House not for sale — CNN/Money, 1/6/05

Can the government force you to sell your house in the name of new development?

By Sarah Max

The neighborhood of Fort Trumbull in New London, Conn., isn't on the National Register of Historic Places. But it is historically significant to the people who live there.

Wilhelmina Dery, 87, was born in her century-old house near the Thames River.

Her son, Matt, and daughter-in-law, Suzanne, live next door with their teenage son, Andrew. Among their most precious possessions: the garden planted by Matt's grandmother, and the kitchen doorway where they've charted Andrew's height over the years.

The Derys' neighbors have their own, similar stories.

Bill Von Winkle bought his first building in the neighborhood 20 years ago, and went to work making sandwiches in the downstairs deli and renovating the upstairs apartments.

Susette Kelo meticulously restored her small pink Victorian house.

So when the New London Economic Development Corporation, a non-profit organization appointed by the city, approached about 70 property owners in Fort Trumbull about selling their homes to make space for a luxury hotel, condominiums and office space, these and a handful of other owners declined.

Their property, they said, is not for sale.

In November 2000, however, the city invoked eminent domain – a government right to seize property for public use – and sent out condemnation notices to owners refusing to sell. The city planned to pay the owners fair market value, take possession of the buildings and tear them down.

According to Daniel Krisch, one of the attorney's representing New London and its economic development arm, the city had several good reasons for razing the well-kept middle class neighborhood to replace it with a new, private development.

Krisch contends that the new development would create jobs, boost tax revenue, improve the city's infrastructure and provide public access to the river. It's for the benefit of the entire community, he said.

Taking for the greater good
In February, the Institute for Justice, a libertarian public interest law firm that is representing seven Fort Trumbull owners for free, will argue in the U.S. Supreme Court that the city of New London has abused its use of eminent domain.

The case, Kelo v. City of New London, will decide whether the U.S. Constitution's definition of "public use" includes private developments like condos and casinos. The decision will have implications through the country.

The Institute for Justice argues that displacing property owners for private development is not legal. "The Constitution says [eminent domain] should be used for a public use — a road, a court house, a military base. Not a Wal-Mart," said Scott Bullock, a senior attorney with the institute.

According to a study of court papers and published accounts covering a five-year period, the institute found more than 10,000 examples of property being condemned under eminent domain for the benefit of private parties.

The city of New London and other cities using eminent domain in the interest of urban renewal argue that such private projects are for public use, even if the public only benefits indirectly.

"This is a tool that is important to local governments because it allows them to revitalize areas that otherwise would not get revitalized," said Tom Grundhoefer, general counsel for the League of Minnesota Cities, which is filing a "friend of the court" brief on behalf of New London.

Cities want to attract new businesses and developers to their urban centers rather than contributing to sprawl by building in the suburbs, he said. But they can only do so if they can get existing owners to sell.

"Often times there might be one or two owners who will not go along with the voluntary sales situation," he said. "The question comes up, 'Do you stop the entire project because one or two won't sell, or do you use eminent domain to encourage that activity?'"

Encourage isn't a word that Joy and Carl Gamble of Norwood, Ohio associate with eminent domain.

The retirees are scheduled to be evicted from their home of 35 years in early February to make way for Rookwood Exchange, a $125 million development with offices, shops, housing and restaurants.

In this case, the city of Norwood voted to exercise eminent domain after a study — which was funded by the developers of Rookwood Exchange — determined that the Gamble's neighborhood is blighted.

"Blight 50 years ago entailed serious problems and neglect," said Bullock, citing cracked sidewalks and weeds as examples of blight given in the study. Now, he said, blight is just an excuse for the government to take land from one party and give it to another.

"The easy story is to wrap the Gambles in the American flag and say, 'It's not right,'" said Richard Tranter, an attorney representing Rookwood Partners, adding that it's not unusual for cities to ask developers to pay for studies and other expenses related to development. "But it's not that easy."

Norwood is a doughnut hole in the middle of Cincinnati that is about to declare a fiscal emergency, according to Tranter. What's more, the Gamble's neighborhood is cut off from the rest of the city by a major freeway and roads feeding into that freeway.

"With the exception of the Gambles, every resident is saying they want to get out of the neighborhood," he said. "An 80-year old blind widow called it a blessing."

Tranter says the developer has signed contracts with 65 residents to buy their property for no less than 25 percent above market value, pending the outcome of the Gamble's appeal.

Still, the Gambles don't want to sell for any price.

"We're very proud of this house. It's extremely well built," said Joy.

"We raised our children here. All of our memories are here," she said. "We don't want to move, especially for a shopping mall."

CNN/Money: www.money.cnn.com

Revitalization breeding fear — San Diego (CA) Union-Tribune, 1/6/05

Business owners worry they're not part of future

By Elizabeth White

Debbie Mrozinski's parents owned their auction house on Eighth Street [in National City] for more than 30 years. She took it over about 1½ years ago when they sold the property to the city.

Mrozinski now pays the city rent on a month-to-month basis. She wants a longer-term agreement, but the city won't give her one.

