|
Bulldozers At Your Doorstep
By M. Robert Goldstein & Michael Rikon
You may love the home left to you by your parents,
but did you ever, in your wildest nightmare, consider that
it could be taken from you in condemnation to make way for
a Costco? Consider the plight of an owner of a small family
business, the goodwill of which was built up over the course
of many years, who learns that upon condemnation to make way
for a shopping mall, the owner will only be entitled to the
sound value of the trade fixtures annexed to the premises.
One day enjoying the entire group of rights inhering in the
ownership of property, and the next day watching a bulldozer
plow down your house. How can this happen in this country
which prides itself on a Constitution and a Bill of Rights
which is the envy of every other nation.
Eminent domain is the right of the sovereign
to take your property. It is an inherent power of government
that is necessary for the fulfillment of sovereign functions.
Indeed, one will find nothing in the Constitution creating
the power, only limitation on its exercise. That limitation
is found within the Fifth Amendment to the United States Constitution
"... nor shall private property be taken for public use,
without just compensation." These limitations are made
applicable to the States by the Fourteenth Amendment. The
Fifth Amendment to the United States Constitution was adopted
on December 15, 1791. The issue immediately presents itself,
did our founding fathers ever consider that it would one day
be appropriate to condemn a small family property to build
a "Costco?"
How did a big box retail establishment become
a permissible "public use?" There has been a metamorphosis
of concept over the years. Once "public use" meant
exactly what it says, i.e., that in order for a taking to
be a "valid public use," the property acquired must
actually be used by the public. We understand the condemnation
of land for a new school, highway or fire house. It is the
"other public use" which truly enrages property
owners, that is, the taking of private property to hand over
to a private developer.
Public Purpose As Defined
By The Courts
Public purpose has enjoyed a broad definition
in New York and other Courts. Building a four-way intersection
for access to and from a shopping mall is a permissible public
purpose. Waldo's Inc. v. Johnson City,
74 N.Y.2d 718 (1989). Condemning residential property located
at 45 Wall Street for an addition to the New York Stock Exchange
is a public purpose and is not impaired by the circumstance
that the proposed project will confer a private benefit. Fisher
v. New York State Urban Development Corporation, 287
A.D. 262 (1st Dept., 2001). In 1975, the Court
of Appeals decided Yonkers Community Development Agency
v. Morris, 37 N.Y.2d 478 which allowed the condemnation
of private property placed in an urban renewal plan for the
removal of "substandard" conditions. In fact, the
properties were not substandard but were taken for the expansion
of Otis Elevator Company, a leading industrial
employer in the City of Yonkers. The Court applied the liberal
rather than literal definition of a "blighted" area
and permitted the taking. If you think that this was outrageous,
consider that even after receiving such municipal largess,
Otis quit Yonkers in 1982. Yonkers then sued
Otis in the United States District Court for
the Southern District of New York only to have its suit for
breach of contract, unjust enrichment and fraud dismissed
with the imposition of sanctions since there was no colorable
factual basis for filing a fraud claim. It seems that Yonkers
failed to obtain any written specific commitment by Otis to
continue production at its Yonkers facility. City of
Yonkers v. Otis Elevator Company, 844 F.2d 42 (2nd
Cir., 1988). The same thing happened not too recently in the
Bronx when Farberware convinced the New York State Urban Development
Corporation to condemn its landlord's building for its
own. Not too long after, Farberware quit the Bronx. Whose
fault is it that such abuse of traditional property right
concepts has occurred?
Professor Gideon Kanner, the editor of "Just
Compensation" and a columnist to the National Law Journal
has long decried the hypocrisy of the "Public Use"
Law. The problem, according to Prof. Kanner is "... Judges
(that) have abdicated their responsibility and are falling
down on their job of safeguarding citizens' constitutional
rights in this field of law. Instead of enforcing the ‘public
use' clause, they allow these new robber barons to wreak
havoc on the lives of innocent people, and to raid municipal
treasuries for subsidies in pursuit of private gain."
The New Robber Barons, Kanner, Nat. L.J. May 21, 2001.
