Public Power, Private Gain: Indiana



Indiana is growing more aggressive in its use of eminent domain to benefit private parties. The legislature tried to pass a bill permitting governments to take property and evict owners more quickly. Indianapolis has taken a large amount of property for private industry, and other cities have attempted similar maneuvers. These efforts have met with decidedly mixed results in court. Although a court permitted the Indianapolis condemnations, attempts to take a residential restriction in Fort Wayne and a church in South Bend were thwarted by court decisions. With these two recent defeats, perhaps Indiana cities will think twice before using eminent domain for private development.

Legislative Actions


Representative Brian Hasler proposed a bill to give the government quick-take authority in eminent domain cases. Introduced in January 2002, the bill would have permitted the plaintiff in an eminent domain action (i.e. the government) to take possession of the defendant’s property upon payment to the court clerk of a deposit equal to the last amount offered by the plaintiff to the defendant.221 Fortunately, the bill died in committee.



Private Use Condemnations


Fort Wayne

William and Judy Daniels own a home in the Broadmoor Addition residential subdivision of Fort Wayne. Since the subdivision was first laid out, the properties have had a restriction (called a “restrictive covenant”) that they could be used only for single-family residences. HNS Enterprises owns three unoccupied homes along the main road in the subdivision, which it wanted to demolish and convert into a shopping center. HNS submitted a rezoning petition to the Allen County Area Plan Commission seeking to vacate all the restrictive covenants in the subdivision. That would allow HNS to build the shopping mall.


The Plan Commission approved HNS’ rezoning petition, on the grounds that commercial development could be beneficial to the public. So in April 2000 the Daniels family filed suit in federal court seeking a declaratory judgment and permanent injunction against removal of the restrictive covenants. The district court granted the Daniels’ summary judgment motion and voided the acts of the Plan Commission purporting to vacate the covenants. The Seventh Circuit ruled that under Indiana state law, economic development on its own does not constitute a valid public purpose. Instead, redevelopment agencies must declare an area to be “blighted” in order to condemn for the purpose of commercial development. In this instance, however, there was no declaration of blight.222 The agency did not even make a finding of public purpose. According to the Court, regardless of any agency findings of public purpose, the speculative public benefit from vacating the restrictive covenants would be “incidental at best.”223



Lucian Anderson owned an unoccupied home in the Fall Creek Place neighborhood of Indianapolis. Since 2000, the City had been acquiring and refurbishing homes in the area, then selling them to other private owners as part of an urban redevelopment project. After Anderson refused to sell his home to the City, the local redevelopment agency condemned the property. Anderson never received personal notification of the City’s action, even though the City had been negotiating with him for years. In addition, Anderson overlooked the miniscule eminent domain notice that ran in the newspaper for three weeks. The trial judge rejected Anderson’s notice challenge, forcing him to accept damages based on the City’s lowball appraisal.224



During the 1980s, local businessman and political figure Bob Parker began purchasing properties in the Martindale-Brightwood neighborhood of Indianapolis. He bought a total of 10 acres there, and hoped to someday transform the area into a booming industrial park. Then the City came along with a brilliant redevelopment idea for Martindale-Brightwood: It would condemn Parker’s land and an additional 70 acres to create Keystone Enterprise Park, a (you guessed it) booming industrial park. The City reached agreements with many of the targeted landowners. However, Parker opposed the City’s proposal to take land he had spent years accumulating, especially because it planned to develop the land exactly as he had planned. In July 2001, Indianapolis City attorneys asked a Marion Superior Court judge to condemn Parker’s property, claiming that he stood in the way of its development plans. The City then offered Parker a mere $349,950 for the parcel, which Parker claimed was worth $3.8 million. The City even disputed Parker’s ownership of part of the land.225


In a September 28, 2001 decision, the judge sided largely with the City, and Parker’s property was subsequently condemned. Indianapolis officials hope to begin selling lots in the wooded, 30-acre north section of the park by the summer 2002. Parker, who was once an unsuccessful mayoral candidate, is steamed, claiming that the City stole his idea and now “is trying to poison me with my own prescription for helping this neighborhood.”226