She believes that's because the city wants to be able to push her out on short notice to make way for a more upscale business. She said city employees have told her there are plans for a condominium development behind her big blue auction building.

Mrozinski feels vulnerable. And she is not alone.

Other business owners in National City fear they'll also be victims of the city's vast redevelopment plans, which include Filipino and Mexican villages, a new hotel and a revitalized downtown populated by specialty stores and sleek office buildings.

Several factors are driving their fears: a lack of information, the rapid pace of redevelopment planning and a proposal to expand the city's power to seize property. As the city undergoes a makeover, many small-business owners believe the city may lose its small-town, community feel.

"My parents only sold because they thought they were going to be pushed out," Mrozinski said. "It's all nice and good but they (city officials) forget about how many jobs there are here."

Mrozinski employs 19 people, and she says 75 to 100 customers come to her weekly auction at H & M Goodies to sell and buy furniture, clothes and antiques.

She and other small-business owners have employed workers and paid taxes in National City for years. Now the city has decided to revamp itself, and in the business owners' worst-case scenario, redevelopment will kill their livelihoods.

City officials say their concerns are unfounded.

Mayor Nick Inzunza said that while city redevelopment plans are moving fast, most businesses won't be affected.

"I wouldn't worry," he said. "I think that's a natural response, but small business wins big with redevelopment."

Ben Martinez, executive director of the Community Development Commission, which is overseeing much of the redevelopment process, said only undesirable businesses need to be concerned.

"The last thing we want to do is redevelop and move businesses that are thriving in the city," Martinez said. "It's easy to distinguish the types of businesses that need to go and those that should stay."

So who needs to go? Auto mechanics, if they're located on prime commercial real estate, check-cashing businesses and pawn shops, to name a few.

"There are winners and losers in redevelopment; let's be honest," Martinez said. "But we try to limit the losers to businesses" that don't fit in with the city's plans to bring in more retail and improve its image, he said.

And that means Mrozinski's auction house.

"The building is very old, very unattractive, dilapidated," Martinez said. "The sales tax from the building is very low."

Martinez said Mrozinski's case is unique – meaning she can be forced out more easily than others – because the city already owns the property. He said the auction house will have to move to make way for another development, probably condominiums above retail stores.

It's talk about situations like Mrozinski's that scares Glenn Batchelor, owner of the Sizzler on Plaza Boulevard near Interstate 805. Batchelor's parents bought the property in 1966.

"I have nothing against redevelopment if it's done right," Batchelor said. "But why can't the city show everybody what they want to do?"

Batchelor's fear is that he'll get pushed out so Filipino-themed businesses and restaurants can move in. A Filipino Village is planned for that stretch of street, but Martinez said the plan features streetscape and building facade improvements, not new businesses.

"A business that's well-maintained like the Sizzler is least likely to be moved," said Byron Estes, deputy director of redevelopment.

It's not just change itself some fear. They are wary of how fast the city is pushing its plans through the approval process.

At a December Community Development Commission meeting, the commissioners – who are also City Council members – were scheduled to certify an environmental impact report for a downtown redevelopment plan. The commission was then supposed to approve the "downtown specific plan," which sets guidelines for the revitalization of parts of National City Boulevard and Eighth Street. The City Council was supposed to take the same action that night.

But so many people showed up at the commission's meeting to complain that commissioners postponed a vote on the plan until February. They also scheduled a community workshop for Saturday so residents can ask questions about the plan.

If the pace of redevelopment isn't alarming enough to some business owners, the city's proposal to expand its eminent domain authority is whipping up even more fear.

This past fall city officials proposed an amendment to the general plan that would allow them to acquire – by seizure, if necessary – commercial, industrial and abandoned properties to make way for redevelopment projects. The amendment would expand the city's relatively limited power to cover the two-thirds of National City that lies west of Interstate 805.

With eminent domain, the city can negotiate to buy properties for a fair-market value. If owners don't want to sell and all possibilities are exhausted, the city can go to court and force property owners to take the payment and vacate.

The proposal has induced anxiety and outrage among business owners and residents alike. Again, Martinez said their fears are unfounded.

"The message is that just because two-thirds of the city is in redevelopment, that doesn't mean that that whole area of the city is going to see huge urban renewal demolition," Martinez said.

But his words ring hollow with a number of property owners. They simply don't believe that their homes and businesses won't be in jeopardy.

After the eminent domain proposal was announced, about 250 residents attended two city meetings in October and November to speak against it. Each resident who spoke told city officials he or she did not want the city to hold blanket power for the next 12 years over such a large portion of the city. The city held off on a vote, and now it is slated to consider the proposal in February.

Exactly when a city can use eminent domain is a question the U.S. Supreme Court is considering in Kelo v. City of New London, Conn. In that case, the court will address whether a city can seize property for a private development that would pay higher taxes, even if the area isn't blighted.

Inzunza has said he is willing to use eminent domain only to make way for housing. However, the city has used its authority – stopping short of eminent domain – to clear the path for other projects.

For instance, for the Education Village that opened in November on National City Boulevard and Eighth Street, the city closed an empty furniture shop, an adult bookstore and the Pussycat Theater, an adult theater that was a longtime landmark. The new complex houses a satellite campus for Southwestern College and a center for the county Office of Education.