Blame The Supreme Court
The blame can squarely be put in the Supreme
Court's lap. The genesis for the change in definition
came in Berman v. Parker, 348 U.S. 26 (1954)
which upheld the District of Columbia Redevelopment Act of
1945. The plaintiffs objected to the taking of their Washington,
D.C. department store which was not part of any "blight"
and argued that the project was simply a taking from one businessperson
for the benefit of another. The Supreme Court held that "[t]he
concept of public welfare is broad and inclusive ..."
The fact of the matter is that while there may have been low
income housing before, which may have been substandard, the
product of the project was high income co-op housing and shopping
mall development which certainly did little to improve the
welfare of the local residents. Some years later, the Supreme
Court had before it Hawaii Housing Authority v. Midkiff,
467 U.S. 229 (1984) and while stating that a taking for purely
private use is unconstitutional no matter the amount of "just
compensation" that may be given, the Court allowed the
breakup of family owned land for sale to others. The Court
stated, "*** where the exercise of the eminent domain
power is rationally related to a conceivable public purpose,
the Court has never held a compensated taking to be proscribed
by the public use clause."
The same Court when previously presented with
an opportunity to uphold traditional notions of property rights
stated, "[t]he dictomy between personal liberties and
property rights is a false one. Property does not have rights,
people have rights. The right to enjoy property without unlawful
deprivation, no less than the right to speak or the right
to travel, is in truth a ‘personal' right whether
the ‘property' in question be a welfare check, a
home, or a savings account. In fact, a fundamental interdependence
exists between the personal right to liberty and personal
right in property. Neither could have meaning without the
other. That rights in property are basic civil rights has
long been recognized." Lynch v. Household Finance
Corp., 405 U.S. 538, 552 (1972). If one has basic
civil rights in property, the threshold for losing ownership
to one's property for an alleged public use should not
be the lowly standard of being merely related to any conceivable
public purpose.
The Poletown Case
In Poletown Neighborhood Council v. City
of Detroit, 304 N.W.2d 455 (1981), the Michigan Supreme
Court allowed the condemnation of some 465 acres, 1,176 buildings
including 144 businesses, three schools, a 278 bed hospital,
16 churches and one cemetery so that General Motors could
build a Cadillac factory. The project cost Detroit over $200
million. General Motors paid $8 million and also received
a 12 year 50% tax abatement. There was very little evidence
of "blight," but the argument was that the economic
benefit to General Motors would, eventually, trickle down
to the public. Perhaps, "blight" is in the eyes
of the beholder. Who is to say what is "blight?"
Can anyone really suggest that a main street, fully rented
with charming ethnic restaurants and antique shops, constitutes
a blighted area? If a government earmarks a portion of a block
for condemnation for many years, does it not itself create
"blight?"
In a case that garnered a great deal of interest
in Connecticut, Curley's Diner objected to the proposed
condemnation of its property based on a 1963 redevelopment
plan which never included their parcel, which they had acquired
in 1977. On appeal, the trial court was reversed and the matter
remanded with an Order to enter a permanent injunction barring
the condemnation. The Appellate Court stated that while a
redevelopment agency need not redetermine the level of blight
at each stage, it may not rely on its initial finding indefinitely,
particularly where the subject property was not targeted for
acquisition when the plan was adopted. The Court noted that
new hearings might disclose that there was no longer any blight
justifying condemnation of the subject property. Apospornos
v. Urban Redevelopment Comm., 790 A.2d 1167 (Conn.,
2002).
Much has been written of the improper use of
the power of eminent domain across the country. Taking property
from a Toyota dealership in Merriam, Kansas to turn it over
to a BMW dealer. "Take and Give," Wall Street Journal,
Dec. 2, 1998. In New London, Connecticut, the local development
agency wanted to condemn some homes for a health club. "Property
Seizures Overstep Boundaries of ‘Public Use,'"
USA Today, March 21, 2001.
The Wall Street Journal, on its editorial page
of May 30, 2002 titled, "The First Church of Costco,"
wrote of the proposed condemnation of 17.9 acres of land in
Cypress City, California owned by the Cottonwood Christian
Center. The land would then be sold to Costco. The editorial
noted, "[t]he powers of eminent domain are tricky enough
when exercised for highways, schools, or other public uses.
But when invoked on behalf of a private business, it represents
the worst form of political collusion. Our advise to Cottonwood
is not to turn the other cheek."
