Public Power, Private Gain: Kentucky



Kentucky courts prohibit the government from taking someone’s property just to give it to another private party,254 and a federal court struck down the attempt of one Kentucky city to declare an ordinary residential area blighted so that it could condemn and transfer the property to a private developer. Despite these clear judicial signals, Kentucky cities do not seem convinced. Both the State and the City of Newport have threatened owners with eminent domain in an effort to force them to sell “voluntarily.” Newport has initiated condemnation proceedings to take property for a private residential and commercial development, while owners in Lexington and Newport (again) are challenging condemnations that might be for government use but that the owners allege are really for the benefit of private developers.  

Private Use Condemnations



The Howlett family found out the hard way what happens when the little guy successfully defeats a state’s attempts to take his land for a billion-dollar project that serves to benefit another private party. The Hyundai Motor Company wanted to build its first U.S. manufacturing facility, and Kentucky officials mounted an all-out effort to lure the automaker to a 1,500-acre site in rural Hardin County. The only problem for the State was that the Howlett family did not want to give up its 111-acre farm. The family vigorously fought all efforts to condemn their land, wishing only to be left alone on their family farm. State officials then tried to bully the Howletts by portraying them in the press (without a hint of irony) as greedy opportunists trying to “extort” money from the state by demanding at least $10 million for their farm. Eventually, the Howletts agreed to an option that would allow the state to buy it for $6 million. But by then Hyundai had announced that it would build its plant in Montgomery, Alabama.


To the Howletts, the issue was never money, but rather about property rights and a desire to preserve the family’s traditional way of life. Hyundai even stated that it could have built the plant without taking the Howlett farm. After losing his bid to lure Hyundai, though, Governor Paul Patton refused to accept the fact that Kentucky lost because of the state’s own ineffectual leadership and inferior proposal to the automaker. Instead, Patton continued to accuse the Howletts, saying the family had tried to “destroy” the Hyundai deal by “kill[ing] the goose before it had time to lay the golden egg.”255 This attitude is typical of bureaucrats who have no interest in people’s attachment to their homes and businesses but see owners just as obstacles to private and public money-making schemes.


Highland Heights

The Gateway West area is located on a prime spot near Interstate 471 in Highland Heights. The 14-acre residential area housed 13 single-family homes. However, the city redevelopment agency wanted the strategically-located land to be used for such purposes as a hotel/conference center, office buildings or retail stores. City leaders envisioned a gleaming commercial gateway for this suburban Cincinnati community. In Fall 1997, the City sought to declare Gateway West a redevelopment area, which would allow it to condemn properties to eliminate “blight.” Once it gained title to the land, the City could then sell it to private developers who would put the land to the City’s desired use. The Highland Heights City Council adopted the redevelopment plan in April 1998 above the objections of many property owners affected by the designation, and even though neighborhood conditions were substantially similar to those in other Highland Heights neighborhoods (including those in which some City council members lived). The City also declared the area to be a high-crime zone, while admitting that only about 10 police calls per year were made to this area. Angered by the City’s actions, these owners banded together to mount a federal court challenge to the decision establishing the redevelopment zone.


In July 1999, a U.S. District Court in Kentucky granted summary judgment to the landowners, finding that the City’s actions were arbitrary, capricious and without a rational basis. The judge held that the subject properties were not blighted, although the City had tried to back up its actions with flimsy “blight” findings by its expert panel.256 As the court noted, “Merely establishing a large administrative and legislative record does not entitle a legislature or administrative agency to declare an apple to be an orange.”257 On appeal the U.S. Court of Appeals for the Sixth Circuit vacated the District Court’s decision for lack of certain jurisdictional findings.258 After making them, the District Court reinstated its original opinion, and the case is now closed.259 Without the blight designation, the City will be unable to condemn the homes of Highland Heights residents.



A battle is taking place over ownership of the Lyric Theatre, a historic building that was once Lexington’s main movie theater catering to African-Americans during segregation. A religious group called God’s Center has owned the defunct theater since 1984, but City leaders have been trying for years to wrest control of the theater and its future direction from the group. The City had pledged to use state funds to build an African-American cultural center, and had been sued by the State for not making good on its promise. So, in the mid-1990s, to settle the suit, the City attempted to condemn the Lyric and designate it as the future site of the promised cultural center. The settlement was obtained without the consent of God’s Center, which was simultaneously working on its own plan to restore the old theater and create its own African-American cultural center.260 Another reason for Lexington’s aggression toward the Lyric was that City leaders were worried about public outcry over the fact that municipal dollars were already going toward the restoration of the Kentucky Theatre, the location where whites attended movies during segregation. During the trial over the City’s “public use” justification for the taking, God’s Center presented evidence showing that the driving force behind the City’s actions was a small group of individuals trying to put the theater under the control of the founder of Micro-City Government, a youth social and political outreach program. In April 2001, Fayette Circuit Judge Gary Payne upheld the City’s condemnation, and God’s Center appealed.261 In November 2002, the Kentucky Court of Appeals upheld the trial court’s decision, ruling that the proposed African-American cultural center is a valid public use.262 God’s Center attorney Gail Slaughter vows that the group will appeal all the way to the U.S. Supreme Court, if necessary. “The bottom line is that it’s unconstitutional to take private property from one private group and give it to another private group,” says Slaughter.263



