Thursday, August 07, 2003

Conservative-Approved Judicial Activism

Here's a case where both liberals and conservatives can applaud activist federal judges who second-guess local governments--in condemnation!

Yeah, it's a boring legal topic--hard to make condemnation sexy, or angry. My excuse is that I was on vacation last week, nothing (via the Internet) seemed to be happening in Arizona politics, and August 3rd was Ice Cream for Breakfast Day in our household, a family tradition that I stole from a law school classmate and you're free to steal from us. If you're a kid and live in Arizona, where it's 90 degrees for the low temperature and 110 for the high and school starts this coming Monday, you need something to look forward to in August.

Municipal Condemnation

East Valley Tribune, Aug. 3, 2003

A recent federal district court decision, called Aaron v. Target Corp., helps show that federal courts increasingly will oversee municipal condemnation, regardless of what the Arizona Legislature eventually does.

The Aaron case -- based on the opinion as reported by Prof. Patrick Randolph of the University of Missouri at Kansas City -- shows municipal condemnation at its worst. Target wanted to replace an existing St. Louis store, built on leased ground, with a larger store with additional parking on a second landlord’s property. (Rote disclosures: I own some Target stock, and shop there, too.) Target approached the landlords, who were interested in striking a deal if Target also renegotiated the rent.

Instead of negotiating, Target acted like a sports franchise and went to city hall. Target claimed that because of the landlords’ “unreasonableness,” unless the city helped acquire the land, Target would close the store, eliminating both jobs and municipal tax revenues.

Target and the city then got a very successful store declared a “blighted” area. Together they ordered a study, with Target’s lawyers helping draft it. The study found blight (surprise!) based on the building and parking areas being “physically deteriorated, unsafe and dangerous” -- but the lease made Target responsible for maintenance. The study also found “blight” due to Target’s “substandard” computer and network systems, which weren’t real property.

There’s more, of course; the city never sent the report to the two landlords, but rather to Target in Minneapolis, so the landlords lacked notice of the public hearing. The city also granted Target $4 million in property tax abatements over 10 years. The city’s redevelopment authority then offered to purchase the property involved for less than $3 million, which the landlords considered an outrage.

Anticipating a condemnation, the landlords raced to federal court seeking an injunction to stop it -- and convinced the judge that they wouldn’t be treated fairly. The judge noted Target’s considerable involvement in the process, the landlords’ lack of notice, and the difficulty in condemnation of fighting the reasons for the government’s actions. The court found the denial of the landlords’ due process rights “manifest and palpable,” whether or not the landlords got just compensation.

But much of what happened in Aaron occurs in any condemnation case. The judge was offended by Target’s extensive involvement, but in a “good” redevelopment project, the municipality works closely with private developers. The landlords didn’t get notice, but it’s often difficult, if not impossible, to track down all owners in slum areas. The fast deadlines and limits on discovery apply to all condemnation cases. Making any sort of viable downtown won’t happen in Arizona without extensive public support. So procedural rules that apply in every case will slow or stop “good” condemnations as well as “bad” ones.

The Aaron decision is one of several recent federal court decisions questioning whether condemnations actually serve a public purpose when the ultimate goal is moving property from one private owner to another. These cases have found a taking for a purely private use unconstitutional, even if just compensation is paid, despite the supposed deference by courts to local determinations of local issues.

Courts increasingly are second-guessing municipalities on such condemnation decisions, regardless of whether state legislatures impose additional procedural hurdles on the condemnation power. Courts may be better for fixing abuses of condemnation, because they can do case-by-case analysis, and legislatures can’t.

If the Legislature still wants to act, then limit local development concessions everywhere but in downtowns and true slum areas. The Aaron court stopped the condemnation, but not Target’s $4 million tax abatement. Focusing less on procedure, and more on substance, might result in legislation with a better chance of success next session.

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