7/02/2006

Eminent Domain Holdouts Throw a Wrench into Development Plans: New York Jewish Times, 6/27/06

By Ted Landphair

Long before a giant office or shopping or housing complex can be built, the developer must buy up all the parcels of land on that site. Quietly, because if word gets out, the landowners will jack up their asking prices.

Sometimes they won't sell at all, at any price. Many of these "spikes," as stubborn holdouts are called in the trade, are the classic "little old ladies" — or men — who just can't bear to part with their homes or small businesses

In the 1960s, the Disney Company created a stealth corporation that secretly gobbled up 11,000 hectares in Florida for a mega-theme park. But two families simply would not sell their chunks of swampland. Disney had to re-route a huge drainage canal around one of these plots, both of which intrude into the Walt Disney World theme park to this day.

More recently, a Washington, D.C., man refused all offers for the two-story townhouse that he uses as his architect's office. So the developer's earth-movers have gouged a deep crater around three sides of him. The holdout owner says that once the new office towers rise around him, he'll open a pizzeria. Skeptics point out he'll have to sell a lot of pizzas to equal the millions of dollars he's been offered.

What can a developer do to pry loose these stubborn spikes? Some partner with a local or state government. That way, the project can be called "urban redevelopment." Governments, you see, have the authority, under the laws of eminent domain, to force a holdout to sell and move.

But if you can't get the government involved, sometimes just filing suit against holdouts, so they must hire lawyers and go to court, can convince them to give up. Then again, many a builder has learned the hard way that it can be a very bad idea to make a little old lady mad!


New York jewish Times: http://nyjtimes.com