Collaborative and market-driven approaches to economic development and revitalization.

RESPONSE TO THE 2005 U.S. SUPREME COURT DECISION IN Kelo vs. New London has been dramatic and polarizing. Overnight, eminent domain has become a topic for discussion in households, businesses and community forums. In the backlash from the decision, national and state legislators have proposed a number of bills aimed at limiting government's power to take private property for public use, and especially to take private property for economic development purposes.

Most of the discussion focuses on several issues:

1. Does the public-use clause of the Fifth Amendment permit condemnation of private property for transfer to other private parties solely for the purpose of promoting economic development?

2. Is the term "public use" synonymous with "public benefit," defined as the removal of blight, the reversal of economic decline, the creation of jobs and improvements to the tax base?

3. Assuming that eminent domain is here to stay--as the Kelo decision suggests--are there better ways to determine just compensation?

These are all good questions but they are shortsighted in that they fail to address the broader issues of how to define blight and best results, and how planners can undertake improvements in a manner that is sensitive to the needs of the people who are most directly affected. The question that remains unasked--and one that may be far more important than the technicalities of public use vs. public benefit--is benefit for whom?

EMINENT DOMAIN AND URBAN REVITALIZATION

One of the first eminent domain cases heard by the Supreme Court was the 1954 urban renewal case of Berman v. Parker, (1) in which the city of Washington, D.C., acquired large tracts of residential and commercial property in an attempt to eliminate slums. Following this decision--which upheld the government's authority to take property, regardless of condition, for the greater good and specifically for the elimination of blight--American cities undertook massive redevelopment projects that cleared large areas in and around central business districts.

The urban renewal process included designating an area as blighted, preparing a development plan, using eminent domain for land assembly, demolition and marketing the cleared land for redevelopment. In a variation on a questionable sentiment, cities essentially believed "if we demolish it, they--the developers--will come."

Unfortunately, the laws of supply and demand, and economic feasibility, became apparent only when the cleared land did not attract market-rate development and remained vacant. Blighted neighborhoods, by definition, were not the most attractive locations for market-rate development. And other problems occurred that officials probably should have anticipated. Once neighborhoods were declared blighted and targeted for redevelopment, individual properties became unmarketable and property owners stopped maintaining them. Without investment, deterioration accelerated and neighborhoods became more depressed, even in areas that were previously stable. Ironically, a program that intended to remove blight actually contributed to neighborhood decline in many cases.

Even proponents of eminent domain suggest that it should be used as a tool of last resort, because it is often more costly and time consuming than acquiring properties through voluntary exchange. (2) However, municipalities point out that it is often impossible to assemble large enough parcels to revitalize blighted communities without condemnation. Across the country, government officials and planning agencies point to any number of important projects that would not have been possible without eminent domain--projects like Times Square, the World Trade Center and Baltimore's Inner Harbor.

These types of successes usually come to fruition because of two reasons. First, revitalization in urban areas often involves infill development, and private developers do not have the ability to assemble the required parcels. Even if all property owners are willing to sell, the only way to obtain clear title typically is through the condemnation process. Second, many economic development projects are not, in fact, economic at all, at least not in the way that the private sector defines economic feasibility. Without the municipality's contribution of an assembled site, along with various tax incentives and below-market financing, the projects would not move forward.

ECONOMIC BENEFITS FOR WHOM?

Everyone wants safer neighborhoods without trash or abandoned buildings, better schools, successful businesses, an improved road network. In contrast, the current outcry against eminent domain is less concerned with long-term benefits than with the social impacts of demolition and relocation. Today, much of the discussion around eminent domain focuses on the best way to mitigate these impacts. What is the best way to relocate the existing residents, or how much can we pay them to truly compensate for their loss? But these still are not the pertinent questions. Rather, the questions should be: What is the best way to serve the existing residents, and must we completely move out the old before we can bring in the new?

Historically, officials have believed the only way to accomplish widespread improvement is to buy out existing property owners and relocate tenants--or not, depending on lease clauses and local policy. More often than not, the original residents are long gone by the time the new, improved neighborhood is ready for someone else to occupy. This is especially true of tenants, who generally have no legal claim on residence in the old or the new community.

The following case studies describe urban revitalization projects that are attempting to improve the situations of the residents, not just the real estate. All these projects have champions and detractors; many are works in progress. Readers who accept the premise that eminent domain may be a necessary evil can view these projects as a way to take a collaborative approach that builds neigh-borhoods without destroying lives.

DEMANDING A BETTER DEAL

In Baltimore, Md., the city has undertaken an ambitious revitalization effort to convert an 80-acre portion of East Baltimore into a new 22-acre biotechnology park for Johns Hopkins University, along with low-income, affordable and market-rate housing. As approved by the Baltimore City Council in December 2002, the 10-year project has the potential of acquiring, through eminent domain, as many as 3,000 properties, and the possibility of displacing as many as 800 households.

East Baltimore Development Inc., which is managing the $800 million project, has partnered with the Annie E. Casey Foundation to provide relocation assistance that is generous in terms of compensation but, more important, includes financial counseling, educational and employment training, and job placement. They connect families with resources including healthcare, social services, senior services, after school programs, credit counseling and substance abuse programs. "We want the families directly affected to end up better off as a result of this revitalization," says Douglas Nelson, president of the Casey Foundation. "Not just changed, not just moved, but really better off in all the common sense ways that we think about: better housing, more job opportunities, a healthier neighborhood, safer streets, better schools, more recreation opportunities." (3)

By early 2006, a total of 395 households had been moved, and Charles Cohen of the Baltimore City Paper reported that "Even some of the East Baltimore plan's most vigilant critics concede that the forces behind the project seem to be making a bona fide effort to improve the lives of the residents." (4) At the same time, Cohen quoted a number of residents, including long-time resident Lucille Gorham. "Whether it was a bad neighborhood and how it seemed to other people, it was my neighborhood and I lived there," Gorham told the newspaper. Lisa Williams, president of Save Middle East (Baltimore) Action Committee, pointed out that "... (some) residents were very happy living here. We were hoping for redevelopment, but renovating redevelopment, without displacement."

More than 60 percent of the East Baltimore redevelopment--the 50 acres of Phases II and III--is still on the drawing board in terms of what will be built and when. Though officials have given some indication that more renovations and less relocations in subsequent phases will take place, the development plan is not complete and Phase I is barely underway.

DEVELOPMENT WITHOUT DISPLACEMENT

The Dudley Street Neighborhood Initiative, or DSNI, is a resident-led community nonprofit dedicated to rebuilding the Dudley neighborhood of Roxbury/North Dorchester, Mass. Located less than two miles from downtown Boston, the DSNI neighborhood had been devastated by arson, disinvestment and dumping, with 1,300 vacant lots by the mid 1980s. At the heart of the neighborhood, the Dudley Triangle was a 64-acre tract that was home to about 2,000 people. The Triangle included approximately 15 acres of vacant land owned by the city of Boston and another 15 acres, or 181 lots, of privately owned vacant land. (5)