12/04/2004

City Council to decide fate of BRA's power to seize land — The Boston Globe, 12/4/04

By Andrea Estes

It is among the city's most powerful agencies, where multimillion-dollar development deals are brokered and officials shape Boston's skyline. But after decades of broad influence, the Boston Redevelopment Authority is in danger of losing the key to its power.

At stake is the agency's authority to seize property and hand it over to private developers, a form of eminent domain granted to Boston and other cities trying to battle urban blight in the late 1950s and '60s. Intended as a tool for spurring new growth, the power is often abused, critics say, to issue favors to politically connected developers.

As the Boston City Council prepares to decide whether to extend the power or take it away, enemies and allies of the BRA have mounted impassioned campaigns. Mayor Thomas M. Menino has dispatched developers and others supporting his quest to maintain the status quo. Meanwhile, a variety of neighborhood activists across the city, some saying they have been victimized by BRA policies, are lobbying councilors to effectively nullify the agency.

The eminent domain power was granted in urban renewal districts set up under the federal Housing Act of 1949. Those districts — which cover 1,382 acres, or 15 percent of Boston — are now expiring.

"The BRA is now acting on renewal plans to make sure all Americans had safe, decent, and sanitary housing," said Shirley Kressel, head of the Alliance for Boston Neighborhoods and a BRA critic. "It has now become an economic development plan, where the BRA takes property from small owners and gives it to big developers."

BRA officials called allegations of political favoritism groundless.

"The opportunities created by bringing back the city and keeping it vital with the tools of urban renewal are well understood," said Mark Maloney, director of the BRA. "If people want to dumb it down by denigrating it, they're wrong. We're in a capitalistic society: The profit motive isn't left off the table as we do economic development."

Maloney said the BRA needs the tools of urban renewal, particularly the power of eminent domain, to spur more private development throughout the city.

BRA officials ticked off a long list of projects that were completed through the urban renewal program in the last several decades, including Flagship Wharf in Charlestown, Quincy Market, Rowes Wharf, the New England Aquarium, and the YMCA of Roxbury.

The projects have drawn visitors to downtown Boston and created workplaces and affordable housing for residents, said Tim McGourthy, director of policy for the BRA.

"It's a common misconception that urban renewal is only used downtown," said Susan Elsbree, a spokeswoman for the BRA. "It's also done a lot of good in the neighborhoods. And it's as useful today as it was 40 years ago."

But Kressel contended the BRA has abused it power, using its land-seizing authority to craft sweetheart deals for favored developers. She said the BRA has assembled parcels of land for the benefit of developers including Henry Kara, Millennium Partners, and John Connolly, who represents Loews Hotels, which has proposed putting up a hotel at the corner of Stuart and Tremont streets.

She said the BRA took by eminent domain the city-owned Hayward Place parking lot on Washington Street. The agency put the parcel out to bid in 2003, and though Millennium Partners was not the high bidder, it was allowed to match the high bid and lease the lot, with an option to buy.

The lot is across the street from Millennium Partners' Ritz Hotel and condo tower on Avery Street. By controlling the parking lot, Kressel contended, no one else can build housing or any other development that could lower the value of the Ritz complex.

City councilors, meanwhile, said they see their review of upcoming urban renewal plans as a rare opportunity to shape policy. They will probably vote Wednesday to extend the two districts that are expiring soon, one in Allston and another in Roxbury, but withhold further approval until they win concessions from the BRA and hold neighborhood hearings in urban renewal districts.

"What's the rush?" asked Councilor John Tobin. "Let's have a conversation. These are districts in the city that we represent. We should have some sort of say on what goes on. By having hearings and meetings in the districts, that only increases dialogue and increases trust."

Under the current urban renewal rules, the BRA is required to submit to the council for approval only those urban renewal proposals considered major, as defined by the BRA board.

As a result, over the agency's 40-year history, less than two dozen projects have gone to the council for its approval.

In the current discussion, the BRA and the council are trying to find a way to let a state agency determine what is major and therefore subject to council approval.

But Kressel and Councilor at Large Maura A. Hennigan think the council can make its strongest statement by ending urban renewal now.

"All this does is perpetuate the power of the BRA, which no other city in the country has," Hennigan said. "There is no need to extend these districts. The whole structure of the BRA is out of control.


The Boston Globe: www.boston.com/news/globe

Housing chief thinks agency should develop Norfolk, not enemies — The (Hampton Roads VA) Virginian-Pilot, 12/2/04

By Battinto Batts

There’s been no hiding from the challenges of the job for Shurl Montgomery in his first three months of leading [the Norfolk VA] housing authority.

A well-publicized court battle over a condemned used auto parts lot rekindled the image problem that the agency has fought for years.

Nationally, the Norfolk Redevelopment and Housing Authority is widely regarded as one of the country’s best housing authorities and is responsible for many high-profile city developments. Still locally, agency officials admit that distrust lingers in some segments of Norfolk.

“One of my roles is to be more engaging in the community and improve the image that I feel is unfair on the agency,” said Montgomery, who became NRHA executive director after working in the city administration for more than 20 years.

Property owners have long claimed that NRHA didn’t offer a fair price for condemned land. Others have claimed the authority defaulted on promises to allow them to return to their neighborhood once revitalization plans were complete. And some say that while the authority’s intentions are good, it simply takes too long to get some projects done.

As Montgomery and other NRHA officials see it, the authority can’t change its role, which is to devise and implement revitalization. And considering Norfolk’s age and the condition of some of its neighborhoods, the authority has to be aggressive. But maybe NRHA can be perceived as a kinder, gentler agency, one whose role, though not always liked, is at least understood and appreciated.

Montgomery has made improving the image of NRHA one of his top priorities. That is why housing authority officials are attending more civic association meetings and increasing their presence in the community to answer questions and solicit ideas.

“We want to eliminate or decrease the negative energy where NRHA is back on its heels in a defensive mode,” Montgomery said. “Instead of it being, 'W atch out for the bogeyman,’ it will be, 'NRHA is coming to help improve your community.’

“Change is painful, but we have to be sensitive about what we do and hear as we bring about that change.”

