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Introduction

When Justice John Paul Stevens wrote the majority opinion in Kelo v. New London, in which the Court held that the federal constitution does not prohibit the use of eminent domain to take property purely for economic development, he penned arguably the most important words toward the end: “[N]othing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.” Kelo v. New London, 125 S.Ct. 2655, 2668 (2005). Legislators in 40 states have since considered—or are planning to consider—legislation to curb the use of eminent domain for private commercial development at the state level. 

The Ohio Supreme Court now has under consideration the first eminent domain abuse case in this post-Kelo world and Supreme courts in Arizona and Washington have been asked to consider issues related to eminent domain. The Arizona Supreme Court had an opportunity to take a case that would have definitely answered the Kelo question in that state, but declined to hear the case while leaving undisturbed a lower court ruling solidly favoring private property rights, while Washington’s Supreme Court failed to accept a property rights claim in the face of a robust constitutional prohibition on takings for private use. All eyes remain on the Ohio court to see how it will apply the Ohio Constitution’s language offering arguably heightened private property rights protections to citizens of that state.

1. Ohio Supreme Court: Norwood v. Horney, et al

Section 19, Article I of the Ohio Constitution provides that “[p]rivate property shall ever be held inviolate, but subservient to the public welfare.” While “subservient to the public welfare” provides a limit on a property owner’s ability to keep his land, it, along with “inviolate,” also places a meaningful limit on the ability of local governments to take it from him for the private use of others. The Ohio Court has previously recognized this limit,—See State ex rel. Bruestle v. Rich 110 N.E.2d 778, 786 (Ohio 1953) ( holding that eminent domain may not merely or primarily be used to take property for private purposes), AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp., 553 N.E.2d 597, 600-601 (Ohio 1990) (instructing lower courts to examine the validity of blight designations in order to ensure that private ends are not being served)—but the Court is now faced with its first post-Kelo look at whether the Ohio Constitution affords more protection than the federal Constitution.

The case began in 2002 when private developer Jeffrey Anderson decided that he wanted to expand his $500,000,000 real estate empire by building a complex of chain stores, condominiums and office space on top of the neighborhood where Plaintiffs Joy and Carl Gamble and Joe Horney owned homes. Using a 2003 “study” initiated and paid for by Anderson, Norwood declared the well-kept neighborhood “deteriorating” so it could use eminent domain. 

The Institute for Justice, representing the property owners, challenged Norwood’s use of eminent domain. In June 2004, Judge Myers of the Hamilton County Court of Common Pleas found that the neighborhood is not blighted, but agreed with the City that the neighborhood is “deteriorating” because, among other reasons, it had “diversity of ownership”—in other words, people own their own homes and businesses. The First District Court of Appeals affirmed the trial court’s decision, and the plaintiffs appealed to the Ohio Supreme Court the question whether Ohio’s Constitution will provide more protection to property owners than the federal constitution provides under Kelo.

The Ohio Supreme Court heard oral argument on January 11, 2006. At one point during the argument, visiting Judge James Brogan asked Timothy Burke, an attorney representing Norwood, why the court should give deference to the findings of a city council that stands to make as much as $2 million a year in revenue from the project. Burke responded that local elected officials are responsible for determining land use, stating: “They’ve lived there all their lives, they’ve walked those neighborhoods, they’ve seen how it has changed.”

In a now widely publicized moment, Judge Maureen O’Connor then asked Burke, “Couldn’t the same argument be made for the homeowners?” 

Institute for Justice Senior Attorney Dana Berliner, arguing on behalf of the property owners, said in her closing remarks:

As the members of this court drive home today, I ask you to think about which of the dozens of neighborhoods you pass would not be “deteriorating” under Norwood’s definition. Which of them have no diversity of ownership, no older buildings, no cul-desacs, and no driveways people have to back out of? Those neighborhoods are full of people like Carl and Joy Gamble and unless this court rules in their favor today, all of those neighborhoods will be subject to condemnation for private development under Ohio’s Constitution.

A decision on this case is expected in the next few months.

