8/27/2006

Cities Race to Acquire Land Before U.S. Court Ruling Is Undone: Bloomberg.com, 8/15/06

By Greg Stohr

Officials in Riviera Beach, Florida, needed to act fast. Governor Jeb Bush was poised to sign a bill to limit government seizures of private land, jeopardizing the town's vision for a $2.4 billion waterfront redevelopment.

So city officials called an emergency meeting for May 10, the night before Bush's planned signing. Looking to beat the clock, the City Council approved a contract with the project's developer and promised to use the city's power to take land for public use to secure the necessary property.

The maneuver is part of the fallout from the U.S. Supreme Court's 2005 Kelo v. New London ruling. The decision said the U.S. Constitution lets governments use their power of eminent domain for economic development, while leaving states free to enact stronger property protections. Since then, dozens of states have passed new laws, even as local governments move to acquire land at what critics say is an unprecedented rate.

``What happened after Kelo was an explosion at every level,'' said Dana Berliner, an attorney for the Institute for Justice, an Arlington, Virginia, advocacy group that plans to represent Riviera Beach property owners challenging the redevelopment plan. ``In some states there's a sense that at some point the law is going to change. They'd better get as many projects started, property acquired, before that happens.''

The issue pits property owners' rights against efforts by cities around the country to boost their economies and increase tax revenue with new stores, hotels, offices and housing.

New York City aims to build a new arena in downtown Brooklyn for professional basketball's Nets, while San Francisco plans to redevelop 150 blocks in its Bayview-Hunters Point neighborhood. And in an unusual twist, officials in Hercules, California, are vying to seize land owned by Wal-Mart Stores Inc. in the hope of filling the space with smaller shops.

Taking Property
The 5-4 Kelo ruling said governments can constitutionally take property and transfer it to another private party for development so long as they pay for the land. The decision interpreted only the U.S. Constitution's takings clause, saying states remain free to tighten their own takeover restrictions. The court has long let governments take private land to make room for highways and public buildings or to clear slums.

The Institute for Justice says it has identified almost 5,800 instances in which agencies at least threatened to seize properties for transfer to other private parties in the year following the Kelo decision. That's up from an average of about 2,000 annually in the five preceding years, according to the group's figures.

``They've been doing this all along but never quite knowing if it was legal,'' Berliner said. ``And now the Supreme Court says it's perfectly legal, green light. So they're moving forward.''

Removing Blight
Defenders of eminent-domain power question those numbers. The Washington-based National League of Cities says many of the 5,800 properties are part of multi-phased projects that began years ago as local officials sought to redevelop blighted areas.

Indeed, negative reaction to the Kelo decision has made officials more cautious in their use of eminent domain, says Jason Jordan, a consultant at the American Planning Association, which represents 39,000 professional planners, elected officials and citizens through offices in Chicago and Washington.

``If anything, the trend seems to be tracking in the opposite direction,'' Jordan said. ``Eminent domain has become a third-rail issue, and elected officials are extremely reluctant to go down that path.''

Much of the backlash against Kelo has come from the grass roots. In New Hampshire, critics of the ruling unsuccessfully sought to seize the home of Justice David Souter, one of the justices in the majority, and build a lodging to be called the ``Lost Liberty Inn.''

Riviera Beach
Many government agencies are pressing ahead, at least with long-planned projects. In Riviera Beach, Mayor Michael D. Brown says eminent domain is crucial to his plan for transforming a pocket of poverty in otherwise-wealthy Palm Beach County. The city's population of 30,000 is two-thirds black and has a 23 percent poverty rate, compared with 12 percent nationwide.

The city's plan, developed over six years at a cost of $6 million, calls for the acquisition of 800 acres near the Atlantic Ocean. The area, according to Brown, is largely dilapidated, featuring abandoned buildings and trailer parks. In their place would go condominiums, a hotel, restaurants, shops, a yachting center, beaches and other modern facilities.

``It is designed to really transform a city into a middle-class community as opposed to one that is a majority-impoverished community,'' Brown said. He said he anticipates the city ultimately will take 40 to 50 properties through eminent domain.

`Blatant Abuses'
The Institute for Justice calls the project ``one of the largest and most blatant abuses of eminent domain in the country.''

A key legal issue will be the impact of the new Florida law. The statute all but precludes the use of eminent domain for private commercial development, requiring governments to wait 10 years before transferring land to another owner.

In enacting the measure, lawmakers rejected Riviera Beach's bid for an exemption. That prompted the city to call the May council meeting to approve the development agreement. Riviera Beach now plans to invoke a U.S. constitutional provision that forbids states from interfering with contracts, Brown said.

Florida is one of 29 states that have moved to tighten their eminent-domain laws since last year, in many cases turning aside objections from developers and local governments. Some states, including Georgia and Pennsylvania, now bar or restrict takings aimed at economic development; others give landowners more procedural rights or require compensation above market value.

State Courts
In addition, state supreme courts in Oklahoma and Ohio have ruled that their constitutions impose tighter restrictions than are required by federal law. At least six states will put questions before voters in November.

Some groups say they worry that limiting governments' power to take private property will allow one or two property owners to thwart projects that would provide community-wide benefits. Donald J. Borut, executive director of the National League of Cities, says Florida and some other states have ``overreacted'' to perceived abuses.

``Where there are abuses, they need to be addressed,'' Borut said. ``The problem is the blanket assumption that somehow this process is bad and should not be used. In framing it that way, there are terrible losses in terms of the ability of communities to address blighted areas.''


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