Newport City officials are trying to remove dozens of homes in the Cote Brilliant neighborhood that stand in the way of a planned $100-million retail and upscale residential development. In total, the project would require razing 150 homes. The original developer for the project was Neyer Properties, Inc., which negotiated contracts to sell from most of the owners in the area. However, 13 owners refused to sell, and four filed suit in federal court to prevent the government from taking their homes. Shortly thereafter, the City decided to find a new developer.264 The City wants to transform the hillside community into Newport Promenade, a combination of shopping and homes in the $300,000 price range with views of the Cincinnati skyline. City Manager Phil Ciafardini says the existing neighborhood meets the definition of “blight.” But Cote Brilliant residents disagree. Many of the homes are in the $200,000 range, and the neighborhood has the second-highest economic base in Newport, according to the lawyer for the residents.265 Lois Joy Sallee-Scheall, the most outspoken opponent of the Newport Promenade project among the targeted property owners, says she is insulted by the City’s apparent preference for a different type of landowner. As Sallee-Scheall says, “What they are telling me is that I’m not worth as much as someone who can live in a luxury condo.”266


By December 2002, the City had purchased more than 20 of the properties needed for the Newport Promenade development. Additionally, the City has begun eminent domain proceedings against several properties, most of which are related to owners the City cannot locate. The City has sought $12 million in bonds to fund the acquisitions and has begun talking to Neyer again. However, some Newport officials are becoming disillusioned with the manner in which the City is forcing owners to sell their perfectly good homes under the threat of condemnation. Commissioner Beth Fennell, who voted against the redevelopment, is not comfortable with the arrangement. “I just don’t feel like we should take a risk for the developer,” she said. “I think we’ve overstepped our responsibilities. [The developer] should have to take the risks if they want the gains.” Meanwhile, the four owners who are challenging the City’s proposed condemnations press on with their suit. None of them are included in this first round of takings, but they want to make sure the City’s redevelopment bureaucrats cannot condemn them next.267



A Newport landowner is taking the City to court over its attempt to condemn property for a new bus terminal. BIF, Inc. owns three parcels in downtown Newport, which it leases to Challenger Piping, Inc., a Goodyear tire store and an auto detailing shop. The Transit Authority of Northern Kentucky claimed that a new central bus depot is needed, and the City agreed to condemn the parcels for this purpose. The landowner claims, however, that internal memos show that the idea for the project originated not with the Transportation Authority, but with two private developers who are trying to develop an office tower on several blocks in the same area and who consider the BIF properties too downmarket to be near their new development. No feasibility or traffic study was ever conducted prior to condemnation. Documents produced for the court challenge indicate that the former city manager suggested that if BIF rejected the developers’ offer, the City would help it concoct a plan to “build a public park or something dedicated to the public so the property could be purchased through eminent domain.”268 The Transportation Authority, on the other hand, claims that BIF is challenging the condemnation merely to jack up the final selling price, and denies that the bus terminal scheme is connected to any private development plans.269 The lawsuit was filed in August 2002.


*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.

254 See, e.g., Prestonia Area Neighborhood Assoc. v. Abramson, 797 S.W. 2d 708, 711 (Ky. 1990).

255 Jim Warren, “Blame for Hyundai Loss Rejected; Attorney Calls Patton’s Version Wrong, Unfair to Hardin Family,” Lexington Herald-Leader, Apr. 3, 2002, at A1.

256 See Henn v. City of Highland Heights, 69 F. Supp. 2d 908 (E.D. Ky. 1999).

257 Id. at 913.

258 See Henn v. City of Highland Heights, 248 F.3d 1148, 3 Fed. Appx. 487 (6th Cir. 2001).

259 See Henn v. City of Highland Heights, No. 98-95 (E.D. Ky. Mar. 23, 2001).

260 Louise Taylor, “Trial of Dispute over Lyric Theatre Wraps Up; Judge Is Expected to Issue Decision Later this Month,” Lexington Herald-Leader, Mar. 8, 2001, at B3.

261 Louise Taylor, “Judge Backs City Takeover of Lyric Theatre; Citizens’ Group Plans to Appeal,” Lexington Herald-Leader, Apr. 14, 2001, at A1.

262 See God’s Center Foundation, Inc. v. Lexington-Fayette Urban County Government, 2002 Ky. App. LEXIS 2315, at *1 (Nov. 8, 2002).

263 Louise Taylor, “Appeals Court Backs City in Lyric Fight; God’s Center Attorney Has No Plans to Give Up,” Lexington Herald-Leader, Nov. 9, 2002, at C1.

264 Stephenie Steitzer, “Newport Promenade; Retail Aspect Bogs Down,” The Cincinnati Enquirer, Aug. 14, 2002, at 2C.

265 Dave Niinemets & Susan Vela, “City Starts Buying Land for Project,” The Cincinnati Enquirer, Dec. 15, 2002, at 1B.

266 Karen Samples, “Fights Brew Over Use of Eminent Domain,” The Cincinnati Enquirer, Jan. 10, 2002.

267 Dave Niinemets & Susan Vela, “City Starts Buying Land for Project,” The Cincinnati Enquirer, Dec. 15, 2002, at 1B.

268 Karen Gutierrez, “Filings Say Depot Plan an Excuse,” The Cincinnati Enquirer, Aug. 15, 2002, at 1C.

269 Karen Gutierrez, “TANK: Lawyers Trying to Jack Up Land Price,” The Cincinnati Enquirer, Aug. 27, 2002, at 1B.