With a $100 million budget, the authority maintains 4,000 public housing units, provides 2,500 housing vouchers for low-income residents and has played a central role in downtown developments such as MacArthur Center and Waterside. It has helped remake some of Norfolk’s largest neighborhoods, including Ghent, Park Place and Ocean View.

Montgomery took over after the resignation of Ernie Freeman, who served as executive director for two years.

There was disenchantment with Freeman’s leadership on several fronts. That included his stewardship of the Broad Creek project, an 87-acre development near Norfolk State University that will transform two public housing projects into a mixed-use housing development. It will be the site of next year’s Homearama.

Prior to that announcement a few weeks ago, progress had lagged. The Broad Creek Renaissance has implications beyond what it will do for the neighborhoods it encompasses, authority officials say. Residents of other housing projects have inquired about when such a redevelopment would come to their communities. In short, that makes it imperative that Broad Creek be successful in order to build a trust that NRHA can deliver as promised.

Moreover, lingering distrust over NRHA’s urban renewal efforts date back to the early 1950s. Starting then and running through the early 1960s, scores of families were displaced, contributing heavily to the agency’s image problem.

“They still have work to do,” said Joshua Paige, a former chairman of NRHA’s board of commissioners. “It takes so long for them to get things done. They destroy a community and it takes them forever to put it back together. That’s people’s lives you are messing with.”

“Look how long it took them to do Church Street. It took them 30 years to do Church Street. If we are looking at Roberts Park, it will take them almost 30 years to get over and finish that. It’s a problem when you have the power that the housing authority has. You have people’s hopes and dreams in your hand.”

To critics, the eminent domain case involving Downtown Auto Parts has been a high-profile example of the authority’s power at work.

The lot, at 316 E. 22nd St., is within an NRHA conservation area. The authority has condemned the land, which has been mentioned as a possible site for the neighboring Coca-Cola bottling plant to expand its parking.

Charles Andrews, owner of the business, claims the authority’s $560,000 offer is too low and is contesting the agency’s use of eminent domain. After two days of testimony last month, Circuit Judge John C. Morrison Jr. is expected to rule some time next year on whether the authority can use eminent domain in this case.

Joe Waldo, the attorney representing Andrews, said that notwithstanding this and other court battles over NRHA’s reach, he respects the agency.

“Norfolk is recognized as a leader in redevelopment and revitalization,” Waldo said. “I fight them in court all the time, but I think we should be proud. Not only in Norfolk, but throughout the region.”

But that doesn’t give the authority the power to run amok, Waldo said.

“They have awesome power to take somebody’s home away from them or their business. The power of eminent domain is so important. It should be used sparingly,” he said.

One of Waldo’s former clients, Hollis Robertson, is still bitter from his dispute with NRHA. Robertson used to own a group of cottages in East Ocean View that was condemned by the agency as part of the neighborhood redevelopment plan.

Robertson fought NRHA for three years over the property’s value. He said the agency initially made an offer that was $9,000 less than his mortgage. The parties settled in April 1996 when the authority agreed to pay $237,500 for the property.

But Robertson has been unable to get over the experience. “I know one thing, I would never live in Norfolk.” said Robertson, of Virginia Beach . “I don’t trust the NRHA. Maybe they are kinder and gentler. They’ve been beat over the head enough times.”

As Norfolk’s revitalization continues to spread, the housing authority will have a vital role in shaping the city’s future. Although there is no schedule or plan yet, the authority will one day have to redevelop the downtown public housing communities.

But with federal funding limited, the agency may need to develop alternative means of financing such projects, including public/private partnerships, authority officials said. That makes it even more important that the agency be perceived well in the community.

“No developer is going to want to come in here and be a partner with an organization with a bad public perception,” said Ed Ware, NRHA’s director of communications and marketing.

Mayor Paul D. Fraim said the agency should not be judged solely on its past. The agency operates separately from the city administration.

“They have a very tough role to play. They have to be firm and tough at times.” Fraim said. “Overall, they have an outstanding record, They are well respected on the national level. I think for the most part the community respects the role they have played.”

Paige, although a critic, is confident that Montgomery can improve the authority’s image.

“I think Shurl will do a fine job,” Paige said. “I have my money bet on him. He was one of the people that we wanted in the housing authority in the first place. He gets along well with people, and he understands what is needed. I just believe that he will do a good job over there.”

Montgomery said he already has noticed a change in how the agency is perceived. “There has been progress, but there is much work to be done.”

He’ll measure progress for the agency when Norfolk residents from all communities spread the word of its success.

“We have to try to build public consensus and teams for public support for projects,” Montgomery said. “It would be great to have teams of support groups in the community. When we do that, we will know that we have turned the corner on our image building.”


The Virginian-Pilot: www.hamptonroads.com/pilotonline

Brief of Amicus Curiae — Pacific Legal Foundation, 12/04

Filed in the United States Supreme Court
in support of petitioners in the case of
Susette Kelo et al v. City of New London Connecticut et al

The Pacific Legal Foundation, along with the Center for Individual Freedom and several provate parties, has filed an Amicus Curiae (Friend of the Court) brief for the pending US Supreme Court appeal of a case in which citizens of New London are objecting to the use of eminent domain to take their property for purposes of private development. The challenge is essentially to the broad interpretation which has evolved over the past several decades to the requirement that any such "takings" be "for public use."

Among other points raised in the brief:
  • [This form of] condemnation is an extreme example of government coercion. Its effects on property owners are severe, not only in the form of economic deprivation, but in emotional, psychological, and social terms as well. Condemnations that take the land of innocent citizens, and transfer it to private developers for their own profit, are fundamentally unfair. They threaten not only the legal standards established by the Constitution, but also the more abstract social values of citizenship and domestic tranquility.
  • The primary victims of such condemnations are poor minorities, and the primary beneficiaries are wealthy, politically powerful groups, who are more able to persuade authorities to condemn property for their benefit.
  • Since the benefits conferred by government will be localized and concentrated, while the costs are broadly dispersed, the incentives will be skewed toward increased lobbying and ever-increasing amounts of wealth distribution. ... Suppose government takes $1 from each of 100 people, and gives it all to person X. It is in X’s interest to spend $99 to convince the government to do this again; but it is only in the interest of each other person to spend $1 to convince it not to. Rent-seeking behavior therefore tends to “restrict[ ] those political processes which can ordinarily be expected to bring about repeal of undesirable legislation ... It is not cost-efficient ... for a taxpayer to fight a particular piece of special-interest legislation.
  • Even though a particular condemnation may concentrate the cost of the taking on the affected landowner . . . that owner is not likely to invest enough to uccessfully oppose the condemnation. First, the existence of compensation, even when not truly substituting for market or subjective value, decreases the cost to the affected owner of the land seized and thereby decreases his incentive to invest in fighting the condemnation. Furthermore, the special interest is likely to have more political influence, because unlike the landowner, the interest group is probably a repeat player in the political process . . . . Additionally, the interest group is unlikely to seek rents through condemnation and transfer if it does not believe that it has a reasonable likelihood of success.

