Recent developments last week show that the government will threaten eminent domain to prevent the lawful exercise of owners’ private-property rights.
First, the City of Charlottesville, Virginia is in a battle with the owner of the Charlottesville Parking Center concerning rates that the CPC wants to charge for parking spots at the Water Street Parking Garage. The ownership of the parking garage apparently looks like this: the Water Street Parking Garage Condo Association owns the parking structure; CPC owns 344 parking spots as well as the land under the structure; and the City itself owns 629 spaces. The parking rates for the parking garage are set annually by the Pooled Parking Unit Owners—the CPC and the City, who are evenly split on proposed rates for 2016.
In March, CPC sued the City, alleging that it insists on charging below-market rates. Among other relief, CPC seeks disassociation of the City from the alleged Charlottesville-CPC joint venture and an injunction to prevent the City from blocking CPC’s efforts to charge market rates. CPC’s owner asked the City to consider selling to CPC. But the City filed its own claim, alleging that in October 2015, Wells Fargo sold its parking units in the Water Street Parking Garage to CPC without offering the City the right of first refusal, as allegedly required by a controlling declaration. Last week, Charlottesville’s city council passed a resolution authorizing the city manager to attempt to purchase CPC’s parking units.
Now, however, the City is threatening to use eminent domain to forcibly take CPC’s property. The City claims to be looking out for the economic interests of nearby shoppers and businesses. But the City is using its eminent-domain power as leverage in an otherwise routine dispute between business partners. As one city council member acknowledged, “Eminent domain is just one of several options the city has. It seemed prudent to not just counter-sue to protect city assets, but to explore further options.” Even if the City is correct on the merits of the litigation, its heavy-handed tactics should be condemned.
Meanwhile, in California, the city of Palo Alto seeks to prevent the owners of a mobile-home park from closing the park and selling the property to developers. The City last year approved the owners’ closure application, which required the owners to provide relocation assistance to the residents of the mobile homes. The residents latersued to get the City’s approval overturned, and they claimed that the relocation-assistance package included with the owners’ closure application was insufficient. The owners filed their own lawsuit, alleging that the City imposed unconstitutional conditions on the owners as the price for its closure-approval.
The City and the County of Santa Clara want the property to be maintained as a mobile-home park due the area’s lack of “affordable housing,” and they have offered to purchase the property, but the owners have not accepted what appears to be a below-market offer. Now, the City and County, along with the Housing Authority of Santa Clara, have threatened to take the property through eminent domain. According to the Housing Authority’s executive director, this action is justified because affordable housing is a “public resource.”
Note that in each of these cases, the property owners are not using, and do not threaten to use, their property in ways that would result in harm—the traditional justification for government action. Rather, the governments here believe that the property could be put to better use, as the governments see it. Thus do governments take advantage of their unique authority to condemn private property.
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Oliver Dunford is Of Counsel at Hahn Loeser & Parks LLP.