Playing Musical Chairs with Businesses

Since Kelo many cities are asking: Why not use eminent domain to take property from one business and give it to its competitor? 

In June 2006, City officials in Florissant, Mo., granted a private developer the power of eminent domain to take a successful British Petroleum gas station and a vacant building—so the developer can build a Shell gas station.[1]

In October 2005, the Cleveland City Council designated the East Bank of the Flats as “blighted,” giving the City the power of eminent domain so it can make way for developer Scott Wolstein to build a residential and commercial complex.  Despite proposals set forth by property owners willing to partner on the project, Wolstein insists on owning and controlling all the land.  This includes a privately owned parking lot that the City is taking so Wolstein can replace it with…a parking lot.[2]

In Port Chester, N.Y., two businessmen planned to build a CVS Pharmacy on land they owned.  Instead of letting them proceed with their proposed development, Village officials condemned their land so G&S Investors can build something else instead—a Walgreens Pharmacy, CVS’ chief regional competitor.[3] 

And, in Los Angeles, Calif., City officials condemned a thriving furniture factory ostensibly for an animal shelter.  But now the City has decided to build the animal shelter on another piece of city-owned property.  So, instead of giving it back to its original owner, the City is handing the land over to a different furniture manufacturer.[4]

The list goes on and on.  Since the U.S. Supreme Court decided Kelo v. City of New London in June 2005, tax-hungry bureaucrats and land-hungry developers are increasingly using eminent domain for private development projects.  It is wrong to take private property from one person and hand it to another, regardless of what the new owner will do with the land, but it is especially outrageous when cities use their condemnation powers to benefit one private business by taking its competitor’s land so the politically connected business can benefit.  Among other things, Kelo, which permits the use of eminent domain for economic development, opened the floodgates to these kinds of takings.

Kelo leaves businesses of all sizes without federal constitutional protection from being taken by the government and given to other businesses in the same industry.  While more than half of the states have responded with state legislative reform to stop the abuse of eminent domain, small businesses across the nation remain vulnerable to eminent domain abuse. 

Justice Sandra Day O’Connor noted in her dissenting opinion, “Nothing is to prevent the State from replacing any Motel 6 with a Ritz Carlton”—a hauntingly accurate prediction, though, as the Castle Coalition has seen, nicer is not always necessary.  The evidence reveals that private businesses with political influence benefit from the government’s use of eminent domain for private profit.

The only force that will stop it is strong statewide and federal legislative reform.  Only then will businesses be protected from the government’s wrecking ball.  

[1] “Developer gets power of eminent domain,” St. Louis Post-Dispatch, June 13, 2006; Joe Scott, “Council considers eminent domain for project,” St. Louis Post-Dispatch, May 17, 2006.

[2] Jay Miller, “Domain debate looms; As Scott Wolstein’s plan for the Flats’ East Bank picks up steam, task force debates nonelected officials’ rights to eminent domain,” Crain’s Cleveland Business, May 1, 2006, at 1; Tom Breckenridge, “Condo plan brings criticism; Planners suspect Flats landowner trying to drive up the asking price,” The Plain Dealer, May 6, 2006, at C1.

[3] Alex Philippidis, “Lawyers have eye on state eminent domain law,” Westchester County Business Journal, January 2, 2006, at 4.

[4] Patrick McGreevy, “U.S. targets L.A.’s seizure of property; A federal watchdog agency is scrutinizing the city’s condemnation of some businesses,” Los Angeles Times, June 14, 2006.