Legal Plunder

by Doug Bandow
January 9, 2005

Doug Bandow is a senior fellow at the Cato Institute and a former special assistant to President Ronald Reagan.

For more than two decades the Michigan Supreme Court's decision in Poletown Neighborhood Council v. Detroit allowed governments in that state to take most any property they wanted to transfer to most anyone they wanted for most any reason they wanted. The U.S. Constitution's "public use" restriction was satisfied, the court ruled, even when Detroit seized an entire ethnic neighborhood to hand over to General Motors for a new factory.

Alas, this case was no anomaly. As Steven Greenhut, an editorial writer for the Orange County Register, observes in his timely new book, Abuse of Power: How the Government Misuses Eminent Domain (Seven Locks Press, 311 pages, $17.95), "governments increasingly use eminent domain to take property from one private owner in order to give it to another private owner." A small home owner or businessman then "must surrender his home or business because a wealthy developer -- perhaps a big campaign contributor and mover and shaker in the community, or an out-of-town corporation promising an expanded tax base for the city -- has bigger and better plans for it."

The abuses are legion. But sometimes property owners -- "ordinary heroes," Greenhut calls them -- fight back and beat city hall. Today they often do so with the aid of the Washington-based Institute for Justice, which has made protection of property rights one of its most important objectives.

So rank have been the outrages that in July the Michigan Supreme Court expressly overruled its Poletown decision "in order to vindicate our constitution, protect the people's property rights and preserve the legitimacy of the judicial branch as the expositor, not creator, of fundamental law." The new case, Wayne County vs. Hathcock, barred use of eminent domain to construct an industrial and office park. Michigan may no longer seize private property for "economic development," that is, to hand to new private owners who might pay more in taxes.

Although the case has no formal legal force outside of Michigan, it reflects a slow renaissance of judicial respect for property rights. The Poletown decision was oft-cited by other courts as they ruled that public officials could take land at their pleasure. Wayne County will help shift legal currents in the other direction.

Indeed, all legal eyes now fall on the U.S. Supreme Court, which is considering a case involving the city of New London, Connecticut. The Connecticut Supreme Court, relying upon the reasoning of Poletown, upheld the plan by the New London Development Corporation to take scores of modest riverfront homes and businesses to build luxury houses, expensive office space, and a hotel. "How come someone else can live here, and we can't," asks Susette Kelo, one of the dispossessed landowners.

It's a good question, and Steven Greenhut's answer is that someone else gets to live there when local officials decide to engage in social engineering for fun and profit. Not always, of course -- sometimes eminent domain is used for traditional purposes as road-building.

But increasingly government deploys eminent domain in an attempt to create "high-valued," meaning taxable, development. That goal often supplements the desire to benefit local elites, usually with the connivance of the usual civic boosters, including the media. Greenhut dissects how journalists routinely fail to question even the most obvious eminent domain abuses.

The heart of Greenhut's book is a series of examples of government's routine misuse of power. There's abundant bad news. Public officials typically favor the wealthy and influential because they are wealthy and influential. But Greenhut also found good news: though property owners often lose, increasingly they are fighting back and winning.

For instance, the city fathers of Garden Grove, a working class community south of Los Angeles, decided to turn a tidy neighborhood of 400 into a theme park. Explains Greenhut: "There was no developer in mind, just an idea in the head of the city's top planners and bureaucrats. They were going to do what they had been doing on a smaller scale across the city: play land developer by condemning property, then trying to market the acquired tracts to some big out-of-town development company."

Officials attempted to deny the obvious, while treating the neighborhood as blighted. No normal person would have thought that but, writes Greenhut, "Blight, as advocates of redevelopment and eminent domain often point out, is a legal term rather than a descriptive term."

Happily, homeowners organized effectively and forced the city to back down. Garden Grove removed the neighborhood from its "redevelopment" area, while proceeding with similar efforts elsewhere.

Equally outrageous was the attempt by Cypress, another southern California city, to seize Cottonwood Christian Center in order to transfer the property to Costco. Churches don't deliver much in the way of property or sales taxes, a black mark in the view of city councilmen dedicated to the old principle of tax, spend, and elect.