"We've really only gotten rid of the businesses that were really problematic," said Martinez, the director of the Community Development Commission.

If the city decides to get rid of some businesses, it will deal with them according to state regulations, he said. Viable and successful businesses will either be relocated or purchased for what Martinez called a "goodwill value for fixtures, furniture and equipment."

Eminent domain is always a last resort, Martinez said.

Not all small-business owners oppose the city's plans. Nancy Estolano, owner of San Diego Leather on the corner of National City Boulevard and Fourth Street, said she thinks the city is moving too slowly. She's been attending meetings about redevelopment for more than a year, she said.

"It's actually going to be a benefit to everyone who's here but some people are just angry," she said. "And I don't know how anyone can honestly say they don't know anything about it because there's been meeting after meeting."

And while city officials make assurances that redevelopment will help, not hurt, local businesses, some still feel they haven't received enough information to back up that claim.

Even some council members say they don't know exactly what's going on.

At a December Community Development Commission meeting, Councilman Luis Natividad said he sympathized with residents and their fears about the city's plans, adding that he also felt in the dark about some development issues. He directed some of his comments at developers in the audience.

"If you're going to talk about anything in the city, you've got to talk to all five of us," he said of the City Council. "Because if I didn't hear from you, then the community didn't hear from you. I'll be glad to work with you, but not like this."

Councilman Ron Morrison said many people are confusing the issues of downtown redevelopment and expanded eminent domain, a power the city already has in the downtown area. He hopes the city's decision to delay the votes on those issues and to host Saturday's workshop will help residents work together "to get to the point where we want to be."

For now, Morrison said, the perception remains that the city "is on a train and the train's moving too fast and that the business people are being left behind."

San Diego Union-Tribune: www.signonsandiego.com

Board: Eminent domain is not the only option — Asbury Park (NJ) Press, 1/06/05

By Bill Bowman

There are planning alternatives that could be used to spruce up the Steiner Avenue industrial area that do not require the borough taking private property, the [Neptune City] Land Use Board was told Wednesday night.

Planner James Higgins — who said he has also worked on the Asbury Park downtown and waterfront redevelopment — appeared on behalf of the owner of G&M Eastern Construction on Steiner Avenue, which is among those fighting the designation of that 21-acre area as being in need of redevelopment.

Higgins was still testifying at press time. The board is expected to hold at least one more meeting before voting on the matter.

Colts Neck-based Beacon Planning and Consulting has recommended that the borough designate more than 30 properties roughly bordered by Steiner Avenue, Memorial Drive and Route 35 as an area in need of redevelopment.

Such a designation would equip the borough with a number of tools to renovate the area, including use of eminent domain.

Higgins told the board that redevelopment and all that it implies "should be done as a very last step" and that, in his opinion, the board is not considering alternatives other than redevelopment.

"The implementation of public redevelopment policies is a very drastic step, probably the most drastic step a community can take in terms of land development," he said. "It's a very serious and overwhelming power that you have because you're taking peoples' property away from them."

Higgins said that among the alternatives supported by the state Department of Community Affairs are zoning changes, overlay zones — which would allow multiple uses in one zone — and declaring an area as being "in need of rehabilitation."

The latter option, he said, gives a town all the powers of the redevelopment designation save eminent domain.

Higgins said that the board could also recommend that the general area be declared in need of rehabilitation, while declaring certain distressed properties as being in need of redevelopment, as is being done with the Asbury Park waterfront.

Board chair Irene Allegro noted that Asbury Park had not yet demonstrated that the approach works.

"I'd be curious to know if there were any towns that took that sensitive route" to fruition, she said.

Asbury Park Press: www.app.com

Eminent Domain Abuse in Haverstraw NY

A Letter to Eminent Domain Watch

By Bruce Kanner

My family is the owner of property in Haverstraw, NY. The building was a chair manufacturing facility until my father's retirement/death in 1995/1996. It was one of the largest employers in the Village of Haverstraw.

As a vacant industrial site we met with Mayor Bud Wassmer of Haverstraw in 1997 and asked him to consider housing on our site which is on the Hudson River. He told us that under no conditions would he consider housing on the waterfront in Haverstraw.

Despite several meetings we were deterred from submitting development plans. ubsequently the same Mayor had a change of heart and has now approved an urban revitalization plan of 850 housing units on the Hudson River which includes our site. Despite having our own Developer who was willing to pay us market value for our property, the Village entered into an agreement with Ginsburg Development to acquire all the parcels using eminent domain.

Ginsburg Development has offered us about 15% of the value that we could receive from a conventional open market sale. They have been named the only game in town by the Village through their agreement and our hands have been tied. No developer will acquire our property since it will be condemned and sold to Ginsburg Development.

Additionally, the owners of the property are saddled with the expenses until such time as Ginsburg Development decides to authorize the acquisition of our parcel which may not be for ten years. We anxiously await the Supreme
Court hearing this year.

The following is an article discussing this situation from the August 14 2003 issue of the Westchester, Rockland and Putnam NY Journal News.

