

It isn't a secret that some businesses and property owners in Ardmore and Bryn Mawr have been nervous about the use of eminent domain.

When Lower Merion and Montgomery County approved the Ardmore Redevelopment District earlier this month, declaring downtown Ardmore "blighted," that decision gave the township all the power it needed to condemn any property within the district.

The Ardmore Redevelopment District includes most of downtown Ardmore on the south side of the railroad tracks from Church Road to Ardmore Avenue. It also includes two parking lots owned by Suburban Square and properties south of Lancaster Avenue from Argyle Road to Ardmore Avenue.

The cornerstone of the Ardmore Master Plan that was adopted last year is a parking garage along the railroad tracks with retail shops and apartments along Lancaster Avenue. In the master plan, that building is being called the Ardmore Transit Center.

If it were built, the $40 million structure would replace more than a dozen businesses west of the Lower Merion Public Safety Building to Station Avenue.
Business owners see the decision as a victory.

"Clearly they can't use eminent domain for economic development," Joe Rufo, owner of Brownies 23 East said. Rufo's business is in the middle of the block that is being considered for the transit center.

In Bryn Mawr, neighbors have also been worried about a plan to redevelop the neighborhoods near the hospital. Two years ago, Main Line Health began a process to buy up more than 70 properties along Summit Grove and Central avenues. For about a year, MLH has been reporting that they have bought about two-thirds of the properties. But there are still some holdouts in the neighborhood.

Although Main Line Health cannot legally condemn the remaining properties, the concern for residents has been that the township could – through a parking authority – establish a rationale to use eminent domain. Lower Merion could then turn the property over to Main Line Health.

Main Line Health has proposed using the neighborhood for parking garages, medical office buildings, retail stores and apartments.

Timothy Sandefur, an attorney with the Pacific Legal Foundation who filed an amicus brief in last month's Michigan case, said it is hard to tell how the ruling could affect Bryn Mawr and Ardmore.

One possible problem Sandefur believes property owners could face in both communities is that both of the redevelopment projects include what could become municipal parking lots. The courts may be inclined to agree with the township that a municipal parking lot is serving the public benefit. And in the case of Bryn Mawr, because a hospital is involved, the courts may be more sympathetic with their need to expand and provide parking for patients.

Zeitz believes the Ardmore case is more complicated than the parking lot issue. If it were a case of Lower Merion condemning the properties to turn them into township owned municipal lot, he believes the courts might agree with Lower Merion. But since the township would likely turn the property over to a private developer, the courts should no longer use the Poletown precedent.

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© The Main Line Times 2004 www.mainlinetimes.com

If They Can't Tax It, They'll Just Take It

Politicians Increasingly Use Property Grabs to Pad Government's Bottom Line 
More and more politicians at all levels of government have been stretching and abusing the Constitutionally outlined power of eminent domain in attempts to generate higher tax revenues, according to a new study released by the 350,000-member National Taxpayers Union (NTU) today.

"From sweetheart corporate deals to publicly funded sports stadiums, taxpayers — even those not directly victimized by eminent domain abuse — almost always stand to lose when governments misuse their power to pad their bottom lines," said NTU Director of Congressional Relations and study author Paul Gessing. "Such land-grab redevelopment schemes rarely serve the 'public good' necessary to justify eminent domain, and instead often lead to higher taxes, a reduced tax base, and further stagnation."

According to the study, a Michigan State Supreme Court decision, which allowed the city of Detroit to uproot families and businesses in the Poletown neighborhood to build a GM factory, has been used by governments around the country to clear the way for "redevelopment" of areas that aren't seen as generating enough tax revenue.

Among the many examples detailed in the study:

• Brooklyn, New York: Well-connected developer Bruce Ratner's ambitious proposal (four office towers, 300,000 sq. ft. of retail, 4,500 housing units, six acres of parks, and a publicly funded stadium for the New Jersey Nets) to redevelop the "Atlantic Yards" area of Brooklyn will kick out 150 tax paying homeowners and ring up nearly $1 billion in subsidies on the taxpayer's tab.
  
  
• Toledo, Ohio: City officials offered to acquire nearly 160 acres of residential and commercial property — including 83 homes — in an attempt to persuade DaimlerChrysler not to relocate their manufacturing facility elsewhere. But the 4,900 jobs the city hoped to save dropped to 2,100 since the new plant was fully automated. Toledo taxpayers are left to pay off a $26.7 million relocation loan and cover a $47,000 rebate for each worker now employed.
  
  
• Pittsburgh, Pennsylvania: Using subsidies and city- financed loans adding up to over $50 million — $150 for every person living in Pittsburgh — Mayor Tom Murphy lured Lazarus and Lord & Taylor to relocate in the city. However, both upscale department stores closed before they even reached the sales target that would require them to start payments on their taxpayer- financed loans.
  

The author contends that the growing number of citizen-based tax revolts may be one reason why politicians are turning to eminent domain as a way to raise revenues without actually raising tax rates. Yet according to Gessing, the failure of such eminent domain schemes will bring these cities full circle. "Trying to lure businesses back through wasteful spending won't address the high taxes that helped to drive the businesses out of these locations in the first place," Gessing said. "Eminent domain is often just a means for politically powerful special interests to steal from property owners and taxpayers alike," Gessing concluded. "If your local officials start talking about grand redevelopment schemes and eminent domain, the next 'taking' to occur is likely to be cash out of your wallet."

