The problems with government planning

This seems to have become the theme of the week with New London, Conn., Derby, Conn., and now Burlington, Iowa all having their own problems with developers. Cato Senior Fellow, Randal O’Toole wrote a piece that appeared in last week’s Baltimore Sun that deals with not so much the problems, as with the failures, of government planning. O’ Toole explains the fundamental character of government plans:

Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special-interest groups ensure that the government plans benefiting them do not change — no matter how costly. Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans or plans that attempt to control other people’s land and resources. Many plans try to do all three.

O’Toole’s solution: market principles. Instead of seeking to control the details of development, O’Toole says local officials should make use of the market, which is inherently flexible, to ensure development. One city in California did just this, and Anaheim’s mayor, Curt Pringle, wrote about how he and his fellow city officials used market principles to develop without eminent domain.

Redevelopment Wreck in Iowa

Nearly a year ago, city officials in Burlington, Iowa, a small city on the Mississippi, began invoking eminent domain on the properties of elderly residents who lived in the Manor neighborhood of the city, a WW-II era development. Click for the more background.

Yesterday, just before start of the Iowa caucuses, City Manager Bruce Slagle announced that the developer for whom the city had seized the homes had suddenly pulled out of the project.

According to the Burlington Hawk Eye, the developer, Minnesota-based Robert Muir Co., told the city its vision to have a mix of shops and restaurants built in the neighborhood “no longer fit within the company’s goals.”

So, Burlington, Iowa, is now saddled with an empty 24-acre site that has already cost the city $5.16 million to acquire. The city plans on increased tax revenue from the development to gain back some of that money, but first they have to find another developer.

While there is hope for the future, Burlington is further proof that having a plan is not enough to justify the government’s seizure of private property and that city officials need to be more skeptical about their grand visions of redevelopment. While the city officials might have the city’s interest at heart, developers have their own interests, too, and the two might not always be shared.

Chicago businesses safe for now, but still fighting

Yesterday, the Committee on Housing and Real Estate passed a substitute ordinance authorizing the acquisition of property in Lincoln Square in Chicago’s 47th ward. The original ordinance would have allowed the city to seize many successfuNancy Smarinsky SLS.jpgl businesses, including Chicago Soccer and The Dental Corner, in order to give the property to a private developer. The businesses joined together to form Save Lincoln Square, and over 250 community members attended their first meeting – which was followed by a spontaneous march on Alderman Gene Schulter’s ward office.

Responding to this massive citizen opposition, Schulter introduced a substitute that removed most of the properties from the “involuntary acquisition list” – but not all. Maintaining the authority to condemn any of the businesses sets a dangerous precedent for the rest of Lincoln Square.

Schulter insists that he’s trying to “protect” Lincoln Square from big box developers, but the businesses clearly don’t want to sell – to a developer or to the city. The city is just trying to protect its own tax-hungry interests by keeping thriving stores like Chicago Soccer on an “acquisition list,” albeit voluntary (for now). The community sees right through the rhetoric.

The city has taken an important first step – but it’s only a first step. Eminent domain should not be authorized against any property. The ordinance will go before the full City Council at their January 9th meeting.

A Columbia Round-Up

ColumbiaTakeover.jpgColumbia’s plans for a new biotech campus in West Harlem moved ahead a couple of weeks ago, after the New York City Council approved the rezoning of the Manhattanville neighborhood, allowing the university to proceed with development, which will take at least a couple of decades to complete. While most of the property owners have already sold out to Columbia, three remain, including Nicholas Sprayregen and Anne Whitman.

On December 19, the City Council voted 35-5, with six abstentions and five absences, to approve the rezoning. The vote came a month earlier than expected. According to The New York Times, those dissentions and abstentions were in protest against the university’s threat of eminent domain and the rushed approval process. At least one councilmember, Vincent Ignizio, realized the gravity of the vote, telling the council: “Be very concerned about what you do, because the bullet you put in the gun of government today when pointed at somebody else may one day be pointed at you.”

