Sunday, May 13, 2007

Public's domain

Acting on 'public purpose,' government can snatch private property

Fred Davis' quarter-acre lot at 205 Looney was appraised at $16,200, according to Shelby County Assessor Rita Clark's Web site. Davis bought the lot, site of a fire-gutted apartment building, in 1989 for $53,000.

The Commercial Appeal [link]
By Amos Maki

Fred Davis, owner of Fred Davis Insurance Agency, bought a small lot on Looney Street in the Uptown neighborhood in 1989.

Davis, a former longtime city councilman, thought the property would make a good investment and that he might eventually develop it.

But he may never get the chance, because the Memphis Housing Authority and the Division of Housing and Community Development have notified Davis that they want to buy his property.

If Davis doesn't voluntarily sell, MHA could use "as a last and final resort" its power of eminent domain to acquire the property.

"If I decide that I want to develop it, I ought to have the option to do it," said Davis. "If they said this was for a fire station or library or the general public good, I can deal with that."

While different in some respects, Davis' case has echoes of Kelo vs City of New London, Conn., where the U.S. Supreme Court decided that local governments may force property owners to sell and make way for private economic development when officials decide it would benefit the public. In Kelo, the public benefit was additional tax revenue generated by new developments.

Governments have long purchased private property for the construction of roads, bridges, dams, sewer lines and other public projects. If owners are unwilling to sell, governments turn to eminent domain.

But the Kelo case touched off a nationwide debate about how and when eminent domain should be used, with dozens of states passing laws to make it more difficult for municipalities to exercise eminent domain.

"The Kelo decision was actually one of the best things that ever happened to the national property rights movement, as it clearly imprinted the precarious nature of private property rights in the public consciousness and has inspired significant reforms nationwide," said Leonard Gilroy, a senior policy analyst at the Reason Foundation, in a statement.

In Tennessee, a bill passed last year placed new restrictions on eminent domain but still allows its use for public purposes, industrial parks and limited private uses.

"It was a bit of a compromise," said Kevin Walsh, a principal with the law firm of Harris Shelton Hanover Walsh PLLC. "It was an attempt to calm some fears people had from Kelo, and I don't know that it truly accomplishes it."

One main provision of Tennessee's legislation requires local governments to certify the "public purpose and necessity" of seizing land.

The law also said indirect public benefits coming from private development -- such as new tax revenue in the Kelo case -- did not qualify as a "public purpose."

The legislation also gives property owners more time -- 30 days instead of five -- to challenge a finding of "public purpose."

Importantly in Davis' case, the legislation said housing authority or community development agencies could acquire property to "implement an urban renewal or redevelopment plan in a blighted area."

That is the main difference between the Kelo and Uptown eminent domain cases.

"If you look at Kelo, there was never any indication by the condemning authority of blight," said Walsh.

The Memphis City Council and Shelby County Commission declared the Uptown area blighted, allowing MHA to use eminent domain. In other words, the use of eminent domain in Uptown is to remove blight while the use in New London was to create more tax revenue by removing existing homes and residents to make way for more expensive developments.

MHA initiates the proceedings and buys the properties through its land bank. Then the city's development partners -- Belz Enterprises and Henry Turley Co., master developers of Uptown -- are paid fees to develop the property.

Davis' Uptown property is at the corner of Fourth and Looney. Surrounded by Uptown homes on the south and east, and well-kept existing homes on the north, with a mix of older and newer homes to the west, the vacant site has some tall grass. But Davis said it is hardly "blighted."

"I've paid my taxes and I keep it up," he said. "I pay somebody to come over here and mow the grass."

Robert Lipscomb, the city's chief financial officer, director and CFO of HCD and executive director of MHA, said the city has always used eminent domain as a tool of last resort and that there is a delicate balancing act of property owners' rights.

On the one hand, Lipscomb said, the city wants to preserve the property rights and investments of owners like Davis.

But on the other hand, the city is trying to bring more investment to the Uptown neighborhood. That investment could be halted or slowed by vacant lots strewn with grass, weeds or junk, Lipscomb said.

Eminent domain has been used, or threatened, in several Downtown projects, including FedExForum, AutoZone Park, the National Civil Rights Museum and in the airport buyout area.

With eminent domain, the government offers "just compensation" for the property and then takes the land. In MHA's case, the agency offers owners the appraised value of the property.

Davis' quarter-acre lot was appraised at $16,200, according to Shelby County Assessor Rita Clark's Web site.

While Davis said he has no current plans to develop the property, which he bought in 1989 for $53,000, he said he might one day decide to build something on the site, formerly home to a six-unit apartment building gutted by a fire.

And Davis believes the lot could bring a higher price on the market, especially since Uptown is in the midst of a remarkable transformation.

"There are two kinds of values to property, appraised and market," he said. "Appraised is a hell of a lot different from market value."

Gene Pearson, director of the graduate program in city and regional planning at the University of Memphis, said that while sometimes controversial, eminent domain is an important tool for cities.

"It's probably the only way redevelopment can take place in a timely fashion," Pearson said. "Clearly, most cities see areas that have declined and they make a judgment call as to what is in the best interest of the city and property owners may not see it that way.

"It's always subject to definition and there is always going to be debate."

If the city moves forward with eminent domain, Davis said the debate would almost certainly continue.

"I would have to get some legal advice on the best way to respond," he said.

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Friday, June 09, 2006

Eminent domain law could impact riverfront redevelopment plans

Memphis Business Journal
by Christopher Sheff
Link to article

Eminent domain legislation signed by Gov. Phil Bredesen this week could give renewed hope to those opposing the redevelopment of Downtown property by the Riverfront Development Corp.

Although House Bill 3450 is one of the least restrictive of several bills introduced by lawmakers this past session, certain provisions give landowners some real recourse to having their land taken for economic development purposes, says Kevin Walsh with Harris Shelton Hanover Walsh, who primarily represents landowners in eminent domain disputes.

In the session that just ended, 59 bills were filed by state Democrats and Republicans in both the House and Senate to limit the use of eminent domain by local governments.

The flurry of activity on the issue was in response to the U.S. Supreme Court 5-4 ruling in 2005 that found that the New London Development Corp., acting through the City of New London, Conn., had the authority to take homes for a development plan that included a resort hotel and conference center, a new state park, 80-100 new residences and various research, office and retail space. The case is now often referred to as the Kelo Case, named after local homeowner and lead plaintiff Susette Kelo.

"I do think it is a good step toward addressing the Kelo issue in Tennessee," Walsh says.

Walsh says the legislation, which was signed June 5 and is still being digested by the legal community, clarifies the limited nature of public use for the stated purpose of taking a property for economic development.

"That should provide some comfort to owners of property that there is a recognized prohibition of taking property solely for economic development," Walsh says.

Test case in riverfront redevelopment?

Locally, the most prominent case that may test the legislation is the RDC's $50 million plan to remake 6 acres of prime riverfront property that now contain the Cossitt Library, Fire Station No. 1, the old Customs House (future home of the University of Memphis School of Law) and Confederate Park.

Private developments, including three proposed new buildings, would pay for projects like a two-level promenade and the relocation of parking garages underground. The buildings would be mixed-use, with restaurants and shops lining the bottom floors. Ground leases would keep the property under the control of the city. The plan also calls for pedestrian bridges that would stretch across Monroe and Court and for improvements to sidewalks on the promenade. Grand staircases would provide access to the upper level of the pedestrian walkways.