With development, Haverstraw must wait and see

By Bob Baird

For the next five to 10 years, this is a test.

It's probably going to take that long to see if the promise of economic rebirth holds true as Westchester developer Martin Ginsburg builds 850 units of housing along Haverstraw's waterfront.

But, like it or not, the first gut check already is unfolding.

The Empire State Chair Factory site has emerged as a rallying point. How fairly and how quickly Ginsburg deals with the families who own the property might be seen as the first barometer of how he will operate. That can win over critics or confirm their fears.

During hearings on Ginsburg's plan, several people have spoken about Andrew Kanner, who worked his way from sweeping floors at the factory to become its owner. They worked there and remember the man they knew only as Andy. He was their boss, their benefactor and their friend until age and illness forced him to sell.

Now his and his partner's families own the building left behind after they sold and the new owners moved away.

The factory has been silent since 1995, but the partners still pay their taxes, though they've sought and been granted reductions. They say they wanted to build on the site — a peninsula jutting into the river — but were discouraged by village officials who told them they wouldn't entertain plans for housing there.

Because they are in the condemnation zone, the families say they can't sell to anyone but Ginsburg and they can't develop the property themselves, even though son Bruce Kanner carries plans in his briefcase.

Their situation has been a concern for village Trustee Angelo Cintron, who said Monday night he based at least one of his votes on reports that Ginsburg and Bruce Kanner were negotiating.

But in the public portion of the meeting — long after the votes to approve the waterfront revitalization and Ginsburg's role were cast — Bruce Kanner told the board there had been no negotiations, just a conversation about talking in the future.

A few minutes earlier, Haverstraw resident Bolivar Marchand spoke eloquently about Andrew Kanner and his factory.

Until the discussions over the future of the waterfront, he said, "I didn't realize how important the Empire State Chair Factory was to me."

The factory, which at its peak employed about 100, "was the blood that moved the heart of this village," he said.

He worked at the factory, he said, and made his first rent payment in Haverstraw with money earned there.

"It is the biggest hope in my life that the people running this will come to a fruitful decision for the Empire State Chair Factory — something good for Andy."

Bruce Kanner thanked Marchand for his kind words regarding his father, who died in 1996, but told the board he had no deal with Ginsburg.

Speaking after Kanner, resident Hector Torres turned to him and said, "You were speaking to the board, the developer and the people." But, he noted, Ginsburg and his staff were no longer in the room. "They came, got what they wanted and left," he said.

Outside after the meeting, Kanner said once again that he had a developer ready to move to build on the property, but that Mayor Francis "Bud" Wassmer only wanted Ginsburg.

As Wassmer left Village Hall, he and Kanner spoke briefly. "I applaud your vision for the village," Kanner told Wassmer. "I just think you could have more concern for us."

"I'm concerned about you," Wassmer said, as he moved to get into his car, "but my main concern is the entire village."

Kanner had expected to wait seven to 10 years for Ginsburg to deal with him, based on the schedule for building sections of the waterfront development.

As part of the measures approved Monday night, Ginsburg has three years to acquire the properties from the time the project's approvals are final and beyond appeal.

Residents like Marchand and Torres will be waiting and watching.

They'll watch for the village to develop amenities they once thought Ginsburg would pay for.

They and others will look out for the interests of bodega owners and others who fear they might be pushed out of a village they've called home if the development results in gentrification.

They'll watch to see if new residents bring prosperity for all of the village.

And they'll watch and wait to see how Ginsburg treats the little guys and the family of a man who once was their boss, benefactor and friend.

The Journal News: www.thejournalnews.com

Don't Junk Property Rights — Forbes Magazine, 12/27/04

Fact and Comment

By Steve Forbes

In the coming months the U.S. Supreme Court will issue two critical rulings on property rights, which are the bedrock of a vibrant, free-enterprise economy. They are rooted in the principle of equality before the law, whereby the least of us can be protected from the most powerful. This is what enables an entrepreneur to start a business — not to mention create a whole new industry — that may challenge existing powerful business entities and not have it effectively seized or gobbled up by those already-existing bigcorporations. Under our Constitution the government can't seize what you own (even while providing "fair market" compensation) unless it is for a public project, such as constructing a highway.

In recent years, however, local and state governments around the country have been misusing this right of eminent domain. In essence, they're seizing individuals' homes and small businesses to aid developers or big companies. Governments say all this is done for the "public good" because the moves increase property values and, thus, government revenues. They also supposedly aid "job creation." In a Michigan case, for instance, Detroit and the state of Michigan seized private property to help General Motors build a new manufacturing facility. In Kansas the State Supreme Court approved of a locality's taking individuals' private property for the construction of a Target distribution center. Developers love this abuse of condemnation powers because they avoid having to negotiate with possibly recalcitrant business- and homeowners.

But the trashing of property rights ultimately means less economic progress and is a threat to our basic freedoms because it gives governments untrammeled powers that inevitably will be perverted for political favorites. Whoever has the power has the "rights." This is manifestly not what constitutes government based on the principles of liberty and equality before the law. Why should a small homeowner have his house seized for the benefit of a large corporation? More to the point, why should politicians take what you own — if you don't wish to sell — to help another private party get richer?

