Drawing the line on eminent domain

By Joyce Howard Price
Published October 9, 2005

Jim Seelbach, 83, lives in a suburb of St. Louis and he is about to lose his home of 20 years. The city wants it to make way for a shopping center.

Mr. Seelbach and several dozen neighbors in the city of Sunset Hills face an eminent-domain order that could seize their properties to develop the $160 million complex filled with stores and offices.

Even if he were amenable to moving, he says the money offered for his home would make it impossible to find similar housing.

Mr. Seelbach has refused to accept the $118,000 offered for his two-bedroom, one-bath frame dwelling in the Sunset Manor subdivision near St. Louis.

"I can't find another home for $118,000, and at 83, there's no way I can even obtain a mortgage," he says.

Likewise, his neighbor, John N. Hogan, 79, a Korean War veteran who has lived in his house for nearly 50 years, doesn't want to move and doesn't think he has a fair offer for it.

"They want to take my three-bedroom, two-bath redwood home for $147,000. But I can't buy anything in this area for $147,000," he says.

Both men have filed lawsuits to block their ousters. They're not alone in their anger.

Homeowners nationwide are seeking to undo a June 23 Supreme Court ruling they see as the death of private-property rights. At issue is the high court's 5-4 decision in the Connecticut case of Kelo v. City of New London, in which justices said government -- typically, cities and counties -- can seize private property from its owner and give it to a private developer who promises to use it to generate more tax revenue.

"This was, perhaps, the most universally unpopular Supreme Court decision in recent memory," says Dana Berliner, a senior lawyer with the Institute for Justice, a libertarian public-interest law firm that was involved in the legal case.

"It is a universally despised opinion."

In the Kelo case, the institute represented nine New London homeowners, who tried to halt the city's takeover of their properties for economic redevelopment. Miss Berliner argued their case before the Supreme Court.

"A lot of Supreme Court decisions affect only a small number of people. But this ruling affects everyone, since everybody either owns a home or hopes to own one someday. It changes what it means to own a home or a business," Miss Berliner says, adding that the property now can be seized to make way for anything from strip malls to amusement parks under what the institute calls the Supreme Court's "expanded" interpretation of eminent domain.

Pennsylvania state Rep. Thomas Yewcic, a Democrat sponsoring a bill to prohibit the use of eminent domain for "nonpublic uses" in that state, agrees.

"This was an absolutely disgraceful Supreme Court decision. Property rights are the fundamental building block of what America is all about. Taking people's property for private use is un-American," Mr. Yewcic says.

Common tactic or not

Don Borut, executive director of the National League of Cities, says there is some uncertainty about how often the taking of private land for private use occurs.

"We don't know how often this happens. We want to see how this is being used and how often. ... Where there have been abuses, they need to be addressed," says Mr. Borut, whose organization says the practice can be beneficial.

A report by the Institute for Justice, however, suggests it is more common than most people think. The institute found that from 1998 to 2003, there were 10,000 cases of eminent domain nationwide.

"In 3,000 cases, the properties were condemned," says a staffer with the Pacific Legal Foundation who was familiar with the study.

Mr. Borut disputes the idea that the Supreme Court ruling "changed anything" with the Kelo decision, saying, "it was not a matter of giving anyone new authority or new power." Instead, he says, the high court upheld the constitutionality of condemnation practices that governments have used as a "last resort" to create jobs and "enhance the overall good of a community."

As evidence of the frequency with which this type of eminent domain is used, the Institute for Justice points out that right now it is being used in three neighborhoods in Missouri -- Sunset Manor, Arnold and Richmond Heights -- all within 20 minutes of St. Louis.

Both Sunset Hills Mayor James Hobbs and a spokesman for Novus Development Co., the firm planning the shopping center, insist local opposition to the proposed redevelopment project is small. For the project to proceed, the city required that two-thirds of affected residents approve.

"They did, and I understand now 90 percent of the people are behind it," Mr. Hobbs says.

Craig Workman, who until recently was a spokesman for Novus, says the 90 percent support figure is correct.
Several of the 229 Sunset Hills families that have signed contracts with Novus have formed a group called "We're Ready to Go" and have established a Web site (werereadytogo.com) detailing developments in the eminent-domain battle.

"Most of the families in Sunset Manor ... support the Novus buyout and are ready to go. Instead, we are held hostage by others ... who have formed the 'Stop the Land Grab' opposition group. They are funded by Westfield [a development firm that runs a rival shopping center in the St. Louis area]," according to the group's Web site.

