Local governments now have judicial blessing to act tyrannically.
Free enterprise advocates - like most of us working in this industry -
are rightfully concerned about the federal government’s massive encroachment
into the economy via TARP, health care and other politically tinged economic
initiatives. However, if you have any worry left over, save some for an equally
threatening siege from the judicial arm of big government.
It stems from the U.S. Supreme Court’sKelo v. New Londondecision in 2005, when the justices
ruled it okay (by the narrowest 5-4 margin) for a developer in Connecticut
under the rubric of eminent domain to seize some homes and private businesses
to build a research campus for pharmaceutical giant Pfizer. Until then the
concept of eminent domain, whereby governments can forceably acquire private
property at reasonable market rates, was reserved for projects such as roads
and other clearly public facilities.Keloestablished the principle that the public good also
was served by compelling some private properties to be gobbled up by bigger,
presumably “better” private entities.
Various jurisdictions across the land have since taken their cue fromKeloand acquired private
property from reluctant sellers to turn over to favored developers. One highly
publicized episode occurred last November when New York State’s highest court
ruled it lawful for the state to seize private land for a controversial $4.9
billion project in Brooklyn centered around a basketball arena. Making it
especially contentious is that one of the major investors is not even American,
Reverberations stretch into the sleepy suburban Chicago community of Mt.
Prospect where I make my home. Our Village has given the go-ahead to a private
redevelopment project that involved the purchase of several little businesses
in an underutilized downtown area. (The project, like so many these days, is on
indefinite hold while the builder tries to shake out financing.) Most of the
area’s former business owners sold out voluntarily - or after a little prodding
- but a single holdout is the cranky owner of a little bar and restaurant who
has been trading newspaper barbs and lawsuits with the Village for years. Now
he is being threatened with an eminent domain takeover. His business is a seedy
joint that sits only a hundred yards from my condo complex. From a purely
personal standpoint I would be happy to see it go, and I am generally in favor
of our Village’s downtown redevelopment plan. Yet, personal preferences aside,
I have a philosophical difference with the way this is being handled, which I
expressed as follows in a letter published in a community
“Legal or not, using eminent domain to
benefit a preferred private developer ought to ring alarm bells in all of us.
It sets the stage for local authorities to yank anyone’s home or business away
because it sits on land coveted by, say, their relatives or campaign
Similar stories are being played out in various local communities across the
land. Some of you reading this might even be the beneficiaries of eminent
domain initiatives to clear out blighted areas for redevelopment. If so, please
set your personal business interests aside for a moment to understand the
larger principle at stake here. As I noted in my letter to the editor, when a
government is allowed to conspire with one private business to undermine
another, the potential for mischief is enormous. Corruption aside, government
officials are eminently (no pun intended) capable of making stupid decisions
about economic development. Who determines that a neighborhood is “blighted” or
which business is more likely to succeed? Today you’re the hammer but tomorrow
you could be the nail.
Those of you who operate aging facilities in rundown warehouse districts face
greater potential to be victims rather than beneficiaries of private eminent
domain takeovers. How would it sit with you to be told, not asked, to sell your
property at a price to be determined by public authorities?
The most discouraging thing aboutKelois that it emanates from the highest legal authority in the land, and the
Supremes cling to a doctrine known asstare decisis- meaning don’t overturn things already
decided. So any relief from this ruling would have to come from the legislative
and executive branches of our federal government, and they have their hands
full nowadays. TacklingKelois on nobody’s political agenda that I’m aware of.
Yet this is something our national leaders should be turning some attention to,
and it’s in the interest of small business owners that they do.
An Underrated Threat
February 1, 2010