A complete copy of the brief is online at:
www.cfif.org/htdocs/legal_issues/legal_activities/
amicus_briefs/Kelo_Formatted_USSC_Draft.pdf
.



Pacific Legal Foundation: www.pacificlegal.org
Center for Individual Freedom: www.cfif.org

12/03/2004

Farm Bureau Files Brief to Protect Landowner Rights — American Farm Bureau Federation, 12/3/04

Working to protect the rights of America’s farm and ranch landowners, the American Farm Bureau Federation today filed a friend-of-the-court brief in a property case before the U.S. Supreme Court.

The case, Kelo v. City of New London, is an appeal by a homeowner in New London, Conn., of a Connecticut Supreme Court ruling. Also joining the brief were 18 state Farm Bureaus.

The Farm Bureau brief contends that the state supreme court is incorrectly allowing the city to use eminent domain authority to take private property for the purpose of turning the property over to business developers constructing businesses generating higher taxes.

“It is imperative that the Supreme Court hear from farmers and ranchers on this very important issue,” said AFBF President Bob Stallman. “Agricultural land is the livelihood of our farmers and ranchers and important for U.S. food and feed production, but land used this way is not the highest income generator for government bodies. Tax revenue cannot be the basis for seizing private property.”

According to AFBF General Counsel Julie Anna Potts, the Supreme Court’s ruling has the potential to affect every farmer and rancher of the nation. As Farm Bureau’s brief points out, each agricultural landowner is threatened “with the loss of productive farm and ranch land solely to allow someone else to put it to a different private use.”

“The U.S. Supreme Court must rule whether government bodies can use eminent domain to basically seize non-blighted private property and hand it over to other private entities simply because they might earn higher tax income,” Potts said.

In the Kelo case, eminent domain is being claimed to take waterfront property from private property owners, Susette Kelo and others, to give it to a private commercial entity that plans to develop the property into a waterfront hotel, office space, luxury homes and other retail businesses.

According to the Farm Bureau brief, the higher tax income and new jobs from the project are the stated justification by the city of New London. The case has nothing to do with slum clearance or blighted neighborhood improvement. The new construction is planned to complement a new research facility being built in the area.

Farm Bureau argues that municipalities cannot enter into partnerships with redevelopers solely to take homes and businesses for the purpose to “convert it into some commercial or industrial use that is touted as a higher generator of taxes and jobs.” Municipalities cannot be allowed to use this extreme measure to try and solve their tax woes, according to the Farm Bureau brief.

The brief also suggests that municipalities should not be involved in speculative real estate ventures with private enterprise. “Speculative development projects are the province of private enterprise, not government,” the brief says.

“The final decision will reverberate across the nation because this is the biggest eminent domain and private property case to be ruled on in years. We are optimistic that the Supreme Court will clarify the situation in favor of our farmers and ranchers,” Potts said.

The brief was filed through the cooperation of Potts, Nancy McDonough, California Farm Bureau Federation general counsel, and the Los Angeles-based law firm of Manatt, Phelps & Phillips, which has extensive experience in eminent domain cases and regularly assists the CFBF.

The 18 state Farm Bureau organizations on record as supporting the brief are California, Connecticut, Florida, Indiana, Iowa, Kansas, Louisiana, Michigan, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Texas, Utah, and Virginia. Also supporting the brief is the New Haven (Conn.) County Farm Bureau Federation.


American Farm Bureau Federation: www.fb.org

Homeowners against eminent domain tracking case — (Akron OH) Beacon Journal, 12/03/04

Perspective

By Terry Kinney

A handful of suburban [Cincinnati OH] property owners are waiting for the U.S. Supreme Court to decide when private property can be taken under eminent domain laws for quasi-public use. By that time, their homes could be leveled.

"This is our home," said Joy Gamble. "At least, we thought it was our home, until someone rich and powerful wants it, then it's not your home."

Carl and Joy Gamble have lived in their Norwood home for 35 years and raised two children there.

"The people that owned it before us died here, and they were happy," said Carl Gamble, who ran an independent grocery and meat market until he retired. "We worked very hard for 48 years and wanted to live happily ever after. We thought we'd live the rest of our lives here."

A Hamilton County Common Pleas judge already has ruled that the Gambles must relinquish their home to make way for office and retail construction. The ruling is being appealed.

The developer of the retail project is Rookwood Partners, headed by Norwood-based Jeffery R. Anderson, who is active in Ohio, Illinois, Michigan and Kentucky. Mark Vander Laan, the developer's attorney, says the Gambles are obstructionists who are holding up a project that most of their neighbors have accepted.

"Remember, there are 65 property owners who have entered into agreements to sell their property," Vander Laan said. "They have been kept in limbo during this proceeding, and that's unfortunate."

The concept of eminent domain originally meant that government could appropriate - with compensation - private property for "public use" such as roads or bridges. In 1954, the Supreme Court expanded that to include "public purpose."

In September, the Supreme Court agreed to look at the issue again and decide when local governments may seize people's homes and businesses to make way for projects - such as shopping malls and hotel complexes - that produce more tax revenue.

Eminent domain often comes into play in blighted neighborhoods that residents are eager to leave. The Washington-based Institute for Justice, a public interest law firm that represents land owners, says there are thousands of cases of eminent domain abuse in the nation, with the highest numbers in California, Kansas, Maryland, Michigan and Ohio.

Institute attorney Bert Gall said the Gambles' case in Norwood is all too typical.