RDC president Benny Lendermon, who says he had not seen the new legislation as of Wednesday, didn't express much concern about the impact of the new law on RDC's redevelopment plan.

While saying that the RDC has hoped to never use eminent domain to obtain property, he says the process "is important for municipalities to grow and prosper."

Eminent domain is not a favorable option because the governing authority often pays much more than the fair market value to get it.

"The courts always make sure the property owner is duly compensated," he says.

But in the case of the property in question, it may be a question of actual ownership.

There has long been a legal dispute about the use of the property and who has the authority to decide it.

The property was apparently donated by the city's founding fathers for use as a public promenade decades ago, although the heirs of the founders reportedly still hold title.

Legal showdown may be afoot

Arguments over aspects of the donated land have gone all the way to the Tennessee Supreme Court in the past. Some members of the legal community see another legal showdown brewing between the City of Memphis, RDC and the heirs, chiefly the Overton family, whose name is attached to one of the city's largest recreation areas, Overton Park.

The riverfront land in question "was given to the citizens of Memphis," says Virginia McLean, an Overton heir and president of the Friends for Our Riverfront. "The city acts as a trustee of the land."

It was the intention of McLean's family that the land be used as a public promenade or public open space like Boston Common.

She says she is not against the property being developed and improved, "but the question is who is the land being improved to benefit? Improved for a public promenade or private development?"

Despite Lendermon's stated hope that eminent dominion would not be involved, McLean says she is confident the city plans to initiate eminent domain proceedings.

Lendermon says since the project was approved by the City Council in 2004 there has been little movement due to the city's budgeting problems and other priorities. But with a new budget approved and those problems seemingly behind it, talks can now begin on how to proceed.

"Dealing with the promenade property in the future will be some target on that schedule," he says.

City attorney Sara Hall did not return calls seeking comment.

RDC's first move is with the city

Whatever direction RDC and the city attorney's office take will first come before the City Council's economic development, tourism and technology committee chaired by attorney Dedrick Brittenum Jr., managing partner of Farris Mathews Branan Bobango Hellen & Dunlap PLC.

Brittenum, who joined the City Council in November and has handled eminent domain cases in his practice, says he was briefed on the RDC and progress on the promenade project by Lendermon just two weeks ago.

He says if any eminent domain proceedings are to begin, the RDC would first have to make the request to the city.

Brittenum says he was about to ask Lendermon if RDC planned to take that step when a fire alarm in One Commerce Square abruptly ended the meeting before Lendermon could answer.

"He was, literally, saved by the bell," Brittenum says.

csheffield@bizjournals.com

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Friday, November 04, 2005

House bill counters eminent domain ruling

Associated Press
Link to original

WASHINGTON (AP) -- Contending that the Supreme Court has undermined a pillar of American society -- the sanctity of the home -- the House overwhelmingly approved a bill Thursday to block the court-approved seizure of private property for use by developers.

The bill, passed 376-38, would withhold federal money from state and local governments that use powers of eminent domain to force businesses and homeowners to give up their property for commercial uses.

The Supreme Court, in a 5-4 ruling in June, recognized the power of local governments to seize property needed for private development projects that generate tax revenue. The decision drew criticism from private property, civil rights, farm and religious groups that said it was an abuse of the Fifth Amendment's "takings clause." That language provides for the taking of private property, with fair compensation, for public use.

The court's June decision, said House Judiciary Committee Chairman James Sensenbrenner, R-Wisconsin, changed established constitutional principles by holding that "any property may now be taken for the benefit of another private party."

The ruling in Kelo v. City of New London allowed the Connecticut city to exercise state eminent domain law to require several homeowners to cede their property for commercial use.

With this "infamous" decision, said Rep. Phil Gingrey, R-Georgia, "homes and small businesses across the country have been placed in grave jeopardy and threatened by the government wrecking ball."

The bill, said Chip Mellor, president of the Institute for Justice, which represented the Kelo homeowners before the Supreme Court, "highlights the fact that this nation's eminent domain and urban renewal laws need serious and substantial changes."

But opponents argued that the federal government should not be interceding in what should be a local issue. "We should not change federal law every time members of Congress disagree with the judgment of a locality when it uses eminent domain for the purpose of economic development," said Rep. Bobby Scott, D-Virginia.

The legislation is the latest, and most far-reaching, of several congressional responses to the court ruling. The House previously passed a measure to bar federal transportation money from going for improvements on land seized for private development. The Senate approved an amendment to a transportation spending bill applying similar restrictions. The bill now moves to the Senate, where Sen. John Cornyn, R-Texas, has introduced companion legislation.

About half the states are also considering changes in their laws to prevent takings for private use.

The Bush administration, backing the House bill, said in a statement that "private property rights are the bedrock of the nation's economy and enjoy constitutionally protected status. They should also receive an appropriate level of protection by the federal government."

The House bill would cut off for two years all federal economic development funds to states and localities that use economic development as a rationale for property seizures. It also would bar the federal government from using eminent domain powers for economic development.

"By subjecting all projects to penalties, we are removing a loophole that localities can exploit by playing a 'shell game' with projects," said Rep. Henry Bonilla, R-Texas, a chief sponsor.

The House, by a voice vote, approved Gingrey's proposal to bar states or localities in pursuit of more tax money from exercising eminent domain over nonprofit or tax-exempt religious organizations. Churches, he said, "should not have to fear because God does not pay enough in taxes."

Eminent domain, the right of government to take property for public use, is typically used for projects that benefit an entire community, such as highways, airports or schools.

Justice John Paul Stevens, who wrote the majority opinion in Kelo, said in an August speech that while he had concerns about the results, the ruling was legally correct because the high court has "always allowed local policy-makers wide latitude in determining how best to achieve legitimate public goals."

Several lawmakers who opposed the House bill said eminent domain has long been used by local governments for economic development projects such as the Inner Harbor in Baltimore and the cleaning up of Times Square in New York. The District of Columbia is expected to use eminent domain to secure land for a new baseball stadium for the Washington Nationals.

Copyright 2005 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

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Friday, July 15, 2005

Herenton says recent Supreme Court decision could help Memphis

WMCTV Action News 5
By Darrell Phillips
Link to original

The mayor's words may anger some, especially those who have been fighting to protect a four block swatch of riverfront property from redevelopment.

Memphis Mayor Willie Herenton was straightforward about an issue that is anything but cut and dry.

"I will admit a bias," said Herenton. "I do have a strong bias. I'm very supportive of the Supreme Court decision."

The U.S. Supreme Court ruling in the Kelo vs. New London, Connecticut case found that local governments can condemn private property for commercial use, as long as it benefits the public in some way.

Herenton agrees.

"Cities should not quite frankly be inhibited to grow the economy, to grow its infrastructure and its needs because of existing buildings and structures," he said.

The mayor's position may play into a heated battle over the future of the Memphis riverfront.

"I think it has a brighter future given this Supreme Court decision," he said.

Opponents like Virginia McLean with Friends of Our Riverfront are disappointed. She says Kelo doesn't apply because the riverfront is already public land.

"The Kelo decision is something that I think the country has really felt outrage about, and it's surprising to me that at this time an elected official would want to use eminent domain to take land away from the people of Memphis," she said.

Herenton hinted the debate won't stop at the water's edge.

