Kelo-style Eminent Domain Abuse Lives on in Denver

This week the Denver City Council authorized the use of eminent domain to seize homes and businesses for private development in the historic Five Points district. The vote puts 246 properties in the commercial corridor—including well-maintained Victorian homes dating back to the 1880s—under threat of condemnation for at least the next seven years.

Colorado lawmakers reformed the state's eminent domain statutes in the wake of the Supreme Court's Kelo v. New London decision, which declared that seizing property for private development does not violate the Constitution. But they left an enormous loophole for local officials: blight, the statutory definition of which is so lax that nearly any neighborhood could fit the bill.

Accordingly, before authorizing eminent domain for private use, Denver officials commissioned a study to reach a predetermined conclusion: The neighborhood is blighted.

Here's some case law, courtesy of that blight study:  

The absence of widespread violation of building and health codes does not, by itself, preclude a finding of blight. According to the courts, "the definition of 'blighted area' contained in [the Urban Renewal Law] is broad and encompasses not only those areas containing properties so dilapidated as to justify condemnation as nuisances, but also envisions the prevention of deterioration."

Essentially, the existence of a few rundown but perfectly serviceable properties that are not generating code violations triggers eminent domain for an entire neighborhood. According to the blight study, the situation in Five Points is dire. Two (two!) properties are safety hazards and nine have serious issues.

The study consists, as these things too often do, of a consultant driving around and taking unflattering photos of whatever presents itself and wildly inflating the dangers of cracked sidewalks ("injurious to the public health, safety, morals, and welfare of the residents of the state"); peeling paint ("a social and economic liability"); and vacant lots and oddly-shaped parcels ("contribute to the spread of disease and crime").

Moreover, Colorado law only gives property owners 30 days to challenge a blight declaration in court. So five years from now, if city officials decide to seize a property that was declared blighted this month, it will be too late for the owner to argue that their clearly non-blighted property isn't blighted.

Once known as the "Harlem of the West" and home to nightclubs that attracted legendary jazz acts, Five Points, like many inner city neighborhoods, is fitfully reviving after decades of disinvestment and urban flight. Old properties are being restored, luxury lofts are popping up, and new businesses are moving in.  Between 2000 and 2006, the population increased 48.6 percent, which is double the rate of other Denver neighborhoods. The Five Points Jazz Festival attracted over 10,000 people in 2011.

The cloud of condemnation threatens to put a stop to all that. Property owners uncertain if the wrecking ball is on the way are unlikely to invest in their homes and businesses—causing the very deterioration the blight designation was meant to prevent.

Take a tearful trip through Reason's archives for more on bogus blight. Click here for pictures of Denver's newest slum.