Elizabeth Fernando owned the Plaza Parking Garage, located between two apartment buildings slated for renovation. After four years of failed negotiations, the City condemned her garage in May 2002, claiming that the property was a necessary missing piece of its plan to redevelop the block. The City plans to sell Fernando’s property to private developers.227



AM General wanted to expand its auto manufacturing facility in Mishawaka. In January 2000, the automaker announced plans for a $200 million plant expansion that would produce a new sport utility vehicle based on the all-terrain military vehicle known as the Hummer, which the company already built in its existing Mishawaka factory. One problem for AM General, however, was that the land on which it proposed to expand was already occupied by a neighborhood of 51 homes.228 So, the redevelopment commission of St. Joseph County stepped in to act on the automaker’s behalf.


The County announced that by March 2000 it would decide whether to declare the surrounding neighborhood as “blighted,” which would allow it to condemn the homes and transfer ownership of the land to AM General. Many of the targeted homeowners were angered by the County’s announcement. For one, the neighborhood consisted of well maintained, decidedly middle-class homes that were nothing like the ramshackle eyesores conjured up by the term “blight.” Also, the County had made no attempts at negotiation with individual owners, who were generally in favor of the redevelopment.229


As the County’s decision date approached, AM General reached agreements with the owners of the seven properties that directly abutted its already existing facility, allowing the automaker to begin the project. Around the same time, the County announced that it would delay until July 2000 its decision on whether to designate the area as blighted, which was a necessary step toward condemnation. This would give AM General more time to negotiate directly with the other owners.230 Over the next four months, the company began in earnest to negotiate for the rest of the properties, and by the July deadline, agreements had been reached with all of the remaining owners. This obviated the need for the blight designation or eminent domain proceedings altogether.231


Certainly AM General’s willingness to deal directly with the owners and take their concerns seriously helped, but the owners still knew that if they did not sell, the County would move forward with the condemnations.


South Bend

City Chapel, a South Bend religious group with about 100 members, operated a church in a four-story downtown building that once housed a large retail store. When the City condemned the building for private redevelopment, the church sued on state First Amendment grounds, claiming that the City’s actions illegally infringed on City Chapel’s right to worship and conduct church activities. The case made it to the Indiana Supreme Court, which ruled that the church was entitled to an opportunity to have a trial to litigate its First Amendment claims.232 On the eve of trial, the City decided to negotiate with City Chapel and the case settled.233


*These numbers were compiled from news sources. Many cases go unreported, and news reports often do not specify the number of properties against which condemnations were filed or threatened.

221 See H.B. 1066, 112th Sess. (Ind. 2002).

222 See Daniels v. Area Plan Commission, 306 F.3d 445, 463 (7th Cir. 2002).

223 Id. at 465.

224 Jennifer Wagner, “Man is Latest to Try to Block City Acquisition of Property,” The Indianapolis Star, June 20, 2002, at B1.

225 Vic Ryckaert, “Landowner Fights City on Eastside Site’s Fate,” The Indianapolis Star, July 10, 2001, at B1.

226 Doug Sword, “City to Begin Developing Land for Industrial Park,” The Indianapolis Star, Oct. 29, 2001, at A1.

227 Jennifer Wagner, “Man Is Latest to Try to Block City Acquisition of Property,” The Indianapolis Star, June 20, 2002, at B1.

228 Deanna McCool, “Homeowners Unhappy,” South Bend Tribune, Jan. 13, 2000, at A1.

229 Rick Thackeray, “Proposed Hummer Plant Raises Eminent Domain Questions,” The Indiana Lawyer, Mar. 29, 2000, at 6.

230 Deanna McCool, “2 Owners Find AM General Deal Fair,” South Bend Tribune, Mar. 29, 2000, at D1.

231 Jason Callicoat, “In General, Hummer Plant Negotiations End Well,” South Bend Tribune, Aug. 6, 2000, at C1.

232 See City Chapel Evangelical Free Inc. v. City of South Bend, 744 N.E. 2d 443, 454 (Ind. 2001).

233 Terrence Bland, “Church Site Is ‘One More Piece of the Puzzle’,” South Bend Tribune, Aug. 4, 2001, at A4.