"There are some other areas within the city of Memphis that we think should provide greater opportunities for growth and development and eminent domain may be the way to make this land available," said Herenton.

He wouldn't elaborate, but says Memphis should be a balance of greenspace and city living.

"The Supreme Court decision will allow cities to get an urban environment that I think will bring about an urban quality of life that a lot of people will enjoy," he said.

The mayor was quick to point out that any new use of eminent domain and the Supreme Court ruling has to be done cautiously and that city planners should be fair reasonable as they move forward.

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Friday, July 01, 2005

Crystal Ball: Five predictions for Memphis, based on recent headlines.

Memphis Flyer
By John Branston
Link to original

John Ford will beat the rap by wrapping himself in TennCare. The more the media, state investigators, plaintiff's attorneys, and rival politicians bore in on him, the greater Ford's chances of being acquitted on federal criminal charges of extortion. The investigations will blur in the public mind and look like piling on.

There is no connection between E-Cycle Management — the bogus company in the F.B.I. Tennessee Waltz sting — and United American HealthCare (UAHC) — the parent of TennCare provider UAHC Health Plan of Tennessee. But Ford has already said he was singled out for indictment by TennCare cutters. If there are criminal indictments stemming from an investigation by the TennCare inspector general's office, which was created by the General Assembly in 2004, or Tennessee Insurance Commissioner Paula Flowers, who put UAHC of Tennessee on administrative supervision in April, Ford will cry dirty politics. And his cry will resonate in Memphis, which has more TennCare recipients who stand to lose their coverage than any other part of the state.

Ford didn't invent the concept of the high-paid consultant, he just refined it as a legislator. This week the Government Accountability Office reported that 34 states used consultants paid on contingency fees to get more Medicaid and Medicare money.

If Ford is tried by a Memphis jury, he will walk.

-- The U.S. Supreme Court's decision on eminent domain in Kelo v. New London will not help the Riverfront Development Corporation in its efforts to develop the downtown Promenade. In fact, it will hurt it by focusing attention on the land bridge, which is the most expensive and controversial part of the RDC plan.

You can read the entire opinion in less than 10 minutes at this Web site: straylight.law.cornell.edu. It is nuanced, balanced, and bears little resemblance to the simplifications and mischaracterizations of it in media accounts. The New London Development Corporation is somewhat similar to the RDC. A small group of private-property owners whose properties were not blighted fought the development plan and lost. The case turned on whether the plan served "public purpose," which is not the same as "public use." See for yourself how economic development serves public purpose.

The RDC wants to take some public land for private use to help finance public improvements. The only way to get the land bridge through is by stealth. When the focus, for whatever reason, shifts to the cost, whether it is $100 million or $250 million, it's a dead duck. Boss Crump recommended a land bridge to Mud Island in a newspaper interview in 1953, the year before he died. The most powerful man in Memphis history couldn't make it happen, and neither will the RDC.

-- The Memphis Grizzlies will wear out their welcome if they don't boost their contributions to the city in a big way. There is no causal connection, but the fact is that public parks and boulevards and golf courses are suffering while the $250 million FedExForum sits idle, the NBA finals get lousy ratings, Grizzlies malcontents making $8 million a year whine and can't get fired up to win a playoff game, and publicists try to get us to care about the 19th pick in this week's draft. Pitiful. How ironic that "surplus" funds from the MLGW water division are helping to pay off the bonds for FedExForum while the city can't water the greens at the Links of Galloway golf course.

-- The Pyramid reuse recommendation — an indoor theme park and a shopping mall — won't happen. It's not that the ideas are bad. It's that they require public subsidies, giving away the building, or both. And this is not the time to be spending public money to promote tourism or economic impact. With the arena, baseball stadium, trolley, Mud Island, and The Pyramid in place and the highest property taxes in the state, the era of big public projects in Memphis is over.

-- Which brings us to this: The next mayor of Memphis will run and win on a program of a better Memphis for Memphians through revitalized neighborhood parks and public spaces. His or her model will be Chicago mayor Richard M. Daley, who has been singing this song for years.

"As schools lost their effectiveness as community anchors, the same thing happened to parks, libraries, and other public spaces," Daley has said. "People stopped using them and the city stopped taking care of them. Or maybe people stopped using them because the city stopped taking care of them. ... The nice thing is, if you improve the quality of life for people in your city, you will end up attracting new people and employers."

Nothing gets the public stirred up like uncut grass or unpicked-up garbage.

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Domain ruling gives developers options

Memphis Business Journal [link]
By Rob Robertson and Amos Maki

Opinions are mixed regarding last week's 5-4 decision by the U.S. Supreme Court that effectively expanded the use of eminent domain for private economic development.

In the case of Kelo vs. New London, Conn., the court held that New London could purchase and remove private homes and businesses to make way for a private riverfront development project because of the potential economic benefit the boost in tax revenues would create.

Kevin Walsh of Harris, Shelton, Hanover, Walsh PLLC, calls the court's decision "an unfortunate expansion of public use."

Walsh has an emphasis on eminent domain in his practice and has represented property owners in cases brought by governmental authorities to take private property.

"I found it disappointing that Judge Rehnquist was not able to muster a majority for purposes of protecting private property rights," Walsh says. "This decision essentially allows governmental entities to take property in the name of public use under the 5th Amendment of the Constitution solely for the purpose of generating additional tax revenue."

Still, there are additional levels of scrutiny to consider regarding the application of Tennessee state law, Walsh says. Tennessee has its own clause with regard to the right to take private property.

"I'm not sure it would be interpreted any differently, but you would have to consider not only the Tennessee Constitution but the enabling legislation or statute under which the power of eminent domain has been delegated," he says.

That would include any legislation that allows a government entity to seize private property, including boards like the Riverfront Development Corp., which gained approval from the City Council last year to transform a four-block area of Downtown known as the Promenade.

The $50 million redevelopment plan calls for using private developments, including three proposed new buildings, to pay for projects like a two-level promenade and the relocation of parking garages underground. The buildings would be mixed-use, with restaurants and shops lining the bottom floors. Ground leases would keep the property under the control of the city.

Ultimately, the RDC seeks to revamp a 5-mile stretch of the Memphis waterfront over the next half century. The cost of that development has been estimated at about $300 million.

The property now contains the Cossitt Library, a fire station, the U.S. Post Office and Confederate Park. The land, except for Confederate Park, is virtually inaccessible to most of the public and offers prime views of the river.

The property was donated by the city's founding fathers for use as a public promenade. The heirs of the founders hold title to the land and have been divided on the proposal.

RDC president Benny Lendermon says the High Court's ruling gives the city attorney another tool in dealing with land acquisition for a plan that could produce a significant economic benefit for the city.

"It's incredibly important nationwide," says Lendermon. "Many large metropolitan areas are going through financial crises right now. This gives them more flexibility to pursue economic development when it is for the public good. We developed a plan for the best use of the property."

Barbara Kritchevsky, associate dean of the Cecil C. Humphreys School of Law at the University of Memphis, says the ruling would not directly change any restrictions under the Tennessee Constitution involving eminent domain.

"(The ruling) talks about what is permissible under the federal Constitution," says Kritchevsky. "It means if a state chooses to do what New London did it would not violate the federal Constitution. States could be more restrictive in their own interpretations of eminent domain."