"The onus should never be put on someone who simply wants to hold onto their home as the villain, one who is stopping progress. When developers go into these situations, they should do what always has been done, to negotiate with property owners without the force of government behind them.

"If the government can take your home simply because it is going to generate more tax revenue, that's wrong. Then nobody's home is safe. A constitutional protection has been erased."

The Supreme Court case turns on whether eminent domain allows seizures not to revitalize slums or build new roads or schools, but to raze unblighted homes and businesses to bring in more money for a town.

"It's ironic that 'blighted' areas are often some of the nicest areas you will ever see," Gall said. "Most developers don't want to develop in an area that's really bad. That's why you have this farcical situation."

The city and the developer have contended - and a judge ruled - that the city of Norwood had the right to use eminent domain to acquire the property and turn it over to a private developer as part of urban renewal. They also argued that eminent domain applied not because the area is "blighted," but is "deteriorating."

"They're going to take it away from us for what it might become?" said Joy Gamble, who has her own views on what's deteriorating.

"Everything's deteriorating, including my health," she said. "Maybe they'll condemn me, too."


The Beacon Journal: www.ohio.com/mld/beaconjournal

Abuse of Power: How the government misuses eminent domain — lewrockwell.com/, 11/10/04

Book Review

By Doug French

The Constitution's Fifth Amendment contains the clear language that no person should "be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

For most people, things like highways, police stations, and courthouses come to mind as examples of "public use." And "just compensation" means what amount of cash a seller demands in exchange for his or her property.

But for local government bureaucrats around the country, the Fifth Amendment has been stood on its head, with "public use" meaning any private use that generates more tax booty for city hall, and "just compensation" meaning whatever the local government goons can steal the property for.

In his outstanding book Abuse of Power: How the government misuses eminent domain, author Steven Greenhut tells of how rich developers and big corporations link arms with local government officials to steal property from small business owners, elderly widows, churches, and just plain old hard-working property owners.

As Greenhut points out, the mention of eminent domain - the power of the state to take private property for public use upon compensating the owner - will typically be met with either bored indifference or a blind justification for the process. People "rarely doubt the legitimacy of eminent domain."

Local governments are especially adept at demonizing property owners who fight eminent domain actions, painting them as greedy obstructionists who are standing in the way of community economic progress.

Greenhut tells the stories of many heroes who fight city hall to keep their property, or obtain reasonable compensation. But, most times these people fight lonely battles against town leaders and government bureaucrats, while their fellow town folk are either rooting against them, or ignorant as to what is happening.

Every city in America is looking for ways to generate more cash flow. Government officials attend conferences and workshops on how to creatively milk more tax money from the electorate. Eminent domain is now a strategy to improve the cash flow of a municipality. A big retail store will generate more tax revenue than a row of older homes or a church. So, declare the present use as "blight," take the property, and in turn, hand it to a national retailer, and your cash flow problems are solved.

"They are picking economic winners and losers," Greenhut writes, "interfering with the natural process by which communities improve themselves, and doing it in the name of promoting economic development, by cleaning up blight."

The definition of blight is no longer a matter of common sense, but has been perverted by government officials and the courts to achieve their desired result - the taking of property. In some cases, houses that lack two-car attached garages or have yards that are too small have been called economically or functionally obsolete, and thus have been considered blight - meaning the property should be razed, and handed over to developers or retailers who will pay higher taxes.

Just when was it that judges took their eyes off of the property rights ball, setting the stage for this tyranny? Greenhut mentions three cases, with the 1954 case of Berman v. Parker doing the most damage to property rights. Berman was "a tour de force of liberal judicial reasoning," according to Greenhut: "a case that gave government carte blanche to do as it pleased with regard to eminent domain."

The case centered on the District of Columbia's Redevelopment Act of 1945, which was created to revitalize a poor section of the city. The court, as Greenhut points out, threw individual rights out the window to justify the redevelopment project.

The following from Justice William O. Douglas captures the essence of the court's decision:

"The experts concluded that if the community were to be healthy, if it were not to revert again to a blighted or slum area, as though possessed of a congenital disease, the area must be planned as a whole. It was not enough, they believed, to remove existing buildings that were unsanitary or unsightly. It was important to redesign the whole area so as to eliminate the conditions that cause slums - the over-crowding of dwellings, the lack of parks, the lack of adequate streets and alleys, the absence of recreational areas, the lack of light and air, the presence of outmoded street patterns. It was believed that the piecemeal approach, the removal of individual structures that were offensive, would be only a palliative."

Greenhut cites other passages from Berman that illustrate the court's totalitarian stance that would set legal precedent to pave the way for thousands of property owners to have their rights trampled upon. The most egregious being:

"If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way."

Increasing the tax base is what eminent domain is now all about, and the primary financial mechanism used is the Tax Increment Financing (TIF). As Greenhut explains, government redevelopment agencies first declare an area bighted, and in turn, the area becomes part of the city's redevelopment area. At that point, any additional property tax money generated goes to the redevelopment agency, not other areas of the government.

The theory is, of course, that the higher tax revenues must be used to retire the debt financing used by the city to clean up the blight, and when the bonds are retired, the area returns to the original tax status. But, in reality, redevelopment areas remain that way forever.

Greenhut writes:

"The end result: Tax increments divert money from traditional public services, such as police, fire, schools, and courthouses. So, in addition to seeking new property-tax revenue by sparking the development of new retail centers, redevelopment agencies want to create new redevelopment areas to divert existing property-tax revenue from other government agencies."

And, it's not just property taxes that these redevelopment agencies are eying: many cities get a share of the sales taxes generated. Thus, retailers and auto malls will enhance city cash flow.

In a chapter entitled Corporate Welfare Queens, the author lists a number of examples of how people are forced to hand over property so that companies like Costco, IKEA, Wal-Mart, and Home Depot can build stores where they want to. Greenhut singles out Costco as the worst offender, citing numerous instances where the company was involved in eminent domain cases. "Costco is the worst of any corporation out there in the case of eminent domain abuse," John Kramer of the Institute for Justice told Greenhut.