In Cypress, writes Greenhut, "City officials did not dress up what they were doing in legalistic language. They were brazen in their goals. They ridiculed church members at public meetings. They bragged about their ability to use eminent domain for whatever reason they chose, and they made it clear that the government's desires should take precedence over the desires of `a narrow special interest,' which is how city officials repeatedly referred to the church."

The 4,500-member interdenominational congregation fought back, aided by the Becket Fund, which specializes in defending religious liberty. To its credit, the church rejected an offer by Cypress to trade for the property next door -- which the city would seize from its owner through eminent domain. Eventually, Cypress, which lost a preliminary court ruling, agreed to a voluntary land swap which yielded the church more room for its new worship center.

Adverse publicity helped derail an abusive taking by Atlantic City. Vera Coking, a widow, was unfortunate enough to live across from Donald Trump's casino. He asked the local redevelopment agency to take her property for a limousine parking lot for high rollers. With the help of the Institute of Justice, Coking won: the term "blight" could be most accurately applied to Trump's enterprise, which has veered towards bankruptcy.

Eminent domain was long thought to be justified for a genuine "public use," that is, something used by the public. That's why the framers of the Constitution included a limited power to take property in the Fifth Amendment. Yet today the public use requirement has almost disappeared, as officials, with judicial approval, regularly take property from Peter to give to Paul. Only if officials forget to invoke an alleged public interest could it be stopped.

Although the courts have been more willing to enforce the provision requiring payment of compensation, they too often have allowed governments to take advantage of property owners. Moving expenses, business goodwill, advantageous locations, as well as real values often are lost or minimized when figuring compensation.

The result would still be rank injustice even if the property was taken for a real public purpose. Instead, more often than not eminent domain is now used as a form of corporate welfare, intended to enrich billionaire retailers like Costco and millionaire real estate moguls like Donald Trump. Other favored beneficiaries are owners of hotels, race tracks, and sports franchises. Its "legal plunder," Greenhut writes, just like the historical experience of mercantilism, which featured "a powerful central state that worked in concert with established, private interests."

Greenhut's worthy call to arms concludes with a practical primer on how individuals, families, churches, and communities can fight back. Most important is an aroused citizenry prepared to defend their rights. "Ordinary heroes" helped create this nation more than 200 years ago. They helped preserve America through many difficult trials in peace and war. They can help restore life to constitutional provisions that were meant to protect all of us from government misuse of its power of eminent domain.

This article first appeared in the American Spectator, November 2004.

http://www.cato.org/pub_display.php?pub_id=3518

Property Rights and Wrongs

October 28, 2004
Christian Science Monitor

If you own a residence on land that could be generating more property-tax revenue for your local government, watch out. The Supreme Court will decide this term whether government can take anyone's private property and give it to a private developer who promises to generate more money from the land.
Such forced removal of private homes for the sake of commercial development has become more common as states, cities, and towns struggle to find more funds. The practice is supposedly justified by the Constitution's Fifth Amendment, which grants the power of eminent domain, or the "taking" of private poverty if owners are justly compensated and the purpose is "public use."

Ah, but the current legal rub lies in defining "public" and "use."

The common-sense definition of public use is things like highways, public schools, and government buildings. That began to change in 1954 when the Supreme Court ruled that a neighborhood deemed "blighted" could be torn down if a local government has a better use for it. In recent years, many local officials have decided that even an unblighted neighborhood could go if they simply demonstrated a "public benefit," rather than mere public use.

Between 1998 and 2002, governments have threatened or filed to take over 10,282 private properties and give them to private developers, according to the Institute for Justice, a conservative nonprofit law firm.

The case soon to be argued before the Supreme Court involves a neighborhood in New London, Conn. The city endorsed a plan by developers to tear down the neighborhood to build a condominium complex and office park, even though no claim of blight was involved. The city's attorneys say the plan is justified solely because it will reap more tax revenue.

In deciding this case, the high court might well consider a ruling by Michigan's Supreme Court last July. It decided that some of the state's residents should be able to keep their land - in spite of a planned office park. The court noted that "if one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, 'megastore', or the like."

