Eminent domain efforts may backfire: Wilmington DE News Journal, 8/23/07

Law city cites could favor property owners

By Adam Taylor

A controversial city plan to use eminent domain to condemn as many as 62 properties would follow a Supreme Court precedent set in one of the most famous cases of its kind, experts on the issue say.

But the Delaware law the city is using to justify its plan, as well as a newer, untested state law, could help a group of property owners fend off the condemnation attempt.

Wilmington City Council will vote tonight on a plan that would allow the city to acquire the properties and sell them to private developers to be redeveloped in line with other urban renewal efforts in the area. Using economic development as a justification for exercising eminent domain reflects a growing national trend away from the more traditional reasons for invoking the law: widening roads or building schools, hospitals or libraries.

Precedent for using economic development to justify invoking eminent domain was set in 2005. In Kelo v. New London (Conn.), the U.S. Supreme Court found the communitywide benefits of taking property for that reason constituted a "public use" along the same lines of taking property to build roads or schools. The case pitted homeowner Susette Kelo and 114 other property owners against New London's government, which wanted to use the properties in a larger redevelopment plan. Pfizer Corp. had built a large research facility near the properties and the city wanted to keep up the momentum from that project.

The motivation in Wilmington is the same. The area in question is across the street from the $200 million Christina Landing residential development. City officials want to redevelop the nearby properties in ways that would create a higher tax base than the current uses, said Widener law professor Tom Reed, a property rights expert, and Christina Walsh of the Institute for Justice, the nonprofit that litigated the case for Kelo.

The key difference between New London and Wilmington, they said, is the law being used to invoke the power of eminent domain.

The Connecticut law upheld by the Supreme Court allows eminent domain to be used to transfer property from one private owner to another to further economic development.

Wilmington is trying to use eminent domain under the state's Slum Clearance Redevelopment Act. To condemn a property under that law, the city must prove there is a shortage of housing in the area, that the properties represent neighborhood blight, and that the acquisition of the properties is needed to meet new community objectives.

But the intention in the New London and Wilmington cases is the same, Walsh said.

"In Wilmington these hard-working, tax-paying businessmen could lose their properties to wealthy developers," she said.

Reed too, said the city's intention is clear: Leaders want to "recycle" the properties - now owned by 50 people and including 38 businesses but no residential lots - into wealthier hands, he said.

Laws could aid property owners
Wilmington attorney Rich Abbott, who is representing a group of the South Wilmington property owners who have banded together to fight the city's effort, said most of the properties are not blighted. He expects that to be one of the things he will argue if the matter ends up in court, which he said is a virtual certainty if the council passes two eminent domain-related measures tonight.

"The Achilles' heel of the city argument is that the area in question is blighted," he said. "I don't think it is [blighted], and the city to this point certainly hasn't demonstrated that it is."

Existing state laws also could strengthen the property owners' case, Reed said.

The city's plan involves amending the South Walnut Street Urban Renewal Plan to rezone the 62 properties from manufacturing to mixed-use designations, specifically prohibiting the properties' existing industrial uses.

However, doing that would mean properties in the South Walnut Street area having more use restrictions than businesses in other areas of the city with the same mixed-use zoning designation. That's illegal under state law, Abbott said.

A new Delaware law, passed in response to the Kelo v. New London case, could further help the property owners, Reed said. The law is designed to limit government's ability to abuse its power of eminent domain, but it hasn't been tested in the courts, he said. Also, there is some decades-old Delaware case law that indicates the state Supreme Court has been skeptical of the policy of taking properties in order to give them to people who would generate more tax money.

"Put those together and you've got an argument," Reed said.

But it's an argument that would likely fare best in the Delaware Supreme Court, he said. Given the decision in the Kelo case, Reed predicted the Wilmington property owners would lose if they tried to fight the condemnation plan at the federal level.

City Economic Development Director Joe Di Pinto said the changes are needed for South Wilmington's future.

"It's a necessary amendment for not just the South Walnut Street Renewal Area, but for Southbridge as well," he said. "The efforts we're making on both places are complementary to each other."

Billboards and petitions
The business owners already have launched a publicity campaign against the city's plan.

Eleven signed a petition Wednesday that tells the city they will not negotiate under the threat of condemnation. They will take the city to court instead.

"I don't like being threatened," said Mike Hill of Shellhorn & Hill Oil, which has employed 50 people on South Market Street since 1979. "But I'm never going to be able to negotiate a fair deal if the buyer knows that in the end I'm going to have to sell whether I like the final deal or not."

Hill bought radio spots that compare the city to a communist regime and likens the proposal to American Indians being put off their land.

Ed Osborne of Osborne's Auto Service paid for a billboard on Martin Luther King Boulevard that asks the council to vote against tonight's proposals. Wednesday, he hired a billboard truck with two similar messages to drive around the city.

"All a council or mayoral candidate needs next year is name recognition, a little money and an issue," Abbott said. "My clients are giving someone one of those three things."

Approach failed elsewhere
That approach worked in Coatesville, Pa., where hundreds of millions of dollars in revitalization plans were derailed after a failed bid to take Dick and Nancy Saha's farmhouse as part of a plan for a new golf course. While the Sahas' spent $300,000 fighting in court, anti-eminent domain candidates unseated incumbents on City Council and the citywide development plans were scrapped.

In Ardmore, Pa., local government officials wanted to bulldoze 10 businesses and replace them with a chic strip of ground-floor retailers with condos atop them. The politicians backed down last year after a series of grass-roots rallies and protests, Walsh said.

Wilmington Councilman Charles Potter Jr. said he will vote against the proposals. Eminent domain should only be used for public projects, he said. Councilman Kevin F. Kelley Sr. will vote for it, saying that he believes the majority of 50 property owners don't object.

Jeff Flynn of the city's office of economic development said the proposed measures are vital to continue revitalization efforts along the Christina Riverfront. Using eminent domain would be a last resort. The city would prefer to negotiate a fair deal with the property owners instead, he said.

"If you adopt the plan, you're adopting a vision, not necessarily condemnation," Flynn said. "This notion that the city is going to abandon business owners is just not true."

Wilmington DE News Journal: http://www.delawareonline.com