Small-business owners crowd House hearing on eminent domain: Maryland Business Gazette, 2/23/06

Everyone wants some protection, but no one is sure what or how much

By Douglas Tallman

Twice in six years, the federal government pushed Tammy Hnarakis’ business out the door to make room for the College Park [Maryland] Metro.

"Now we’re very concerned because the city of College Park has a redevelopment plan and the administration wants to redevelop Route 1, so our hackles are up. I’ve decided to become pro active,” Hnarakis said last week.

Hnarakis was among the small-business people who crowded into a packed House Environmental Matters Committee hearing room Tuesday to testify on 28 bills before the panel. The Senate Judicial Proceedings Committee — chaired by Sen. Brian E. Frosh (D-Dist. 16) of Bethesda — will hold similar hearings Thursday.

Fueling the concern is June’s U.S. Supreme Court decision that governments can use their eminent domain powers to condemn property for economic development.

"The Supreme Court ruling sickens me because I’m very familiar with the inadequacy of the programs that are there to help those that are displaced,” Hnarakis said.

Her store, Precision Small Engines, sells mowers and other garden equipment. In 1987, the Washington Metropolitan Area Transit Authority forced her out of one location, so Hnarakis moved a short distance away; WMATA had assured her the agency would lack funding to continue the project for another 20 years.

Then in 1993 WMATA was back and forced her to relocate again.

Several other organizations, however, are eyeing the proceedings cautiously.

"History shows that government acquisition of property is a critical component to the success” of projects, said David Bliden, executive director of the Maryland Association of Counties. "We’d hate to see the legislators create insurmountable impediments.”

Environmentalists support preserving eminent domain, because it can revitalize communities and focus development away from greenfields, said Dru Schmidt-Perkins, executive director of 1,000 Friends of Maryland.

Both political parties want to do something, and several proposals have bipartisan support. The questions revolve around what to do.

Several bills hope to have government shoulder more of the costs of seizing land, by eliminating a $10,000 cap on subsidies that pay moving expenses or by forcing the government to pay the property owner’s legal fees.

Business would be reimbursed for losses that go unrecognized now, including the loss of intangible assets or future net operating income.

Bliden said MACo would oppose most of these proposals because it takes Maryland "outside the mainstream.”

"These elements are not available in other states because they are inherently speculative,” Bliden said.

But some advocates, like Ellen Valentino of the National Federation of Independent Businesses, want to take fear out of the process.

"We think there need to be provisions to protect the small business owner from every possible economic loss in any case of eminent domain,” said Valentino, NFIB’s state director.

If property is condemned, but never used, several lawmakers would force governments to sell the property back to the former owner or the former owner’s heirs.

Other bills would redefine terms such as "public use,” to exclude specifically efforts to increase tax revenue or employment.

One area that has exposed a partisan divide is how to enact the changes, through statutes or with changes to the state constitution.

Sen. Allan H. Kittleman said the GOP believes prohibitions for eminent domain for economic development should be written into the constitution.

"Our plan is no loophole,” said Kittleman (R-Dist. 9) of West Friendship. Thirteen of the Senate’s 14 Republicans and 42 of the House’s 43 Republicans have signed on to constitutional amendments.

House Speaker Michael E. Busch rejected a constitutional amendment, saying a statute will give future legislatures the flexibility to handle unforeseen issues.

"We need to balance the rights of property owners and the overall benefit of the community,” said Busch (D-Dist. 30) of Annapolis. He was confident that the complexity of the issue and the range of proposals would not deter the legislature from enacting sweeping legislation this session.

Kittleman, however, remarked on the imbalance between those who defend themselves in condemnation proceedings and those who benefit from them.

"People who lose businesses are small businesses. Nobody seems to condemn a wealthy corporation’s property. No one seems to condemn a rich person’s house,” he said.

Business groups are divided on the issue. The Greater Baltimore Committee, a private organization that serves as a catalyst for business projects, opposes reform.

"We think there’s no need for alterations in authority and we would hope the legislature would reject any attempt to hinder those authorities or to make compensation at a level that could be prohibitive,” said GBC President Donald C. Fry, a former legislator.

Thomas S. Saquella, president of the Maryland Retailers Association, favors the reforms proposed by a task force that outlined 11 changes to the law, including greater compensation to displaced businesses. Saquella cited a study by the Institute for Justice that showed Maryland led all states in condemnations.

Maryland Business Gazette: www.gazette.net