Paul Ferber, an attorney for several Sunset Manor residents who want to keep their homes, confirms that Westfield is involved in the case, as it owns four homes that would be condemned.

There is uncertainty about the redevelopment project, given that Novus announced in late August that its financing to acquire the homes had been withdrawn. "And now it looks as if there never was any financing for this project," Mr. Ferber says in an interview.

He says that Novus originally was to have paid for houses of those who agreed to sell in August but then asked them "to extend their option contracts until Sept. 30." That deadline passed, and Novus told residents last weekend it needs more time to close on their homes and build a shopping center and office complex.

Worth the effort

There also has been uncertainty about whether the redevelopment project proposed for Sunset Hills can be successful.

One 12-member commission that examined financial questions says it would not be in the best interest of the region. But the panel's vote was nonbinding, and Sunset Hills aldermen and the mayor disagreed.

Kathy Tripp, a single mother in Sunset Manor who is resisting the loss of her home, says she believes this could be a "test case" for the Supreme Court's Kelo ruling.

However, that distinction could fall to a case in Ohio, given that that state's Supreme Court became the first to accept an eminent-domain case since the Supreme Court ruled.

In the Ohio case, private developer Jeffrey Anderson wants to demolish houses and business offices in the city of Norwood to build a complex of chain stores, condominiums and office space. According to the Institute for Justice, the Norwood government wrongly characterized "the well-kept neighborhood 'deteriorating' [in a study] so it could use eminent domain under Ohio law."

In the Kelo case, Susette Kelo and other homeowners fought New London's seizure of their homes. The homes on Fort Trumbull Peninsula are near a 90-acre waterfront site that is to be developed to support the recently opened global research center operated by pharmaceutical giant Pfizer Inc.

The unhappy New London residents argued unsuccessfully that the city does not have the right to take their property to give it to private developers.

The city said it wanted to in order to create more jobs and raise additional tax revenues.

The Fifth Amendment's eminent-domain clause allows government to take private property for public use.

Traditionally, this has meant land to build highways, roadways, schools and other public facilities. The owners are paid what the government considers fair-market value for the condemned properties.

In the Kelo case, however, the court was asked whether economic development projects that transform private property to other private uses constitute a "public purpose."

Justice John Paul Stevens and four other justices decided they do.

Mr. Borut, of the National League of Cities, complains there has been a "rush to judgment" about the Supreme Court's ruling in Kelo and what it means.

"We need to see the consequences and implications [of using eminent domain for economic development] across-the-board" with an eye toward "balance."

"It's not an all-or-nothing situation, in that jobs are being created that wouldn't otherwise be there. .. . It should be used according to the needs of a community. Elected officials won't make such decisions arbitrarily. They are trying to balance the need to protect individual rights and the overall community good. There is a tension there."

Michael Brown, mayor of Riviera Beach, Fla., says a posh billion-dollar waterfront yachting and housing redevelopment project proposed there will bring his impoverished city "out of the economic doldrums."

But the project will displace 6,000 residents, and some of them say there has to be a better way to revitalize the poor, predominantly-black beach community.

States' rights

In the majority opinion, Justice Stevens noted that state legislatures are free to enact laws that prohibit condemnation of property for private development.

In a recent speech to the Clark County Bar Association in Las Vegas, Justice Stevens said that if he were a legislator, he would oppose a program to "take homes for private development."

Few state legislatures were still in session when the Kelo opinion came down. Of those that were, along with some that are in session now, some quickly addressed the issue.

In Alabama, Delaware and Texas, legislatures already have enacted legislation, signed by the governors, to restrict eminent domain.

The Alabama law prohibits governments from using their eminent-domain authority to take privately owned properties and turning them over to retail, industrial, office or residential developers.

"The Alabama [and Texas] legislation is much more specific than the new law in Delaware, which restricts the use of eminent domain to a 'recognized public use.' But it doesn't define it," says Larry Morandi, a program director for the Denver-based National Conference of State Legislatures.

So far, there have been proposals in as many as 30 states to restrict eminent domain to public projects or to private projects in rundown areas, according to the Institute for Justice and other groups. However, in some cases legislators have merely expressed an intent to draft such legislation.

In addition to Pennsylvania, the list includes California, Colorado, Connecticut, Florida, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, Michigan, New Jersey, New York, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee and Virginia.

