Eminent domain: Public interest or private profit?

Eminent domain: Public interest or private profit?

by Paul F. P. Pogue

Lori Vendetti grew up expecting to one day inherit her childhood summer home in Long Branch, N.J. But in 1995, she learned that the Long Branch City Council was targeting her parents' home and one she had just purchased next door as part of an "area in need of redevelopment," setting off a fight to save the properties that continues today.

Citing redevelopment provisions, Long Branch condemned numerous neighborhood properties in 2005 so a local developer could replace them with condos and townhouses. Vendetti and 24 others in the group filed suit in Monmouth County Court and lost; the case is currently under appeal with the Appellate division of the New Jersey Superior Court.

"This is the American dream, to own your property and give it to your children, and they're trying to take that away," Vendetti says. "We're holding out for our homes. We're holding out for principle."

The major point of contention is whether or not the area is blighted or, as New Jersey law defines it, "in need of redevelopment." John Aaron, the attorney for Long Branch, says the city concluded in 1995 that the area needed to be redeveloped after an exhaustive study found the homes were, among other things, not being kept up to standards. He also notes that the homeowners missed numerous opportunities over the years to challenge the plans. But Vendetti denies that and says the area is fine just like it is and the city only used the designation because developers wanted the land.

The power of eminent domain is enshrined in the Constitution, which allows a government to take private property for public use with just compensation. The question now up for debate is what exactly constitutes public use. A 1954 U.S. Supreme Court decision expanded "public use" to include "public purpose," such as allowing eminent domain to eradicate blight. In the decades since, eminent domain has grown to include property transferred from one private owner to another, usually a developer.

The Michigan Supreme Court's 1981 decision in Poletown Neighborhood Association v. City of Detroit upheld the city's right to seize property to make way for an auto factory. The court reversed itself in 2004, but by then the city had bulldozed 1,000 homes and 600 businesses.

Proponents say building better properties increases the tax base and overall economic strength of an area, thus constituting a public purpose. Opponents, however, say private-to-private property transfers are tantamount to stealing and call such cases "eminent domain abuse."

The Poletown case notwithstanding, private-to-private property transfers remained largely off the public radar until 2005, when the U.S. Supreme Court issued a high-profile decision in the Connecticut case of Kelo v. City of New London (go to story). In that case, Susette Kelo and six other property owners sued to keep their homes, which were in an area being redeveloped by the New London Development Corporation. They ultimately lost when the U.S. Supreme Court ruled that the city had the right to condemn their homes under eminent domain.

"The Kelo case really perpetuated what had been a dangerous trend in the law, to foster this convenient use of eminent domain to assemble property that developers didn't want to assemble the old-fashioned way - by arm's-length negotiation." says Amy Boulris, a Florida-based eminent domain lawyer who has lectured at national seminars on the subject.

Nobody keeps nationwide records on the use of eminent domain. But representatives of the Institute for Justice, a Washington, D.C.-based law firm that litigated Kelo and often works on similar cases, say the decision opened the floodgates. According to their numbers, instances of private-to-private cases doubled in 2006 and continue to climb in many states.

Public opinion since Kelo has turned overwhelmingly against the use of eminent domain for private-to-private transfers. In a recent Angie's List Quick Poll, 67 percent of Angie's List members say they oppose eminent domain for private redevelopment, while an additional 29 percent say it's justified only in some cases.

As the current ballot battle to limit eminent domain in California shows (go to story), the legal struggles are far from over, though the application of private-to-private transfers differs by region. More than 40 states have enacted reforms, but they haven't necessarily limited these cases as much as one might expect. According to the Institute for Justice, loopholes and wording in about half of the laws leave homeowners more vulnerable than ever to private-to-private transfers.

Larry Morandi, director of state policy research for the National Conference of State Legislatures, says loopholes can be found in what he calls the "four 'ly's": Primarily, solely, predominantly and merely. "Those adverbs are very important legally because they give local government some wiggle room," he says. "They can say, 'We're not primarily doing this to increase tax revenue.'"

Dana Berliner, senior attorney for the Institute for Justice, also notes that blight provisions are frequently broadly worded to make condemnation easier. She says she's seen houses labeled as blighted for wet leaves on a tennis court, a cooler on a front porch and, in one noteworthy case in Lakewood, Ohio, any house that didn't have an attached two-car garage, central air conditioning or three bedrooms and two bathrooms.

However, proponents of the use of eminent domain for private redevelopment point out that the Kelo decision didn't grant the government new rights; rather, it affirmed what had been accepted practice for decades. "I think we've overreacted as a country to the issue," says John McIlwain, senior resident fellow with the Urban Land Institute, which studies land use policy around the nation. "The use of eminent domain with private controls is a very important tool."

"Opponents have been very effective in fanning the flames of hysteria," says Lora Lucero, staff attorney for the American Planning Association, which filed a brief in Kelo in favor of the developers. "It's a very emotional topic, and it unfortunately comes with good sound bites. We asked the Supreme Court to uphold more than 50 years of precedent showing that eminent domain is a worthwhile economic development tool in the community toolbox. Of course, it should be used sparingly, and in our amicus brief, we even said it should be a tool of last resort."

Experts note that three years is a short time for policy development, and even though lawmakers responded with remarkable speed to Kelo, the long-term effects won't be clear for a while. "Until we have enough time to see how local governments will react, we won't see what the effect has been," Morandi says.

Some, however, saw an immediate effect, particularly when lawsuits had been put on hold while awaiting the final word on Kelo. Wright Gore III says the city of Freeport, Texas, filed condemnation papers on his family's shrimping business, Western Seafood, less than 24 hours after the decision. "We were actually the first victims of the Kelo case aside from Susette Kelo herself," he says.

City officials have targeted Western Seafood for seizure since 2002 to make way for the construction of a privately owned marina. Gore says the family tried to negotiate in good faith but instead had to resort to fighting eminent domain proceedings in court. The case is currently before the Texas First Court of Appeals. "[The Kelo decision] was just the most demoralizing thing we had heard," Gore says. "When a local municipality has its mind made up that they want to take property, nothing will stop them. Condemnation law, to this day, is very much stacked against the property owner, even considering the [eminent domain] reforms. You can't just close your eyes and hope the government will be reasonable with you."

Representatives for the city of Freeport didn't return several calls from Angie's List seeking comment.

The Institute for Justice says they'll continue working on a state-by-state basis to turn the tide, but the fight may not be over, even in states with strong reform. "There are starting to be efforts to move back reforms, and I think that's going to be a major issue in the coming years," Berliner says.

Aaron, the Long Branch attorney, says he fears a public discourse of buzzwords and catchphrases will weaken eminent domain's legitimate uses.

"Being on the municipality's side in today's world isn't popular, and the taking of someone's home is not to be done lightly," he says. "But the explanation for [eminent domain] is found in years and years of initial findings and is used only sparingly, and only when there is a tremendous public benefit as a result of the taking."

As for Vendetti, she's not through fighting even though Long Branch is offering $374,000 for her house and $410,000 for her parents'. "A house is a brick structure to some people, but it's part of our family to us," Vendetti says. "People say, 'Anyone can be bought.' And I say, 'There's no amount of money that could make us sell our homes.'"

Time will tell if she's going to have a choice.

 

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