2. Washington Supreme Court: HTK Mgmt v. Seattle Popular Monorail Authority

At issue in this case was Seattle’s “Sinking Ship” parking garage in Pioneer Square owned by HTK Management, LLC (HTK). In the spring of 2004, the Seattle Monorail Project—the city’s transportation authority created to facilitate development of a monorail system in Seattle—passed a resolution authorizing the use of eminent domain to acquire HTK’s property for a monorail station. The Monorail sought to condemn part of this property to build a station for the planned monorail expansion, but the “footprint” of this station would not cover the entire property. The Monorail also needed to temporarily use the remainder of the parcel as a construction staging ground for building the station.

All the parties agreed that the Monorail could constitutionally take the property for the station and for the temporary construction staging area. However, the Monorail also sought to take the portion of the property needed for a temporary construction staging area permanently from HTK, with the Monorail’s need for this property ending with construction.

At the trial court, HTK produced evidence that the Monorail sought to permanently condemn the entire property because it wished to sell the property outside the footprint of the station to private developers once construction was complete in order to generate revenue. On October 20, 2005, the Washington Supreme Court held that the Monorail, and any other governmental entity in Washington, may constitutionally take private property so long as some portion of the property is devoted to the public use. See HTK Mgmt., L.L.C. v. Seattle Popular Monorail Auth., 121 P.3d 1166 (Wash. 2005).

In a strange twist to the case, Seattle’s citizens voted on November 8, 2005 to terminate the Monorail Project after years of disastrous leadership and financial mismanagement. Subsequently, HTK and the Monorail worked out a deal that allowed HTK to keep its property in exchange for its agreement to drop all claims against the Monorail. But the precedent remains on the books. 

3. Arizona Supreme Court: Tempe v. Valentine, et al

In 2003, the Arizona Court of Appeals considered the extent of private property protection under the Arizona Constitution in Bailey v. Meyers, 76 P.3d 898 (Ariz. Ct. App. Oct. 1, 2003). In Bailey, the City of Mesa sought to condemn a family-owned brake shop in order to turn that property over to the owner of an ACE Hardware store who wanted to relocate his business from a nearby corner to expand his business. The Institute for Justice Arizona Chapter challenged the taking. The Court of Appeals rejected the taking finding, as Judge John C. Gemmill wrote: “The constitutional requirement of ‘public use’ is only satisfied when the public benefits and characteristics of the intended use substantially predominate over the private nature of that use.” Bailey, 76 P.3d at 904.

The City chose not to appeal, but only two years later the Arizona Supreme Court had an opportunity to consider the appropriate standard for determining “public use” under Arizona’s Constitution. The case of Tempe v. Valentine involved the City of Tempe’s attempt to condemn businesses in an industrial park and turn it over to a private developer who wished to build a 1.3 million square foot retail shopping center.

In March of 2005, Tempe initiated 19 condemnation suits against those property owners who chose not to sell their property under the threat of condemnation. Under the terms of the redevelopment agreement entered into with the private developer, the developer was responsible for all costs associated with the acquisition of property, including any condemnation actions. Tempe claimed at trial that the land was environmentally contaminated and that the properties needed to be consolidated to be cleaned up—the parcels lay atop a former city dump, which allegedly resulted in dangerously high methane build up under the surface. 

In September of 2005, Maricopa County Superior Court Judge Kenneth Fields found Tempe’s attempted use of its eminent domain power a violation of the Arizona Constitution under Bailey’s “substantially predominate” standard. The judge found that the environmental remediation was a self-justifying rationale because it only needed to occur to build the developer’s planned retail center. It was not required if the current uses remained in place. The developer admitted at trial that the majority of problems were not environmental, but geotechnical and that such concerns “relate solely to the construction of improvements and pose no threat to human safety if the property in the Redevelopment Area is allowed to remain in its current state.” The trial court went on to find that the private developers were the driving force behind the project, not the City of Tempe.

The City of Tempe filed a Petition for Special Action, an extraordinary writ seeking to bypass Arizona’s Court of Appeals and go straight to the state’s highest court. In doing so, Tempe explicitly asked the Arizona Supreme Court to overrule the Bailey standard and to adopt a Kelo-like standard where “public use” actually means “public benefit.”

On November 28, 2005 the Arizona Supreme Court declined to hear the City’s Petition, and thus left for another day a review of the Bailey standard. Tempe still has the option of a traditional appeal, although it appears unlikely such a step will be necessary: since November, the developer has announced the project will move forward regardless of whether it acquires all of the remaining property owners who decided not to sell.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We welcome responses to the views presented here. To join the debate, please email us at [email protected].