The city of Lancaster, California, attempted to use eminent domain to take a 99 Cents Only Store property, and then sell it to Costco for one dollar. The owner of 99 Cents Only Stores, Dave Gold, decided to fight the condemnation with his own money. Despite the city dropping the case, Gold wanted the court to hear the case. The judge blistered the city of Lancaster, ruling:

"In this case, the evidence is clear beyond dispute, that Lancaster's condemnation efforts rest on nothing more than the desire to achieve the naked transfer of property from one private party to another. In short, the very reason that Lancaster decided to condemn 99 Cents' leasehold interest was to appease Costco."

Did the judge's decision make city officials see the light? Not hardly. David McEwan, Lancaster's city attorney told the Wall Street Journal:

"The court has gone way beyond what the law permits. It's a troubling trend. I don't know where the courts are going with it. 99 Cents produces less than $40,000 [a year] in sales taxes, and Costco was producing more than $400,000. You tell me which is more important."

Decisions like the one in Lancaster have been few and far between. But, after Abuse of Power went to press, the Michigan Supreme Court overturned its own Poletown decision, and drastically restricted Detroit and Wayne County (Michigan) municipalities from seizing private land to give to other private users.

Poletown was a landmark case, that along with Berman, set the standard to justify land seizures. In Poletown, the court originally ruled that it was OK for the city to seize private homes and small businesses so that General Motors could build an auto factory.

In overturning the 1981 ruling, Justice Robert Young wrote:

"We overturn Poletown in order to vindicate our Constitution, protect the people's property rights, and preserve the legitimacy of the judicial branch as the expositor, not creator, of fundamental law."

Wayne County officials expressed outrage over the decision. Robert Ficano, Wayne County Executive said:

"The Michigan Supreme Court's decision to change Michigan law, and divest municipalities from their ability to create jobs for their citizens is a disappointment, not only for Wayne County, but for all of the Michigan communities struggling to address these difficult economic times."

A professor of land use at Wayne State University called the decision a "significant blow" to revitalization efforts. "Any limitation on the power of eminent domain," John Mogk told the Detroit Free Press, "will reduce the chances of the city accomplishing those kinds of projects."

Also on a positive note, this fall the United States Supreme Court agreed to hear arguments in the case of Kelo v. City of New London, Connecticut. The city of New London wants to seize Susette Kelo's home, pay her market value, knock the house down, and lease the property to a private developer for 99 years. No public use is argued by the city, just an increase in the tax base.

Like the Michigan court's reversal of Poletown, a Supreme Court ruling for Ms. Kelo could help turn the tide against local governments that abuse eminent domain.

As it stands now, arrogant public officials believe that cities are their own personal sandboxes to play in. Las Vegas Mayor Oscar Goodman recently described downtown redevelopment to the Las Vegas Chamber of Commerce as:

"It's like playing Monopoly with real money, it's like playing Legos with real bricks and mortar. And, on occasion, you can even help your son."

Hopefully, the Supreme Court will send Mr. Goodman, and his fellow mayors, the message that there is still such a thing as property rights in this country.


Doug French: dfrench@SilverStateBank.com

Doug French is a policy fellow of the Nevada Policy Research Institute

This book review was originally published by lewrockwell.com: www.lewrockwell.com

12/02/2004

Judge clears way for commercial, residential project — Cincinnati (OH) Post, 12/2/04

By Kimball Perry

A judge ruled Wednesday that a developer can tear down a Norwood building the city took from a private citizen using eminent domain, literally clearing the way for construction of a commercial and residential development to begin as soon as the first of the year.

Hamilton County Common Pleas Court Judge Beth Myers sided with developer Jeffrey Anderson and the city of Norwood, who want the building razed. Norwood won a court case that allowed it to use its power to seize property owned by Joe Horney and transfer it to the developer.

"Frankly, it's good news. It indicates that this project can continue to move forward," said attorney Tim Burke, representing Norwood.

After the city won its court case against Horney, it placed $233,000 — the purchase price — with the Clerk of Courts and then deeded the property to Anderson.

Horney and his attorneys at the Institute of Justice, the Washington, D.C.-based agency fighting eminent domain cases nationally, asked the judge to keep the building intact until the resolution of his appeal.

Burke and attorneys for the developer contended that Horney had no right to appeal because the property was no longer his.

"It was bad enough that the Court allowed the City to take our clients' property for Jeffrey Anderson's private benefit. It's even worse that it has allowed Anderson to take the wrecking ball to their home and businesses during their appeal," noted Bert Gall, an Institute for Justice attorney.

In her ruling, though, Myers warned Norwood and the developer that they are taking risks by razing the building and beginning construction on the project.

"Norwood and/or Rookwood may be required to return the property" if Horney is successful on appeal, Myers noted in her Wednesday decision.

The financially strapped city has insisted it needs the property for the proposed Rookwood Exchange development — 200 condominiums, apartments, retail space and 550,000 square feet of office space — to bring an additional $1.8 million annually in earnings tax into the city's coffers. The development also will generate an additional $300,000 per year for Norwood schools.

Already, 65 of the 70 parcels needed for the development are under contract.

"I'm happiest for the 65 property owners who have been waiting for two years for their properties to be closed on," said Richard Tranter, an attorney for the city.

Similar court decisions are expected in four other cases in which Norwood is using eminent domain to seize property for the development.

Anderson has commitments from new tenants for the development.

Retailer Crate and Barrel will be joining the Sheakley Group of Companies, provider of outsourced business services including unemployment cost control and workers' compensation administration, which will move its 500 employees and corporate headquarters from Tri-County to Rookwood, Tranter said.


The Cincinnati Post: www.cincypost.com

Santa Cruz tells landowner: Use it or lose it — Santa Cruz (CA) Sentinel, 12/2/04

City considers eminent domain on long-empty downtown lot

By Shanna McCord

Downtown property owner Ron Lau vows he will fight the city’s attempt to seize his land for redevelopment.

"That’s unfortunate and misguided and just a flaw in how we as human beings operate," Lau said of the city Redevelopment Agency’s plans to condemn his Pacific Avenue property that has been sitting empty since the Loma Prieta earthquake leveled much of the area in 1989.

A Hawaiian native who lives in Watsonville, Lau is a self-described free spirit who doesn’t like to be told what to do or when to do it. He owns the gaping concrete pit between Lulu Carpenter’s and the World Savings Bank branch — a spot many see as nothing but an eyesore and place for weeds to sprout in the heart of downtown.