The Tide May Be Changing
In 1998, 99 Cents Only Stores moved into a vacant
piece of property located next to a Costco in a newly developed
shopping mall in Lancaster City, California. Costco wanted
to expand and threatened to relocate unless it was provided
with additional space in the shopping center. Costco wanted
99 Cents' space. Viewing Costco as an "anchor tenant"
and fearful of Costco's relocation to another City, the
redevelopment agency made a deal with Costco. It sought to
buy out 99 Cents' lease and when that failed, adopted
resolutions which authorized the condemnation of the 99 Cents'
store site. In an action to enjoin the condemnation of its
property brought in the United States District Court for the
Central District of California, 99 Cents Only Stores
v. Lancaster Redevelopment Agency, 00 Civ. 7572 (June
27, 2001), the plaintiff prevailed. The Court held that "the
evidence is clear beyond dispute that Lancaster's
condemnation efforts rest on nothing more than a desire to
achieve the naked transfer of property from one private party
to another." The Court also noted that there was no "existing
blight" (emphasis in original).
Perhaps the tide is changing. Maybe the Courts
have had enough of this abuse. Recent cases from across the
country indicate a judicial backlash which is quite noticeable.
In West St. Louis, Illinois there is Gateway International
Motor Sports, a Nascar racetrack which over the years prospered
and increased its seating capacity. It wanted to increase
its parking capacity as well, so it called on its friendly
development authority to condemn its neighbor's 148.5
acres. The proposed parking lot was owned by National City
Environmental, L.L.C., which operates a metal recycling center.
The recycler employed upwards of 100 people and had been in
operation since 1975. The development agency, SWIDA offered
$1 million for the property. When that was rejected, SWIDA
instituted condemnation proceedings.
The lower Illinois court held a hearing and
found that the taking was for a public purpose as there were
serious public safety issues involved. It appears that traffic
backed-up during major race events and that pedestrians often
crossed the highway from parking areas east of the racetrack.
This safety risk would be eliminated by acquiring the property.
And, of course, the development of the racing facilities had
indirectly helped to eliminate blight in the area. The Court
also made a preliminary finding that $900,000 was just compensation
for the property. Upon appeal to the Illinois Appellate Court,
the decision was reversed. The Appellate Court determined
that SWIDA had exceeded its constitutional authority in taking
the recycler's land by eminent domain. The agency then
filed a Petition for Leave to Appeal to the Supreme Court
of Illinois, which granted the Petition and reversed the Appellate
Court and remanded the cause. However, National City Environmental
petitioned the Supreme Court for rehearing which was allowed.
This, as most lawyers know, is extremely rare.
In a decision filed April 4, 2002, the Supreme
Court of Illinois reversed itself and affirmed the decision
of the Appellate Court. The Court stated that, "[b]efore
the right of eminent domain may be exercised, the law, beyond
a doubt, requires that the use for which the land is taken
shall be public as distinguished from a private use."
The Court also noted that while great deference should be
afforded the Legislature and its granting of eminent domain
authority, the exercise of that power is not entirely beyond
judicial scrutiny and it is incumbent upon the judiciary to
ensure that the power of eminent domain is used in a manner
contemplated by the framers of the Constitution and by the
Legislature that granted the specific power in question. The
Court also noted that the taking was not for the purposes
of eliminating blight. The Court continued, "[w]e do
not require a bright-line test to find that this taking bestows
a purely private benefit and lacks a showing of a supporting
legislative purpose." The agency had argued that the
wisdom of the legislation and the means of executing the project
are beyond judicial scrutiny once the public purpose has been
established. The Court disagreed, citing Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439
(1982). It stated, "the government does not have unlimited
power to redefine property rights." The Illinois Supreme
Court concluded, "[t]he power of eminent domain is to
be exercised with restraint, not abandon." Southwestern
Illinois Development Authority v. National City Environmental,
LLC, ___ Ill.2d ___, ___ N.W.2d ___, (April 4, 2002).
Conclusion
Public purpose should mean exactly what it says.
The definition of a valid public purpose should not be stretched
to an illogical conclusion to allow something that the authors
of the Bill of Rights clearly prohibited – the taking
of private property for a private purpose. If the Courts are
unwilling to stop this charade, then legislation should be
adopted clearly defining what is a valid public purpose.
Back to first page of publications
|
