3/05/2006

Eminent domain looms over downtown project: (Eugene OR) Register-Guard, 1/22/06

By Edward Russo

It's called the ultimate weapon or the last resort.

Whatever the name, the power of eminent domain, as exercised by the city of Eugene, could play a pivotal role in the unfolding downtown redevelopment drama.

Yet Oregon voters - through a statewide ballot measure regarding eminent domain - ultimately may influence what the city can or cannot do to acquire land along Broadway on behalf of developers.

City officials say they don't want to use eminent domain to acquire land for a proposed shopping, office and entertainment complex on Broadway.

They say they will try to help the developers and property owners reach sales agreements that the developers have so far been unable to accomplish on their own.

"The (City) Council's pretty clear that eminent domain is something that we rarely use," said City Manager Dennis Taylor. "Our charge is to work on how we can get a project to go forward, rather than some type of veiled threat about condemnation."

But city officials haven't ruled out the possibility of using eminent domain, either.

And that's where the ballot measure could come in.

Last year, a divided U.S. Supreme Court upheld the constitutionality of local governments' forcing private property owners to sell in order to make way for private commercial development if there is a legitimate public purpose.

The ruling has prompted backlash efforts to strengthen property-owner rights in several states, including Oregon.

Oregonians in Action, a property rights group, is circulating signature petitions to put a measure on the November ballot that would prevent governments from acquiring land from one private property owner and selling it to another property owner for private use.

"We are trying to remedy the very narrow situation where the government says, `We know better than you what to do with your property, so we are going to declare your property as blighted, take it from you and give it to this developer who will put it to what we think is a much better use,' "said Ross Day, a lawyer for Oregonians in Action.

The Oregon Constitution and state laws give local governments wide latitude in using eminent domain, Day and other lawyers said.

In eminent domain, a court, after hearing arguments from both sides, sets the sale price that a government must pay an owner for his property.

The state constitution allows cities to use eminent domain as long as the property is being acquired for a "public use."

"Public use" is a broad term that can include economic development, said Glenn Klein, an attorney for the city of Eugene.

So, local governments are not limited to using eminent domain for roads, public buildings, parks and other publicly owned facilities. There are no laws preventing governments from acquiring property under eminent domain and then selling it to a private property owner as long as the project is "associated with some kind of public benefit," Klein said.

Public urban renewal agencies have used eminent domain to acquire blighted property, clear sites and improve streets, and then to sell the land to private owners for development, he said.

The Connecticut connection
The use of eminent domain by New London, Conn., triggered last year's Supreme Court case. New London, through a private, nonprofit development agency, sought to acquire private homes along a waterfront and then to sell the land to developers. The developers were to build offices, housing, a marina and other facilities near a proposed $300 million research center by pharmaceuticals giant Pfizer.

Justice John Paul Stevens, writing for the majority, cited cases in which the court has interpreted "public use" to include slum clearance and land redistribution.

Stevens wrote that a "public purpose" such as creating jobs in a depressed city can be used to satisfy constitutional requirements for condemnation. "Promoting economic development is a traditional and long-accepted function of government," he wrote.

If Oregon voters approve the pending ballot measure, that could prevent Eugene from acquiring downtown property through eminent domain and selling it to a private developer, Day said.

However, the ban would not likely stop a condemnation that got under way before the law took effect, he said.

Whenever a government agency gets involved in redevelopment, there's a chance it will consider using condemnation.

The downtown Eugene proposal is particularly volatile because many of the private properties the developers - Tom Connor and Don Woolley and their partner, The Opus Group - want to secure are owned by small-scale business people and are occupied by tenants, including stores, taverns and offices.

If city officials fail to help the property owners and the developers reach sales agreements, the City Council could be asked to approve condemnation. That would test how far councilors are willing to go to support the developers' plan.

"I wouldn't rule out the possibility of condemnation, but you really would have to make a case for that," said Jack Roberts, director of a Eugene-Springfield business recruitment agency, and a joint owner of a Broadway building in the project footprint sought by the developers.

Roberts said he's willing to sell. But many of the other adjoining property owners are more reluctant.

Viable existing businesses
Scott Kirkpatrick, who lives near downtown Eugene, doesn't object to the city helping Connor and Woolley redevelop the properties they own downtown. But, to him, it makes no sense for the city to condemn buildings that house viable businesses, such as the John Henry's and Horsehead taverns. Kirkpatrick, who patronizes those night spots, noted that Connor and Woolley own downtown buildings that are mostly empty, plus the pit on Willamette Street that once was the site of the F.W. Woolworth building.

"I would like to see the energy spent there first, before we condemn businesses that already employ people and bring people downtown," Kirkpatrick said.

Taylor, the city manager, said that in coming weeks city employees will act as ambassadors of sorts between property owners and developers, to see if sales deals can be reached.

City employees could play a similar role to that of Springfield officials, who have sought purchase options on property in the Glenwood area as a possible site for the McKenzie-Willamette Medical Center, he said. In those cases, Springfield officials asked property owners to name their price. About a dozen owners responded with initial prices averaging a lofty $1.1 million an acre.

There are other ways for the developers to acquire property besides agreeing to a high price, Taylor said. Those may include giving property owners an ownership stake in the new development, or rental space in it at favorable rates, he said. "There are a lot of ways to skin this cat," Taylor said.

At a Jan. 9 council meeting, most councilors were enthusiastic about the downtown project. Still, the majority worried about possibly having to weigh the development's potential benefits against the negatives of condemnation.

Council divided
Councilor Chris Pryor said he likes what he's heard of the Connor and Woolley project.

Connor and Woolley are "longtime community residents who want to build something that will be beneficial commercially, and contribute to the overall quality of life," he said.

But the city should use condemnation only "under the most extreme circumstances, where all other options have been exhausted and the community's need has been established," he said.

Councilors Betty Taylor and Bonny Bettman said they were troubled by the prospect of condemnation. They objected to giving city staff permission to work with the developers, but at the Jan. 9 meeting were outvoted, 6-2.

Bettman said the city should use eminent domain only "to achieve a quantifiable and very high priority public good, like health or safety."

Property owners in the proposed development area, some of them "loyal to downtown for decades, should have the right to maximize their investment by selling to the highest bidder, or remain in business if they so choose," she said.

"The targeted businesses are not an obstacle to downtown redevelopment; they are only an obstacle to Connor (and) Woolley's attempts to monopolize solid blocks of downtown property," Bettman added.

Sue Prichard, a real estate broker working for Connor and Woolley, said it's easy to characterize the situation as wealthy developers trying to maximize their profits and the "little guy getting squeezed."

But the project would improve the heart of the city, she said. "Instead of talking about what we don't want, let's talk about what we do want. What I want is a more vibrant, diverse, fun and interesting downtown. And if it takes the combined efforts of the city, the developers and the individual property owners, then that is what we should do."


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