Eminent Domain Abuse and the Courts
Eminent domain has a long history, and it isn't likely to go away. After all, it's enshrined in the U.S. Constitution, not to mention the constitutions of all 50 states. What distinguishes the current era is the degree to which local governments are willing to use this power to achieve all manner of public policy goals. Sometimes they succeed, and sometimes they're driven back by public protest or the courts. But they're unquestionably pushing the boundaries.
Jeff Finkle is president of the International Economic Development Council, a trade association representing development and redevelopment organizations and agencies. Not surprisingly, Finkle feels that eminent domain is critical to the revitalization of cities. Few projects in urban areas occur on small, isolated lots, and the costs of negotiating with dozens of property owners are simply too high, he argues. In addition, some property owners refuse to sell or set an unreasonable price, scuttling projects with large benefits for the community.
"Lose eminent domain in urban settings," Finkle says, "and the only land that will be developed is green space on the edge of cities."
That said, Finkle doesn't defend eminent domain's recent form; he recognizes that the power should have limits. Taking private property, he says, "should be the last possible tool. If negotiations fail, if the bully pulpit fails, then you go to a takings case."
In the current climate, many of the traditional constraints on public takings of private property seem to have disappeared. Most redevelopment laws, including Arizona's, explicitly acknowledge that land can be taken even if the beneficiaries will be other private parties. This principle is even articulated in federal law, through the 1954 Supreme Court decision Berman v. Parker, which allowed local governments to condemn land for urban renewal and then transfer title to private parties. Even then, local governments didn't have carte blanche; they had to justify the taking as a way to mitigate "urban blight." But over the years that term has become little more than a name for property a government wants to take. Today redevelopment agencies enjoy more discretion than ever, and eminent domain is becoming their tool of choice:
� In 1993 the Las Vegas Redevelopment Authority condemned Carol Pappas' apartment building as a "blight" so a consortium of eight casinos could demolish it to build a parking garage. No one ever surveyed the block on which Carol's apartment building stood to assess whether it was actually blighted.
� In 1999 the mayor of New Rochelle, New York, decided that a neighborhood housing almost 200 residents and dozens of businesses would be better used for a retail-oriented development anchored by the Swedish furniture giant IKEA. The city offered to condemn 15 acres of land for the company.
� In 2000 the mayor and city council of Pittsburgh tried to condemn an entire downtown neighborhood in the Fifth and Forbes area and transfer title to a Chicago developer who intended to create an upscale shopping mall.
� In 2001 the State of Mississippi condemned some property to accommodate a new Nissan plant. While many of the property owners were willing to sell, one family, the Archies, had deep roots in their home and wanted to stay. The state continued to pursue the condemnation even though officials admitted publicly that Nissan didn't need the Archies' land to build its plant.
Then there's the case of Gateway International Raceway, near St. Louis. Built in 1997, the track hosts several major events, including auto and drag racing, almost weekly. Gateway opened with 50,000 seats, drawing 400,000 race fans into the stands in its first year. Its owners hoped to expand to as many as 100,000 seats, a size large enough to attract a highly coveted Winston Cup NASCAR race date.
To do that, Gateway had to solve a problem: traffic congestion. With 50,000 seats, the raceway couldn't accommodate the traffic generated by throngs of patrons clogging the roads on race day. Moreover, various development projects were quickly eating away at the land available for parking around the raceway. So on February 20, 1998, Gateway asked the Southwestern Illinois Development Authority (SWIDA) to condemn 148.5 acres owned by National City Environmental and the St. Louis Auto Shredding Company and transfer them to Gateway to accommodate new parking.
In this case, the taking was prevented: The Illinois Supreme Court invalidated SWIDA's effort. But the case revealed a system that barely respected property rights at all. Anticipating requests like Gateway's, SWIDA had adopted a "Quick-Take" program. All applicants had to do was fill out a form, pay a fee, add a commission to SWIDA based on the value of the property, and voilà, the redevelopment agency would condemn someone else's land and hand it over. Of course, it wasn't quite that simple -- the St. Clair County board had to approve the transfer -- but the message was clear: "If you need land, we'll get it for you." The Illinois Supreme Court said as much: "It appears SWIDA's true intentions were to act as a default broker of land for Gateway's proposed parking plan." The agency hadn't done a traffic study, or even included the project in an economic development plan.
Arizona Dust Bowl
As for Randy Bailey: Judge Myers ruled in April that Mesa could take his property and hand it to Ken Lenhart simply because the government had decided that a hardware store was a more valuable use than a brake shop. The city's redevelopment plan calls for improving its image and making it more economically and socially attractive. It also calls for putting land to its highest and best use to maximize its retail potential. In 2000 the city estimated that the Country Club and Main deal would generate one-time revenues of more than $95,000 through impact fees and sales taxes, an annual increase in sales tax revenue of $168,000, and increased utilities revenue of $69,000. Alternative ways of achieving the same ends were not even considered.
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