Pappas Realty Co... "Commercial Real Estate...Exclusively" in Northeast Ohio since 1957

Wednesday, June 29, 2005

Another ride on the ferry-go-round?

The biggest news item in our area yesterday was Mr. Danny Ferry and the Cleveland Cavaliers Draft. Albeit, we had no picks, we still managed to get, Martynas Andriuskevicius, yes that lovable russian who no one in cleveland & akron has ever heard of. I respond with, who cares if we have heard of him, he is 7 feet 3 inches and can shoot, or so they tell us. Well see what happens. Maybe he will become best buds with Dsagna Diop (however its spelled).

Onto other brief news and bytes....

U.S. Supreme Court: Cities Can Seize Homes for Private Economic Developmentby Kenneth R. Harney
The U.S. Supreme Court's 5-4 decision last Thursday upholding local governments' eminent domain rights to seize property for private economic development purposes should be an alarm bell for homeowners, Realtors and builders around the country.

Supreme Court Justice Sandra Day O'Connor, writing for the four dissenters, summed up the potential ramifications of the decision this way: "The specter of condemnation (now) hangs over all property. Nothing is to prevent (governments) from replacing any Motel 6 with a Ritz Carlton, any home with a shopping mall or any farm with a factory."

"The government now has license to transfer property from those with fewer resources to those with more. The founders cannot have intended this perverse result."

The majority decision in the case, written by Justice John Paul Stevens, held that eminent domain property seizures by local governments need not be limited to "public uses," such as roadways, schools or public buildings. Eminent domain seizures now can also include a "public purpose," whereby a government takes real estate from one private owner and gives it to another private owner who will develop it in ways that benefit the local tax base and encourage creation of jobs.

"Promoting economic development is a traditional and long-accepted function of government," wrote Justice Stevens. "Clearly there is no basis for exempting economic development from our traditionally broad understanding of public purposes."

The case, Kelo vs. City of New London, involved 15 homeowners in the Fort Trumbull neighborhood of New London, Conn., who refused to accept the city's condemnation of their property to make way for a redevelopment consisting of privately owned office buildings, a hotel and conference center. Susette Kelo, a registered nurse who purchased her home in the waterfront neighborhood eight years ago, appealed the city's action in state courts, arguing that private economic development did not qualify as a "public use" under the Fifth Amendment of the U.S. Constitution. That amendment requires governments to provide "just compensation" when they use their eminent domain powers to acquire private property. Kelo and the 14 other plaintiffs ultimately lost their case before the Connecticut Supreme Court, then appealed it to the highest federal court.

Kelo said Thursday, "I was in this battle to save my home and, in the process, protect the rights of working class homeowners throughout the country. I am very disappointed that the court sided with powerful government and business interests."

Justice O'Connor's comment about the "specter of condemnation" arose from a dialogue the court had with New London's attorney during oral argument. Asked whether a city could seize a Motel 6 and hand the property over to developers of a Ritz-Carlton hotel solely because the new hotel would yield higher tax revenues to the city, New London's attorney replied that yes, the city could.

Reduced to that harsh legal possibility -- that a local government needs nothing more than the prospect of higher revenues to justify the seizure of any private property -- there would appear to be virtually no federal legal constraints on what municipalities can do, provided they claim a "public purpose."

Dana Berliner, a senior attorney with the Institute for Justice, a public interest law firm in Washington D.C. that represented the New London homeowners, said Friday: "It is a sad day for American homeowners. Whereas most court decisions affect a small number of people, this decision undermines the rights of every American, except the most politically connected."
Scott Bullock of the Institute for Justice said his group now intends to fight "eminent domain abuse" at the state legislative and judicial levels, where some state courts already have put restraints on municipalities' eminent domain powers.

Published: June 27, 2005

Have a good day.

Gone Surfing,


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