The 20,000-square-foot lot has been appraised at $1.4 million.

Lau has 90 days to accept an offer by local developer Bolton Hill to buy the parcel. If a deal is not reached, the agency will attempt to negotiate with Lau. If that proves unsuccessful, the city says it will consider eminent domain.

Bolton Hill is a 25-year-old Santa Cruz-based development and consulting firm that specializes in housing projects. It’s responsible for the Pacific Shores apartment complex that opened last year on Shaffer Road.

Bolton Hill first approached Lau with an offer to buy his downtown plot a year and a half ago. When Lau rejected that offer, Bolton Hill struck a deal with the Redevelopment Agency in September 2003 to assist in acquiring the property.

Eminent domain is the power of government to condemn private property and take title for public use, provided owners receive fair compensation.

"With all due respect to Ron, he has been trying to get a project there that was sustainable, but it’s been difficult for him to find and develop a relationship with someone who could meet his ideologies," said Ceil Cirillo, the agency’s director. "He hasn’t done anything so far."

Fault lines
Devoted to the idea of constructing a building he believes is "ecologically advanced," Lau’s numerous development plans over the past 15 years have fallen through.

In support of his environmental building ideas, Lau has posted banners on a wall facing his property that endorse "building cities in balance with nature."

There should be more high-rise buildings, in his opinion, rather than further urban sprawl.

Lau said faulty development plans and perpetual delays through the years are partly the result of him not knowing exactly what the perfect fit would look like.

"I’ve never been a developer and I have no idea what the hell to do with it," he said. "I like to understand things thoroughly. I’m interested in the nuts and bolts. I’m not just interested in putting money in and taking it out. I want to see things holistically."

Last week Lau made a last-ditch attempt to present the City Council with a "green project" plan drawn by Healdsburg psychologist Craig Brod, who recently developed a condominium project in San Diego.

The council unanimously rejected that idea.

Up next
Bolton Hill’s plans for the site include two adjoining parcels owned by the city and agency.

The entire project reaches from Pacific Avenue to Cedar Street and would involve displacing Oswald’s restaurant, Asian Rose Cafe and Artforms; all three are housed in buildings owned by Lau.

The businesses will receive relocation assistance and benefits, Cirillo said.

"We think it’s very sad that something hasn’t occurred there in 15 years," said Norm Schwartz of Bolton Hill. "It’s not good for the quality of the community. The impacts of not doing this project are significant."

Restaurateur owner Lou Caviglia, who operates Clouds Downtown, has spoken of opening a similar restaurant on the site.

Up to 60 condos and a parking garage would be included.

Burt Rees, owner of the Lulu Carpenter’s cafe building adjacent to Lau’s property, said it’s been frustrating to listen to his neighbor’s repeated empty promises of putting a new building there.

"I’ve listened to Lau, I’ve talked to him, I’ve never had a cross word with him," Rees said. "I’ve supported every idea he’s had, but nothing has come to fruition. ... I’ve become frustrated by the fact nothing has happened."

Rees said a store or restaurant on Lau’s property would improve safety in the northern section of Pacific Avenue.

"There’s not a lot of light and energy at that end of the mall," he said.

Eminent domain would require a super-majority City Council vote — approval by five of the seven council members — which doesn’t appear to be a problem.

The agency would also have to show that taking Lau’s land is in the public interest and meets its requirements.

"There’s no question that this will pass the eminent domain test," Mayor Mike Rotkin said. "It’s a blighted hole in the middle of downtown. People expect to walk down the street and see storefronts. Fifteen years is a long time to leave a hole in downtown."

Lau’s property was home to Bookshop Santa Cruz when the earthquake hit. The building partially collapsed, falling onto a coffee shop, where two people were killed.

Lau, still searching for the ideal eco-friendly project, wants the council to reverse its latest rejection of his plans and allow a project that "better satisfies the needs and aspirations of the local community."

Of the Bolton Hill plan, Lau said, "There’s nothing special about it. It’s done in the same old routine way."

Eminent domain in Santa Cruz (Source: Santa Cruz City Redevelopment Agency)
  • March 1991: 554-square-foot vacant land owned by Bernard and Kay Zwerling was taken for construction of a parking structure at Locust and Cedar streets. (This involved only a partial taking.)
  • September 1996: A 6,700-square-foot portion of Marnall Alley off Soquel Avenue.
  • October 1996: Property owned by Irma Hansett taken for Gateway shopping center project on River Street.
  • October 1996: Frontage property owned by Robert and Wanda Cash taken for River Street widening project.
  • July 1997: Property owned by Frances Bonne taken for Soquel Avenue/Front Street parking garage.



Santa Cruz Sentinel: www.santacruzsentinel.com

12/01/2004

Hell No, We Won't Go! — The (St Louis MO) Riverfront Times, 12/1/04

A south St. Louis neighborhood raises a ruckus over plans to demolish homes for a shopping center

By Jennifer Silverberg and Kristen Hinman

Relocate? The Smiths aren't interested.

Diana Smith shudders and scrunches her shoulders, recalling the October night her ten-year-old son Jacob kept hammering his parents with an angry question: "Why do we have to move?"

Jacob, who has an attention-deficit disorder and a form of autism, "doesn't deal well with change," says his mom. He'd been sleepless for days over thoughts of switching homes and schools, and he didn't understand his parents' explanation: "We're moving because the city is kicking us out." That night Jacob blew a fuse. So did his dad.

"I got really angry," Dennis Smith recalls. "I made calls. I called [Eleventh Ward Alderman] Matt Villa and left him a nice message, like, 'Thanks!', 'cause he don't have to live with the problems my son has."

At 3 a.m. Smith was still boiling. Then it hit him -- sidewalk chalk. Smith took his son's 50-piece pack from the closet and spent the next two hours defacing the fa├žade of his narrow brick home, scrawling sarcastic missives to Villa and St. Louis Mayor Francis Slay, and protests of "Not For Sale To Big Corporations," and "NO TIF."

Smith's south-city neighborhood near Carondelet Park is about to become the latest of many that the city is looking to grant a TIF, a thirteen-year-old tax-increment financing arrangement that allows developers tax breaks to raise new buildings in so-called blighted areas.

