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Eminent-Domain Chutzpah

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Talk about chutzpah! A development company is thinking about suing Florida and the city of Riviera Beach for refusing to use eminent domain to provide land for upscale condominiums and a marina. Viking Inlet Harbor Properties was assured the city would condemn a number of working-class homes, but the city council had second thoughts. Now the company fears the $50 million it has already spent acquiring other lots will go to waste. “I’m stuck with these properties but can’t develop them because I can’t fill in the puzzle pieces,” said Mike Clark, president of the development company’s real-estate division. Hence the possible lawsuit.

Ever since last year’s U.S. Supreme Court decision in Kelo v. New London, cities have had the green light to take people’s property for private redevelopment projects. The victims of eminent domain are usually working-class people who are forced to sacrifice their homes for the sake of luxury homes and shops. Sure, they get paid something, but it’s not a true market price and some of these folks don’t want to move at any price.

Fortunately, the Court ruling unleashed a public backlash against eminent domain, and in response, over 20 states, including Florida, passed restrictions on their cities’ power to take people’s homes for private development. That’s what led to the unusual circumstances in Riviera Beach, a low-income city in Palm Beach County.

Five years ago the city declared an area blighted, although homeowners disagreed with that description. It didn’t matter. The designation made it eligible for condemnation and development by a private firm. The state’s standards for blight “are so vague they can mean anything,” says Dana Berliner, an attorney with the Institute for Justice, the pro-property-rights public-interest law firm that represents some of the Riviera Beach homeowners.

The city last year approved a $2.4 million project for a 400-acre area now occupied by 1,700 homes and businesses. Last May it agreed to let Viking develop the area for homes, condos, fancy stores, and yacht slips. The city pledged to use its power of eminent domain to condemn the properties. That led to three homeowner lawsuits.

There was a rub, however. The day after the agreement was made, Gov. Jeb Bush signed a bill prohibiting eminent domain for redevelopment. While Riviera Beach Mayor Michael Brown wants to challenge the new state law, city attorney Pamela Ryan prepared a resolution for the city council stating that the city would not violate the law. In other words, no eminent domain, leaving Viking high and dry.

At that point, the company threatened to sue Riviera Beach for going back on its word. “We don’t think it [the resolution] should be adopted,” said Bob Healey, chairman of the development company. “All they’re trying to do is get out of the lawsuits.” The Council is to vote Nov. 1.

No doubt the company feels wronged, but there’s no just way to compensate it. Taking the homes would be a violation of private property. But the taxpayers shouldn’t be on the hook either; this was a decision the city officials shouldn’t have made.

Imagine the homeowners’ agony.

“I built this home, raised my children here, and am raising my grandchildren here,” said Princess Wells, an Institute for Justice client who has lived here for 20 years.  “This is my dream home.  I never imagined the government that was supposed to protect my home could take it away from me for someone else.”

“Across America,” says Bert Gall, a senior attorney with the Institute for Justice, “local governments are using the power of eminent domain to seize private homes, businesses, farms, and houses of worship in order to transfer those properties to other private owners for their private use. More often than not, governments justify these private-to-private transfers by making bogus ‘blight’ declarations and arguing the new owners might create more jobs and taxes.  But if that can be a justification for taking someone’s property, then no home, small business, farm, or church will be safe from this kind of government land-grab.”

Sheldon Richman is senior fellow at The Future of Freedom Foundation, author of Tethered Citizens: Time to Repeal the Welfare State, and editor of The Freeman magazine. Visit his blog “Free Association” at www.sheldonrichman.com. Send him email.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.