Too often in these cases the victims lack the political clout to protect themselves in the face of a raw exercise of political power. The Institute for Justice, a nonprofit, public interest law firm, has found that in recent years local governments have taken or threatened to take by force more than 10,000 homes or small businesses to further private economic development. And that apparently is the tip of the iceberg. (The best way to promote development, by the way, is to cut taxes and antigrowth regulations, as well as to improve local schools.)

Another abuse of even longer standing, of course, is local rent control. Capping what a property owner can receive in rent for an apartment or house decreases the market value of that building. Cities and towns proclaim that controls are a public good, yet they don't compensate the owners for their economic losses.

As with the misuse of condemnation powers, rent control perversely hurts the very people it is supposed to help. New York City, for example, is chronically short of housing, and rents are outrageously high. Many New York apartments are "rent stabilized." It's no surprise that developers prefer to build condominiums or cooperatives, which they can sell outright. Such sales give them real profits — or at least the prospect of gains — and none of the risks of politicians forcing them to charge rents that are not economical. Chicago, in contrast to New York City, has no rent control, and it has abundant housing for all levels of income earners. Free markets work when politicians allow them to.

The condemnation case the Supreme Court will be hearing is Kelo v. the City of New London (Conn.). There the government is aiding a private corporation to seize the homes of Susette Kelo and others to build a hotel, high-priced condos, an office building and other projects to complement a major pharmaceutical company. New London is strapped for cash and figures the project will help it out of its fiscal straits.

Fifteen state supreme courts have ruled on the issue of this perverse exercise of the power of eminent domain. Nine have decreed that government powers cannot be used to help private developers in this way; six have deemed it to be within the law's purview.

In the second property rights case, the state of Hawaii put a cap on the amount of rent that oil companies can charge their service stations. A federal court has recently ruled that form of rent control as being unconstitutional, saying that such a cap discourages investment and therefore leads to fewer independent dealers. If the Supreme Court upholds this finding, then rent control in New York City and elsewhere could very well fall by the wayside. Many politicians are up in arms, believing that the "public interest" should be whatever they want it to be. Voters may have a better understanding. Oregon, one of the bluest of the blue states, saw voters overwhelmingly pass an initiative that permits property owners to force government to compensate them for losses resulting from environmental or zoning rules.

The Supreme Court can strike a blow for liberty — and for our future well-being and progress — with these two cases.

Forbes Magazine: www.forbes.com


Activists out of Tempe land fight — East Valley (AZ) Tribune, 1/5/05

By Dennis Welch

The Institute for Justice will not defend a group of Tempe landowners fighting the city’s attempts to take their property for a planned $200 million shopping center.

Tim Keller, executive director for the institute’s Arizona chapter, said a number of other high-profile cases throughout the country has stressed its financial resources.

The institute expects two of its cases to go before the U.S. Supreme Court this year, which demands a considerable amount of time and money, Keller said. One case involves a New London, Conn., woman fighting municipal attempts to take her business, which could have broad implications for property rights nationally.

He said the institute has pledged to continue supporting the Tempe holdouts, but advised them to hire private lawyers.

"There is no doubt in my mind or the institute’s mind that this is an abuse of eminent domain," Keller said.

The Tempe City Council will vote Thursday on a resolution calling for the condemnation of more than 30 properties needed to build the proposed Tempe Marketplace. The resolution must pass by a super majority.

The Washington, D.C.-based law firm successfully defended Mesa business owner Randy Bailey against that city’s attempts to take his brake shop for economic development.

Supporters of the proposed mall have said the project differs from the Bailey case because it offers a public benefit.

Brad Wilde, president of Miravista Holdings, said building Marketplace will rid the community of a slum and blighted area and clean up potentially lethal environmental contamination.

"I want to give the people of Tempe a place they can go to and be proud of," Wilde said. "I first became intrigued with the notion of helping to clean up a slum and blighted area," he added.

A recent environmental study by Brown and Caldwell, a major environmental engineering firm, found hazardous waste — including methane gas — on a number of properties.

Wilde estimates that he has spent nearly $30 million to buy property and relocate businesses in the area. His company had set aside more than $42 million for land acquisition, according to city documents.

Opponents of the planned shopping center have said it fails to meet the test for condemnation because it does not deliver a public use such as a road, a government building or a hospital.

"This is being done for profit, not for the environment," said Del Sturman, part-owner of a machine shop facing condemnation. Although the institute will not take the case, Sturman said he plans to continue fighting the city.

The city could move forward with eminent domain proceedings even if the council votes down the proposed resolution on Thursday, said City Attorney Marlene Pontrelli.

The council passed a previous resolution authorizing condemnation in April, possibly committing the city to use eminent domain.

According to a development agreement with Miravista Holdings and Vestar, the city is contractually obligated to condemn once a resolution has been passed by the council.

The city called for the council to pass an additional resolution on Thursday to ensure that they were in compliance with state statute.

