Should eminent domain be used to boost tax base?

The Kelo vs. City of New London decision has states debating laws on when property can be taken for a 'public purpose'

By Blake Fontenay, The Commercial Appeal
March 19, 2006

When the U.S. Supreme Court decided last year that homes in a Connecticut town could be seized for a redevelopment project, the ruling sent shock waves around the country.

It's long been accepted that governments can acquire property needed for roads, railroad tracks, utility lines or other public purposes through a legal process known as eminent domain, provided the land owners are paid fair market value.

However, the Kelo vs. City of New London case gave town officials authority to replace generally well-kept homes in a waterfront neighborhood with a luxury hotel, condominiums and office buildings for the sake of economic development.

The court's ruling essentially said individual states have the right to make their own laws governing eminent domain, but that nothing in federal law prohibits economic development from being used as a justification for taking property.

Legislators in at least 43 states, including Tennessee and Mississippi, have been discussing changes that would better protect small property owners from losing their land to private development interests, according to the Castle Coalition, a grass-roots group that tracks eminent domain issues.

Mississippi legislators have been working to reconcile the differences between eminent domain bills passed by the House and Senate earlier this year.

In Tennessee, House and Senate subcommittees have been sorting through dozens of bills filed this session.

Sen. Mark Norris, R-Collierville, believes there's general agreement among his colleagues that the state law needs to be changed.

More than likely, that will mean providing clearer legal definitions for terms such as "blight" and "public purpose."

But that won't be easy because, as Norris puts it, "One person's farm might be someone else's inefficient blight."

While the legislators' work may be difficult, Steven Anderson, the Castle Coalition's coordinator, says the issue is extremely important.

Without proper guidance, city and county government officials could be free to seize private land for just about any purpose that helps the local tax base.

"If that's the argument, nobody's home is safe," Anderson said. "Anyone's home could be converted into a condominium, if tax revenue is the justification."

Not everyone agrees that the situation is quite so dire.

Jeff Sanford, president of the Center City Commission in Memphis, said the Supreme Court's ruling hasn't granted local governments any more or less power than they had before.

Eminent domain has been threatened or used in several high-profile projects in Memphis over the last few years, including AutoZone Park, the FedExForum and the Uptown housing development.

In each of those instances, government officials cited specific public benefits the projects would bring. However, some critics have said private businesses benefited as much or more than the public did.

While cities and counties can use eminent domain to take property from landowners who are unwilling to sell, that's usually not the preferred option.

It's better to negotiate a fair price and buy the land from property owners whenever possible, Sanford said.

Most elected officials would rather avoid the political fallout involved with booting people out of their homes.

"That's probably a good thing," Sanford said. "I don't think it (eminent domain) should be easy. With elected officials, it will never be easy."

Chad Jenkins, deputy director of the Tennessee Municipal League, thinks much of the furor over the Kelo case has been overblown. Jenkins said he worries that legislators might go too far in attempting to protect property owners and try to list specific circumstances under which eminent domain could be used.

"The danger is that any time you make a list, the courts could determine that is an exhaustive list," Jenkins said. "I'm not smart enough to anticipate what every use could be. And I'm not sure anyone could."

Memphis City Councilman Rickey Peete expressed a similar concern. While echoing Sanford's belief that eminent domain is best used sparingly, Peete also said local governments need enough wiggle room in the law to account for unusual cases.

"Every decision and every situation is not cut and dried," Peete said. "There needs to be some flexibility there."

Kevin Walsh, a local attorney who specializes in eminent domain cases, believes legislators should also consider a change in the law that would give courts more discretion to decide if the "public purpose" reasons cited by legislative bodies in such cases are valid.

Walsh said other reforms would also be helpful. For example, under current law, if a government agency decides to seize property through a process known as a "quick take," the landowner has only five days to challenge that decision before a judge, he said.

Walsh believes it would be more fair to give landowners more time, perhaps up to 90 days.

Walsh also believes it might be more fair for a jury, not a judge, to decide if an eminent domain seizure is warranted. As the law is now written, a judge decides whether to allow an eminent domain seizure, but then a jury decides what represents fair compensation for the landowner who loses his or her property.

While people across the country debate the eminent domain law, Victor Robilio has watched with more than passing interest.

Several years ago, the Memphis Housing Authority wanted to acquire a parcel the Robilio family owned near Second and Auction to make way for the Uptown project.

The Robilios worked out a settlement with MHA without going through eminent domain proceedings. But because the land had been in his family since 1866, Robilio said being forced to sell left a bitter taste in his mouth.

The backlash against the Kelo decision has given him hope that Congress will eventually have to pass federal laws limiting the use of eminent domain.

"What goes up the street goes back down the street, too," Robilio said.