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NTU is a non-partisan, non-profit organization working for lower taxes, less wasteful spending, and more accountability from government officials at all levels.

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NTU Issue Brief 148, Eminent Domain Abuse: If They Can't Tax It, They'll Just Take It, is available online at http://www.ntu.org.

California Eminent Domain

This Land Is Not Your Land

Michigan’s failed experiment with Eminent Domain comes to an end
Timothy Sandefur

With so much bad news emanating from the nation's courts, it is a treat to see a court get it right for once. In a unanimous decision late last month, the Michigan supreme court overruled a case called Poletown, which for over 20 years has hovered like the Sword of Damocles over Michigan's property owners. The ruling is a victory not only for Michiganders, but for Americans in every state whose property is threatened by eminent domain.

The Poletown case began when the city of Detroit seized an entire neighborhood — called Poletown after the large number of Polish immigrants who lived there — in order to give it to General Motors to build an automobile factory. The city claimed the factory would "create jobs" and increase tax revenue. But the homeowners in this modest neighborhood pointed out that the Michigan constitution (like the constitutions of practically all states) limits the government's condemnation power to taking property for "public use." An automobile factory, they argued, is not a public use, but a private use; GM would keep all its profits. If that was a "public use," then anything would be, and there would be no limits to the power of eminent domain.

The Michigan supreme court ruled in favor of the city. If the city decided that taking homeowners' land and giving it to a private party was in the public's interest, then the court would do nothing to stop it. Eminent domain, once limited to public uses like roads or post offices, was unleashed in the service of any well-heeled private party able to persuade the local government to see things its way.

In the years since Poletown, eminent-domain abuse has exploded nationwide. As Ramesh Ponnuru has pointed out, powerful corporations frequently send representatives to lobby cities for "free" real estate. The city takes a neighborhood, usually of modest homes, and gives it to a developer or a megastore, and then rakes in the higher taxes. The only losers are the home- and small-business owners, who lack the political influence necessary to persuade local officials to respect their rights.

Poletown has become the leading symbol of eminent-domain abuse. Every law student reads the case in law school, and even lawyers unfamiliar with eminent domain will recognize the case's name. Since Poletown, most state courts, and the federal courts, have adopted the same rationale, allowing government to redistribute property to whatever group they consider more worthy. A report by the Institute for Justice documented 10,000 reported cases of threatened or completed condemnations benefiting private companies. As the Ninth Circuit Court of Appeals once wrote, "the whole scheme is for a public agency to take one man's property away from him and sell it to another. The founding fathers may have never thought of this, but...our hands are tied — if the book on the procedure is followed."

Eminent-domain abuse is an abuse of the entire political process. Its primary victims are minority property owners and the poor, who lack the lobbying power of a retail giant or pharmaceutical company. Last year, in Boynton Beach, Florida, the director of the city's redevelopment agency told the city council that the reason he advocated condemning a large black neighborhood was "to compensate for the loss of one of the city's major taxpayers. Our property-tax values are meager compared to other cities and this redevelopment is our attempt to enhance property values within this City.... In Boynton Beach, there is a significant amount of property that pays little or no taxes. Given that reality, we must do other things to compensate for that loss of tax dollars." In other words, if the city throws out the poor folk, the city's median income will go up. Perhaps that's true. But that is just why groups as different as the Pacific Legal Foundation and the ACLU of Michigan joined forces to urge the Michigan supreme court to rein in the use of eminent domain, and protect the property rights of all citizens, particularly the most vulnerable.

In their decision last week, the justices agreed that such abuse cannot be tolerated: "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...."

The message is clear: Michigan's failed experiment with eminent domain is over. If businesses want land, they must pay for it like anyone else.

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Timothy Sandefur is an attorney with the Pacific Legal Foundation. He authored PLF's friend of the court ("Amicus") brief, which was filed jointly with the ACLU Fund of Michigan, in Wayne County v. Hathcock.

Click here for a copy of the PLF Amicus brief: http://www.pacificlegal.org/briefs/hatchck.pdf

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The National Review: http://www.nationalreview.com

Can They Take Your House?

Letter to the Editor


MANY Philadelphians have been 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 the city today principally because of the Neighborhood Transformation Initiative.

At issue are viable buildings or vacant lots in blighted areas at prices that may, indeed, represent fair market value but aren't enough for the owners to buy comparable replacements.

The trend has been to define "public use" broadly. Interpretations such as "for public benefit" or "the greater good" have often been accepted. A decision by the Michigan Supreme Court may now halt that trend.

Wayne County wanted to take land and sell it to a developer for a high-tech industrial park. The county argued that a "public purpose" would be served through greater tax revenues and job creation. The court agreed the facility would provide a public benefit, but found that the project was not a "public use," violating the conditions for "takings" in the Michigan Constitution - conditions which appear in identical form in the U.S. and most state constitutions, including Pennsylvania's.

This decision will force government entities to substantiate the public use requirement of eminent domain. This may be impossible in some NTI situations when property is turned over to a private developer.

But people who believe they can now keep their homes in areas identified for NTI revitalization should bear two caveats in mind. First, the Michigan court 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 like parks or schools, or ownership is to be retained by a government agency like the Philadelphia Housing Authority, or by a tightly regulated utility, the public use requirement is satisfied.

Alan Krigman, President

KRF Corp., Philadelphia