The Desco Development Group, a Clayton-based developer and the Schnuck family's development company, plans to put a $40 million shopping center called Loughborough Commons on the 30-acre parcel of land at Loughborough and South Grand avenues, adjacent to I-55. Desco spokesman Steve Houston says the firm is looking to build a bigger Schnucks and a Lowe's Home Improvement Warehouse, and to bring in some smaller retailers. The project has been in the works for eighteen months.

The site currently houses a Schnucks Supercenter, a shuttered furnace plant, the Carondelet Sunday Morning Athletic Club and twenty homes that will have to be razed, perhaps as soon as February.

Desco wants $11 million in tax-increment financing for the project that it hopes to complete in spring 2006. A public hearing before the city's TIF commission is scheduled today, December 1, at 8:15 a.m. at the St. Louis Development Corporation's offices at 1015 Locust Street. If the commission approves the financing plan, the boards of Aldermen and Estimate & Apportionment are expected to green-light the project.

Tax-increment financing, or TIF, took off in California in the early 1950s and is used now in nearly every state. Here's how it works: The government freezes property taxes in the designated TIF district for 23 years. All the while, the property owner puts some money in lieu of taxes (equivalent to incremental increases in real property taxes), plus 50 percent of the econonmic activity taxes (utility, local sales and earnings) generated in the TIF district, into a special fund. The monies are then used to float bonds and reimburse the developer for some project costs.

Once a property is TIF-ed, a city agency can invoke eminent domain, relocate any resisters and bring on the wrecking ball, so long as the proposed project is for "public use" — traditionally, schools or roads.

But does a shopping center qualify as public use? In many cases, courts nationwide have answered "yes." The U.S. Supreme Court could decide next year the constitutionality of using eminent domain for economic-development projects, when it reviews a Connecticut case pitting homeowners against developers of a hotel and health club.

Though St. Louis County has been at the center of numerous TIF-related dramas over the years, the development-starved city has only recently begun aggressively courting developers looking for tax breaks and the right to blight.

The city approved ten TIFs between 1991 and 2001, confirms Dale Ruthsatz, commercial development director at the St. Louis Development Corporation. But in the past three years, forty-four projects have been TIF-ed, and seven are in the pipeline.

If the Loughborough Commons TIF is approved, bulldozers will roll over a hodge-podge of predominantly brick shotgun houses, most of them more than 90 years old.

Many of the homeowners, some in the neighborhood for decades, were outraged when they learned of the retail plan in a September 29 St. Louis Post-Dispatch story.

"We got broadsided," says Bill Sheahan, a twenty-year resident. "We were ticked off, mainly at the integrity part of it." At the very least, an explanatory letter from Villa, or some city official, should have been provided to affected residents, fumes Sheahan.

"No one knocked on the door, and no one left a business card," says resident Rachelle Brown. "I think they did this in a very back-door way. I'm very disappointed in Matt Villa. And I voted for him!"

Villa, who has endorsed the project and plans to seek aldermanic approval that will, if necessary, allow for eminent domain to obtain the land. Villa did not return calls requesting comment for this story.

When the news broke, Dennis Smith, who's lived on South Grand for 27 years, hurriedly organized a neighborhood meeting with Robert Denlow, a high-profile Clayton real estate lawyer. Most residents attended, listening to Denlow tell them they'd never win an eminent domain fight with the city and might as well try to sell for top dollar.

"He was saying, 'You don't need me, you don't need me,'" Sheahan recalls.

By the second meeting, a week or so later, factions had formed between the holdouts and the sellouts.

Five owners, including Smith, hired Denlow. Signs broadcasting in bright red letters, "NO TIF," and "NO BLIGHT," went up in their yards at the southern end of South Grand, and Denlow began negotiating for the highest possible price.

The city assessor's records list fair-market value of between $50,000 and $80,000 for the brick homes, but some of them have sold in recent years for more than $100,000, property records show.

Howard Thompson, who says his offer from Desco "wouldn't make good toilet paper," hired St. Louis attorney Michael A. Wolff. Thompson refuses to sell and is circulating petitions protesting the redevelopment that he intends to present to city officials at the December 1 hearing.

There are at least seven "quick nickels," as Thompson calls them, who during the past two months signed option-contracts with Desco, and, according to Sheahan, can expect to walk away with $150,000 to $175,000 once Desco exercises its buying rights. That could come as early as next month, residents believe, though Desco wouldn't confirm a date.

The firm insists there's no way to build the shopping center without acquiring and removing the existing properties.

Real estate lawyers claim the project is an outright abuse of Missouri and constitutional eminent domain statutes. They maintain the city is interpreting "blight" and "public use" too broadly — that private property owners will lose their life savings while developers and large corporations line their pockets.

"This is a nice old St. Louis neighborhood," Wolff says. "You don't see anything in those residences that's in line with a 'blighted' area."

"To the city, if it's profitable, it's blighted," Denlow says.

The mayor's office disagrees.

"It used to be that nobody called, nobody had proposals, nobody wanted to develop in the city," argues mayoral chief of staff Jeff Rainford. "You've got to do TIFs in the city to jump-start development. Will there be a tipping point when we don't have to offer these? Absolutely. Are we getting close to that point? Absolutely. Are we at that point? No."

But Board of Aldermen President Jim Shrewsbury worries that tax-increment financing has spiraled out of control. "It's becoming a standard practice, and I think that's very dangerous, because what it's doing, it's threatening general revenue." He adds, "The purpose of a TIF is to make or break a project. It's not simply something that is offered to everyone."

Urban studies experts agree.

"When everybody gets a TIF, nobody gets any benefit," observes Saint Louis University public policy studies professor Todd Swanstrom. "The tax burden is shifted onto middle-class and working-class taxpayers from the retailers. It's not good public policy."

"I think the city has gone TIF-crazy," says Joseph Heathcott, American Studies professor at SLU. He points to the struggling St. Louis Marketplace on Manchester Road — the city's first project to use tax increment financing — as an example of the risk and burden levied on taxpayers' backs. "If more projects like that end up failing, we are going to be paying for decades."

All the while, health, parks and police departments, and schools, get short-changed in the short term, say critics of TIF.

