Eminent-domain case goes to court: Cincinnati (OH) Enquirer, 1/8/06

By Steve Kemme

The eminent-domain fight in Norwood is to head into Ohio's Supreme Court on Wednesday, with the fate of three remaining homes at stake. Owners contend Norwood illegally took private property for a $125 million retail, residential and office complex.


Attorneys for Norwood and the Rookwood Exchange developers say Norwood has the right to take the property because:
  • Norwood needs the property to accomplish urban renewal goals. The U.S. and Ohio Constitutions uphold the rights of municipalities to use eminent domain for urban renewal.
  • Norwood's urban renewal study identified problems in the area bordered by Edwards and Edmondson roads and Interstate 75 that Rookwood Exchange will eliminate. Problems cited include traffic safety, substandard lots, and bad street layout.
  • The Ohio Constitution allows eminent domain to be used for a public purpose and specifies that improving a municipality's economy, creating jobs and building new housing are public purposes.

Attorneys representing the three property owners fighting eminent domain say Norwood has no right to seize the property because:
  • Norwood relied on a flawed urban renewal study as a basis for declaring the neighborhood "deteriorating."
  • Any law that allows a normal neighborhood to be declared deteriorating and subject to eminent domain is unconstitutional. It gives local governments too much power to transfer someone's property to another private party.
  • Norwood developed urban renewal plans for the proposed Rookwood Exchange site simply to acquire eminent-domain authority. Urban renewal plans are supposed to be undertaken to eliminate blight.

The bitter, lengthy legal fight over Norwood's right to take private property for a $125 million retail, residential and office complex resonates far beyond this financially struggling city.

Municipalities, property owners, developers and state lawmakers nationwide are watching to see whether the Ohio Supreme Court sides with Norwood and the Rookwood Exchange developers or with three property owners - an elderly couple who have lived in their house for 35 years, a man with a rental house and a couple who operated a small math and reading center.

The outcome of this three-year legal battle will influence how other Ohio cities use eminent-domain authority to seize property for economic development. It also could provide clues about how eminent-domain laws might change in other states.

On Wednesday, Norwood's eminent-domain case is to take center stage in Ohio's highest court.

Attorneys for Norwood and the Rookwood Exchange developers will argue before the Ohio Supreme Court why they believe Norwood acted legally when it seized the three lots. The city plans to tear them down for a development expected to generate $2 million in tax revenue.

They contend that Norwood was serving the public good by trying to replace a deteriorating neighborhood with a new development that would create jobs, housing and generate badly needed tax revenue.

Meanwhile, attorneys for Joy and Carl Gamble Jr., who want their house back, Joe Horney, who wants his rental house back, and Sanae Ichikawa-Burton and Matthew Burton, who operated the Kumon Math & Reading Center, will challenge the city.

They say the neighborhood was not blighted or deteriorating. They contend that Norwood illegally took private property.

The seven-member Ohio Supreme Court may take several months to issues a decision.

This is the first eminent-domain case to come before a state supreme court since the U.S. Supreme Court's landmark 5-4 decision last year. In Kelo v. New London, the court supported the right of New London, Conn., to use eminent domain to seize homes and businesses to allow a developer to build a hotel, health club and offices.

Beyond establishing economic development as a legitimate reason for eminent domain, the court gave state supreme courts leeway to provide greater protection for private property owners, if they desire.

"The Norwood case will serve as a real indication where states may go in this area," said Scott Bullock, an attorney with the Institute for Justice, a civil liberties law firm in Washington, D.C., that represents the Gambles, Horney and the Burtons. "It will determine whether there will be any meaningful limits on eminent domain in the state of Ohio."

"This case means a lot to local governments in Ohio," said Tim Burke, an attorney for Norwood. "Older, built-up communities, especially, need the power of eminent domain to put together property for economic development."

Bill Baldwin, a Cincinnati attorney who often represents developers in real estate and commercial transactions, said there's another reason why the Norwood case has created such widespread interest.

"There is a universally held perception that unless I'm in a slum or the government wants to built a highway in front of my house, I'm safe from eminent domain," said Baldwin, one of the attorneys who represented Hamilton County in the seizure of riverfront property needed for the construction of Paul Brown Stadium. "It's startling to people that the government could take your property even if you're taking good care of it and they're not building a highway."

The three buildings that had been owned by the Gambles, Horney and the Burtons sit in a large empty tract of land cordoned off by a chain-link fence. They are the only remnants of the middle-class neighborhood that had been bordered by Interstate 71 and Edwards and Edmondson roads.

The other 64 homes and two small businesses were demolished in April. So far, the courts have protected the remaining three buildings from the wrecking ball while the case is being decided.

Initially, 66 of 71 property owners in the neighborhood agreed to sell to the Rookwood Exchange developers, Anderson Real Estate and the Miller-Valentine Group. Five property owners resisted. After two lower courts ruled in Norwood's favor, three of the five decided to appeal to the Ohio Supreme Court.

Until the three remaining buildings are torn down, the developers can't start building the Rookwood Exchange and Norwood can't begin collecting the anticipated tax revenue.

And until the case is resolved, the holdouts have put their lives on hold. Courts awarded them sums of money far above their properties' market values, but they don't want to use the money while the case is pending.

The Gambles, who are in their late 60s, are living with their daughter in Northern Kentucky. About two months ago, they drove past their old neighborhood and saw the house they had bought as a young married couple and where they had raised their two children.

"I felt sadness and sorrow," Joy Gamble said. "There's our home, and we're elsewhere. But we're happy it's still standing. What Norwood did to us was wrong. They threw us to the wolves."

Another indication of the extensive interest in the Norwood case: 14 groups filed amicus or "friend of the court" briefs on behalf of the three holdouts; and eight groups filed in support of Norwood and the Rookwood developers.

The Tennessee-based National Federation of Independent Business Legal Foundation filed a brief supporting the three property owners. This business organization is an advocacy group for small business owners.

"Norwood was outrageous in labeling the properties as deteriorating and blighted," said Karen Harned, executive director of the group's legal foundation. "If we're going to start defining properties as blighted when somebody thinks it might bring in more tax revenue, then almost every home or small business could be called blighted."

The American Planning Association, a Washington, D.C.-based nonprofit group representing more than 38,000 professional planners, filed a brief in favor of Norwood and the Rookwood developers.

Lora Lucero, who heads the association's committee that reviews court cases throughout the country, said Norwood's use of eminent domain was "very appropriate," even though the neighborhood hadn't become a slum.

"We think it was very important that community leaders not wait to take action until it gets to the point where properties already have suffered from years of neglect and blight," Lucero said. "Norwood saw a neighborhood heading in the wrong direction and wanted to take a pro-active stance."

She said the American Planning Association believes eminent domain should be avoided whenever possible.

"In Norwood's case, the facts are crystal clear that it was a tool of last resort," Lucero said. "That's why it was easy for us to support Norwood in this case."

In reaction to last year's U.S. Supreme Court decision, legislators in about 40 states have or will consider changing laws to make eminent domain more difficult to use. Ohio recently placed a one-year moratorium on using eminent domain for economic development while legislators consider changes in state law.

Burke says the Norwood case boils down to a basic dilemma: "How far do you go to respect individual rights in relation to the efforts of a municipality to better the condition of the community as a whole?"

Bullock expressed the same point in a different way.

"Ohio now has a choice as to which direction it'll take," he said. "Will it go toward the U.S. Supreme Court's Kelo decision or will it go in a direction that provides real limits on eminent domain authority?"

Cincinnati Enquirer: http://news.enquirer.com