Is Ukiah Unfairly Teeing Up to Use Eminent Domain Against the Palace Hotel?

Nossaman’s Eminent Domain Report talks about how the city of Ukiah is getting increasingly frustrated with the owners of the dilapidated Palace Hotel in the middle of its downtown, and is currently considering reviving the local redevelopment agency’s eminent domain authority to force the project forward:

Nearby residents recall the Palace Hotel serving as a hub of activity in the 1970’s and 1980’s when it housed a restaurant, a bar, and a popular music venue attracting well known acts.  But the Hotel has been sitting vacant since 1988.  According to the article, in 1994, more than 200 downtown merchants and customers signed a petition demanding that the city have the building either cleaned up or torn down.

The property appraised in 2006 for $309,000, but the owners purportedly want over $1 million.  A study commissioned by the city concluded it would cost $4.5 million just to tear the Palace Hotel down.  Like any redevelopment, the proposed use of eminent domain is drawing a wide range of opinions.

I’d be very interested to know more about the $4.5 million demo estimate—seems like a big number to just float out there all by itself.  And it looks like there have been some suggestions made in the past for renovating or re-provisioning the building for other uses besides tearing it down completely.  The $309,000 appraisal at the height of the real estate boom also seems conspicuously low, and I would guess it has something to do with onerous historic district regulations and other land use controls relevant to this downtown area that tend to make maintaining such properties ridiculously expensive.  As a result, redevelopment agencies are able to low-ball the owners to re-provision their property as they like.

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The Phantom Limb of Kelo

Nossaman’s California Eminent Domain Report links this story about citizen outrage over a slated redevelopment plan in the city of Placentia.  The irony is that, apparently, the city does not have the power to condemn property for private redevelopment.  This story vindicates what I previously wrote with respect to the use of eminent domain for private redevelopment—that the repugnance of the practice would lead to unthinking citizen objection to even legitimate and needed redevelopment.  In other words, Kelo v. New London‘s holding that the Constitution permits takings for private redevelopment has led to citizens revolting against their cities’ redevelopment efforts, even if their cities are don’t have the power to do what Kelo otherwise allows.  It reminds me of stories of amputees who report feeling pain in “phantom limbs”:  there’s nothing causing the pain, but it hurts anyway.

But I disagree that there’s nothing to fret:  the lack of authority is not much of a reason to expect a city not to violate its citizens’ property rights.  Case in point, back in 2007, while working with John Eastman—now California Attorney General candidate—and The Claremont Institute Center for Constitutional Jurisprudence, I appeared before the San Diego Planning Commission to explain why federal law forbade the Rancho Bernardo Planning Board (“Planning Board”) from denying the Grace Church of North County a conditional use permit (“CUP”) to continue using their place of worship.  The Planning Board had decided they had enough churches, and considered the denial of the CUP an easy decision.  They insisted that, like the members of the Planning Board, businesses near the church were probably annoyed with having churches around and would likely move to other areas unless action was taken to oust the worshipers.

The only law actually relevant to this decision—the Religious Land Use and Institutionalized Persons Act (“RLUIPA”)—was not even on the Planning Board’s radar.  Even the Planning Commission gave blank stares as I explained that, under RLUIPA, a city may not make land use decisions that impose a substantial burden on religion without a compelling state interest.

The district court agreed, and granted the church’s motion for summary judgment on its RLUIPA claim.  The district court held that “Grace Church experienced outright hostility to its application, decision-making that is seemingly arbitrary or pretextual, and ignorance regarding the requirements of controlling federal law regarding the application of land use laws to religious institutions.”  (Emphasis added.)  In fact, this ignorance of the applicable legal limits of what planning official may do was by design.  As the court further noted, the evidence showed that the city established the local Planning Board, made up of community members with no legal training and little to no knowledge of RLUIPA, to be “a central part of the mandatory CUP process.”  And yet there was “no attempt by the City to educate the [Planning Board] regarding RLUIPA.  To the contrary, the City expressly directed the [Planning Board] to deny CUPs for any project conflicting with the stated objective of preserving industrial lands.”  (Emphasis added.)

The city wound up paying $950,000 of taxpayer money for their refusal to heed the limits of its authority, in addition to granting the requested CUP.

City planners often have a one track mind, and they’re quite used to glazing over objections—even as to federal supremacy and constitutionality—as they plod ahead in their agendas.  I’d say the citizen objectors in Placentia are well justified in voicing their concerns.

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Greedy Holdouts

Long Beach just voted to use eminent domain to shave off landowners’ property abutting PCH in order to make way for a right turn lane.  Notice how sympathetic the local Press Telegram is to the city’s beneficent agenda:

The City Council made the rare decision Tuesday to use its power of eminent domain to acquire a sliver of property along Pacific Coast Highway in order to widen the roadway.

The council voted 8-1, with Councilwoman Gerrie Schipske dissenting, to force the sale of the 9,934-square-foot strip of land in southeast Long Beach to create a right-turn lane on southbound PCH north of Second Street.

The property is behind City National Bank and in front of Hof’s Hut restaurant. The city will pay the property owner $655,000, which is an offer that the owner had rejected.

One thing that always bothers me about these stories is that the reporter will generally do a bit of research to report the long plight the local redevelopment agency has faced on a particular project in advancing the “public good,” but rarely gives the owners’ side of the story.  This is the case here:

Eminent domain gives governmental entities the ability to force someone to sell their property at a fair market value for the public good. Dennis Thys, the city’s director of Community Development, said the traffic mitigation project had been recommended in a 1998 environmental impact report for the Marina Shores Shopping Center located on PCH, south of 2nd Street, which is where the Whole Foods Market is located.

The often crowded intersection serves more than 85,000 vehicles per day and up to 100,000 daily during peak summer months, city traffic engineer Dave Roseman said.

“It’s an exciting time for the community,” said 3rd District Councilman Gary DeLong. “They have waited for this project for many years.”

Any comment from the owners or their counsel?  Any field research about the impact on the owners?  Any discussion of whether the $655,000 would actually compensate the owners for their loss?  Nope.  In fact, throwing out those kinds of numbers—big ones from a regular Joe’s point of view—without any context automatically makes the owners look like greedy holdouts standing in the way of the convenience of everyone else.  This version of the story goes one further, explaining not only did the owners inexplicably reject the city’s generous offer for this noble project, but the subject property merely “consists of landscaping and a single parking space.”  The nerve of those evil property owners!

I’m not saying I’m against this project (though I will say this intersection is certainly not of the particularly troublesome ones in Long Beach), but it is trouble that, even in the wake of Kelo and our Supreme Court’s well nigh complete abdication of judicial review of governmental takings, the media machine still insists that we automatically assent to the government’s use of this power, and to paint detractors as greedy enemies of the public good.

The Effects of Obama’s Cowboy Economics

This is absolutely wild.

May 19, 2009
Letter from a Dodge dealer
letter to the editor
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

U.S. to Condemn Land for Flight 93 Memorial

The federal government will use eminent domain to assemble land to build a memorial to Flight 93 and its passengers who diverted terrorist hijackers. I can think of no better way to honor the heroes who gave their lives defending freedom than to forcibly confiscate other citizens’ property.