Jim Arthur, an attorney at Armstrong Allen, says Tennessee's eminent domain clause is not more restrictive; it essentially mirrors that of the federal Constitution and has been construed by state courts in lockstep with the U.S. Supreme Court.
The New London case, therefore, may have a particular relevance if a similar situation were to occur here.

"It means if an E-Cycle could convince enough local officials to declare that a particular development project it proposed provides a 'public benefit,' however speculative, private property owners whose property stands in the way are afforded no protection by the Constitution," Arthur says, referring to the fake company the FBI used in its Tennessee Waltz sting operation that netted several local elected officials for allegedly taking bribes.

"According to the Kelo majority, I see nothing to stop the City of Memphis, or some agency to which it might delegate its power of eminent domain, from condemning every square foot of riverfront property in furtherance of some development plan it pronounces to be of 'public benefit'," Authur says.

Virginia McLean, president of Friends for Our Riverfront, a group that opposes the RDC's proposals, says that won't happen.

"The Public Promenade is protected by the Tennessee Supreme Court's prior decisions involving the property and the Tennessee Constitution," McLean wrote on the group's official Web site. "We believe that if the RDC attempts to condemn the Public Promenade, the Tennessee judiciary will reject the U.S. Supreme Court's reasoning in Kelo."

Lendermon says the RDC would use eminent domain as a "last resort."

Another project where eminent domain could come into play is the city's push to redevelop the blighted, 138-acre section of the city south of the $250 million FedExForum. Current conditions in the area, bounded by Mulberry on the west, G.E. Patterson on the south, Danny Thomas on the east and Linden on the north, are bleak, with lots overgrown with weeds and covered in trash.

The Center City Commission, the agency charged with guiding development Downtown, has developed a plan for revitalizing the area that includes the possibility of using eminent domain for land asemblage that would spur development.

"Land assembly will be key in creating development in what is a long forgotten neighborhood of vacant land," says Jeff Sanford, CCC president. "I would hope that eminent domain wouldn't have to be used to assemble property, but in the end it may be an option."

Downtown developer Henry Turley says the Supreme Court ruling is a victory for cities looking to attract economic development opportunities.

"I think a city has to be able to assemble property for economic development within that city," says Turley, principal of Henry Turley Co. "Otherwise, that economic development occurs outside the city. So the city tends to languish while the surrounding areas tend to prosper, putting the city at a great disadvantage."

At the other end of the spectrum is retired attorney Hal Rounds, chairman of the Libertarian Party of Shelby County, who says the Kelo case is fraught with dangers to everyone who intends to work, invest and build something.

"We have gone from being property owners to conditional custodians at the pleasure of our government," Rounds says.

He believes the matter is not settled, in part because as Justice Clarence Thomas noted in his dissent, the entire body of cases cited by the majority rests not on Constitutional law but on other precedents.

Should the next similar case go back to the 5th Amendment it could overturn more than a century of decisions. In the meantime, Rounds believes the Kelo case, while potentially unlawful, strengthens the hand of the city.

The problem with the decision, as Arthur sees it, is that it lowers the standard for governmental exercise of its power of eminent domain to an all but meaningless level.

"The 5th Amendment originally contemplated government taking private property for its own use, for forts, roads or other necessities for the common good, or for use by others who might incidentally reap a benefit to serve the public," Arthur says.

"Now, government can take your property simply because it determines that someone else can use your property more profitably and generate more tax revenue than you have."

CONTACT staff writer Rob Robertson at 259-1726 or rrobertson@bizjournals.com. Contact staff writer Amos Maki at 259-1764 or amaki@bizjournals.com. Staff writer Scott Shepard also contributed to this story.

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Tuesday, June 28, 2005

Editorial: More questions about riverfront

Commercial Appeal

A U.S. Supreme Court decision last week might make it easier for the City of Memphis to move forward with its plans for redeveloping the riverfront.

The nation's highest court ruled that cities may use "eminent domain" power to take property from private landowners for the sake of creating new development. Acquiring land through eminent domain might be necessary to complete at least two major projects the city has in the pipeline, the Downtown promenade and the Mud Island land bridge.

But just because the city could use that power doesn't mean that it should.

The legal issues notwithstanding, there are still other questions city officials should address before they move forward with those projects.

The promenade project calls for new commercial and residential development, possibly in high-rise towers, along four blocks west of Front Street between Adams and Union.

The land bridge project would involve damming the Wolf River Harbor to create more developable property connecting Mud Island to the rest of Downtown.

Cost should be a major consideration in both cases.

Those two projects account for much of the total expense of a riverfront redevelopment plan that's expected to cost about $300 million. Given the city's recent budget troubles, it's fair to ask how high they should rank on a priority list for spending public dollars.

Benny Lendermon, president of the city's Riverfront Development Corp., has suggested that some or all of the costs might be recovered through leases charged to private tenants who would use the redeveloped property.

The issue there is how much would tenants be willing to pay and over what period of time? City officials should be very cautious about going into long-term debt to support private businesses that might not stick around until the debt is completely repaid.

There's also a question about how much more space Downtown needs for new offices or retail businesses. With the wrong mix of businesses in the areas targeted for redevelopment, the city's plans could wind up doing more harm to economically fragile areas like Main Street.

Friends For Our Riverfront, a citizens group that has been monitoring the city's plans, also has raised some valid environmental questions about the land bridge project.

John Gary, the group's vice president, believes converting Wolf River Harbor into a lake could create underwater pressure and seepage that would erode Mud Island, possibly causing property damage to the homes there.

Also, Gary said a lake with no outlet into the Mississippi River would trap stormwater pollutants and become a breeding ground for mosquitoes.

As for the promenade project, Virginia McLean, president of Friends For Our Riverfront, doesn't believe last week's Supreme Court decision would apply to property the city needs there. McLean said the state Supreme Court has already laid down the ground rules for developing that land in previous decisions. That may be a matter for the courts to decide.

What's clear, though, is that the city has a long way to go in terms of justifying key components of its riverfront plan.

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Friday, June 24, 2005

Riverfront up for grabs? Supreme Court ruling may allow Memphis to take land for project

The Commercial Appeal
By Tom Charlier

A U.S. Supreme Court decision backing the use of eminent domain for a riverfront project in Connecticut opens up new options for Memphis as it pursues a similar initiative along the Mississippi River, officials said Thursday.

By a 5-4 vote, the court held Thursday that New London, Conn., could seize homes and businesses for a private development project because of the potential boost in tax revenues and jobs that could result.

The decision was viewed as expanding the limits on eminent domain. Municipal leaders said it would help financially stricken cities generate revenue, while critics called it an affront to the rights of property owners, who could be uprooted to accommodate wealthy developers.

The New London case had been followed closely by the Riverfront Development Corp., which plans some $300 million worth of projects to revamp a 5-mile stretch of the Memphis waterfront over the next 50 years.

The decision means RDC could resort to eminent domain to take a four-block section of the Downtown promenade, where a mixed-use development is planned.

"It definitely gives the city more tools in its tool box for dealing with the legal issues surrounding that piece of property," said RDC president Benny Lendermon.

The promenade is land west of Front set aside by Memphis founders for public use. Although the city has a permanent easement, the land is owned by heirs to John Overton and other founders.

The nonprofit RDC, established to manage riverfront projects, wants to raze structures such as parking garages and a library to make way for public areas and residential and commercial development, possibly including high-rises.

