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Study: Governments Increasingly Seize Property as First Resort, Not Last

Cities pursue economic development goals at the expense of low and moderate income families, businesses

February 3, 2005

Los Angeles (February 3, 2005) — As the Supreme Court prepares to hear the enormously important property rights case Kelo vs. New London on Feb. 22, a new Reason Foundation report finds eminent domain is being abused as a "tool of first resort" by governments seeking the new revenue streams that come with redevelopment projects.

"More and more we are seeing homeowners and small businesses displaced by the whims and financial desires of city councils under the guise of eminent domain," said Samuel Staley, Ph.D., director of urban land use policy at Reason Foundation and lead author of the report. "Once upon a time, eminent domain was reserved for severe cases of blight. Now, if a city thinks that it can generate more tax money with redevelopment, the government plays the eminent domain card."

Reason concludes that a growing number of governments are using eminent domain to circumvent the conventional real estate market. Eminent domain forces property owners to sell their property to the city while the city then turns around and sells the property to developers. Private developers often reap significant financial gains through this process, which is increasingly driven by local politics and gives well-connected property developers significant advantages over homeowners and small businesses.

The Reason study offers in-depth analysis of two cases that are similar to the Kelo case soon to be heard by the Supreme Court. That case involves Susette Kelo and her neighbors, whose non-blighted homes were condemned by the City of New London, Conn., so that developers can build luxury condos, a hotel, and office space.

The Reason case studies offer a rare glimpse into the mechanics of how eminent domain is used in redevelopment. The first case examines the condemnation of a small, family-owned brake repair business in Mesa, Arizona after local hardware store chain decided it wanted to expand on the same property. The city, taking its queues from local private developers, tried to condemn the land so it could sell it to the hardware store franchise as a redevelopment project. The second case shows how local planners and city officials targeted a stable, moderate income neighborhood in Lakewood, Ohio for condemnation after the city decided an upscale commercial and residential "lifestyle center" was a better economic use for the property. Thousands of families would have been displaced by redevelopment project which, like Kelo, was motivated by the city's desire to generate higher tax revenues from the property.

"These cases provide a unique window through which we can see how invoking eminent domain has become routine practice in urban redevelopment," says Staley, co-editor of the book Smarter Growth: Market-Based Strategies for Land-Use Planning in the 21st Century. "A tool that was intended to constrain government and be used sparingly has become a tool of first resort as cities pursue politically driven economic development goals at the expense of low and moderate income families and businesses."

Full Report Online

The full study, Eminent Domain, Private Property, and Redevelopment, is available online at www.reason.org/ps331.pdf. Reason's amicus curiae brief filed in the Kelo case urges the Supreme Court to protect the property rights of the New London families because the city and developer clearly fail to meet any of the standards previously established by the Court as valid under the Constitution's Takings Clause. The brief is available online at www.reason.org/KeloAmicusFinal.pdf.

About Reason

Reason is a leading libertarian think tank that has been advancing free minds and free markets since 1968. Reason's policy analysts, considered among the nation's premier privatization experts, have advised the last four presidential administrations, California Gov. Arnold Schwarzenegger, Florida Gov. Jeb Bush, and numerous other state and local governments.

Contacts

Samuel Staley, Director of Urban and Land Use Policy, Reason Foundation, (937) 848-8896
Chris Mitchell, Media Relations, Reason Foundation, (800) 582-2245 ext. 3037



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