September 14, 2003

By Dale Buss / Special to The Detroit News

Detroit, Michigan

http://www.detnews.com

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Condemnation trends

* The Michigan Supreme Court's 1981 ruling in the Poletown case set a precedent cited all over the country for allowing homes and businesses to be taken by the government solely for the benefit of another business. Property in Detroit was taken to make way for a General Motors plant.

* Some Michigan appellate and trial courts have since criticized government takings of property for private parties, while others have upheld such actions.

* A 2002 Michigan law strengthens the ability of local governments and redevelopment agencies to condemn land designated as blighted and sell it to private developers. It exempts industrial, farm and railroad properties.

* For many years, courts rubber-stamped any use of eminent domain. But from 1998-2002, courts rejected condemnations for private use or overturned blight designations 37 out of 91 times (40 percent).

Source: Institute for Justice

Photo: Paul Smoke, president of the Grosse Ile Bridge Co., is fighting an attempt by the township of Grosse Isle to take the private bridge through eminent domain. The family-owned operation is one of two crossings to the Downriver island town. Photo by Ricardo Thomas / The Detroit News http://www.detnews.com/pix/2003/09/14/a13bridge.jpg

Grosse Ille, Michigan - Paul Smoke's family built the northern bridge to Grosse Ile over the Trenton Channel of the Detroit River in 1912, when his great-great grandfather, an early competitor of Stroh Brewery, began raising draft horses on a farm on the island's northern tip. The family has owned and operated the bridge ever since, with barely a murmur of public objection.

Now, however, Grosse Ile Bridge Co. faces a threat from local government officials who are determined to use their power of eminent domain to take over the bridge. They say the grab is defensive, meant to protect the Township of Grosse Ile while the free county-owned bridge to the south undergoes two years of repairs -- and to pre-empt other scenarios that might close the Smokes' right-of-way, one of two bridges to the island.

Smoke is calm but hardly confident of his position before the initial court hearing scheduled for Sept. 26.

"I don't think our ownership could be eliminated, but when you get into the use of eminent domain, it's difficult to predict," says Smoke, standing at the western end of his bridge one day last week while cars paid the $1.25 toll and crossed.

"Seldom do condemnees prevail against the government."

Smoke's is one of several recent attempted government takings of private property in Metro Detroit since Detroit tried unsuccessfully to take over some downtown properties on the east riverfront to clear the way for casinos. In Dearborn, city government is threatening to evict Price's Men's Wear from its store in the largely abandoned old Jacobson's block on West Michigan Avenue to make way for a new retail and housing development. And the Michigan Supreme Court may consider the case of several land owners near Metro Airport who won't sell out to Wayne County, which wants to create the 1,300-acre Pinnacle Aeropark high-tech industrial park there.

Government has always been allowed to take private property, while providing compensation to the owner, if it served a public purpose. But the definition of what is public has expanded to include taking land to make way for other private developers or businesses. Courts in Michigan and elsewhere have been debating in individual cases whether this practice has gone too far, a fight that has yet to be settled.

Michigan has become a national hotbed of eminent-domain cases. The state ranked fourth in the nation for using condemnation laws from 1998 to 2002, says the Institute for Justice, a Washington, D.C.-based libertarian public-policy group. More than 300 land parcels in the state were either threatened or condemned during that period for "public" uses that had a strong private component.

Detroit finished first among all cities, taking private land for projects including Ford Field, Comerica Park and Jefferson Village, a 400-home development on the city's east side.

The institute says Michigan became even more assertive about eminent domain after the state Legislature passed a law in 2002 that strengthened local governments' hand in areas designated as "blighted." Local experts agree that the state is a national leader in eminent domain.

"Michigan has used this power regularly, and some of the most controversial decisions have come out of Michigan courts," says Rochelle Lento, a clinical-law professor at the University of Michigan in Ann Arbor.

Yet in part Michigan's aggressiveness, particularly in and around Detroit, represents the challenges of revitalizing one of the nation's oldest urban centers.

"I tend to be not so negative on this," says Paul Tait, executive director of the Southeast Michigan Council of Governments. "Having people displaced is never your first choice, but clearly there is a greater good in some of these projects."

While America was built on the right to private property, the U.S. Constitution lets federal and state governments take land as long as it is for a "public use" and involves "just compensation" of the property.

For centuries, "public use" mostly meant some material facility that would end up being owned by the government, such as a road, a railroad or a prison. But in the 1980s, that definition of eminent domain expanded to embrace government-sponsored initiatives that advanced the public welfare by rewarding private interests. Much of this change began in Michigan with the famous Poletown case.

In 1981, the Michigan Supreme Court set a major precedent by giving Detroit permission to purchase and raze dozens of houses in the Poletown neighborhood of Detroit to make way for the huge assembly plant that General Motors Corp. wanted to locate there. Eminent domain precedent favored the defendants because the condemnation clearly would trade the interests of many private parties for those of just one.

But in a surprise decision, the court set a new precedent. The court said it was influenced by the political realities of the moment, which included 18 percent unemployment in Detroit and almost 30 percent joblessness among African-American residents; GM's promise to preserve thousands of jobs that otherwise would leave the city and create huge tax revenues in a new facility; and the solid support of then-Mayor Coleman Young and other Detroit officials.

Experts agree that the Poletown decision was a catalyst for more-aggressive eminent-domain moves across the nation, because it allowed governments to redefine the public good as something that could be entrusted to private interests.