Property rights are a bedrock of democracy and should not be curtailed simply because a community decides it won't raise its taxes or trim spending. Rights once taken are not easily returned, while sources of revenue are more fluid and temporary.

A person's castle should be a bastion of individual rights, not a revenue center.

http://www.christiansciencemonitor.com/2004/1028/p08s03-comv.html?s=rel

Property rights: not a given for churches

Religious groups don't generate taxes. Could that make them prime targets for eminent domain actions?
By Jane Lampman | Staff writer of The Christian Science Monitor

Donald Trump doesn't always have the final say. When the real estate mogul wanted a New Jersey redevelopment agency to take Vera Coking's home by eminent domain to add a limousine parking lot to his casino, the state superior court said no. That would be taking private property for private gain, not public use.

Yet David doesn't always defeat Goliath in such matchups. And there are some who worry that churches and the property of other religious groups - which generate no tax revenue - could become increasingly vulnerable parties to eminent domain seizures for economic development purposes.

The US Supreme Court is preparing to hear arguments on eminent domain next week in Kelo v. City of New London (Conn.).

"The exact issue before the court is, can you condemn property solely to generate taxes and create jobs. If the court rules that you can't, it will protect churches. Otherwise, churches will be in grave danger," says Dana Berliner, attorney at the Institute for Justice, the law firm representing property owners in the Kelo case.

In recent decades, synagogues, churches, temples, and mosques have run into difficulty on zoning and land-use matters as municipalities, with tightening budgets, grew more reluctant to support tax-exempt uses within their boundaries. The problem became so widespread that Congress passed a law in 2000 requiring munici-palities to demonstrate a compelling reason for denying permits to houses of worship.

Now some say the Supreme Court could open another path to interfering with religious expression.

The Becket Fund for Religious Liberty, which represents faith groups in zoning and landuse cases, filed an amicus brief in the Kelo case, arguing that such groups would be "singularly vulnerable to being taken" by eminent domain if the court sides with the city.

"Any commercial use is likely to be preferred over a religious use," says Jared Leland, legal counsel at the Becket Fund. "To be able to practice your faith, you need a place to congregate and worship."

Just ask the Rev. Fred Jenkins, pastor of St. Luke's Pentecostal Church in North Hempstead, N.Y. While holding services in a rented basement, his small congregation saved money for a church for more than a decade. In 1997, St. Luke's bought a downtown property with a partially built church they intended to complete. They sought a building permit and parking variance, drew up construction plans, and borrowed money to finish the project.

"Then they sprang the eminent domain law on us," the pastor says. The local development agency condemned the property for retail development. St. Luke's soon learned the property had been targeted for redevelopment back in 1994, but no one told them as they went through the purchase and planning process.

The church has been demolished and the property added to other parcels that are part of a downtown renewal project involving housing, a supermarket, and a bank. North Hempstead held the groundbreaking. While others in the Long Island community are delighted to get the boost for the neglected suburban area, St. Luke's is struggling to survive.

"This has been devastating for our church. Some people have left town and our membership has dropped off," says Mr. Jenkins. "We're still renting the basement and also having to pay off the mortgage for the church building."

The government offered the congregation $80,000 for the property, $50,000 less than they paid for it. St. Luke's is litigating for a fair value for the property. "We spent a lot of money getting prepared for construction, and it was unfair not to have said anything to us," Jenkins says.

The Fifth Amendment to the US Constitution does allow governments to take property for public use - traditionally roads, schools, and parks. A half century ago, the use of eminent domain was expanded to include condemning blighted areas for redevelopment purposes. In recent decades, many citizens are decrying municipal actions to take property for economic development that might yield higher tax revenues than current uses.

In its brief in the Kelo case, the National League of Cities says that eminent domain is "often indispensable for revitalizing local economies, creating much-needed jobs, and generating revenue that enables cities to provide essential services."

For many public officials, that sounds exactly like a public use, even if direct benefit goes to private developers. It is a fundamental economic development tool for the long-term benefit of the community that must be protected, officials say.

