John K. Ross
2008-02-07 08:00:00.0
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BALTIMORE -

In 2005, the U.S. Supreme Court ruled, in Kelo v. City of New London, that municipal officials could seize well-maintained property for private development projects. Baltimore officials, who had filed a brief arguing that restricting eminent domain power would doom efforts to revitalize the city, applauded.

The decision ignited widespread public outrage, and in response, lawmakers in 42 states, Maryland included, placed new limits on the use of eminent domain for private redevelopment projects. Annapolis passed some of the weakest reforms in the nation, however, and the abuse of eminent domain continues unabated in Baltimore. Indeed, the City Council approved eminent domain authority along the Fells Point waterfront and around the Oldtown Mall last fall.

The lack of real reform stems from the ill-founded fear that protecting property owners might undermine economic development. This concern is misguided, however, as a new study examining three indicators most closely related to economic development — construction jobs, building permits and property tax revenues — demonstrates.

The Institute for Justice compared data from states that added substantial new protections with those that passed none or, like Maryland, passed incomplete reforms. IJ also compared the trends in the economic indicators before and after reform.

Even after controlling for factors that could skew the data (such as a state’s overall employment picture, which influences the number of construction jobs created or lost), we found that reform — even strong reform — had no significant impact on economic development. The same was also true when comparing data before and after reform in each state.

Because jobs, permits and tax data are closely tied to redevelopment, we would expect to see early negative effects of eminent domain reform if, in fact, there were some. But there weren’t. Despite gloomy predictions to the contrary, securing citizens’ property rights does not hinder development.

Concerted efforts by nonprofit, community-development groups have turned around neighborhoods like Patterson Park, property by property, rebuilding and restoring hundreds of old homes — without eminent domain. The University of Maryland acquired enough land to build a new biotech park without condemnation — even building around a widow who refused to sell her home. Once targeted for massive demolitions, neighborhoods like Mount Vernon, Fells Point and Federal Hill have blossomed since residents fought off urban renewal plans.

City leaders point to the Inner Harbor as example of unqualified redevelopment success, but they fail to note that eminent domain and the threat of it contributed to the very conditions — high vacancy rates, deteriorating properties — that the project is said to have alleviated. Indeed, more than 700 businesses were forcibly displaced. Those that replaced them relied heavily on public subsidies. Forty years later, politically favored developers there still receive tax breaks unavailable to other property owners.

Many urban renewal plans failed unequivocally, however. Officials have kept troubled neighborhoods like Park Heights, Coldstream-Homestead-Montebello and Greenmount West under the cloud of condemnation for decades with neither economic development nor blight remediation to show for it.

Instead of stimulating economic development, officials use eminent domain to co-opt it, targeting property in resurgent neighborhoods — where developers spy opportunity — like Poppleton, Pigtown and the west side “Superblock.” In Charles North — home to the tony Charles and Everyman theaters — for instance, officials condemned the Parkway Theater, which was actively being restored, the Chesapeake Restaurant, also being refurbished by its owner, and the Magnet Bar, which the City Paper named Baltimore’s Best Dive Bar in 2005.

Threatened property owners consistently report that key decisions take place behind closed doors. Indeed, the Baltimore Development Corporation, the city’s redevelopment arm, has argued that it is a private entity (with the public power of eminent domain and city attorneys at its disposal) and therefore exempt from open meetings laws. In 2006, Maryland’s highest court ordered the BDC to open its sessions to public scrutiny, but little has changed.

The practice of seizing property from unwilling sellers — and the mere threat of it — imposes a tremendous cost on individuals and families — often longtime residents or small-business owners who weathered the worst of Baltimore’s deindustrialization. Baltimoreans should know that progress does not depend on this injustice. Maryland can reform its laws to protect private property from eminent domain abuse and still welcome economic development.

John K. Ross is a research associate with the Institute for Justice and co-author of Doomsday? No Way: Economic Trends & Post-Kelo Eminent Domain Reform. The report can be found at www.ij.org.