Two New Studies Detail How Cities Block Private Revitalization Efforts

WEB RELEASE: June 23, 2008
John E. Kramer
(703) 682-9320, ext 205

50 State Report Card

Simplify, Don’t Subsidize: The Right Way to Support Private Development

. 50 State Report Card

Baltimore’s Flawed Renaissance

Arlington, Va.—Government-driven redevelopment efforts stifle economic development projects and actually hinder the revitalization of the nation’s cities, argue two new studies from the Institute for Justice.

In Baltimore’s Flawed Renaissance, authors Stephen J.K. Walters, a professor of economics at Loyola College, and Louis Miserendino, a graduate of Loyola, closely examine Baltimore’s half-century-long failed attempt to bring investment back into the city. Independent developer Doug Kaplan details the outrageous bureaucratic and regulatory hurdles small developers must pass in order to build private projects in Simplify, Don’t Subsidize: The Right Way to Support Private Development.

Baltimore’s Flawed Renaissance and Simplify, Don’t Subsidize are the Institute for Justice’s third and fourth Perspectives on Eminent Domain Abuse, a series of independently authored reports that examine eminent domain abuse from the vantage point of noted national experts.

While Baltimore’s Inner Harbor is often touted as the example par excellence of government-subsidized redevelopment, Baltimore “is today two cities, separate but unequal, not in spite of its extravagant and interventionist redevelopment program, but because of it,” argue Walters and Miserendino

The city’s redevelopment strategy, according to Walters and Miserendino, is deeply flawed and has been affected negatively by the heavy-handed use of eminent domain over the past 50 years. Although Baltimore’s Inner Harbor has recently become the city’s premier attraction, the rest of the city remains a relic of post-WWII urban decay and bears the scars of failed government-backed redevelopment in decades past. Walters and Miserendino recount the city’s failed attempts since the 1960s to revitalize the city, while businesses fled for the surrounding Baltimore County and elsewhere where they would not be threatened with eminent domain and, at the same time, taxed exorbitantly.

“The city’s lack of progress on so many fronts is a direct by-product of its failure to understand and treat the real source of its problems: hostility to private property rights and a resulting flight of capital that largely drained the city of its economic lifeblood,” the authors conclude.

On the West Coast, Kaplan details his attempts to build a shopping center in Santa Cruz County, Calif. Kaplan, a small independent developer, argues that the amount of paperwork and fees that go along with each of the intricate regulatory steps to build and renovate in Santa Cruz actually stifles efforts to bring economic development to local communities.

Kaplan also shares his company’s navigation through Santa Cruz County’s “ever-expanding gauntlet of government-imposed regulatory, administrative and financial obstacles” in order to build a small commercial building in Capitola, Calif. Through his experiences in Capitola and elsewhere, Kaplan has found that “more often than not, local governments don’t ‘catalyze’ private development; they drive it away by making it too expensive.”

“Today, a private developer faces a difficult choice: Go into business with the local development agency, or go it alone, at great cost and peril,” Kaplan argues. “If cutting taxes, reducing fees and streamlining regulations benefits government’s public/private partners, then think what miracles could occur if government did the same for everyone,” he concludes. “Do less to us and watch us have fun taking care of the rest.”

The release of these two reports is especially timely as today (June 23) is “Kelo Day.” Three years ago, the U.S. Supreme Court ruled that New London, Conn., could take the homes of Susette Kelo and her neighbors in order to try to generate more tax revenue. Today, after $78 million in taxpayer dollars, nothing has happened with the land, which sits brown and barren.

“The beneficiaries of eminent domain abuse maintain that planning, controlling and subsidizing development helps communities, but as these groundbreaking reports prove, that approach has the opposite effect,” said Christina Walsh, coordinator of the Castle Coalition, which helps home and business owners nationwide fight eminent domain abuse. “Eminent domain, exorbitant taxation, regulations, permits, development fees—the list goes on and on—all have a chilling, if not lethal, effect on private investment. Municipalities need to get out of the development business and leave that to private individuals who want to do it themselves.”

Both studies are available for download at and