Eminent domain revision concerns economic development backers: Des Moines (IA) Business Record, 4/9/06

By Joe Gardyasz

After facing the threat of having his business properties taken away to make way for more upscale development in the East Village, Brad Hamilton is hopeful that proposed changes to Iowa’s eminent domain law will preclude any further efforts by the city to condemn the properties.

Hamilton, who owns storefront properties at 422 and 424 E. Locust St., said he believes the media attention surrounding his case was the reason the city “backed off,” but that the proposed legislation will provide him some assurance for the future.

“I think the thing to do is to ease up and give people incentives to fix up their properties, rather than threatening to take it away,” Hamilton said.

On the other side of the dispute, city and economic development groups remain concerned that proposed changes to Iowa’s law governing eminent domain may make it more difficult to condemn land for key projects, and that it could make it tougher to make a case for condemning blighted properties for urban renewal projects.

“At the end of the day when the dust is settled, we still think on balance this bill goes way too far and has a chilling effect on economic development,” said Tom Bredeweg, executive director of the Iowa League of Cities. “I think city officials are concerned that (legislators) need to back this off to a much more narrow bill. Whether they will do that remains to be seen.”

A possible exception to the bill’s provisions, which would enable Archer-Daniels- Midland Co. to proceed with development of a proposed plastics plant in Clinton, points to the need for legislators to think more broadly about how the legislation might affect future economic development projects, Bredeweg said.

“I cannot understand why legislators aren’t more sensitive about the next (economic development project) that’s going to happen a few months from now,” he said. “Occasionally these projects come along; there’s a consensus that they’re badly needed.”

Of particular concern to some city officials is language in the bill that would require that at least 75 percent of properties in an area must be considered “slum” or “blighted” before condemnation can take place.

“What that means is that property will deteriorate to a level that it will become quite an eyesore before you can utilize eminent domain,” said City Councilwoman Christine Hensley. “That’s not a win-win for any of us.”

The legislation, House File 2351, would allow eminent domain condemnation to be exercised only for projects involving a public purpose, use or improvement. It would tighten the definition of “public use” to exclude a broad range of economic development activities. It would also expand the requirements for public notice, expand the ability of property owners to challenge condemnation proceedings and enable landowners who were subject to eminent domain to reclaim properties not used for the intended public purpose within five years.

Amendments proposed in the Senate would also broaden the reach of the bill to restrict the use of eminent domain for creating lakes to projects large enough only for drinking water purposes, and which would prohibit lake developments from being transferred to private developers.

Virtually all state legislatures have addressed the eminent domain issue since June 2005, when the U.S. Supreme Court ruled that the use of eminent domain by the city of New London, Conn., to condemn a blighted area for economic development purposes was allowable because it served a “public purpose.”

By a 5-4 vote in Kelo vs. City of New London, the court held that a redevelopment plan devised by the city of New London to condemn and redevelop a blighted 90-acre neighborhood served a “public purpose” under the public-use provision of that state’s constitution, even though it would benefit private individuals.

The original suit was brought by seven landowners who refused to sell their property to the non-profit development corporation, saying the city’s use of eminent domain violated both the U.S. and Connecticut constitutions. The economic development plan was to create an area to complement a facility that pharmaceutical maker Pfizer Inc. was planning to build.

“This year, 43 states have come into session, and 42 of them have taken it up,” said Larry Morandi, director of state policy research for the National Conference of State Legislatures. “It’s a very prevalent issue, and so far this year, we’ve got six states that have passed bills that the governor has signed; two have passed bills that are still on the governor’s desk; and one has passed that the governor vetoed.”

The states that have enacted eminent domain revisions are Idaho, Indiana, Kentucky, South Dakota, Utah and Wisconsin. Bills in Georgia and West Virginia are pending signatures by those states’ governors, while New Mexico’s governor vetoed that state’s bill.

“The three approaches that seem to be the most in vogue are defining traditional public uses of eminent domain, prohibiting it for economic development or added tax revenue, or redefining what blighted property is,” Morandi said. “So we see a lot of these statutes redefining what ‘blighted’ is. It’s got to really pose a problem to public health and safety to be blighted.”

According to a position paper the city of Des Moines provided to the Legislature in December, more than 90 percent of contested property cases reach a settlement without having to use eminent domain procedures. Some examples of past redevelopment projects include Guthrie Business Park, Central Place and Western Gateway.

“I still contend (legislators) are reacting to a situation that exists on the East Coast, not Iowa,” Hensley said.

Outside of Iowa’s cities, 1000 Friends of Iowa is advocating a move to apply eminent domain limitations to lake development projects. Under proposed Senate amendments, new lakes would be limited to the size necessary to provide a new source of drinking water, and local governments would be restricted from selling newly developed shoreline property to developers.

“The main context for our concerns is that we always want to make sure land use decisions are made that are fair to the individual as well to the community as a whole,” said Jonna Higgins-Freese, executive director of the group, which advocates environmentally responsible development. “From as far as we can see, there is no evidence that those projects will bring economic benefit to the entire community, not to just a few people.”

Doug Gross, a Des Moines attorney who has been a major advocate for recreational lake development for economic development in Iowa, could not be reached for comment.

Within the city, Hamilton said he believes the threat of using eminent domain for economic development purposes has had the effect of slowing improvements by property owners.

“There were a lot of people around me who weren’t fixing up their properties because they were waiting to see what was going to happen,” he said.

Des Moines Business Record: http://www.businessrecord.com