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USA>Justice
from the
January 02, 2007 edition

Next big test of power to seize
property?

The US Supreme Court will examine
whether a private company can demand payment in exchange
for not seizing private property.

By Warren Richey | Staff writer of The Christian Science
Monitor

Bart Didden
wanted to put a CVS pharmacy on his property in Port
Chester, N.Y. He even obtained approvals from the local
planning board.

But because a portion of
the CVS site was in a blighted redevelopment zone, Mr.
Didden was told that planning board approval wasn't
enough. He'd have to reach an understanding with a
private company that had been selected by Port Chester
officials to control all construction inside the renewal
zone.

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The developer, Gregg
Wasser of G&S Port Chester, told Didden he'd have to
pay $800,000 or give G&S a 50 percent stake in the
CVS business. If Didden refused, Mr. Wasser said, he
would have Port Chester condemn and seize his property
and instead of a CVS he'd put a Walgreens drugstore on
the site.

Didden refused. The next day, the Village
of Port Chester began legal proceedings to seize
Didden's land by eminent domain.

Lawyers for Didden took the matter to
federal court. They even went to the FBI - all to no
avail. Now they are asking the US Supreme Court to
examine whether a private company can demand payment in
exchange for refraining to seize private property in an
urban renewal zone.

Property rights activists are hoping that
a majority of the justices view Didden's case as an
opportunity to clarify a portion of the high court's
controversial decision in its last big eminent domain
case, Kelo v. New London. In that June 2005 opinion, the
court ruled 5-to-4 that local governments could seize
private property and turn it over to a private developer
when the action was part of an economic development
project of benefit to the public.

Rebellion in the
states

The decision sparked a national backlash.
Since then, 34 states passed laws restricting the use of
eminent domain for private development. New York is not
among them.

The US Constitution forbids government
officials from taking the property of one person and
giving it to another. But if the overall purpose is a
public benefit, such as economic transformation or urban
renewal, transfers of private property to a private
developer are permissible, the high court has said.

At issue in the Didden case is whether a
developer selected to carry out an urban renewal project
in the public interest can use the government's eminent
domain power in a way that maximizes the developer's
profit.

"The 'public use' clause may encompass a
lot of public purposes after [the high court's decision
in] Kelo, but it does not mean that eminent domain can
be used to make the most money possible for one
particular person," says Dana Berliner, an attorney with
the Institute for Justice, which is asking the high
court to take up Didden's case.

Lawyers for G&S and the Village of
Port Chester hold a different perspective.

For taking the risk, a
reward

For decades Port Chester tried to persuade
various developers to launch urban renewal projects in
the village. None did. Then in 1999, G&S agreed to
undertake the challenge - and risk. The company proposed
a 27-acre, $100 million project to replace run-down
buildings with new retail stores, new roads, utilities,
and a multiplex movie theater.

In exchange, the village agreed to give
the developer exclusive power to decide which properties
within the redevelopment zone would be acquired through
negotiation and which would be seized by eminent domain.
It also gave the developer the exclusive right to build
- and profit from - the project.

"The thing that got [G&S] to spend
over $100 million in the village is that at the end of
the day he is going to make money," says Mark Tulis, a
lawyer for the village. "He is going to make money by
building a Costco and renting a Costco, building a Stop
& Shop and renting a Stop & Shop, and building a
Walgreens."

In effect, there is an economic value to
the G&S agreement with the village. It equals the
potential amount of profit G&S might extract by
developing the property.

From this perspective, Didden's proposal
to build a CVS on a portion of the redevelopment site
cut into G&S's anticipated profit from its plan to
develop a Walgreens in the same area.

Mr. Tulis says control over the
redevelopment zone and the resulting profit is the
benefit of the bargain struck between G&S and the
village in 1999. "It would be inappropriate for the
village to change the bargain after G&S has been
successful," says Tulis. "A contract is a contract."

Rather than extortion, as some suggest,
G&S was seeking compensation from Didden in exchange
for freeing up a portion of redevelopment land
controlled by G&S to allow Didden's CVS project to
go forward, says Mark Weingarten, an attorney for
G&S.

The discussion over the $800,000 was a
settlement negotiation undertaken at the request of
village officials, Mr. Weingarten says. "We have the
right to go forward with this project and keep it all to
ourselves," the attorney says. "We were offering this as
a way to give him a share."

Didden has a different view of the case.
"In 1999 when they acquired the rights to condemn my
property, if they [had] offered me fair compensation I
would have taken the money and been on my way," he says.
"But they let me keep my property for four years. They
let me maintain it and pay taxes and make repairs, and
only when I showed up looking for approval for a
redevelopment that would have substantially increased
the value of the property did they condemn it."

RICH
CLABAUGH - STAFF

Didden says he's not opposed to
redevelopment - only to the methods used in Port
Chester. "The whole process has been outsourced to the
developer without any checks or balances by the
village," he says.

The village and the developer are named as
codefendants in Didden's suit. Their lawyers say the
case was properly dismissed by a federal judge and a
federal appeals court panel because Didden failed to
file his suit in 1999, when the redevelopment contract
was debated and approved. He missed the 30-day deadline,
they say.

Ms. Berliner says if the lower court
rulings in this case stand, "it would mean that every
redevelopment area in the country would be a
Constitution-free zone. Any taking [of property], no
matter how private, would be OK as long as it was in
those areas."

The lower courts were wrong to throw out
Didden's suit because he allegedly missed the deadline,
Berliner says. The action against Didden didn't occur
until 2003, and there was no way to know in 1999 what
might happen to Didden's property, she says. The
Constitution mandates that a remedy be available, the
attorney says. "This issue is one of real national
significance," Berliner says. "There are so many
redevelopment areas in the country, and giving immunity
to any kind of misbehavior in those areas will have huge
effects."

Related
Stories

Editorial:
Righting a wrong on property rights 10/25/06

Topping
2006 ballots: eminent domain 10/05/06

Last
stand for property-rights activists 06/08/06

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