Your Home for a Wal-Mart?

Your Home for a Wal-Mart?

On February 22, the U.S. Supreme Court will hear a case that may decide if your city is entitled to bulldoze your home to make way for a Wal-Mart. Though the U.S. Constitution requires that private property be seized only for "public use," local governments are increasingly invoking their power of eminent domain in the name of "economic development" -- often on behalf of big-box stores and, as in upcoming Kelo v. City of New London, corporations like pharmaceutical giant Pfizer. Cities claim that the desperately needed tax revenue generated by new development qualifies the projects as "public use."

In the January/February issue of Mother Jones, Gary Greenberg reports on a Norwood, Ohio case where citizens are standing up to a city that deemed their homes "blighted" and "economically obsolete" in order to make way for a shopping complex - and the resistance they are facing from developers and neighbors alike. Read: The Condemned

http://www.motherjones.com/news/feature/2005/01/01_407.html

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<snip> ...were it not for the 13-acre, triangular spit of land directly below the tower. There, under the spruce and maple trees, are the asphalt-shingled roofs of a tidy neighborhood of modest houses. Bounded by the Cincinnati city line to the east and Rookwood to the south, and cut off from the rest of Norwood by an interstate highway, these 97 homes and small businesses are glaringly out of place, a mid-20th-century remnant amid all this 21st-century glitz. They’re also in Anderson's way. He wants to expand the Rookwood complex, but he has to buy and raze all these houses first, and while most property owners have eagerly accepted his offer to buy their houses at a premium price, five have refused. And so the $125 million-plus project, known as Rookwood Exchange, slated to be under construction by now, is at a dead standstill.

But Anderson has an ace up his sleeve. At his behest, and using his money, the city of Norwood has invoked its powers of eminent domain -- the right, granted by the Takings Clause of the Fifth Amendment to the Constitution, of a government to seize private property and turn it to public use -- to condemn a neighborhood and order residents out of their homes. Norwood is not the first city to act as a real estate broker whose offer can’t be refused, nor is Anderson the first businessman to benefit from this kind of largesse. A 1954 Supreme Court decision stating that the economic benefits of private development are a legitimate "public use" has forged an unholy alliance between cities strapped for cash and entrepreneurs promising economic bounty. (Anderson, for example, forecasts that Rookwood Exchange will net Norwood, a city with an annual budget of $18 million, between $1.5 and $3 million in annual taxes.) Struggling cities have placed their urban renewal hopes in the hands of developers like Anderson, who in turn rely on governments to assemble the parcels for their projects.

According to the Institute for Justice (IJ), a public-interest law firm, this is a growing trend. The institute analyzed eminent domain cases between 1998 and 2002 and found more than 10,000 instances where local governments had attempted to use a power once reserved for indisputably public projects like highways and railroads to obtain properties for private development projects such as box stores and golf courses.

No properties are off-limits -- working-class communities, ski chalets, and one-tenth of San Jose, California, have all been targets of condemnation proceedings on behalf of enterprises as varied as casinos, Costco, and the New York Times -- and no one has yet been able to thwart this newly privatized version of eminent domain. But by litigating against what it calls "eminent domain abuse," the IJ has succeeded in creating enough disarray in state courts to achieve its ultimate goal: convincing the Supreme Court to revisit the issue. This spring, for the first time in 50 years, the court will address the parameters of eminent domain, and the institute hopes the justices will rein in the private use of what the court itself once called government’s "despotic power."

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There are no limits to what cities can do to force people out of their homes for giant corporations, and very little recourse for people, either. I hope these guys are successful with their lawsuit, because this sort of thing happens far too often.

It's a dangerous situation when the government isn't allowed to take your property unless the need fits a certain criteria, and the government decides what that criteria is.

But apparently, only if it is a castle.

eom

seems only when it's in their favor.

that could be used to make inroads in western states, where land use issues take center stage. They hate big government b/c it's a threat to private property, but pointing out that big business is also a threat to individual property is extremely effective.

cut-rate prices just so they can hand over the land of recalcitrant sellers to big companies. The takings clause should only apply to the transfer of land to the government for public uses.

However, I do think that people who have land they're not using for it's most economically beneficial use should not be able to sit on a piece of undeveloped land for ever.

And there is an existing mechanism that is available to governments to address that: its called property tax.

I think what should happen here is that the government should probably raise the property tax on this piece of property, reflecting the fact that it does have a valuable commercial use. If the owner can't justify keeping the land and paying the taxes (because she's not using the land for a valuable purpose), she will sell it to WalMart. If she can justify the property tax increase, then she won't sell.

Here are two catches: once that property tax rate is increased, it should aplly to the neighboring plots of land, and WalMart should have to pay it too. They shouldn't be able to cut a deal with the gov't to pay lower rates, and/or the government shouldn't be able to immediately lower the rate once the property is sold.

Also, I think there should be some mechanism that ensures that commercial property is always taxed at a higher rate than residential property so that it's harder to use this mechanism to force the transfer of homes, which, because they're not used for commercial activities, and because you don't realize profit form them unless you take out a loan against equity or sell the property, don't generate money to pay taxes.

A third thing, as long as I'm talking about property taxes: they should be progressive. The rate should increase in steps, just like income tax.

And Wal-Mart wants to build a big ugly store there instead, the government should price me out of my family home until I sell to Wal-Mart out of desperation? Seems pretty cruel to me.

First of all, I think there should be real limits on residential property tax -- even for land valued exactly the same, there should be credits or a reduction available to residential property since the only way to really extract value out of it is either to sell or take a loan out.

Now the key to what I'm saying is that the government should have to keep the higher property tax rate AFTER WalMart buys the land in the private transaction.

Of course, the government shouldn't be able to collude with walmart about where it will set its property taxes, but WalMart certainly isn't going to want to be saddled with property with high taxes on it, so there's a limit to how high the government will raise taxes on the property. In fact, they'll only raise them so high as to reflect the actual value of the land, which is what is best for everyone. That's what property taxes are supposed to do: they're supposed to reflect the rate of return on investment one can expect from a piece of land so that people don't take land out of circulation and deny the rest of the economy the benefits of its productive use.

If this isn't clear I'll give you an analogy, but that's time consuming. So only if you really don't get it, let me know.

Although I like the property tax idea. The tax should be on the economic value of the land -- if it is economically valued at income to the city of $100k per year, that should be the tax rate. I'm not sure that homeowners *should* fit into this.

Many projects of all types would never happen if there was no way to take over city blocks or significant land areas. I believe keeping our cities growing and prosperous is more important than the temporary pain of relocating.

This will be controversial, but I believe that economic development is usually a good thing -- especially in inner cities where this is often used.

uses: buy the land from the owners.

my father in law had a huge farm that has been in the family for about 5 generations. The local airport took most of the land. He was raped big time. Then they demolished it,for airport lights, which was wet land, then they re-built the wet land, and it's doing poorly. The land will never be the same again.

a chance to buy back the land in a situation like that, like a right of first refusal along with a government-subsidized loan program.

Communities need airports and roads.

The most notorious offenders are AMC Theatres (their worst one was the Yonge-Dundas boondoggle in Toronto but they've done a lot of land grabs in the US) and Donald Trump (Atlantic City tried to bulldoze some homes to expand his casino parking lot).

That the city/state should pay for any land they take. But they should pay comporable rates, not jacked up pricing.