Eminent Domain

Keeping an eye on eminent domain abuse has been en vogue since the 2005 Kelo v New London Supreme Court decision. I don't have to look very far to find an example of land use being twisted by shady local politics. From Saturday's Milwaukee Journal Sentinel...

The city is using its power of eminent domain to help accomplish a $300 million makeover of Bayshore shopping center, but a lawsuit filed by one property owner is questioning whether the takeover fits the law's strict criteria.

Those involved on both sides of the case say a decision on the matter, which is expected soon, could shape the legal debate over setting limits on the state's eminent domain law, which weighs the protection of private property rights against economic development that could result in benefits for an entire community.

At issue is whether Bayshore had lost so much of its luster by late 2001, when city officials formed a public-private partnership with developers for the makeover, that it could have been labeled a blighted area.

If it were deemed blighted, Glendale could use its power of eminent domain, a tool created by state statute that allows a municipality to buy private property for a fair price and relocation fees.

While several owners quarreled with the city over the city's condemnations, none of the business owners attacked the core of the eminent domain law - allowing a municipality to forcibly purchase private property as part of a plan for a blighted area.

The Seemann Family LLC, the living trust created by Harold and Edna Seemann, owns the property in question, which is just north of the shopping center at 5960 N. Port Washington Road, where the Goodyear Auto Service Center is located. The trust is seeking an injunction to prevent Glendale from taking the land.

It has been pointed out by Volokh Conspirator Prof. Ilya Somin that these post-Kelo reform laws have a huge problem with them: they don't actually do much. One of the common oversights is the blight issue. Other laws are just lip service to property rights with no actual teeth. Even with Wisconsin's new restrictions, the municipality is still in a favorable position. Here is my Real Estate Finance and Development professor quoted in the article...

In June 2005, the U.S. Supreme Court ruled in a Connecticut case that private property can be taken by a municipality for economic redevelopment. The decision provoked a storm of protest from coast to coast, said Julian Kossow, a Marquette University law professor and expert in real estate law.

More restrictive laws created by states can trump the Supreme Court decision, he said.

"More than 30 states, either through legislation or court cases, acted to impose higher standards," Kossow said. "They said municipalities should not be able to condemn property unless it was blighted."

Despite the more restrictive nature of Wisconsin's law, Kossow said, the fact that Glendale wants the land for public purposes tips the scales to Glendale's favor.

What is "blighted"? Well, that's the $64,000 question.