Hollywood weighs eminent-domain gambit: Miami FL Herald, 1/10/07

Hollywood officials could use their power to take private property to fix up a struggling neighborhood, but some fear legal challenges

By Todd Wright

The 5600 block of Wiley Street, where some Hollywood [FL] officials hope to reclaim two properties through eminent domain, has been a blighted area for years. Hollywood officials are poised to test Florida law and once again try to use the city's power to force the sale of private property to clean up a blighted area.

On Jan. 17, commissioners are expected to vote to use eminent domain on two properties on Wiley Street to pave the way for an affordable housing development that could turn around the once drug-infested and crime-riddled block.

The move comes less than a year after state legislators and voters restricted government's ability to use eminent domain.

Commissioners ran afoul of the new law just six months ago, when a Broward judge ruled the city's downtown Community Redevelopment Agency illegally tried to take the property of a business owner for redevelopment.

In May, state legislators stripped CRAs of their eminent domain powers and essentially limited cities to only using condemnation powers on properties that stand in the way of public uses such as a new road, school or courthouse.

The state also prohibited taking property under the guise of economic development. Voters affirmed the new law in November.

Several commissioners said the city could be treading on thin ice by invoking its power to take private property.

''We've got in enough trouble in the city of Hollywood. I sure wouldn't vote for using eminent domain, and anyone who would at this point in time is crazy,'' Commissioner Cathy Anderson said.

The block between 56th and 57th avenues would be the site of about 40 town houses, said Neal Hearst, the city's housing coordinator. The city would not transfer the land to a developer, which is prohibited under state law, but instead would give ownership to homeowners, he said.

''This isn't economic development because we are not going to sell to a developer. We are not selling that land to anybody,'' Hearst said. ``The land goes to the family that buys the home. We have no restriction on what we do as long as we have the title.''

City attorneys called the legal move a ''friendly condemnation'' and said it would not be initiated until the property owners signed off on it. The eminent domain would clear the titles of the properties, which were muddled by a 1990s mortgage scam.

'The new eminent domain legislation allows `friendly' condemnation when the property owner concedes to the city taking the property and seeks to reinvest the money received through the taking in purchasing replacement,'' wrote Mitchell Burnstein, the who handles the city's eminent domain cases.

But those arguments may not fly, said Steven Anderson, director of Castle Coalition at the Institute For Justice, a Virginia-based nonprofit public interest law firm. The coalition works against the abuse of eminent domain.

Florida law prohibits transferring private land to any private party, including developers and individual homeowners, Anderson said. Despite never transfering the title, the city still could get in trouble because the developer would be controlling the use of the land.

Even a cause as noble as affordable housing is not enough justification to take property under the new law, Anderson said.

Steven Anderson represents some 5,100 Riviera Beach residents whose properties are in jeopardy of being taken for a new condominium and marina project. The case is in the pretrial stages in state court.

''Because of the abuses that were going on, particularly in coastal Florida, the legislators said that you can only use it for traditional reasons, not condos or box stores or whatever,'' he said. ``The moment you allow these other justifications like affordable housing, there is no natural end-point.''

The city's plans for Wiley have been slowed by efforts to sort out who the stakeholders are.

Under the scheme that was reputedly masterminded by the late James Christenson, properties bought under a trust bearing the name of Christenson's sidekick Howard Kratenstein were cut up and resold to straw buyers'' using phony appraisals and other fraudulent documents to obtain mortgages far above the property value.

Fort Lauderdale was also hit hard by the scam.

Many of the 14 properties on the Wiley Street block were cut up into smaller pieces and sold to individuals, leaving as many as a dozen people vying for control of some properties, Hearst said.

The city has spent the past four years tracking people down and making offers to buy their portion.

To date, the city has used eminent domain to take nine of the 12 properties it has acquired. It has spent about $2 million acquiring the properties, but used federal loans to pay out settlements.

The final two pieces of property would cost a combined $1.2 million, Hearst said.

''This has been a very complicated project. This was a horrendous task,'' he said. Since the 1970s, the 5600 block of Wiley has been synonymous with the drug trade, prostitution and crime.

The dreadful conditions spread to nearby blocks in the Washington Park neighborhood, causing many homeowners to petition the city to do something about it.

''It is an entire block that looks like a bomb fell on it,'' said Commissioner Peter Bober, the area's representative.

The city tore down most of the apartment complexes and houses that were notorious for illegal activities. The few remaining buildings are boarded up.

Only about four families live in a couple of duplexes on the block. The city is in the process of relocating them, Hearst said.

''It's not a very attractive block,'' said Nadine McCrea, president of the civic association. ``But I'd rather it look the way it does now than fall back to the way it as before.''

Miami FL Herald: http://www.miami.com/mld/miamiherald