[Read more…]

Protest in Glassboro, New Jersey

Members of Glassboro Citizens United, a group of local property owners and concerned neighbors, will be rallying against eminent domain abuse on Saturday, January 5. A large portion of downtown Glassboro has been declared “in need of redevelopment,” which allows the borough to forcibly acquire property for private profit.

Shenanigans abound there already.

Here are the details:

Protest Against Eminent Domain Abuse
Saturday, January 5 at 6 p.m.
Glassboro Municipal Building
1 South Main Street
Glassboro, NJ

Downtown developer gets booted in Derby

In July 2004, the Derby, Conn., board of aldermen signed a “preferred developer agreement” with Louis Ceruzzi, who planned to build apartments and commercial space on 14 downtown acres at the intersection of the Housatonic and Naugatuck rivers . The terms of the agreement, which said the city would use eminent domain to seize land not sold to Ceruzzi, threatened 18 property owners at the time.

Three and a half years later, the city has dropped Ceruzzi, citing the lack of development and progress in the redevelopment area.

In 2006, the city declared the downtown neighborhood blighted, using a survey in which no “physical condition analysis was completed” of the buildings they wanted to acquire. City officials also helped create blight in the area by allowingproperties owned by the city to deteriorate.

By October 2006, only five property owners, including Carl Yacobacci, owner of Clark Development, a design and building firm, had not succumbed to the threat of eminent domain.

The business owners were supportive of the project but angered by the city’s threat of eminent domain. At the time, Yacobacci said, “The only thing they’ve said about eminent domain is it’s a last resort. However, in their development plan the use of eminent domain is all over it, with how it will be used, how to compensate costs…. So if they’re not going to use it, why do they have it in the redevelopment plan?”

The city is now back to square one, and hopefully the remaining property owners, including the Yacobaccis, will be able to convince the city of the futility of using eminent domain as a means to assure the success of a redevelopment project.

Still waiting in New London

In New London, Conn., home of Susette Kelo, they are still waiting for the Fort Trumbull development to get off the ground.

The Day (link subscriber only, unfortunately) has finally had it with the preferred developer of the New London Development Corporation, and it seems the patience of the NLDC is coming to an end as well. In the two years since the Kelo decision of June 2005, construction has yet to begin on the development that is supposed to revitalize the Connecticut city.

One of the oft-overlooked dangers of using eminent domain for private development is underestimating the myriad of variables that go into making sure the plan, as proposed on paper, actually makes it into the realm of reality. Situations like that in New London, which could still avoid becoming a “Redevelopment Wreck“, should remind us all of the cost of buying into the promises of politicians and developers who say they need the use of eminent domain to prevent potential roadblocks to the development. Rarely is it mentioned that developers and local politicians are potential roadblocks as well.

The inability to predict the future should, in theory, make politicians a bit more hesitant to use such a heavy-handed tactic like eminent domain, but, as we all know, it doesn’t. In the case of New London, the chances for a successful economic revitalization shrink as the days move forward and construction site lies vacant. So far, the public hasn’t received any return on the investment local officials made in the name of New London’s economic well-being.

Ilya Somin over at Volokh.com has some additional commentary on this, too.

Keeping watch…

Despite legislative reform in 42 states over the past two years, the effects of the Kelo decision are still felt across the country as local governments, large and small, seek to grab land from their own citizens all for the sake of higher tax revenue.

Every day, we find story after story every day about yet another group of homeowners or small business owners threatened with condemnation so that local officials can hand property over to developers.

The number of situations out there make it difficult to give the attention each one deserves, but CastleWatch Daily will make it easier for people to be aware of the eminent domain situations not only in their own neighborhood but also across the country.

So, every day, we’ll share what we find in the news across the country with some occasionally entertaining commentary. And if there’s something we’ve missed, email us at castlewatch@ij.org.

As time moves forward, we’ll have other exclusive web content, including guest commentary from others at the Institute for Justice, who will provide even more insight into eminent domain abuse and the state of property rights in the United States.