Is Development Really the Goal?

Vineland Construction Company has plans for a waterfront development on 140 acres it owns in Pennsauken, N.J.[1] Dr. Prabhu Dhalla in Riverside, Calif., is in the process of turning an abandoned thrift shop he recently purchased into a medical building, having already sunk $1 million into construction.[2] Carol Segal is planning to build townhouses on a vacant strip of land he recently purchased in Union Township, N.J., property he bought for that precise purpose.[3]

So it may strike you as odd to learn that these municipalities are moving to condemn each of these properties—all for the alleged purpose of economic development.

In what is an increasingly common trend across the nation, government officials are using eminent domain to acquire private property so that they can then hand land over to developers of their choosing, ignoring the fact that some current owners have the intent, the ability and, often, even the plans to redevelop the land themselves.

In Pennsauken, for example, Cherokee Investment Partners of North Carolina—a competitor of Vineland Construction Company—hopes to move forward with a $1 billion mixed-use development along Pennsauken’s waterfront. Cherokee’s 600-acre plan relies on 140-acres, land already rightfully owned by Vineland. The catch, says Vineland’s attorney Lloyd Levenson, is that the Township has moved “to take property and give it to someone else to do the same redevelopment that we are capable and willing to do.”[4]

The situation in Riverside isn’t much different. In July 2005, the City Council brought in Thrifty Oil Company to build a downtown, four-story medical building with restaurants and retail establishments. The only problem is that neither the City nor Thrifty owns the land for the proposed commercial project; the two entities do not even have a development pact. Meanwhile, Dr. Dhalla, an orthopedic surgeon, owns the land on which the City intends to build, and he has already started construction on an office building of his own. In fact, City Councilman Dom Betro, who represents downtown Riverside, told the Riverside newspaper that the “problem” is that Dhalla only recently began to “get religion” and decided to redevelop his land.[5]

And in Union Township, developer Carol Segal purchased vacant land for the sole purpose of building a townhouse development and now the Township is attempting to seize his land by eminent domain to hand it over to a developer of its choice—who plans on doing the exact same thing with the property that he does.

Ironically, if the government officials in these situations actually sought economic development, they would not intervene when economic development is exactly what is taking place. After all, Vineland promised Pennsauken the same development it is seeking, Dr. Dhalla is conveniently already building an office building where the City wants just that, and Segal plans on building the same townhouses the city hopes its own developer will produce.

Similar situations are occurring nationwide. In June 2005, the U.S. Supreme Court opened the floodgates to eminent domain abuse in Kelo v. City of New London, signaling to officials and developers throughout the nation that they could use eminent domain for the mere possibility of increasing local tax revenue. In response to public outcry against the now infamous decision, defenders of Kelo—typically those who stand to gain from eminent domain abuse—adamantly deny that the government is now engaging in real estate development. However, when officials take land from one developer and give it to another, local governments are doing just that, making business decisions that are best left to the private sector.

The Castle Coalition emphatically opposes government at any level taking land from one person and giving it to another—regardless of whether economic development in that particular instance will be achieved. After all, as the overwhelming evidence indicates, private economic development is undoubtedly successful without any government intervention whatsoever, and there are a number of situations, such as Scottsdale, Ariz., in which government interference actually inhibited billions of dollars of private investment. Situations such as these emphasize just how far city officials teamed up with greedy developers are willing to go.

Too far.

[1] Jill P. Capuzzo, “Decision in Pennsauken case,” New York Times, December 18, 2005, at 14NJ.

[2] Dan Bernstein, “Cheek to cheek,” Press Enterprise (Riverside, CA.), December 20, 2005, at B1.

[3] Sean Hannity, Alan Colmes, “New Jersey Town threatens to take land from owner for townhouses,” Fox News Network: Hannity and Colmes, November 4, 2005.

[4] Capuzzo.

[5] Bernstein.