As for potential abuses, "there are several checks on the indiscriminate use of eminent domain," says David Parkhurst, NLC's legislative counsel. "If the community doesn't like a certain decision, they can make that known at the ballot box. State law can prohibit its use beyond certain limits. And the media provide a spotlight and public scrutiny when such cases bubble up."

In Cypress, Calif., the Cottonwood Christian Center needed space for a burgeoning congregation and new ministries. In the 1990s, it spent five years assembling land parcels for an 18-acre site to build a large church complex. Cottonwood then went through a three-year process seeking permits to build on the purchased land. But church leaders learned the city had begun seeking a retailer - a large discount store - to locate on their land.

In 2002, when Cypress Redevelopment Agency moved to take the property by eminent domain and make it available to Costco, the church filed a lawsuit, citing violations of US and state constitutions and the 2000 federal law on religious land use. "This is something we hoped would not be necessary, but the city's actions left us no choice," said Pastor Bayless Conley.

Cottonwood's story has a happier ending than St. Luke's, however. A US district court judge granted an injunction preventing the city from seizing the property, saying there was strong evidence its actions "specifically aimed at discriminating against Cottonwood's religious uses." The judge also doubted that turning the land over to Costco was a public use.

"If revenue generation were a compelling state interest, municipalities could exclude all religious institutions from their cities," the judge wrote.

The city then worked out an agreement with Cottonwood amounting to a land swap; the church sold its property to the city and bought 28 acres of a neighboring golf course.

The question is which direction the court will go in Kelo and what impact it might have on such cases. Some expect new limits on government power. A landmark ruling on eminent domain at the state level - used for 20 years as precedent in many cases, including by the state court in Kelo - was reversed by the Michigan Supreme Court just six months ago.

In the 1983 decision in Poletown v. City of Detroit, the Michigan court approved the taking of 500 acres to sell to General Motors for a plant. Hundreds of homes and businesses and six churches were condemned. In July 2004, the court called the Poletown decision "a radical departure from constitutional principles" and overturned it in County of Wayne v. Hathcock.

"[I]f one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, mega-store or the like," the court said.

The US Supreme Court accepted the Kelo case shortly after the Michigan court rendered that decision.

http://www.christiansciencemonitor.com/2005/0216/p15s01-lire.html?s=rel

A fight to keep their homes

Is it 'public use' when a city seizes homes and gives them to a private developer? The Supreme Court takes up the question.
By Warren Richey | Staff writer of The Christian Science Monitor

NEW LONDON, CONN. - Economic redevelopment is supposed to be about progress and prosperity. But in the battle over the future of this city's Fort Trumbull neighborhood, longtime residents say the city's tough tactics have caused them only hardship and suffering.

This is particularly so, they say, among the neighborhood's elderly residents, many of whom have lived their golden years in fear and dread of losing their most prized possession - their home.

"I am a 93-year-old homeowner of Fort Trumbull [and] have lived here all my life. This is our home. My wife and I do not want to leave here." Walter Pasqualini wrote those words in 1998 in a plea to discourage the city from taking court action to seize and demolish his house.

"The last thing he said before he died was, 'What are they going to do with my house in Fort Trumbull?' " says Susette Kelo, a neighbor.

Ms. Kelo and a handful of other residents are all that remain of more than 80 families whose homes and businesses were targeted for demolition by the city of New London to make way for a 90-acre economic redevelopment project.

They aren't alone. Their plight mirrors similar battles under way nationwide.

Now, as the debate over the redevelopment effort heads to a US Supreme Court hearing next week and a possible landmark ruling in late June, residents are speaking out about what they see as hard-fisted tactics they have endured while trying to save their homes from wrecking cranes and bulldozers.

Although the US Constitution authorizes public seizure of private property, this case - Kelo v. New London - tests the limits of that power. At issue is whether a government entity, the New London Development Corp. (NLDC), can seize and demolish private homes and then turn the vacant land over to a private developer.

The precise issue before the high court is whether this kind of arrangement between a city and a private developer violates the Fifth Amendment mandate that private property may be taken by the government only for "public use."

