TCS Daily

Eminent Threat

By Bob Collins - October 1, 2003 12:00 AM

They wore T-shirts that said "My House -- My Rights" and "Fight Eminent Domain Abuse." You'd think that the defenders of property rights would be heroes -- the little guys standing up to the big developer and fighting City Hall. But you'd be wrong.


The scene was in Norwood, Ohio, an older suburb of Cincinnati. The City Council was holding a public hearing was on a study of the "Edwards Road Corridor," an emerging retail/office center. The study found a neighborhood in the corridor to be "blighted," thus opening the way for the city to take properties by eminent domain for a private developer who is eager to put the land to "higher and better use."


Recently, CBS's "60 Minutes" spotlighted a neighborhood in another mature suburb at the opposite end of Ohio -- Lakewood -- where residents are fighting eminent domain for a private condo development. The Lakewood homeowners were portrayed as heroes, but that's not how it looked on the ground in Norwood.


An Opportunity and a Charade


Norwood is a nice town, but it has struggled since an auto plant closed in 1987, taking 4,000 jobs and a third of the city's tax base. In recent years, Norwood has tapped an opportunity tucked into the southeast corner of the municipality -- an exit off I-71 near some of Cincinnati's most prestigious neighborhoods. A "lifestyle" center with upscale shops and restaurants opened on a former industrial site near the exit. A second commercial complex is under construction on the other side of the highway. And now a developer wants to build a third office-retail-condo complex where homes and small businesses are wedged between I-71 and major streets.


There's just one problem -- a few of the property owners don't want to sell.


So a consulting firm was hired to study the area and found the neighborhood to be blighted and a candidate for redevelopment. Scott Bullock of the Institute for Justice -- which is defending property owners in Norwood and Lakewood -- called the study a "charade," noting that not a single home is dilapidated or tax delinquent. Among the criteria for blight was that homes were more than 40 years old -- a fact that applies to most of the homes in Norwood.  Another factor involved proximity to the expressway -- a fact that will apply to the condo residences in the proposed development.


Still, the holdouts against this charade are not heroes but troublemakers, at least in the eyes of neighbors who have already agreed to sell to the developer. And folks from the Institute for Justice are portrayed as out-of-state meddlers.


The Problem with Property Rights


The Fifth Amendment provides this protection -- "nor shall private property be taken for public use, without just compensation" -- thus ruling out the taking of private property for private use.


The problem is that private property rights are not synonymous with the right to get what I want. In fact, property ownership, like all individual freedoms, carries a lot of risk.

Many speakers at the Norwood hearing were unhappy with the impact of nearby commercialization on the value of their homes -- all the result of decisions by other private property owners. Buying a home in a neighborhood at the end of an Interstate off-ramp turned out to be a bad bet.


Most of the owners -- about 70 out of 75 -- exercised their property rights by agreeing to sell to the developer. But the agreement they signed leaves them in limbo until the holdouts come on board -- voluntarily or forcibly -- or the developer walks away. So now the majority wants the city to force their neighbors to sell.


With just a few holdouts, you'd think maybe the developer could work around those parcels, or negotiate with the owners. But the Norwood developer decided from the start to go the political route. City Council wants the tax base and the civic prestige -- we're talking a Crate and Barrel here. They also want to make as many people happy as possible, and now that means siding with the homeowners who've already agreed to sell, who want to get out of limbo, who probably want to get out of the neighborhood, and who don't want other property owners to get better deals than they got.


At the hearing, the most impassioned speeches against the urban renewal plan were from homeowners in other neighborhoods. Clearly, if the target neighborhood is "blighted," just about any homeowner in Norwood could face eminent domain -- if there's a developer who wants the land.


But a homeowner in a target area doesn't have the luxury of taking such a principled stand. His home probably represents his biggest single asset, and he can't afford to take a big hit on its value. If that means selling out to the developer, that's his right as a property owner. If it means getting the city to force other property owners to sell, well, he's got to protect his own interests first.


The Proper Role of Government


Then there's the mindset of the Council. The lawyer for the developer pounded away at the theme that Council is expected to take action, that they would regret not acting to approve the urban renewal plan and make way for development. He argued that this action was necessary for "smart growth," that developments like this would go to the suburban fringe where large sites are easier to assemble. (He didn't explain how a development in the distant suburbs would tap the high-income market in nearby Hyde Park.)


This is a particular view of government -- that it must act. An alternative view is that economic prosperity is driven by private activity, and that government's role is to provide the legal and social framework necessary for that activity to take place -- including private property rights.


In this framework, we would expect a properly functioning market to find the price at which the developer and stubborn property owners can come to terms. Why should the developer be allowed to use the city's power of eminent domain to pay anything less? It's not just a matter of fairness and rights, but also sound policy. Past urban renewal that was not subject to the discipline of the market has often resulted in vacant wastelands.


Ultimately, the Norwood City Council approved the study and is moving toward eminent domain. The holdouts, with the help of the Institute for Justice, vow to fight back in court.


Tearing Down Defenses


We're used to telling children, "With every right comes a responsibility." But the fact is a right is a responsibility. We've come to think of rights as things we have coming to us: the "right" to a job, the "right" to health care. But citizens have a responsibility to protect their rights -- whether convenient or not. 


The real threat to private property rights does not come in the form of condemnation by big bad government. It's in the process of temptation that leads up to that final step -- the temptation for developers to use the political route to put together a site rather than slogging it out with the individual owners; the temptation for homeowners who've signed agreements with the developer to support government action against the holdouts; the temptation for city officials to support the desires of the many against the rights of the few.


In the end, expediency almost surely will win out over principle. After all, people ask, what's the value of defending private property rights, if it makes my property -- my home, my development project, my city's tax base -- less valuable?


Bob Collins is a writer in Ohio.


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