But the promenade plan, which was approved by the City Council in 2004, has elicited opposition from a group that includes some of the heirs. They oppose commercial use of the land.

Lendermon said the city attorney's office is reviewing options concerning the promenade. No decision has been made as to whether eminent domain will be used, he said.

But the group opposing the RDC's proposal said the agency's failure to negotiate with the heirs so far suggests it already has decided to pursue eminent domain.

"It's been our assumption that they've been waiting for this case to give them a green light to take this land away from the citizens of Memphis and lease it to private developers," said John Gary, vice president of Friends For Our Riverfront.

Gary expressed disappointment at the decision, which he said allows cities to seize a "public gem" like the promenade and "dispose of it any way they choose."

But Lendermon said the decision provides a boost for Memphis and other cities.

"It's critically important for cities, for their ability to control economic development opportunities, especially in these days when financial crises are the norm," he said.



Eminent domain's past

The Supreme Court's opinion goes further than before in allowing the government to invoke its "eminent domain" and to seize private property from unwilling sellers.

The Constitution says government may take private property "for public use" if it pays the owners "just compensation." Originally, public use meant the land was used for roads, canals or military bases. In the 19th Century, railroads were permitted to take private lands because they served the public.

In the mid-20th Century, the court said cities could condemn homes and stores in "blighted" areas for redevelopment. That 1954 decision helped trigger various urban renewal projects across the nation.

In Thursday's decision, the court went a step further and said officials need not claim they are condemning blighted properties or clearing slums.

-- Los Angeles Times

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Thursday, June 23, 2005

Supreme Court ruling may affect Downtown development

Memphis Business Journal

A U.S. Supreme Court decision handed down Thursday on the taking of private property for redevelopment will likely reverberate throughout Downtown Memphis.

The case before the High Court involved a settled residential neighborhood in New London, Conn., which the city wants to condemn to make way for an office complex. Homeowners have fought the city over the principle of private property; they've argued that condemnation laws are intended for blighted areas in need of renewal, and for public projects.

New London's argument for bulldozing the middle class neighborhood is that office space would generate lots more in taxes, plus jobs, and that's good for the entire community.

The Supreme Court agreed, saying that local leaders know what's best.

In Memphis the first immediate implication is a proposal to redevelop a huge swath of the bluffs facing the Mississippi River; tearing down public and private buildings and creating a grand promenade park.

The plan was developed by the Riverfront Development Corp., and approved by the Memphis City Council. The Supreme Court ruling now gives the city attorney another tool in dealing with those opposed to the promenade, says Benny Lendermon.

"It's incredibly important nationwide," says Lendermon, president of the RDC. "Many large metropolitan areas are going through financial crises right now. This gives them more flexibility to pursue economic development. We developed a plan for the best use of the property."

Others do not agree.

Friends For Our Riverfront, a group of concerned residents and heirs to the promenade land, has opposed the RDC's plans to use private development, such as tall office towers, to pay for public improvements to the promenade.

FFOR members have long suspected that the RDC would use eminent domain to acquire the land if the heirs could not reach a consensus.

"Why pay when you can just take it?" says John Gary of FFOR.

In 2003, the RDC hired the law firm of Shaw-Pittman, which specializes in legal disputes over development rites and eminent domain, to design the legal strategy for acquiring the promenade land.

Beyond the riverfront, the High Court ruling also has implications south of Downtown, in an area peppered with old industrial buildings, some dating to the Civil War.

The neighborhood has numerous small businesses, such as welding shops and metal fabricators, but the renaissance of Downtown is knocking. The area is slowly being taken over for condo developments: renovations when possible and new construction when not.

Many property owners have resented pressure to sell. A common complaint is that when an owner doesn't sell they get harassed by building and safety inspectors. The Supreme Court may have made the process easier for developers.

© 2005 American City Business Journals Inc.

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Friday, April 22, 2005

Shutting Off Wolf

Land bridge would force companies to move

The Commercial Appeal
By Tom Charlier

The company Terry Martin works for isn't just situated in Wolf River Harbor. It's cemented there.

Lafarge North America Inc. operates a cement terminal that distributes 165,000 tons of powder a year to mixing plants in the Memphis area. Barges carrying 1,500 tons of cement regularly pull into the 58-year-old terminal at Henry and Front, a mile north of The Pyramid.

That's why Martin, the terminal manager, has trouble even contemplating being forced to move some day to make way for an expansive riverfront-development project envisioned by Memphis officials.

"We've got a lot of money invested in this terminal," he said.

Nonetheless, Lafarge and six other industries and government agencies that remain along the waterway are the focus of a survey gauging the impact of a long-range proposal to close off the harbor with a land bridge linking Downtown and Mud Island.

The land bridge is a central feature of a $292 million master plan of improvements -- most of them privately financed -- sought by the city's Riverfront Development Corp. But it's not going to be built for probably another 15 years or so, RDC president Benny Lendermon said.

"You really have to have a majority of the developable property on or close to the waterfront developed" before new acreage is created through a land bridge, he said.

If it is built, the land bridge will transform the harbor into a recreational lake, eliminating a last remaining vestige of Memphis riverfront history.

In the decades before the Corps of Engineers rerouted the Wolf River to north of Downtown in the early 1960s, the mouth of the Wolf served as a bustling harbor for commercial vessels on the Mississippi River.

But the construction of a causeway to Presidents Island more than 50 years ago created McKellar Lake -- a large, slack-water embayment that has become the city's main port.

According to the Waterborne Commerce Statistics Center, river vessels shipped 18.2 million tons of material in and out of the Memphis area in 2003. But only 1 million tons came through the Wolf River Harbor.

Although that total was up from the 877,000 tons reported in 2002, it was barely half the 1.8 million tons of cargo shipped in and out of the harbor as recently as 1995.

The operations that still line the Wolf's former channel include the headquarters of Anderson-Tully Co., a hardwood timber management and lumber firm, and a Coast Guard facility that helps oversee nearly 800 miles of the Mississippi.

In addition to Lafarge, industrial operations include a cement terminal run by Buzzi Unicem (formerly Lone Star Industries) and terminals and elevators owned by Bunge North America, Cargill Inc. and Westway Feed Products.

The survey, conducted by a corps contractor, will help define the scope of the harbor facilities and how they are served by the waterway and the surrounding road network.

Officials with some of the firms say they dread the prospect of moving.

"It would be expensive," said Deb Seidel, spokesman in Bunge's St. Louis headquarters.

The land bridge would "shut us down," she said. "Most of our business is barge traffic."

The Coast Guard's Group Lower Mississippi River facility is the base for a 75-foot cutter that tends navigation buoys up and down the river. But officials there haven't staked a position on the land bridge, said operations specialist Joel Coffman.

Some harbor facilities would feel little effect.

Anderson-Tully, for instance, no longer has barge traffic in the harbor. Most of its mills and facilities are centered near Vicksburg, Miss. "Our business operations would not be affected," president Chip Dickinson said.

Donald McCrory, executive director of the Memphis and Shelby County Port Commission, said he's concerned about the potential effects of the land bridge on overall river commerce. "I hope that's given the consideration it needs."

In addition to the long-range RDC plans, the harbor industries might conflict with the city's Uptown development being built just to the east.

Robert Lipscomb, director of Memphis Housing Authority and director of Housing and Community Development for the city, said relocating the industries is vital to the city's redevelopment.

"I think you have to relocate them. ... There's a higher and better use for that property."

