Baum represents one property owner at Skyland who is contesting the action on the grounds that the redevelopment is not a legitimate public purpose. "NCRC's publicly announced price tag on this project has more than doubled to $115 million since we have been involved," Baum tells GlobeSt.com The case is now before the District of Columbia Court of Appeals, where it was kicked after the Superior Court ruled that a recent Supreme Court decision permitted such a seizure.
That Supreme Court case was Kelo v. City of New London, a 5-4 decision that clarified governments' rights of eminent domain for economic development. One year later, the impact of this widely discussed decision is still unfolding. A backlash against it almost immediately formed; within six months or so new legislation was introduced in some 40 states limiting its use. In other cases, state judges began to more narrowly interpret existing laws in favor of property holders.
Yet for every case in which property holders have managed to contest local government's claims of eminent domain, there is an opposing example illustrating its growing use. Stuart Blaugrund, a partner with Gardere Wynne Sewell LLP, is representing a group called Land Grab Opponents of El Paso in an eminent domain battle over a downtown redevelopment plan in El Paso, TX. It will, according to its opponents, will displace many small business, as well as homeowners, with little compensation for lost business. Blaugrund tells GlobeSt.com it is looking likely that the city planners will vote in favor of it. Eventually, he believes, the case will wind up before the Texas Supreme Court on constitutional grounds. Texas was among the first states to pass laws limiting the use of eminent domain, but they haven't been truly tested yet, he says.
Both supporters and critics of Kelo expect such high profile cases to continue to drive the legislative and judicial tussle over the circumstances under which local governments are able to seize private property. "Until legislation is put in place or takes affect we will continue to see cities wielding eminent domain as a club to transfer property to private developers," Dana Berliner, senior attorney, Institute for Justice says. According to a new report by the Washington, DC-based think tank, in the year since the ruling, local governments threatened to use eminent domain against more than 5,429 homes, businesses, churches and filed 354 condemnation actions -- more than half of the 10,282 threatened or condemned properties tallied over the five years between 1998 and 2002.
"Basically the law came down on one side of the local governments' rights to do certain things and the public opinion came down squarely on the other side," Jim Ettelson, partner with Thorp Reed & Armstrong tells GlobeSt.com. That said, it is important to remember, he adds, that much of the business of eminent domain is completed in amicable settings. "It is just part of the every day process of development--property is identified, an offer made and negotiations completed."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