Lawyers for the residents say public use is something like a road, school, or park - projects that broadly benefit the community. New London officials say an economic development project run by a private company qualifies as public use because it will ultimately attract new businesses to the city and increase the city's tax revenues, which is also a benefit to the community.

The underlying legal debate is only a small part of the Fort Trumbull residents' tale. They say the city tried to frighten them away. When those threats did not work, the city waged what some call a psychological war.

"They did everything they could to make us miserable," says Kelo.

"Every day it was something else," adds William Von Winkle, a neighborhood resident and landlord for 21 years. "Anything to aggravate you."

New London's side of the story
City officials offer a different perspective. When the drug company Pfizer decided to locate its $300 million global research headquarters on an abandoned riverfront factory site near Fort Trumbull, local leaders saw it as a golden opportunity to revitalize the city's stagnant tax base. The influx of highly paid scientists and potential spinoff companies might transform the area into a mecca of scientific innovation and commerce.

The plan calls for construction of a waterfront complex of offices, condos, a hotel, a conference center, and a marina - all within a short walk of the Pfizer compound.

Much of the development is slated for vacant land once occupied by a US Navy research facility. But the plan also calls for the destruction of the adjacent Fort Trumbull neighborhood, which lies between the vacant land and the Pfizer compound.

The NLDC was authorized to use eminent domain powers to seize and demolish any properties where homeowners refused to leave voluntarily. Under the plan, once the land is cleared it is to be leased for $1 a year for 99 years to a private company to build and manage the project. All profits revert to the company. The benefit to the city: an increased tax base.

Residents say that if New London wins its case at the US Supreme Court, any private property in the country could be targeted for economic development through eminent domain to facilitate increased tax revenues. Lakeside cottages, they warn, could be snatched away to permit high-rise condominium developments. And mom and pop grocery stores could be torn down to make way for more profitable stores.

The issue is at the center of what has become a seven-year battle between neighborhood residents seeking to remain in their homes and city officials struggling for a chance to realize their broader vision of a revitalized New London. In essence, the city's plan is to destroy a neighborhood in order to help save the city.

"The New London City Council that voted to do this, they were friends and neighbors of these people," says NLDC attorney Edward O'Connell. "This was a very difficult situation. This was not some unthinking, unfeeling municipal machine that simply ground down there."

In the 1800s New London was a thriving whaling port, and later it was a manufacturing center. By 1990, the state designated New London as a "distressed municipality." Unemployment is 7.6 percent - twice the statewide average.

But the real source of the problem is a lack of sizable tracts for commercial development. The city is relatively small - less than six square miles - and more than 55 percent of that area is occupied by tax-exempt land used for colleges, government buildings, and hospitals. Tax revenues cover only half the city's annual budget; the rest is paid by state subsidy.

An opportunity to change
To city officials, the project is an opportunity to guide the city back toward economic prosperity.

"New London had this opportunity to do something," says Mr. O'Connell. "Should [city leaders] let the private sector drift along as it has been for 100 years without doing anything at all? Or should they seize this opportunity that will occur only once in the history of the city?"

Fort Trumbull residents say they are not opposed to redevelopment. But why can't their homes - which occupy 1.54 acres of the 90-acre project tract - be retained as part of the redevelopment process, they ask. That would probably be the outcome should they win their case, analysts say.

The city has rejected such a compromise. O'Connell says it is up to the City Council to decide upon the best plan, not a handful of holdouts.

Fort Trumbull residents say they've long been slighted by the city. When New London needed a place to locate the sewage treatment plant, Fort Trumbull won the prize. On hot summer days with no breeze, the stench blanketed the area, but residents say their complaints and protests were routinely ignored.

The pervasive odor spewed forth for years - until the arrival of Pfizer. The city and state spent $11.2 million to upgrade the sewage plant in 2001.

Neighborhood residents were excited when they heard Pfizer was coming. But it soon became clear that there was no place for them in the city's plans.

What happened next is what Matt Dery calls "neighborhood cleansing."

Residents say they were told they had no alternative, they could either accept the amount being offered by the city for their homes or the city would seize their property under eminent domain powers.

