Wrecking property rights: how cities use eminent domain to seize property for private developers

Reason, Feb, 2003 by Sam Staley

Arizona Dust Bowl

As for Randy Bailey: Judge Myers ruled in April that Mesa could take his property and hand it to Ken Lenhart simply because the government had decided that a hardware store was a more valuable use than a brake shop. The city's redevelopment plan calls for improving its image and making it more economically and socially attractive. It also calls for putting land to its highest and best use to maximize its retail potential. In 2000 the city estimated that the Country Club and Main deal would generate one-time revenues of more than $95,000 through impact fees and sales taxes, an annual increase in sales tax revenue of $168,000, and increased utilities revenue of $69,000. Alternative ways of achieving the same ends were not even considered.

Although "the Court is sympathetic to Mr. Bailey's position," Myers wrote, the city "properly" used its eminent domain power to take his property. Mesa could effectively close down Bailey's business because it had presented, in court, "some reasonable support in the facts, even though those findings may be reasonably doubtful and fairly debatable." In essence, Myers concluded that the city could take just about anyone's property in town as long as it conducted the right number of public hearings and talked enough about the property in a public forum.

Myers' unwillingness to question Mesa's determination that it was necessary to take Bailey's property is rooted in a 1983 decision by the Arizona Supreme Court, City of Phoenix v. Superior Court, Maricopa County. That ruling separated takings decisions into two components. The first considered "necessity," which the court considered a legislative decision. The second component was "public use," which the court determined was subject to judicial review. The Arizona courts, unfortunately, have typically avoided applying judicial scrutiny to the public use aspects of a project, ruling against cities only if the owners could demonstrate fraud or "arbitrary and capricious conduct." Apparently, Mesa's policy of enabling well-established private businessmen to covet their neighbor's property and use the city's power of eminent domain to seize it is not arbitrary or capricious.

Myers' approach is not unique to Arizona or his courtroom. On the contrary, it's the rule. Property rights do not get the same level of protection as other fundamental liberties, such as free speech, the right to assemble, or the right to an impartial jury. Restrictions on other rights have to meet a "means-ends" test: There has to be a compelling government interest to justify them. "In eminent domain," notes Notre Dame law professor Nicole Garnett, "there is no means-end scrutiny at all. [The courts] don't even bother to check to see if the government is advancing a public use. They wash their hands of it. They don't ask if economic development could be done another way."

Not surprisingly, the entire Arizona bar is watching this case. No "cleaner" case is likely to be found that tests the words of the Arizona Constitution or the Phoenix decision, notes Bailey's attorney Tim Keller. If the city's taking of Bailey's property is upheld on appeal, it will be open season on private property in Arizona.