"It’s troubling to have had our hands tied by a prior council action," said Tempe Mayor Hugh Hallman, who took office after the April vote. "Now we’re faced with making a vote that some view as meaningless."

Hallman said he had been struggling to decide which way he will vote, saying this is one of the most difficult decision that City Council is asked to make.

Council members Pam Goronkin and Hut Hutson have said they support redeveloping the area. Likewise, Vice Mayor Mark Mitchell has said he does not expect the council to vote differently.

East Valley Tribune: www.eastvalleytribune.com

City delays action on eminent domain — Bowling Green (KY) Daily News, 1/5/05

Use of law in promoting private redevelopment hot election topic; leaders will wait on court decision

By Jim Gaines

Bowling Green’s new city commission dove into a controversial issue at its first meeting Tuesday night, wrestling with whether to ban the use of eminent domain as a tool in promoting private redevelopment projects.

In a 3-2 vote, commissioners chose to delay a decision indefinitely – at least until a U.S. Supreme Court case dealing with the issue is decided later this year.

The ordinance, introduced by Commissioner Brian Strow, would have prohibited the city from condemning land for the purpose of turning it over to another private entity, such as a development company. The ongoing plan for the city’s ambitious downtown redevelopment specifically allows that use, citing potential economic development as a worthwhile public purpose.

Strow campaigned on opposition to this use of eminent domain last fall.

“I do not feel it is the proper use of city power to take private land from private individuals and turn it over to a private developer,” he said last night.

Commissioner Delane Simpson said that he agreed, but considered it too early in the new commission’s life to quickly decide a matter with such far-reaching consequences.

Strow and Commissioner Mark Alcott cited constitutional protections of private property as a reason behind the ordinance. “There are some items that this may hinder,” Alcott said.

Several planned downtown projects explicitly call for the city to buy private property, through eminent domain if necessary, and turn it over to a private firm – but barring use of eminent domain won’t necessarily stop them, Alcott said.

Using eminent domain to buy property for another private entity has the net effect of taking the sale’s profit from the original owner and transferring it to the potential developer, he said.

The effect of the ordinance would be felt not just downtown, but all over the city, he said; the city could still buy property and turn over to a private developer – it just couldn’t use eminent domain to do so.

Commissioner Brian “Slim” Nash asked for comments from the public, and several downtown businessmen and landowners rose to say that uncertainty about whether their property will be bought for redevelopment – or when – discourages them from doing needed maintenance or making improvements. They complained that several months or even two years after being told they might be targeted for buyout, the city had given no timeline or amount for the purchase.

Nash said that he struggled with his decision: He agrees with Strow, but thinks the move would be premature before the Supreme Court case of Kelo vs. New London is decided.

He pointed out that if it did not pass, commissioners could still vote against any use of eminent domain they considered unfair on a case-by-case basis, and that prohibiting this use of condemnation did not address the lack of communication that downtown owners complained about.

He moved to table the ordinance.

The vote split the commission, with Nash and Simpson voting to table while Strow and Alcott sought to press forward. The deciding vote fell to Mayor Elaine Walker.

She voted to table the ordinance. Voting rules prevented her from commenting on it once the motion to table had been made, but she gave her opinion immediately after the meeting.

“I support what was brought forward in the ordinance,” she said. But Walker, too, felt the need for additional input on the move’s timing and long-term effects, saying that she expects it to re-emerge in the near future.

The close vote and long discussion demonstrated that commissioners take the use of eminent domain for redevelopment very seriously, she said.

“I don’t believe that there’s one member who feels like it should be used as a big stick, and I think that’s how it was used in the past,” Walker said.

Bowling Green Daily News: www.bgdailynews.com

Abusing property powers — Minot (ND) Daily News, 1/5/05

Editorial Opinion

Early this year the U.S. Supreme Court will hear arguments in an important property rights case, one that could - and should - put legal limits on "public use" of property seized under the government's constitutional power of eminent domain.

Most Americans readily support the notion that there are times when the government must have the power to buy land from unwilling sellers, such as to build a road. But in recent years local governments across the nation have begun to abuse the awesome power of property condemnation.

The victims usually are ordinary people. In one of the more infamous cases of abuse, an entire community in Detroit's "Poletown" was condemned for a General Motors plant that was never built; the Michigan Supreme Court recently overturned that taking.

Local and state governments for the most part have turned a deaf ear to their pleas, because, well, too many politicians tend to enjoy playing developer with the power of government.

Sadly the Bush White House appears to be having a difficult time deciding which side it should be on in this case.

Concern about the administration's possible hostility to ordinary property owners is so great that 44 conservative and libertarian organizations, ranging from the Institute to the National Taxpayers Union and the Family Research Council, have sent a highly unusual joint letter to the White House pleading for the president to order his lawyers to at least, if they can't bear to do the right thing and support limitations on the government's condemnation power, to stay on the sidelines.

But Americans deserve better than that. They deserve to have the White House stick up for ordinary Americans' property rights and for a recognition that there properly should be limits to government power, especially the power to take property gained by the sweat of one's brow.

