Battling eminent domain: U S News & World report, 11/15/05

Small Biz Watch

By James Pethokoukis

In this week's issue of U.S.News & World Report, I write about how small businesses can deal with attempts by local governments to exercise powers of eminent domain, which have been enhanced by a recent Supreme Court's decision. Truth is, when governments try to seize private property, business owners don't have many options other than to sue the city or squeal to the media and raise public awareness. But those options can be effective. Late last month, a San Diego jury awarded $7.7 million to cigar-store owner Ahmed Mesdaq, who was forced to move after the city used its eminent domain powers to take his property. Although the city offered Mesdaq $3 million before the trial, the jury found that the offer took into account only the value of the property–not the value of the business due to its location and reputation.

Then there's the story of Sean Wieting, who successfully fought an attempt to condemn his restaurant in Lincoln, Neb. He says energizing the public is key. "It would have cost me $120,000 to move, so I went on TV and handed out fliers to every single customer who came into my restaurant," says Wieting. It also didn't hurt that he was a former University of Nebraska football player in the Cornhusker-crazy state.

The U.S. News article highlights the story of Scott Mahan, who owns an office supply store in Ardmore, Pa. After the local township initially tried in 2004 to use eminent domain to take over a group of downtown properties–including his own–Mahan helped organize a group called Save Ardmore. The group adopted a two-pronged strategy:
  • Sue the township.
  • Get the public on its side and use that awareness as a cudgel to change the political makeup of the board of commissioners.

So far the group is batting .500. During local elections earlier this month, five new members were elected to the Lower Merion Township Board of Commissioners, including three who signed an anti-eminent domain pledge. As Mahan stated in an E-mail to me: "We are encouraged that they will now listen to what the people want, which is local government that will protect their rights."

The group has had less success on the legal front. Last week, a U.S. district judge dismissed the coalition's lawsuit on the grounds it was premature because the township had yet to finalize its redevelopment plan. But Mahan and other local business owners are hoping the political changes will make more legal action unnecessary.

U S News & World Report: www.usnews.com