IS OUR GOVERNMENT GRASPING FOR TOO MUCH?

ILLUSTRATION: ISTVAN OROSZ

“The government should not be taking people’s small businesses or homes to increase its tax base.”
Scott Bullock

ILLUSTRATION: JAMES FRYER

Sum of its Parts

Matthew Berger '95 makes his case for the assemblage doctrine

It was just a vacant lot — basically, an alley — somewhere in Norwich, Connecticut. The city was taking it by eminent domain, had it appraised for $16,000 and was willing to give the owner $20,000 for it. Enter Matthew Berger ’95 for the lot owner. With a straight face, he demanded his client get $95,000. The city balked, but Berger won when he prevailed on a seldom-applied legal theory known as the “assemblage doctrine.”

Four words limit the government’s power of eminent domain: “public use,” which defines what the government can take land for; and “just compensation,” which requires the government to pay the property owner the land’s fair market value when put to its highest and best use at the time of the taking. What Berger did in Styx Investors v. City of Norwich, a 2006 decision of the Connecticut Appellate Court, was dispute how much money constituted “just compensation” in his client’s case.

Matthew Berger stands next to Susette Kelo's house, just before it was dismantled and moved in July. A New London native, Berger represented several other property owners whose land was condemned as part of the same municipal development plan that included Kelo's.

Norwich wanted the lot belonging to Styx Investors, Berger’s client, as part of an $18 million redevelopment project to turn a long-abandoned hotel into subsidized housing. The lot abutted the hotel and was needed to ensure the project met fire codes. The lower court refused to award the assemblage value, saying that Styx Investors was not entitled to any increase in property value added by the taking — a standard principle in eminent domain law. But on appeal, Berger argued that the “highest and best use” of the property was its assemblage value.

Berger explains: “Assemblage applies when the highest and best use of separate parcels involves their integrated use with lands of another, if the joinder of the parcels is reasonably practicable. If applicable, this doctrine allows a property owner to introduce evidence showing that the fair market value of this real estate is enhanced by its probable assemblage with other parcels. Since assemblage value is calculated as of the date of the taking, it does not include value created by the taking, so it is not applicable in most eminent domain cases. In Styx, the plans for assemblage were on file with the city well before the condemnation was discussed, so it was not just reasonably probable; it was likely, something the Appellate Court agreed with.”

The upshot: the city paid Styx $95,000, and Berger, a solo practitioner, got lots of attention from the Connecticut bar and the local press. – J.Z.

PHOTO: DANA SMITH

Summer 2007

Razing the Question

By Jeri Zeder

Some media images become iconic: the lone student standing unarmed before a rolling tank in Tiananmen Square, for example, or Marines raising the US flag on Iwo Jima. In this century, these may very well be joined by a little pink house perched on a hill in the Fort Trumbull section of New London, Connecticut, amid a neighborhood demolished by wrecking balls and bulldozers, a giant Pfizer plant looming in the background.

That little pink house belongs to Susette Kelo, named plaintiff in Kelo v. City of New London, a controversial 2005 Supreme Court decision that upheld the power of New London to assemble land through eminent domain in pursuit of an ambitious urban revitalization project. As a result of the ruling, Kelo would lose her house. Fueled by the scathing dissents of Justice O’Connor and Justice Thomas, and by indignant popular outcry, pressure mounted on politicians to do something about what many perceived as a shocking abuse of government power. State legislatures across the country began enacting legislation to limit exercises of eminent domain.

Among those who tend to join in the popular criticism of Kelo are law students. “But they wind up surprised to see amicus briefs supporting New London filed by urban planners, affordable housing advocates and environmentalists. Many students are surprised to find themselves embracing Clarence Thomas’ libertarian take on takings,” says Professor Lee Breckenridge, an environmental and property law expert.

Recalling his own response to Kelo, which was wending its way through the courts when he was a student, Robert Eric Slagle ’03 says, “Your emotions tell you, how can we let the money-grubbers get the land?” Now, as a city solicitor for Lowell, Massachusetts, Slagle admits he sees it differently.

So what exactly is the meaning of that little pink house in New London? Well, that depends.