Copyright 2005 commercialappeal.com

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Sunday, October 24, 2004

Riverfront planners watching high court eminent domain case

Commercial Appeal
by Tom Charlier

A Connecticut legal battle that has made its way to the U.S. Supreme Court could help determine whether Memphis uses eminent domain to seize the downtown acreage it covets for an expansive riverfront redevelopment.

The high court late last month agreed to hear a case arising from a waterfront development project in New London, Conn., that bears similarities to the one envisioned in a 50-year, $292 million plan of improvements along the Mississippi River in Memphis.

Proponents and critics of the plan say they'll be watching the court's ruling in the New London case because it's likely to determine when and how governments may seize private property for economic development projects.

"I think it will be very telling," said John Gary, vice president of Friends for Our Riverfront, a group that has opposed portions of the plan set forth by the Riverfront Development Corp., the nonprofit group guiding the city's efforts to remake its waterfront.

While stressing that he'd prefer to use other means to obtain property, RDC president Benny Lendermon said eminent domain is "an option that we've always considered."

The New London case, he said, "may have some bearing on it, one way or another."

The Connecticut dispute began when officials announced plans to raze a working-class neighborhood to make way for a hotel, health club and offices along the Thames River. As in the Memphis proposal, a major goal of the development is to attract people to the waterfront.

However, several homeowners sued, calling the plan an unjustified taking of their property. The Connecticut Supreme Court, in a ruling earlier this year, sided with the city's claims that the promise of additional tax revenue justified the condemnation of the waterfront property.

The New London case is the latest of several focusing on eminent domain. It follows a Michigan Supreme Court ruling this year that overturned a two-decade-old decision allowing Detroit to raze an ethnic neighborhood to accommodate an auto plant.

With more and more cities turning to redevelopment projects to boost their sagging budgets, the Connecticut case has ramifications nationwide, officials say.

Municipal leaders argue that cities should be able to use eminent domain to revitalize downtowns and neighborhoods.

"If the court takes away this tool that has 50 years of precedence, where will cities find the revenues to do the things they are legislatively charged to do?" said David Parkhurst, principal legislative counsel for the National League of Cities.

But property rights groups contend that in employing condemnation, cities often have strayed from their constitutional charge to transfer the property for public use. In thousands of cases, the private land has been taken for the benefit of private developers and businesses, said Bert Gall, a staff attorney for the Institute of Justice in Washington, which is representing the New London homeowners.

"Public use is not condominiums. It's not offices, it's not retail," Gall said.

In Memphis, the plan pursued by the RDC would revamp a five-mile stretch of the riverfront. It includes mixed-used commercial development, including high-rise towers, in the historic promenade area along Front Street, construction of a lake and a 50-acre land bridge to Mud Island and redevelopment of current industrial sites.

In a recent report assessing the RDC plan, the Urban Land Institute raised the prospect that eminent domain might be needed.

"Given the critical amounts of land needed for riverfront development, this tool may become important to the RDC," the institute's report said.

Still, RDC officials say they'll try to avoid condemnation. To obtain the promenade area, they plan to negotiate with the heirs to the Memphis founders who set it aside for public use.

"I'd rather not even have to consider it (eminent domain)," said John W. Stokes, chairman of the RDC board.

Lendermon said he remains confident the promenade area can be acquired without eminent domain. He said a condemnation case there would be "very convoluted" because the owners - the founders' heirs - number in the hundreds and don't have direct use of the land because of an easement held by the city.

"You're condemning these rights that are somewhat nebulous," Lendermon said.


Other areas where the city might have to condemn land for the riverfront project include the industries along the Wolf River harbor.

RDC officials say the court's ruling in the New London case, which is expected as early as next summer, will provide some needed guidelines on the use of eminent domain.

"I think the pendulum has swung away from condemnations that used to go through pretty easily," Stokes said.

Copyright 2004 by The Commercial Appeal

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Monday, September 20, 2004

Letter: RDC should put a chunk of Tom Lee Park up for sale

Commercial Appeal
Letters to the Editor

If the Riverfront Development Corporation is hell-bent on selling public land for private development, perhaps it should consider selling off part of Tom Lee Park.

RDC's refusal to plant additional shade trees, install picnic benches or gazebos or shelters results in an open expanse of land on which to build condos and office buildings, with plenty of space remaining for Memphis in May festivities.

RDC could easily exercise its power of eminent domain because Tom Lee Park doesn't have the easement restrictions the City of Memphis must overcome to promote private development of high-rises on the public promenade.

Tom Lee Park would likely "lease" to private developers for enough money to relocate the fire station and two parking garages from the public promenade. And devel oping a small part of Tom Lee Park might be what the RDC needs to bring "critical mass" to the riverfront.

Bill Tillner
Memphis

Copyright 2004, commercialappeal.com - Memphis, TN. All Rights Reserved.

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Sunday, July 25, 2004

Memphis brawls on the Promenade - Revitalization quest splits city

Atlanta Journal-Constitution
By Drew Jubera

Memphis --- There are hundreds of them, maybe a thousand. Descended from this river town's 19th-century founders, they're all over the world, living all kinds of lives, from judge to jailbird. Two have been mayor. They're Democrats, Republicans, white and, in one branch, black. They've made and lost fortunes, married (sometimes each other) and multiplied.

But after 180 years and five or six generations, the heirs of this city's three founders are now front and center in a high-profile dust-up over a downtown development on a bluff above the Mississippi River.

It's a dispute full of blue blood, new blood and bad blood, destined for a courtroom but not necessarily a resolution. It centers on four precious but declining blocks called the Promenade that Memphis' original proprietors gave as public space in the 1820s --- but to which the heirs still hold title, allowing them to block plans contrary to the founders' intent.

Now this rebounding city wants to let private developers refashion what has become a bleak stretch of moldering civic buildings and "No Trespassing" signs into a mixed-use playground of condominiums, boutiques and restaurants where patrons can look over a wine list while looking out at the Big Muddy.

That vision has split not only the heirs, but many of the city's movers and shakers, from business moguls to land barons to celebrities like actress Cybill Shepherd and basketball legend Jerry West.

Supporters of commercial development claim it will kick-start a long-dormant area. Opponents, including preservationists and environmentalists, view the plan as a land grab that violates the founders' aim. They want the city to develop a park instead.

"It's a passionate issue. It's a where-do-you-stand-on-Memphis issue," said John Branston, columnist for Memphis magazine. "There are a lot of hard feelings. If they go after a legal solution, there's no way it will be resolved. Solomon couldn't decide this."

'Interesting headache'

Nobody knows how many heirs there are to John Overton, James Winchester and John McLemore (who bought his stake from a cash-strapped future president, Andrew Jackson). While their surnames appear on park and street signs, nobody seems certain what the heirs' rights are, who speaks for them or whether one set has more say-so than another.

"Nobody will really know until it's brought to court and goes through the legal process," said Newton Allen, a Memphis lawyer who represented heirs in a 1965 state Supreme Court decision that upheld their title rights and stopped the city from giving part of the Promenade to a hotel chain.

"It's going to be a headache," he added, "but an interesting headache."

Here's what is known: When the founders laid out Memphis, they set aside prime river bluff property as open air for what was then a malarial sweatbox. When they gave the new city an easement to the land, the founders insisted, in a document filed with the Shelby County registrar's office in 1828, that the property forever be "public ground for such use only as the word [promenade] imports."

