Increasingly, local governments are turning to eminent domain to acquire land to put up sports complexes, shopping centers, and new condominiums
For the last three years, Atlanta resident Sean Breslin has kept followers of his personal blog, Breslanta, breathlessly updated on the progress of SunTrust Park, the Atlanta Braves’ splashy new stadium, which opens this month. The former sportswriter was excited about the ballpark’s location near his home in the Cumberland/Galleria neighborhood, where he and his future wife had moved in 2013.
But early last November, Breslin found out that the stadium—and the network of new roads that would be built to provide access to it—was going to cost him his home.
"If it wasn’t all so ironic, I would cry," Breslin wrote in his blog.
The feds have been using eminent domain since the 1800s, and the principle was ratified by the Supreme Court in 1876, when the owner of a private house in Cincinnati sued the government, which had seized his land to build a post office. The court ruled that the power of eminent domain was necessary. It's been a controversial and highly contentious issue ever since.
Now it's kicking into high gear again. As the economy has bounced back from the housing crash, and real estate markets have heated up, more local governments have been turning to eminent domain to acquire land to build sports complexes, shopping centers, and new condominiums. Sometimes—but not always—these are blighted areas.
And although the ousted owners are provided with what local officials deem "just compensation" for their land, in accordance with the Fifth Amendment, some owners are rising up to challenge the notion that a bona fide public use is behind such seizures.
Sean Breslin; Cat Breslin
Eminent domain has skyrocketed, and here's why
Eminent domain has been on the rise across the country for a few years now, says Robert McNamara, senior attorney at the Institute for Justice, a public-interest law firm based in Arlington, VA, that defends against such cases.
It dates to the time that developers started to come out of their recessionary hibernation in earnest—ready to put up sports, housing, and entertainment complexes. Backed by local officials in many of these communities, they weren't letting private homes and businesses stand in their way.
During the recession, "you saw an almost entire absence of eminent domain abuse," McNamara says. Now, by contrast, he adds, "We’re seeing cities and suburbs eager to redevelop their downtown areas."
The growing recent use of eminent domain for private projects can be traced to the landmark Kelo v. City of New London case, which went before the U.S. Supreme Court in 2005. In a 5-4 decision, the court allowed local governments to use eminent domain when redevelopment promised economic benefits to a community.
In simple English, that means homes and businesses in most states can be seized, legally, if it is believed that the development might raise property values and could generate higher tax revenues.
"Under the Fifth Amendment of the Constitution, you’ve got two requirements for a taking: It has to be for public use, and the government has to pay just compensation," says attorney Emmett Boney Haywood, a partner with the Nicholls & Crampton law firm in Raleigh, N.C. But Kelo changed all that.
The biggest spike in eminent-domain seizures is happening in the Northeast and the Mid-Atlantic regions, particularly in states like Connecticut, Massachusetts, New York, New Jersey, and Maryland, McNamara says.
There is no national system for tracking when eminent domain is used for private developments rather than for public works projects, like schools and roads. But seizures in both categories are up considerably. The feds seize property for things like roads, military bases, federal buildings, and oil pipelines.
Local governments aren't always the bad guys when they seize someone's property. Building schools, parks, and entertainment venues can make struggling neighborhoods safer, increase existing property values, and bring in new businesses as well as sorely needed jobs.
In Kansas City, MO, for example, eminent domain helped the city clear several blighted blocks for the development of an entertainment district and arena. Housing, hotel, office, and retail redevelopments have followed.
But all too often, eminent domain is used in cases that are not so clearly beneficial to the general population. The process can leave homeowners feeling powerless and badly adrift.
In many cases, there's little homeowners can do once their homes are marked for the taking. Sean Breslin blogged about his experience, hoping that it would scare up a whistleblower who could reveal government shenanigans that could delay or derail the project. So far, no signs of foul play have emerged, and Breslin has accepted his fate. He anticipates receiving a first buyout offer from Cobb County as early as June.
“We’re thinking of having kids, so in a couple of years, we were likely going to be looking for a home in the suburbs,” Breslin tells realtor.com®. “But this certainly moves up the timing for us.”
States push back against Supreme Court ruling
Outrage over the Kelo decision prompted 44 states to enact laws to protect home and business owners from losing their property to private development. The exceptions are New York, Massachusetts, Oklahoma, Hawaii, New Jersey, and Oklahoma.
Last year, for example, the Pennsylvania Supreme Court declared unconstitutional part of a 2012 law that allowed the taking of property for private natural gas projects. It ruled that an underground storage company could not show a benefit to the state beyond job creation.
In October, Gov.Jerry Brown signed a bill that allows communities to form "Community Redevelopment and Investment Authorities" and use eminent domain to take blighted property for economic revitalization projects, affordable housing, and infrastructure.
But "blight" doesn't necessarily mean run-down properties in polluted industrial wastelands. Instead, the broadly defined term could apply to as much 78% of California’s land, according to a study by a Sacramento consulting firm, Andrew Chang & Co. That's nearly four-fifths of the state.
During California’s budget crisis five years ago, Brown abolished about 400 local redevelopment agencies, which for years had been using eminent domain to declare private property blighted and to divert property taxes to pay for projects such as shopping districts, residential developments, stadiums, and even a green renovation on a luxury golf course. A state analysis concluded that instead of creating lots of new jobs, the projects generally just transferred jobs between communities, at a cost of roughly $5.5 billion a year.
“Now that the economy is better—and as states and cities have become hungrier for tax revenues—lawmakers are creeping back to the old habit of taking private property and turning it over to a private developer, under the guise that it’s somehow a public benefit,” says Larry Salzman, an eminent domain attorney at the Pacific Legal Foundation.
How a former NFL player fought the system
Entrepreneur and former National Football League offensive lineman Phil Olsen wasn’t facing off against private developers when he led a recent effort to fight eminent domain in Garden City, UT. Instead, he was trying to block the town’s mayor, who was trying to take over portions of seven private properties in the town's Bear Lake area. Including Olsen's.
The lake is heralded as the “Caribbean of the Rockies,” and the mayor wanted to create more public access to it. In December, after years of wrangling with property owners, he announced that Garden City would use eminent domain.
"We knew that if the city went ahead, we couldn’t stop them," says the 68-year-old Olsen, who visited Bear Lake every summer as a kid and bought his property after signing his first professional football contract. "But the city had never done eminent domain and thought it would be easy and cheap. Our goal was to prove that it was not going to be easy, and it was not going to be cheap."
Among other actions, Olsen's homeowners association began educating nearby property owners as to what could happen to them if the city was successful. It also lobbied for support, beginning with the governor’s office in Utah and working its way down through the Legislature and state agencies. Eventually, the eminent domain was quashed—in return for an agreement that all parties would help in funding a new, less intrusive, public access point.
"We care about public access to the lake. We’re not jerks," Olsen says. "But you don’t use eminent domain flippantly. It should be used when there are no other alternatives, and in this case, there were plenty of alternatives."