Enshrined in the US Constitution and the constitutions of the states, eminent domain is the inherent power of the sovereign to take private property with just compensation for public use. Highways, roads, sewer lines, storm drains, access to utilities and public schools would not exist without eminent domain. Nor would open space protecting wetlands, woods and recreational areas.

Nor would a community’s ability to wrestle back private property that has fallen into decay, a situation Daniel Funk ’73, city solicitor for Newton, Massachusetts, is facing now with a public beach. The city has co-equal rights to the beach with a private abutter. On that property is a fire-damaged, uninhabitable house and an unsafe retaining wall running its length. The beach is unusable because the owner refuses to tear down the wall. The city wants to take the land and fix up the beach and recreation area. “It will be Newton’s first taking in about 20 years,” Funk says.

Just What’s Reasonable?

Similarly, Paul Capizzi ’99, an attorney for the city of Revere, Massachusetts, hypothesizes a situation where a company owns a building, say a supermarket, and later acquires a new location, but refuses to sell the old building so it won’t fall into the hands of a competitor. “After a while, that can be a burden and eyesore to a community, and give the appearance of blight,” Capizzi says. Eminent domain gives the community leverage to tell the owner: if you don’t sell it, the city is going to take it and do it for you.

Both of these examples present what are commonly considered reasonable rationales for the exercise of eminent domain. But detractors point to a long history of horror stories. These include the path of the interstate highway system, which paved over acres of property belonging to the poor; the razing of entire blue-collar neighborhoods to achieve gentrification, like Boston’s West End; and the Poletown case in Michigan, where the main purpose of the project appeared to be increasing the profits of a major corporation (the Michigan Supreme Court overturned Poletown Neighborhood Council v. Detroit in County of Wayne v. Hathcock [2004]). The Institute for Justice, a libertarian public interest litigation firm, trolls the country for test cases, such as the alleged attempts of Long Branch, New Jersey, to take the modest, lovingly maintained beachfront properties of seniors and working families for the benefit of a private developer who plans to raze the area for luxury condos. “The government should not be taking people’s small businesses or homes to increase its tax base,” says the institute’s senior attorney, Scott Bullock, who represents Susette Kelo.

Yet Kelo is not a departure. It is settled law that taking property for urban renewal is a proper public use. That’s what New London was up to: after careful planning and public input, it was to turn property over to a private developer to build mixed-use structures — housing, shopping, a museum and restaurants — to revitalize a dying neighborhood. Marc Mihaly, an associate professor of law at Vermont Law School who has written extensively about the case and eminent domain, acknowledges that eminent domain has been, and continues to be, abused. “But I don’t think that’s a reason for the Court to throw the baby out with the bathwater,” he says. Established precedent does — and should, he believes — permit municipalities to take property for the “public purpose” of jump-starting jobs, housing and tax revenue-generating businesses in economically depressed areas. The thinking behind these projects goes roughly like this: when the free market, hamstrung by pre-existing, antiquated limits on land use, is unable to reverse a downward economic spiral, then government must intervene and use its power of eminent domain to reconfigure the division and uses of property. Of Kelo, Mihaly says, “I wish the majority opinion had made clear that the economic situation in the redevelopment area of New London was just untenable in a democracy. Nothing could happen. No one would invest. It would have been valuable if the Court had put its decision in the context of redevelopment projects across the states.”

To undertake these projects, poor cities try to draw major corporations to blighted areas, in part by identifying desirable pieces of property and making them attractive to a new wave of businesses and homeowners. Cities seek private developers to do the work, both because developers have more expertise and because of financing. “Poor cities have trouble raising capital through bonds; interest rates would be too high,” explains Professor Mary O’Connell ’75. When a city is too depressed to do the financing, they look to developers to bankroll the process at the front end.

This approach often works out just fine. In Lowell, Massachusetts, for example, the city has used urban planning to engineer cityscapes that mix residential and commercial uses, creating a community within an urban envir-onment, according to Lowell city attorney Slagle. To do this, Lowell has forced the sale of large tracts of industrial space owned by absentee landlords and real estate trusts, and turned them over to private developers. Slagle says this happens all the time, without fanfare. He believes that Kelo became such a cause célèbre because it involved modest, single-family homeowners with emotional attachments to their property.