More expansive than it is now, the land was whittled away as the city and its geography changed: The river receded, an island formed off its bank, new industries sprouted. Heirs allowed some changes and fought others.

By the 1960s, with Memphis in decline, the Promenade was an incoherent jumble of public buildings. A quaint park with a river view did survive, though few seem to notice it anymore.

The Promenade has since been largely ignored. As downtown Memphis bounced back in the '90s, development drifted elsewhere: a rejuvenated Beale Street; a mall attached to the Peabody Hotel; new housing along the more southern bluffs.

"The privilege of using that property for the public has been squandered," said Napoleon Overton, an heir and stock analyst whose office overlooks the Promenade. "Everybody agrees on that."

In 2000, the city ceded riverfront planning to a nonprofit, quasi-governmental agency, and last year the Riverfront Development Corp. unveiled its Promenade project. The corporation, whose board of power brokers run the gamut from old influence to new money, hailed it as a vibrant answer to a bluff known as Memphis' "front yard." The board's star power included West, president of the NBA Memphis Grizzlies, and Shepherd, a Memphis native who lives there part time. (West supports the plan; Shepherd was originally in favor, but now opposes it.)

The City Council OK'd it. Even the heirs appeared to be on board. Hamilton Gayden, a Nashville circuit judge, unearthed 160 fellow Overtons. A survey he mailed asked them to choose between two Promenade options: an accord that allowed private development if there was sufficient green space and revenue-sharing with the heirs; or leaving the property as it is.

A large majority favored development and sharing in profits.

"We ought not be obstructionist," Gayden said. "Nobody's expecting any money --- there's not enough money to cover that many heirs and make it worth it."

Other heirs, mostly Memphians, say they weren't contacted or didn't respond to the survey, and were outraged by what they viewed as a blood betrayal. A meeting between the groups was a disaster.

"They're a good group of people, but I'm starting to wonder about some of the gene pool," said Virginia Overton McLean, president of a grass-roots group opposing bluff development in favor of an enhanced park.

"We try to be civil to each other, but the whole thing just incenses me," she added. "It's just so abhorrent to what I believe should be done."

Condemnation possible

The next step likely is in court. Benny Lendermon, Riverfront Development Corp. president, said the city's options include condemning the land and collaring it by eminent domain. The land has not been assessed, but its value could run into the tens of millions, a portion of which would go to the heirs.

"It's a way to get before a judge to rule on what the heirs' rights really are," Lendermon said. "I don't think anyone with the city is concerned about resolving it. It's just deciding which is the best way to pursue it. It could take as much as two years."

Most heirs are silent on the issue; many hadn't considered the Promenade in years, if ever, before this ruckus.

"I wanted not to be involved, because when people hear the word 'heir' it has an old-timey, negative connotation," said Lisa Overton Snowden, who opposes the development. "People thought we were going to benefit personally, and that's the last thing I wanted people to think."

But both sides feel the weight of their ancestry.

"It's bizarre," said Ruth Warner, heir and historian at Travelers Rest, the Nashville home of founder John Overton. "It's putting a burden on your descendants to say something should be restricted like that. I would like to honor his wishes, but I also have to think of the needs of a modern city. How could he possibly have envisioned what Memphis would be like today?"

Yet heirs who oppose the commercial development insist the founders' vision was both enlightened and timeless.

"This is not like a son all of a sudden thinking his father didn't have any sense," said McLean. "These were astounding people way back when who had this broader view of what could be good.

"I feel a responsibility to them," she added. "You couldn't pay me enough to go away."

© 2004 The Atlanta Journal-Constitution

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Monday, June 07, 2004

Memphis riverfront in tug of war; Wanted for park, redevelopment

Associated Press

MEMPHIS, TENN. - In 1819, the founders of Memphis had run off the Chickasaw Indians and were getting down to drawing a design for their city.

They envisioned a town with a long, green park as its front door gracing a high bluff over the Mississippi River. The Promenade, as they called it, was to offer a commanding view of the river and would forever remain "public ground."

But not much of that park is still a park, and the view is far from commanding.


Now the view of the river from the Promenade is blocked by two run-down city parking garages, a firehouse, an old library and a former federal courthouse.

The city's plan for gussying up the riverfront would clear out the old buildings and open four central blocks of the Promenade for developers to put offices, condos, shops and restaurants.

That plan has created two determined camps: a citizens group that wants the Promenade returned to open green space and the Riverfront Development Corp., which wants a splashy commercial waterfront like other cities have built.

Likely in the mix, too, will be hundreds of heirs of the Memphis founders who argue they can claim the land if private developers move in.

"It was meant to be reserved for the use of the people, not for private business," said Charles Crawford, a University of Memphis history professor.

Though the land on which Memphis sits was then occupied by the Chickasaw, North Carolina claimed it in the late 1700s and a speculator named John Rice bought a 5,000-acre chunk.

The founders of the city, John Overton, James Winchester and John McLemore, got the land from Rice's estate after he was killed by Indians. By the 1820s, Memphis had fewer than 100 residents, but it was a center of trade for livestock, cotton, timber and other goods.

The Memphis founders were land developers, but they took the unusual step of setting aside several sites for public parks. The Promenade drew the attention of private business early on.

"People were using it to park their wagons. They would camp there, and if they brought something in to sell, they would pile it up on the riverfront," Crawford said.

In 1828, the founders drew up a written explanation that their easement for the site meant it was to be public land.

Benny Lendermon, president of the current-day Riverfront Development Corp., said the site has since become an eyesore and the only way to transform it is with private money.

"It's been talked about for years, but it's not ever going to happen. It will just keep sitting there like it is," Lendermon said.

His nonprofit corporation is under contract with the city to manage and redevelop the 5-mile-long riverfront.

Memphis, like other cities, has pushed in recent years to make its riverfront more attractive to tourists and local residents alike.

Over the past two decades, the city has made major strides cleaning up downtown -- a revitalized Beale Street entertainment district, the new Peabody Place mall, a new minor-league ballpark and the NBA Grizzlies' FedExForum opening later this year.

The face-lift has convinced more people to move downtown and has sparked commercial development. The Riverfront Development Corp. has plans for more improvements.

Lendermon said clearing out the old buildings plus laying out a park could cost $50 million. Members of the citizens group, Friends of Our Riverfront, predict it would cost considerably less, however, perhaps as little as $7 million.

The development corporation has the city council's OK to move ahead with its plans, but Virginia McLean, president of Friends for Our Riverfront, said her group's fight is far from over.

"The land they're talking about is public land. It belongs to the citizens of Memphis," said McLean, an heir of founder John Overton. "We think it should remain open space for everybody to use."

The Riverfront Development Corp. now must begin talking to the founders' heirs, a diverse group that still owns the land, even though the city has an easement to use it.

Lendermon has said there must be a court decision on how the land can be used, and that might take up to two years to settle.

The Riverfront Development Corp. hopes to find private developers to build two towers up to 150 feet tall for offices and condominiums. The development also would include shops, restaurants and other such businesses.

The riverfront already has more than 250 acres of parks but little else to draw people to the river, Lendermon said.

"If you want to have a view of the river and have dinner at a small bistro or some nicer place, there's no place to go," he said.

Copyright 2004, The Associated Press. All Rights Reserved.