The Minot Daily News: www.minotdailynews.com

If you wish to add your voice to the appeal to the Bush Administration on this key property rights issue, elephone comment numbers and email addresses are as follows:
The White House (202-456-1111): president@whitehouse.gov
The Dept of Justice (202-353-1555): AskDOJ@usdoj.gov


Ruling could affect projects here — St Louis (MI) Post-Dispatch, 1/2/05

By William C. Lhotka

If the U.S. Supreme Court were to reverse the 50-year-old decision on the government's taking of private property for urban renewal, it could spell the death knell for major economic development projects in the St. Louis area and throughout Missouri and Illinois.

Local experts say that such projects as the hospital development in the Central West End, the St. Louis Galleria, Brentwood Promenade and even the redevelopment of the West County Center owe their genesis to that high court ruling in 1954 allowing government to seize property for economic benefits.

"Clearly, much of the major developments that have occurred in the St. Louis metropolitan area have benefited from tax-increment financing or some other form of public subsidies," said Gerard Carmody, a Clayton lawyer often involved in property disputes.

And one of the most recent additions to the shopping scene, Maplewood Commons, almost mirrors the case in Connecticut that the Supreme Court will take up, Carmody said.

Maplewood Commons includes a Wal-Mart and Sam's Club on Hanley Road just south of Highway 40.

Local lawyer Jerome Wallach said the pendulum had swung so far away from the constitutional rights of property owners that legislators can set any rules they want regarding property condemnation and the blighting of property, and lower courts can do nothing about it.

Some pundits have described the use of condemnation powers and tax-increment financing in recent years as a reverse Robin Hood rule - take from the poor and give to the rich. Wallach agrees: "At the very least, it is taking from the middle class and giving to the rich."

"At the end of the day, the taxpayer pays for everything, and the developer owns it," Wallach said. "I'm not sure the framers of the Constitution ever intended for that to happen."

The Institute for Justice, a Washington-based, libertarian public interest law firm, doesn't think so either. It is spearheading the Connecticut case before the high court. Joining the institute in seeking a drastic revision of government policy are such diverse groups as the NAACP and the AARP.

The Connecticut case
In the land dispute in Connecticut, the Supreme Court is being asked this simple question: Can the government seize people's property for economic development projects?

Susette Kelo is one of 10 landowners in the Fort Turnbull neighborhood of New London who refused to sell property to a company that plans a major development along 90 acres on the Thames River, adjacent to Pfizer Inc.'s new global research facility.

The development plan includes a hotel and conference center, a marina, 80 houses, space for a Coast Guard museum, a high-tech research building, parking for an adjacent state park and more than 140,000 square feet of office and retail space.

The planners said the development would bring more than 1,000 jobs to what the state has declared a distressed city because of high unemployment in recent years.

New London officials signed a 99-year lease with a private developer to market and develop the plan. The 10 landowners refused to sell. They own 15 of the 115 parcels within the proposed development. Their property is being condemned.

During a seven-day nonjury trial, the owners said they loved their homes, didn't want to sell and argued that economic development was not a public use under state and federal constitutions.

A trial judge sided with the developers. So did the Connecticut Supreme Court, in a 4-3 decision on March 9.

The Connecticut majority said: "We conclude that economic development projects ... that have the public economic benefits of creating new jobs, increasing taxes and other revenues, and contributing to urban revitalization, satisfy the public use clauses of the state and federal constitutions."

Like the Connecticut case, Maplewood Commons is expected to generate taxes for a revenue-starved Maplewood, create more jobs and revitalize the area. Those who had opposed the project argued that the city was destroying a neighborhood of 130 houses for the economic betterment of a developer.

Basis for ruling
The Connecticut judges relied heavily in their decision on the case of Berman v. Parker. In that case in 1954, the U.S. Supreme Court said it was OK for a developer in Washington to use government condemnation power to rebuild a neighborhood.

Urban renewal, the judges said, was a public purpose and legislatures could decide what was a blighted area for condemnation or renewal purposes.

The Fifth Amendment to the U.S. Constitution limits the government's power of eminent domain or taking of land, saying: "Nor shall private property be taken for public use, without just compensation."

Until the Berman ruling, courts generally restricted condemnation cases to such obvious public uses as highways and bridges. Exceptions included a series of railroad cases in the 19th century in which lands seized to build railroads were approved on the theory that a railroad like a highway provided public transportation.

The courts also allowed legislators to decide if private enterprise or public authorities should develop projects that promoted the public interest

In recent years, the pendulum has begun to swing in the other direction from Berman. Courts in at least nine states have issued rulings saying in effect that economic development is by itself not public use for eminent domain purposes.

"A lot of municipalities have got caught up in the idea that they can't build a project without giving a benefit to someone, somewhere," Clayton lawyer John King said. "And a lot of it is unnecessary."

Madison County case
One such case took place in Madison County. In a decision frequently cited by proponents of property rights, the Illinois Supreme Court invalidated a taking of private land to create additional parking for Gateway International Raceway.

On April 4, 2002, the judges in a 5-2 decision allowed National City Environmental, a metal recycling company, to keep the 148.5 acres that an economic development agency had taken from National City by condemnation.