Power Plays

Which raises the question of how, when and by whom the government’s power of eminent domain should be regulated. Through Kelo and other lawsuits, the Institute for Justice has been pressing courts to limit what constitutes “public use.” The Supreme Court refused in Kelo, but the institute’s Bullock says that state courts have been more willing. He also cites a rash of post-Kelo local and state-wide legislation placing limits on eminent domain. But Bullock says eminent domain so skews the balance of power between the government and the property owner, he would sooner see it off the table in a much wider range of matters. He’s unimpressed with requirements for studies, plans, hearings and public input. “Having another layer of procedural protections is not going to make any difference in the real world,” he says. “People who benefit from eminent domain have disproportionate power in the political process.”

Others disagree that eminent domain itself is the problem, contending that the trouble lies instead in the political system. Professor Rashmi Dyal-Chand ’94, who worked for a nonprofit affordable housing developer before joining the Northeastern faculty, notes that eminent domain is a necessary tool by which government conducts long-term planning for the public good. “If you don’t like what [the government] is doing, then elect different representatives,” she says. She agrees it’s bad when people lose their homes. But, she insists, “The problem is partly with whom we elect and their ideas about development. If they feel that development is simply something that can be accomplished in a hands-off manner by giving the responsibility to private corporations, that’s a bad definition of development. We need to get people into office who are more thoughtful, careful and sophisticated about development — and let those people look for ways to minimize the negative impact on minorities and the poor.” She calls for law reform and voter education, not the gutting of eminent domain.

Her point is illustrated by the Dudley Street Neighborhood Initiative in Boston, which, according to a 2006 Georgetown University Law Center report exploring eminent domain and economic development, turned a blighted neighborhood of trash-filled vacant lots, minority residents trapped by poverty and crime, and a dearth of capital investment, into a pleasant bustle of more than 1,000 new or renovated homes, a town common, community center and gym, childcare center, community greenhouse, youth and sports programs, adult ed programs, job fairs and assistance for low-income people who want to buy homes. The drug dealers and illegal dumpers are gone. This was all accomplished by the planning of a grassroots community organization controlled by local residents, funding from the Ford Foundation and the power of eminent domain.

Drawing the Line

Of course, not all exercises of eminent domain proceed with so much community input or have such sunny results. Northeastern Professor Peter Enrich, who believes that corporate tax “incentives” are bad public policy, sees similar questionable dynamics going on in some eminent domain cases. But that’s not his last word on the matter. “My view on this is either nuanced or conflicted,” he says. “It’s one thing to recognize some protection for private rights. It’s another thing to say private rights are prior to public interests. I’m concerned with courts stepping in and saying where the boundaries are.” He cites, with trepidation, the Lochner era, when, in the name of contract rights, the Supreme Court routinely thwarted legislative efforts to improve laborers’ working conditions. His point: if the courts take the restriction of eminent domain powers too far, they’ll make it impossible for the government to operate for the public good.

Checks on the power of eminent domain can come not only from statutes, regulations and court decisions, but also from informal sources, like public opinion and local culture. Tom Harrington ’90, a partner in the Watertown, Massachusetts, law firm Miyares & Harrington, serves as town counsel for several small towns, which he says engage only in friendly takings: for example, voluntary donations of private land to the town, where eminent domain serves as a simple, clean tool to clear the title. When you need two-thirds of town meeting to agree to take land through eminent domain, it’s unlikely to happen unless the property owner is willing.

In close-knit communities, eminent domain clashes can be avoided by approaching property owners non-threateningly. City attorney Capizzi offers the example of a property owner in North Revere: the city needed to get a drainpipe through his property. “We didn’t come in like gangbusters. I sent him letters, and he came to my office and we discussed it. We try to be as good a government as we can,” he says.

And that might be the crux of the matter: good government. It’s healthy to be skeptical of government power. But to vilify it per se? “The [political right wing] has changed the terms of the debate to where government is seen as a source of oppression, not a source of good,” says Vermont Law School’s Mihaly.

Which brings things back to that little pink house in New London. In a settlement with Kelo, the city agreed to move her home to another location outside of Fort Trumbull — where it will stand, depending on your perspective, either as monument to a rebellion against government tyranny or as an obstacle to the alleviation of poverty.

Jeri Zeder is a contributing writer.