Last year a U.S. Supreme Court ruling made it easier for local governments to use their eminent domain powers to seize private property for public purposes. Critics warned of widespread abuses. Now comes a case here in Los Angeles that some see as the warning come true. Kelly Mack has an exclusive report.
KELLY MACK: When the city needs a new highway or some other facility for the public good, the laws of eminent domain allow it to seize the necessary private property and pay off the owners. But what happens if the city wants to seize your property for a project you're already planning to build on the same piece of land? Does the law allow it?
STANLEY KRAMER: It's something that is really un-American.
KELLY MACK: Stanley Kramer is a businessman who grew up in South Central Los Angeles and established this business there, a scrap metal business that employs nearly a dozen local residents.
STANLEY KRAMER: This is something I built to leave to my son and to leave to my grandson.
KELLY MACK: His son, Doug, president of the company, has turned it into a profit center for the community - with the potential for something bigger. But a city agency known as the CRA - the Community Redevelopment Corporation - has gone to court to seize Kramer's property under the eminent domain laws. Their idea is to pay him off and relocate him with taxpayers' money, then hand over his property to another developer to build a Food 4 Less shopping center. There's just one problem:
STANLEY KRAMER: We have been ready, willing and able since 1999 to do the exact same project with no cost to the taxpayers.
KELLY MACK: That's right, Kramer says he's willing to build the same shopping center right here with his own money - and has even teamed up with a leading developer who owned adjacent land.
JOHN CARROLL (OPERATIONS DIRECTOR, CHARLES COMPANY): We do these types of projects in central and south central Los Angeles and have for the past 25 years.
KELLY MACK: They've also gotten approval for their project from the City Planning Department.
JOHN CARROLL: Which allows us to build what we wanted to build, what the CRA wanted us to build.
KELLY MACK: But meanwhile the CRA has tied Kramer and his partner up in legal proceedings to seize both their properties, at great public cost in lawyer's fees. Once the two are paid off and relocated, the total price tag could be …
ATTORNEY ALLISON BURNS: $20 million of the taxpayers' money.
KELLY MACK: Burns represents Kramer.
ALLISON BURNS: If Mr. Kramer had been allowed to proceed in 1999 when he first stated his interest in developing this property, this shopping center would be built. Instead, the CRA is spending millions upon millions of dollars to take the property away from him.
KELLY MACK: To add injury to insult, says Burns, the CRA is offering next to nothing for Kramer's property and his partner's, and has conducted key deliberations behind closed doors.
ALLISON BURNS: There's no way for anyone in the public to know what their rationale was for taking this property.
KELLY MACK: To develop Kramer's property, the CRA has chosen a nonprofit group called Concerned Citizens for South Central Los Angeles. Their spokesperson refused to comment. But legal papers show they're linked to a Florida contractor, who'll build their planned shopping center, and they've pledged a large future interest in the project to a local businessman, who'll in turn pay them a percentage.
DOUGLAS KRAMER (PRESIDENT, KRAMER METALS): Concerned Citizens is a self-serving, completely self-absorbed organization that's interested in making money for themselves.
KELLY MACK: The group has been in the news before, obtaining state and federal funds to build what was supposed to be a soccer field here in South Central LA. Eventually, because of questionable financing, says Kramer's lawyer, part of the money had to be returned.
ALLISON BURNS: This says that Concerned Citizens is not a developer in whom the Community Redevelopment Agency of the City of Los Angeles should place its trust.
KELLY MACK: The CRA refused to be interviewed for this story. But in a long written statement, the Agency asserted the courts have rejected Kramer's position and insisted that he and his partner have failed to prove they can build the same project with no public subsidy. The Kramers say that's untrue.
DOUG KRAMER: We've offered to do it. We will do it.
KELLY MACK: But for now they won't get the chance. The CRA is in the final phases of seizing their property and their partner's - for what it says is the public good. Kelly Mack, Channel 4 News.
On the ballot in November will be a measure, Proposition 90, designed to prevent the seizure of private property in circumstances like those in this story.
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