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Sunday, April 25, 2004

Letter: Legal questions demand answers

The Commercial Appeal
Letters to the Editor

In 1819, Memphis's founders (being developers themselves) employed a checks and balances mechanism to protect the promenade from future developers.

They gave Memphians a perpetual easement, with the stipulation that the property always be a public promenade. They allowed the underlying land to pass to their heirs, who for all practical purposes cannot do anything with it while the easement remains.

If an easement's stipulations are violated, the landowners may sue to stop the violations or ask the court to dissolve the easement. In the 1960s, the heirs sued the city to prohibit leasing a portion of the promenade to a commercial developer. The Tennessee Supreme Court upheld the heirs.

Given that precedent, what does the RDC plan to do? It seems they would abandon the easement, reverting full control of the property to the heirs. Then they would have the city take the land by eminent domain, paying the heirs current market value.

That raises three disturbing questions:
  • Should the RDC and the city be allowed to destroy a valuable possession of the citizens of Memphis (the easement) without appropriate public process?
  • Will Memphians then be forced to pay for something that was already theirs?
  • If the proposed development fails to provide sufficient revenue to cover the debt service, will future generations of Memphians foot the bill?

Arguably, the only logical purpose of abandoning the easement, then buying the land at today's prices, is to enable commercial development. It appears that taxpayers, not developers, would bear the brunt of the business risks.


Regardless of how one feels about the esthetics of the proposed development, these questions demand to be answered.

Michael Cromer
Memphis
Copyright 2004, commercialappeal.com - Memphis, TN.

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Thursday, April 01, 2004

Pushing the limits of 'public use': Owners see their land taken -- and handed over to developers

USA Today
by Dennis Cauchon

Rene Corie installs drapes in Florida mansions. Her husband, David, builds the mansions' gates.

Eight years ago, the working-class couple finally found some waterfront real estate they could afford: a two-bedroom house for $70,000 in Riviera Beach, a poor town near the wealthy enclaves of Palm Beach and Jupiter.

But Riviera Beach now wants to bulldoze the Cories' home and 2,200 others to make way for one of the nation's grandest redevelopment plans: a collection of high-rise condos, bigger homes and upscale shops. The city plans to use eminent domain -- its power to confiscate private property for projects that benefit the public -- to take the homes of 5,100 people if the residents do not agree to move."

It's un-American to take my property and give it to a private developer," says Rene Corie, 55."I couldn't afford a water view anywhere else."

The use of eminent domain is meeting growing resistance in courts, legislatures and neighborhoods from Connecticut to Ohio and Colorado. The criticism targets local governments' efforts to spur economic growth by transferring land from homeowners and shopkeepers to developers or corporations.

Local governments are using eminent domain to acquire land for Wal-Mart, Target and other retailers that need big sites for stores. Land also is being taken for manufacturing plants, hotels, condominiums and parking lots.

Riviera Beach Mayor Michael Brown says his predominantly black community is trying to take advantage of its greatest resource: the waterfront. "For their own selfish reasons, some people want to live near the water and pay little or no taxes," he says. "Who wouldn't? But city government has to look out for all residents."

Larry Morandi, environmental program director for the National Conference of State Legislatures, says cities are using eminent domain to address financial problems. "They are taking property they don't believe is generating enough tax revenue and turning it over to a developer who will generate more taxes," he says.

To accomplish this, cities are pushing the legal limits of eminent domain. California City, Calif., declared vacant property in the Mojave Desert as "urbanized and blighted" so it could acquire land for a Hyundai auto testing facility.

Legislatures in 10 states this year are considering limits on the use of eminent domain that benefits private corporations, but the measures aren't likely to pass immediately. "It's a tough concept for legislators to understand," Morandi says. "It often takes several years for these types of laws to pass." The Arizona Legislature last year enacted similar limits."

The use of eminent domain has expanded for years, but the pendulum is swinging the other way now," says Scott Bullock, attorney at the Institute for Justice, a non-profit legal group in Washington, D.C., that is trying to establish precedents for limiting the practice.

Government at all levels has long used eminent domain to acquire land to build roads, schools, parks, hospitals and other projects of public benefit. The Constitution says private property can be taken for "public use" if the owner receives "just compensation." Courts have traditionally defined "public use" broadly. "Just compensation" usually means fair market value as determined by an appraiser.

Whether economic development justifies the use of eminent domain is at the heart of many disputes.

In a landmark case, Detroit cleared the ethnic Poletown neighborhood in 1981 for a General Motors luxury car plant. The city took 1,300 homes, 140 businesses, six churches and a hospital. The Michigan Supreme Court is considering whether to overturn the precedent in a current case that involves taking 1,300 acres near the Detroit airport for a business complex.

City planners say eminent domain is a crucial tool for restoring the economic health of cities and older suburbs. Older communities often need higher tax revenue and new attractions to remain vibrant."

Sometimes you have to acquire an old gas station or massage parlor to make way for a better use," says Jeffrey Finkle, president of the International Economic Development Council, an association of professionals involved in community development. "The community is often 100% behind these projects, and the problem may be one landowner who wants $1 million for a $400,000 project."

New York City used eminent domain to acquire land for a Pathmark supermarket on 125th Street in Harlem."Without eminent domain, that supermarket never would have happened," says Orlando Artze, program vice president of the Local Initiatives Support Coalition, a national non-profit corporation that helps revitalize urban neighborhoods.

Harlem's Pathmark store has brought the neighborhood 100 jobs, lower food prices and the convenience of not having to travel 40 blocks to shop, Artze says. But he and other urban planners fears that aggressive use of eminent domain could backfire. "If it's overused, we run the risk of legislatures and courts becoming skeptical -- and that would be bad news for people who care about inner cities," he says.

In Florida, Riviera Beach, a city of about 30,000 people, wants to redevelop 800 acres along its waterfront and U.S. Highway 1 with luxury housing, yachts and upscale shops.

The mayor says the project will increase the assessed value of the property from less than $80 million to as much as $2 billion. The added tax revenue will finance better roads, new schools and safe streets, Brown says. "We will eliminate poverty in Riviera Beach."

But Herman McCray, a restaurant owner and former city councilman, says razing whole neighborhoods is too great a price to pay. "Things should be done in moderation," he says.

Rene Corie's waterfront view may soon be gone. Across the street, a lot has been cleared for high-rise condos. The developer plans to build an 8-foot-high wall around the complex. "They are taking what I love," she says.

The mayor sees it differently: "The people who live on the water are cheating the poorest members of our community."

(Sidebar)
Eminent domain rulings in courts
Recent court cases that have limited government power to confiscate private property:

* The Colorado Supreme Court on March 1 rejected a Denver suburb's attempt to take a private lake for a new Wal-Mart.

* The Arizona Court of Appeals ruled in October that the city of Mesa couldn't take a brake-repair shop so an Ace hardware store could expand.

* The Illinois Supreme Court ruled in 2002 that a local government could not take a privately owned auto scrap yard and give it to an auto racetrack for a parking lot.

But property rights advocates aren't winning every case. The Connecticut Supreme Court ruled on March 3 that a private, non-profit corporation, which had been given eminent domain authority by the city, could take 15 riverfront homes in New London and turn the land over to a developer. Opponents plan to appeal the case to the U.S. Supreme Court, which has not ruled on whether economic development is a legitimate reason for government to take property.

© Copyright 2004 USA TODAY, a division of Gannett Co. Inc.

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