Many of Carondelet's "quick nickels" are disgusted with the way the city has handled the Loughborough project and are now shopping for moderately priced homes in the county.

"We've been here twenty years. We go out in the city. We go to the opera. We defend the city to every person we know," Sheahan explains. "It ticks us off that after spending all this time and money they could care less."

Rainford says he's saddened by this sentiment, but he defends the project. "I think this is four steps forward, to one step backward."

To Dennis Smith, who's constructed and installed nearly everything in and around his home, including built-in aquariums, an expansive deck and a jungle gym, the "community betterment" argument leaves him cold.

In the Smiths' front hallway, several stacks of boxes stand sentry. The Smiths figure they probably won't have a choice but to leave, so best to start packing 27 years' worth of belongings now.

"How can you blight an area," asks Smith, "if you've got nice-looking homes here?"


The Riverfront Times: www.riverfronttimes.com

11/30/2004

Farmers may seek change in eminent domain law — The Roanoke (VA) Times, 11/30/04

By Lois Caliri

Farmers will decide today whether to push for changes in the state's eminent domain law, an issue that directly affects their land and businesses.

Eminent domain lets government agencies and private entities acquire private property for public use, paying landowners for property taken or damaged. But farmers object when they believe the government uses eminent domain as a rite of passage. "We have the least say," said Gordon Metz, a state director for the Virginia Farm Bureau Federation, which is holding its annual convention at the Homestead. Metz raises cattle and more in Henry County.

Government agencies, he said, increasingly appear to look at the vast amount of land owned by the farmers and say, "let's take that," instead of looking at eminent domain as a last resort.

In 2003 the Virginia Department of Transportation took and then demolished every barn and structure of a dairy farm in Alleghany County to widen a road, the Farm Bureau said.

In Henry County, East Tennessee Natural Gas, a subsidiary of Duke Power, condemned a 100-foot easement across a number of farms for a gas pipeline.

The landowners challenged these actions in court and won.

Farm families in Henry County, for example, received six to 30 times East Tennessee's offers for property it took, according to the bureau.

Susan Rubin, a lobbyist for the Farm Bureau, cited a class-action dispute involving landowners in Virginia and North Carolina against Virginia Electric Power Co. and Dominion Telecom.

At issue was how much the utilities should pay for installing fiber-optic cable networks on 536 miles of transmission power line rights of way without first getting permission and settling with landowners.

In May the U.S. District Court for Eastern Virginia issued a formal notice of the $20 million settlement.

"It's cheaper for businesses to do what they want upfront and then deal with it when they get caught," Rubin said.

Rubin also said landowners won in a case involving Level 3 Communications out of Colorado. Level 3 laid fiber-optic lines involving more than 100 Virginia landowners without proper authority.

The company later tried to get eminent domain authority through the State Corporation Commission. The SCC denied the request. Level 3 appealed to the Virginia State Supreme Court and lost.

"They wanted the power of eminent domain so they couldn't be sued," Rubin said.

The Farm Bureau successfully lobbied the General Assembly to add amendments to a bill that gave new eminent domain authority to six telecommunications limited-liability companies.

The amendments prevent the companies from receiving retroactive condemnation authority if they trespass on private property or ignore the law.

Eminent domain promises to be a hot button in the General Assembly session that begins in January.

The farmers' vote will frame the agricultural agenda for the 2005 General Assembly.

A coalition of stakeholders, including the Virginia Farm Bureau, is drafting legislation that would help tighten the rights of property owners, Rubin said.

In other business, Farm Bureau delegates will vote on presenting agricultural budget items to the 2005 General Assembly, and the equine industry in Virginia will ask legislators to grant a referendum on a program to fund educational grants, research and promotion activities.

One budget item includes Virginia Tech's request for $3.3 million for the second year of the two-year budget cycle to fund 56 extension and specialist positions.


The Roanoake Times: www.roanoke.com

11/29/2004

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

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."



Background

Poletown, a working-class neighborhood that extends across the border here into neighboring Hamtramck, was the focus of a 1981 economic development plan to take private property for public use.
It's for the public good, officials insisted at the time plans were announced to make room for a new General Motors auto assembly plant.

The plan uprooted 4,200 people from 1,300 homes. Along with the homes, the cities bought 140 businesses, six churches, and one hospital. All were leveled.

Then-Detroit Mayor Coleman Young promised 6,000 jobs. The $750 million assembly plant ended up bringing less than half.

Today, 23 years later, Hamtramck still exists, as does the Polish Village Cafe on Yemans Street where Carolyn Wietrzykowski works. But the 29-year-old barely remembers the controversy that was ignited throughout the neighborhood and spread throughout the Detroit area.

"I was 6 or 7," she said, remembering the priests who fought for their churches and residents who now have scattered over the years. "They wrote a book about it."

Whether Detroit and the area are better off remains a subject of occasional debate in the community. A recent Michigan Supreme Court decision essentially had the effect of reversing the ruling that allowed the Poletown project to move forward - but it's impossible to reverse demolished homes.

The ruling said that Michigan governmental entities should not use eminent domain - law giving government the power to acquire property - purely for achieving a "public purpose." The Fifth Amendment to the U.S. Constitution says the government's eminent domain authority must be for a "public use," which has generally been taken to mean acquiring public property to make way for such uses as a highway or a public school.

Over the years, however, courts and politicians have stretched the meaning to include addressing urban blight and creating jobs.

The recent decision reversed officials in Wayne County, Mich., who used eminent domain power to take land near Detroit Metro Airport for Pinnacle Park, an industrial and technology park designed to attract business. The Poletown case from 1981 also was reversed in the 7-0 ruling handed down in August.

Brenda Braceful, deputy corporation attorney for the City of Detroit, said she does not believe Pinnacle Park and the Poletown cases are similar. The city had filed a brief in support of Wayne County in the Pinnacle Park case, she said.

"Our official reaction [to the state Supreme Court ruling] is there were some differences. We felt that our previous position [on addressing urban blight] remained," she said.

The U.S. Supreme Court has agreed to take up a similar case from New London, Conn. At issue is whether economic development - specifically, creating jobs - qualifies as a public use. The nation's top court could establish permanent rules on the government's use of eminent domain in the future.


The Toledo Blade: www.toledoblade.com