The Southwestern Illinois Development Agency merely took property from one business and gave it to another, the Illinois Supreme Court held.

"Using the government for purely private purposes to allow Gateway to avoid the open real estate market and expand its facilities in a more cost-efficient manner, and thus maximizing corporate profits, is a misuse of the power entrusted by the public," the court said.

The future
No expert is predicting how the Supreme Court will rule in the Connecticut case - either that government's action for economic development is a usurpation of private property rights or it is a proper use of public power for the greater good.

Carmody said a ruling favoring the property owners could have an immediate effect on some developments here. He noted that Rock Hill was attempting to develop the corner of Rock Hill and Manchester roads, and government subsidies to developers are a possibility. A ruling saying economic development alone is insufficient for government intervention could adversely affect that project.

Almost every major development project in the St. Louis area recently has relied on some sort of government subsidy, Carmody said. He included on his list the expansion of the new West County Center in Des Peres and the developments in the Central West End by the Washington University Medical Center Redevelopment Corp.

St Louis Post-Dispatch: www.post-dispatch.com

Bar owner on Liberty Avenue threatened by URA purchase — Pittsburgh (PA) Post-Gazette, 1/4/05

By Mark Belko

Denise Gaynor took a chance and bought the Liberty Tavern in 1998 at a time when the eastern end of Liberty Avenue, Downtown, was populated by "prostitutes and drugs."

Now, seven years later, Gaynor could lose her restaurant, which stands in the path of the proposed African American Cultural Center, just as the area is undergoing a rebirth with completion of the new David L. Lawrence Convention Center, a new hotel and new businesses.

Somehow it doesn't seem fair to Gaynor, whose purchase of the tavern culminated a childhood dream to own a restaurant.

"Basically, I did the city good for seven years and now, all of the sudden, you're out. I don't think that's fair," she said.

"I came in to this end of town when nobody else wanted to go here. I took a chance and got out a lot of the debris in the area and feel really strongly about being in the area."

Gaynor is being forced to move her restaurant from 972 Liberty Ave. by the city's Urban Redevelopment Authority, which acquired the building as part of Pittsburgh's efforts to assemble land for the cultural center.

The URA paid $525,000 to owner William Zotis for the building, a price set through legal proceedings before the Board of Viewers. The building was assessed at $226,700, according to Allegheny County's real estate Web site.

The URA gained possession Dec. 23. Five days later, it notified Gaynor that it was terminating her lease and that she had at least 90 days before being required to move.

Although URA officials pledged yesterday to help Gaynor relocate her restaurant, she fears that rents in other buildings along Liberty Avenue will be much higher than she can afford. She said her own informal check found them to be double for half as much square footage.

Gaynor wants to remain on Liberty near the convention center because she also owns the Tonic Bar & Grill, which she opened in April 2003, across the street from the Liberty Tavern.

She said she does not want to move across town or into another city neighborhood or the suburbs. Instead of doing that, Gaynor said she probably would close the restaurant.

And if she does, she believes she should be compensated for her business, just as Zotis was compensated for his property.

"If they have the money to take the property, why don't they fairly reimburse me for the loss of the business?" she asked. "If I'm being kicked out, someone should have to buy my business."

Susan Malys, URA real estate manager, said there are no such provisions under the federal uniform relocation act or under state eminent domain laws. But Malys said Gaynor is eligible for other assistance, including moving expenses and up to $10,000 in "reestablishment" payments over two years to help in getting started at a new location. That money could be used to subsidize higher rent payments, she said.

If Gaynor decides to close the restaurant, the URA will reimburse her for business-related personal property, such as equipment. She also would be eligible for a lump sum payment of $20,000 in lieu of moving expenses.

Malys said the URA is willing to work with Gaynor to find another location. She said the agency talked to her once after doing a preliminary relocation survey in 2003 and plans to do so again now that it has control of the building.

"I don't think we'll have too much of a problem finding comparable space at a comparable rent," she said.

As for accommodating her on Liberty, Malys said she knows there are some vacancies in the area, but declined to comment further until she had a chance to talk to the restaurant owner to "see what her preferences are."

For her part, Gaynor said she's willing to work with the URA to find another spot, but fears it may be for naught.

"I don't see how there's any way they're going to be able to relocate me in a comparable spot," she said.

She said one possible solution would be to give her first-floor space in the cultural center. Officials have been considering a restaurant as part of the complex.

Gaynor and her husband came to Pittsburgh 12 years ago so he could attend the University of Pittsburgh. She worked two jobs so that she could save enough to buy her own restaurant.

She purchased the Liberty Tavern at a time when there was little else at that end of town. She said she "lived there 24/7 and kept kicking people out who were not paying customers. When I bought it, it was bad. We had to work a long hard road to get where I'm at."

With the purchase of the building at 972 Liberty, the URA has acquired all but one parcel needed for the cultural center. The holdout is the building housing the Chez Kimberly strip club, at 966 Liberty. Those negotiations have proven to be challenging, especially in regard to trying to find another spot in the city for the club.

Pittsburgh Post-Gazette: www.post-gazette.com