Wall St. and Business Wednesdays: High Court Decision Eases Eminent Domain Seizures But Homeowners Can Organize And Fight by Kenneth Harney

Is your home more vulnerable to eminent domain seizure by your local government in the wake of the Supreme Court's 5-4 decision June 23 in Kelo v. City of New London?

The ruling upheld that Connecticut city's right to seize 15 properties from private owners and to transfer the real estate to private developers for hotel, office and conference center projects. None of the owners wanted to sell at any price. None of the houses was considered to be blighted or in bad repair. None of the real estate will be used or owned by the city itself.

Leonard Zax, a Washington land use attorney who represents developers and cities, says homeowners across the country have nothing to worry about. ''People are just as safe [from seizure] the day after the court's decision as they were the day before, the week before, the month before and for the past 50 years,'' said Zax.

But listen to what Supreme Court Justice Sandra Day O'Connor had to say in dissent: ``All private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded. . . . The specter of condemnation hangs over all property. Nothing is to prevent [local governments] from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.''

O'Connor added that the high court's decision eliminates 'any distinction between private and public use of property -- and thereby effectively [deletes] the words `for public use' from the Takings Clause of the Fifth Amendment'' to the Constitution. The Fifth Amendment prohibits governments from taking private properties ''for public use, without just compensation.'' Traditionally ''public use'' was understood to mean direct public ownership and use -- eminent domain seizures for roadways, public buildings and the like.

But in recent decades, courts have expanded the concept of ''public use'' to include projects that contribute to ''public purposes,'' even if the direct beneficiaries of the seizures were private owners such as developers and real estate investors. The most notable case, Berman v. Parker, involved the wholesale condemnation in 1954 of economically depressed, predominantly African-American neighborhoods in Washington, D.C., to be replaced by new, privately owned buildings.

In the New London case, the five justices in the majority held that when a local government determines that eminent domain seizures will contribute to a public benefit -- even if that benefit is little more than the prospect of increased tax revenues -- then the Supreme Court should give the local government ''deference,'' and not interfere.

Where, then, does that leave you in the event that your local government sees potential for a higher and better use for your home and land? What if you, like the New London homeowners, don't want to give up your home no matter what you're offered?

In brief: The court's decision leaves you in a weaker position -- at least under federal law -- than you might imagine. The majority of justices appear to be saying that ''public purposes'' may be discernible in a wide variety of private projects. If, for example, your city's political leaders decide that all the houses on your street would produce higher tax revenues as a regional shopping center, they are now in a stronger position to seize your house under the court's Kelo doctrine.

(Florida law has allowed cities and counties to take land for redevelopment for decades, The Miami Herald reported after the Supreme Court decision. Just last month, the city of Hollywood decided to use its eminent-domain powers to take a downtown building that the owner doesn't want to sell for the planned 19-story Young Circle Commons.)

As a practical matter, who's really at greater risk of such seizures? Surely not homeowners in the wealthier parts of town, who have the ears of -- if not control of -- the local political establishment. Dana Berliner, an attorney for the Institute for Justice, the public interest law firm that represented the New London homeowners, says only certain categories of homeowners are at heightened risk. Based on her research on more than 10,000 ''abusive'' eminent domain seizures across the country, the high-risk homeowners are:

• Residents of older neighborhoods that have some locational feature -- they are near a waterfront, they are low-density but are adjacent to higher-density commercial areas -- that make them attractive for an allegedly ``higher and better use.''

• Working class and middle-income areas in general.

• Neighborhoods with high concentrations of lower income, minority residents.

With the Supreme Court majority now giving ''deference'' to local government decisions on eminent domain seizures for private projects, Berliner expects the phenomenon to spread in the years ahead, affecting thousands of homeowners who assumed they were safe.

The remedy? Organize and fight such projects at the state and local levels where you may find greater statutory protections. To assist in that effort, Berliner's firm is sponsoring a grass-roots group, the Castle Coalition. There is no membership fee; the coalition provides legal information and training seminars for property owners who choose not to go down without a fight.

Kenneth Harney, president of a Maryland consulting and publishing firm, is executive director of the National Real Estate Development Center. E-mail: kenharney@earthlink.net. This article appears in The Miami Herald

Kenneth Harney

Wednesday, July 6, 2005