Legislators in several of those states want the new restrictions in the form of state constitutional amendments. Several states, including Kentucky and Rhode Island, are seeking amendments to the U.S. Constitution.
Before the Kelo ruling, six states -- Maryland, Connecticut, Kansas, New York, Minnesota and North Dakota -- allowed government to "take" private property for economic development.

At least nine other states -- Arkansas, California, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington -- restricted condemnation for economic development to private property in "blighted areas."
Reviews of eminent-domain laws either under way or planned in most states will include a closer look at the definition of blighted areas.

That's vital, Miss Berliner of the Institute for Justice says, as definitions of blight are vague and "prone to abuse." In some cases, she says, it is defined as land that is "economically underutilized."

Mr. Yewcic, the Pennsylvania state representative pushing for eminent-domain reform in that state, says his bill would do three things: prohibit the use of eminent domain to increase the tax base, prohibit its use for nonpublic projects and ensure that land inappropriately taken reverts back to the original owner.

The Yewcic bill does not authorize the continuation of condemnations of private property in blighted areas of Pennsylvania. But he says he would be open to an amendment allowing the taking of abandoned property in regions that need upgrading.

"What's going on now is legalized plunder," Mr. Yewcic says. He says he anticipates passage of a reform measure before the current legislative session ends in November 2006.

"Pennsylvanians realize that what happened in Connecticut could happen here," he says. "It's already been happening in the city of Pittsburgh, which has used eminent domain for private development and forced businesses out."

In Connecticut, Gov. M. Jodi Rell, a Republican, has endorsed an eminent-domain seizure moratorium until the legislature can revise existing law to protect property owners. Mrs. Rell says she believed the voluntary moratorium put on hold New London's plans to take the homes in the case decided by the Supreme Court, but the developer says it did not.

In Florida, House Speaker Allan Bense, a Republican, has tapped a special committee to revisit eminent domain in that state.

Towson Fraser, spokesman for Mr. Bense, says "the definition of 'blight' is so broad, it's useless. So they will be looking at that, as well as the meaning of the term, 'full compensation,' which Florida law says will be paid to those whose property is condemned."

At this time, the Pacific Legal Foundation is representing landowners in Charlotte County, Fla., whose vacant lots and dwellings are targets of condemnation proceedings. PLF says they are "victims of a redevelopment agency's bogus 'blight' designation." As many as 3,000 lots are involved, of which 80 have homes on them.

Valerie Fernandez, a lawyer in the Institute for Justice's Florida office, says of that state: "Florida engages in condemnation all the time. It is the leading abuser ... in the United States."

But there is some opposition in high places in the state.

"Gov. [Jeb] Bush feels eminent domain should not be used to take property to build condos or something like that.

He believes it should be used for projects that are really needed, such as highways and schools," spokesman Russell Schweiss says.

"As a result of the Supreme Court decision in Kelo, there will be a lot more condemnation for private development, and there will be a lot more people trying to stop it," says Miss Berliner.

Immediately after the Supreme Court ruled against the New London homeowners, the institute filed a motion, asking that it rehear the case. The high court refused.

Public opinion

Less than a week after the Kelo ruling, the Institute for Justice and its 3,000-member Castle Coalition announced a $3 million "Hands Off My Home Campaign." The organizations described this effort as an "unprecedented financial commitment to halting eminent domain for private profit."

Polls have shown unusual unity on strengthening property rights, with the percentage of support consistently in the high 80s and in the 90s.

A number of bills addressing this same issue have been introduced in Congress with strong bipartisan backing. Supporters range from liberal Rep. Maxine Waters, California Democrat, to Rep. Tom DeLay and Sen. John Cornyn, both conservative Texas Republicans.

In the District of Columbia, a proposed congressional ban on providing federal money to communities that use eminent domain for private development could threaten the Skyland Shopping Center project in Southeast.

The project, which has been in the works for 15 years, would condemn several small businesses in an area designated as blighted to make way for a large discount retailer, a restaurant and a bookstore. Merchants fighting the takeovers say the city never proved the area is blighted.

Miss Berliner says she has no doubt many states will pass legislation restricting eminent domain. "I recognize lobbyists for local governments and developers will be very active," promoting condemnation of private property for economic development.

"But public opposition to using eminent domain for private development is so overwhelming that lawmakers will have to do something."

Researchers Amy Baskerville and John Sopko contributed to this report.