"Local governments across the country relied on it to believe that they could condemn neighborhoods that had nothing wrong with them in the interests of private, profit-making enterprises," says Dana Berliner, senior attorney for the Institute of Justice. Detroit itself relied on the precedent in its push to site a casino on the riverfront.

The definition of "public" good is also the focus of the Dearborn case. The city has been overhauling the avenue west of Ford Motor Co. headquarters for several years and has succeeded in refurbishing a couple of blocks with new restaurants and other stores facing the street and the West Village condominium complex to their south. City officials would like to turn the next blocks west into a complementary hotel, retail and condominium complex, mainly using city land that now is devoted to parking lots and occupied by the old Jacobson's buildings.

It "is a critical component to the city's revitalization," Mayor Michael Guido has said.

Price's remains the jewel of the block facing Michigan Avenue, which was made nearly vacant by Jacobson's departure in 1997. Stuck between the old Jacobson's main building and the former Jacobson's Home building, owners Frank and Jim Manchel have felt compelled to display a banner in front of their stores that says "open." Inside, several rows of hundreds of suits beckon customers into an upscale atmosphere that draws many loyal customers, including Mayor Guido.

But city officials would like Price's to relocate because the store's footprint lies smack in the middle of their plan for the block. The redevelopment plan shows a narrow, even alley-like street, flanked by angled-parking spaces and outdoor eating plazas that would be paved right through the 9,000 square feet now occupied by Price's.

City officials note that the street, parking and plazas would be public facilities. And they maintain that, overall, the development would be a public good -- even though the developer and new private tenants would be the biggest direct beneficiaries -- because it essentially would complete the physical refurbishment of that downtown area.

"If you take the total anti-government view in this case, then how can you justify Wayne County's condemning property for new runways that are going to be used by Northwest Airlines to make money selling airline tickets?" says Romeo Betea, Dearborn's director of economic development.

But Dearborn easily could shift the plaza slightly to the east and leave Price's intact, says Jerome Pesick, the Manchels' attorney. And as for the parking and plaza spaces, says the partner in Steinhardt, Pesick & Cohen, in Southfield: "Who benefits from that? The development and its tenants. ... What this is all about is this is how the developer wanted to do it. But there are plenty of other developers out there."

Resolving the Price's case may come down to money. The city has helped research alternative locations and has offered $1.12 million for the property, retailing fixtures and Price's moving expenses.

Pesick says that amount is grossly inadequate. For example, while Dearborn is proposing $27,500 for Price's fixtures and moving costs, the actual cost of re-fixturing and moving to a new space -- even right across Michigan Avenue -- would run to more than $300,000, he says.

The Grosse Ile bridge case has a different twist. In the early 1940s, a citizen challenged the Smokes' ownership of the bridge but lost in court.

The town worries about the private bridge having a monopoly on business when the county-owned bridge does its repairs. Some drivers were angered when the company raised the one-way toll by 25 cents in 1999 to $1.25 (though the price is as low as 75 cents through volume purchase of tokens). And errant freighters wiped out a span or two in 1965 and again in 1992.

The 3,000-foot-long bridge is more convenient for commuters to Detroit than its county-owned counterpart to the south, and substantial emergency traffic uses Smoke's bridge. He also has been preparing to boost service on the bridge, which carries about one-third of the island's traffic, when the county begins to repair its bridge next year.

"I've had plans to build a temporary four-lane plaza," Smoke says. "We did the same thing the last time the county repaired its bridge in 1995."

One possibility would be for Grosse Ile to agree to assume ownership of the bridge for only the duration of the county-bridge repairs and then give it back to Smoke.

"There's substantial law to support this kind of approach," says Alan Ackerman, Smoke's attorney and a partner in Ackerman & Ackerman in Troy.

Looming over everything is the possibility that Matty Maroun, who owns the Ambassador Bridge, will attempt to turn his holdings on the west bank of the Detroit River, south of the bridge, into a container-handling facility for ship freight. In that case, rerouting of traffic adjacent to the bridge and maybe even the bridge's removal would be necessary. Maroun's company may have the authority to do so unilaterally because of its federally recognized status as a railroad. Maroun's company emphatically has said it has no interest in Smoke's bridge. Carl Rashid, Jr., Grosse Ile's attorney, was unavailable for comment.

Smoke and all the adjacent municipalities unsuccessfully fought Maroun's efforts to get federal designation of the old McLouth property as railroad land; Riverview wanted to make it a park. But while Maroun's intentions are a bit of a wild card, Smoke's attorney argues that the courts will protect his client from the township in any case.

"Does the speculative potential of a railroad's coming and taking [the bridge] someday justify the government's taking it in 2003?" Ackerman says.

"No. The government can't take for future speculative use."

State supreme courts in Illinois and New Jersey recently upheld the rights of property owners in eminent-domain cases, representing a bit of a reversal of the trend during the last 25 years.

"This is significant, because states are where it happens in this area," says Roger Pilon, vice president of legal affairs for the libertarian Cato Institute in Washington, D.C.

But whether the pendulum is swinging will be determined in Michigan's courtrooms, where property owners like Smoke and the Manchels and governments like Grosse Ile and Dearborn fight over the definition of public use -- case by case.

http://www.detnews.com/2003/editorial/0309/14/a13-269782.htm

National Condemnation Map: Michigan a leader in condemnations http://www.detnews.com/pix/2003/09/14/a13map.gif