This column warned nearly two years ago that the U.S. Supreme Court's narrow ruling on eminent domain could imperil property rights.
It's happening already. And the massive redevelopment case in Clayton, Mo. should serve as a warning to local government officials in the fast-growing Pocono area to use eminent domain rarely and wisely.
Clayton, Mo.'s thriving downtown business district wasn't strong enough to stand up to a large corporate entity that talked town fathers into a sweet deal. Now busy offices and favorite restaurants of Clayton will be gone thanks to a $190 million agreement between the city council and health care giant the Centene Corp.
Centene plans to build a new, 16-story headquarters and 15-story office building with retail space on Forsyth Boulevard. Project backers say the plan will create hundreds of jobs and add millions in new tax revenue. But it will also displace many long-standing businesses, among them a 40-year-old tailor's shop and a real estate office.
No surprise. In June 2005, the Supreme Court decided a case involving nine homeowners who lived in a working-class neighborhood in economically depressed New London, Conn. The nine were holding out against the city's eminent domain condemnation that would make way for a major redevelopment featuring a new drug research facility. Other property owners had already sold out and municipal officials argued that condemning the holdouts' properties would benefit the entire community through new jobs, businesses and tax revenues.
The Supreme Court agreed with the developers arguing that using eminent domain to spur private economic development was a legitimate use of the eminent domain process.
Eminent domain traditionally has been a tool governments have used only for public projects such as schools, parks, highways and airports. Much of the nation's school and transportation network could not have been created had government not been able, when necessary, to condemn property that stood in the path of public works. But the court's ruling in New London opened the city gates to any scheme that purports to "benefit" a community.
It's one thing to replace blight with development through condemning property, paying its owners what it's worth, and rebuilding. But in Clayton, the plan involves condemning functioning businesses in a healthy downtown simply because a new business can make more money and the town can collect higher tax revenues.
The ruling makes public officials vulnerable to developers who sometimes wield outsized political or economic pressure. Under the capitalist system, ordinary citizens and small businesses just don't have the same clout as a large developer with engineers, lawyers and glitzy plans.
That's exactly why the town fathers of Clayton, Mo. are handing the keys to the city to Centene Corp., forcing existing property owners to sell out for a higher amount of economic development.
So far Pocono residents haven't faced the kind of eminent domain case that would pit the little guy who wants to hang on to his business against a well-heeled corporation. But this fast-growing area could easily see such a proposal.
Government officials would be well advised to tread cautiously in cases where a developer requests them to use eminent domain not for a public project, but to enable private development. Officials should use eminent domain wisely, with clear targets in blighted areas only, and for obvious returns through new businesses, more jobs and a rejuvenated tax revenue stream.
Small businesses, residents and other tax-paying property owners should always find a rightful place in our communities.
Pocono Record, Stroudsberg PA: http://www.poconorecord.com