Think Successful Redevelopment Necessitates Eminent Domain?

When the city of Seattle redeveloped part of its downtown in 1996, it did so the old-fashioned way—through private negotiation instead of public force. City officials and developers worked together to create more than one million square feet of new retail space, generating a 15.8% increase in taxable sales and a 4.4% increase in retail jobs. This was a classic case of targeted urban revitalization, and Seattle accomplished its goals while simultaneously respecting private property rights.[1]

Defenders of eminent domain for private commercial development all too often argue that eminent domain is absolutely necessary for private commercial development. Bart Peterson, testifying before Congress on behalf of the National League of Cities, asserted: “If cities did not have the tool of eminent domain, it would be impractical to undertake large economic development projects.”[2] Georgetown Law Professor John D. Echeverria, an outspoken supporter of the U.S. Supreme Court’s decision in Kelo v. City of New London, argued, “Without the eminent domain power, we would not have…many of our most successful downtown redevelopment projects, like the Baltimore waterfront.”[3] They could not be more mistaken.

Many of the most successful economic redevelopment projects throughout history stayed clear of eminent domain. Walt Disney constructed the magic of Disney World without condemning or threatening to condemn a single piece of property. He and his subsidiaries purchased 100% of the land for the Florida amusement park through voluntary negotiation.[4] The Rouse Company created an entirely new city from scratch in Howard County, Maryland, purchasing more than 15,000 acres from 140 different owners in 1963.[5] The Commonwealth Development Group assembled 21 separate parcels of land in Providence, Rhode Island, and built an enormous shopping center—now a vibrant commercial hotspot that’s created jobs and tax revenue, attracted hotels to the area, and become a cornerstone of growth and revitalization.[6]

Economic development happens every day without eminent domain. There are countless ways in which cities and commercial developers can improve the aesthetics of a given area, attract private enterprise and even facilitate infrastructure improvements to generate increased tax-revenue and job-growth, none of which require forcibly transferring land deeds from one person to another.

Since the 1970s, Main Street Programs, sponsored by the National Trust for Historic Preservation, have offered grants and loans for façade improvements, facilitated comprehensive grassroots-based economic development and revitalized entire neighborhood commercial districts.[7] The United States Department of Housing and Urban Development’s Dollar Home Program allows local government to purchase abandoned, foreclosed homes that have been on the market for more than six months; the properties are then renovated and often sold to low-to-moderate income families, benefiting the city as well as the new owners.[8] On a much smaller scale, Frank Cassidy, a building inspector in Bonita Springs, Florida, has worked with homeowners to restore the appearance of the exteriors of their homes. Once a property is named for aid under the “Beautify Bonita” project, Cassidy solicits tax-deductible donations and recruits volunteers to do the repairs.[9]

Projects involving land assembly and the transfer of property ownership can and do succeed without threatening eminent domain or initiating condemnation proceedings. In Las Vegas, Nevada, Focus Property Group created a 3,000-acre community called Mountain’s Edge. This project, undertaken without eminent domain, has been an exemplary success in developing residential and commercial real estate. Perhaps more significantly, city officials chose not to resort to abusing their eminent domain powers while still accomplishing a major economic development venture that is often touted by development professionals.[10]

This kind of success is not unique to the Nevada desert. In the mid-1980s, two developers in West Palm Beach, Florida, discreetly assembled 26 contiguous blocks of a run-down inner city area by buying over 300 separate parcels of land from 240 different owners. Only nine months later, they broke ground on a major shopping center now known as CityPlace. It is still a vibrant urban district, bustling with retail, dining and entertainment establishments—and certainly a model from which cities and developers can learn.[11]

In contrast, Scottsdale, Arizona, stonewalled $2 billion of successful redevelopment for years by threatening eminent domain. In 1993, Scottsdale designated four redevelopment areas, setting the groundwork for government to seize the homes and small businesses of hardworking Arizonans. When the city removed two of these designations, it reported an influx of billions of dollars. Areas that at one time were thought to need governmental interference have seen unprecedented prosperity and revitalization. Money poured in only after Scottsdale removed the threat of eminent domain.[12]

As these examples indicate, accumulating large parcels of land is clearly possible without condemning homes and small businesses against the will of their owners. Just as George Washington acquired land for the nation’s capital by involving landowners in the process and making them partners in economic reward,[13] West Palm Beach, Florida, initiated shared-equity partnerships. And, in the same way that the Disney brothers quietly purchased enough land for one of the nation’s most visited tourist attractions, Howard County carefully amassed thousands of acres for an entirely new city. John Norquist, former mayor of Milwaukee and president of the Congress for the New Urbanism, said it best: “The economy of this country was built by the private sector… Today, the same economic incentives which have always attracted private investment and spawned sustainable development continue to draw private real estate developers all over America.”[14]

The private sector has the expertise and experience to effectively evaluate risk, to weigh the complexities of real estate development with the likelihood of success, and to ultimately generate the sustainable job and revenue growth that cities and municipalities seek. The remaining defenders of eminent domain abuse scare Americans into believing they must choose between private property rights and economic growth. Fortunately, the evidence is clear and compelling—Americans can have both.