"The majority of the elderly people moved because they were afraid or felt threatened," says Suzanne Dery.

"We don't want that to happen to my parents. That's our perspective on this," adds her husband, who works in the circulation department of the local newspaper. His family has occupied the property at the same street corner in Fort Trumbull for almost a century. "All my family as far back as my great-grandmother were on this property," he says.

His mother, now 86, was born in the blue house with white trim on the corner of Walbach and East Streets in 1917. It is the only house in which she has ever lived. Mr. Dery's father has lived with her in the blue house since they were married in 1945.

Low-ball offers, or fair?
When the city first approached Dery, he was offered $208,000 for all four multistory houses on the family's property. When he turned down the offer, the property was seized through eminent domain.

Dery says low-ball appraisals were part of a deliberate strategy. "Their whole plan hinged on us being the kind of people who didn't have the financial wherewithal to fight this," he says. "They had all the money, and they were going to stretch us out financially so we would crack."

Dery and his neighbors admit that had it not been for the pro bono intervention of lawyers from the Institute for Justice, in Washington, they would have lost their homes long ago.

Under the eminent domain process, the city can negotiate the voluntary sale of a targeted property. It can offer whatever it thinks a homeowner might accept. If an offer is refused, the city can continue to negotiate or file papers in court to have the property seized. Once the property is seized, the owner has a right to challenge in court the fairness of the price. But to launch such a challenge, the owner would have to go through the expense of hiring a lawyer and paying open-ended trial costs. These are expenses most working-class and elderly Fort Trumbull residents could not afford.

City officials decline to discuss individual cases, but say that they negotiated in good faith with every resident.

O'Connell says all the other neighborhood residents have been successfully relocated. He adds that the city does not have to tailor its plans to a small group of holdouts.

"We certainly sympathize with their plight. Everyone understands that it is a wrenching circumstance," the NLDC attorney says. "You think we are so heartless that we don't care about these people?"

Dery's Neighbor, Mr. Von Winkle was offered $300,000 for his three buildings, including a three-story brick apartment house. "Their offer was less than I paid for the materials to renovate the buildings," he says.

After his buildings were seized, city officials approached Von Winkle's tenants and offered to cut their rent from $650 to $450 a month if they would pay their rent to the city rather than Von Winkle. When Von Winkle complained that rent money was his only source of income, the city offered $4,500 cash to any tenant who moved out.

Undeterred, Von Winkle re-rented his apartments. The city responded with a court order. "They filed an injunction to stop me from interfering with the peaceful enjoyment of their property," he says.

Byron Athenian lost his 24-year auto body business because it was on leased land and the owner sold the property to the NLDC. Mr. Athenian now works part time. He lives next door to the now-vacant lot in a house owned by his mother. She refuses to sell.

The house sits on sloping property adjacent to a tract slated for an office parking lot. Despite Athenian's continued presence in the house, city contractors raised the level of adjacent road and park lot tract, leaving the home and property in a man-made swale. "When it rains like in the spring the cellar [floods]," he says. "The fire department has been pretty good; they come down and pump it out."

O'Connell says eminent domain is a harsh but necessary tool of urban redevelopment. He asks if the debate would be any different if Fort Trumbull homes were being seized to make way for a road instead of an economic development project.

"Wouldn't there be turmoil and fear if it was a road? What if it was a school? Wouldn't there be turmoil and fear if it was a school?" he asks. "Is it OK to have turmoil and fear to move elderly people out for a road, but not for economic development?"

Walter Pasqualini's beloved white house with red trim is still standing nearly five years after his death. But it is barely habitable. Smith Street has been torn up and lies under six feet of fill dirt that forms a berm outside the Pasqualinis' front porch. Rainwater poured into the basement deep enough to douse the furnace pilot light.

Walter's wife, Cesarina, is 96. Unable to see and hear, she is living temporarily with her daughter across town. Even now, she refuses to sell. Neighbors say she hopes to return home to Fort Trumbull, soon.

http://www.christiansciencemonitor.com/2005/0216/p11s01-lihc.html

Justices wary of stopping land seizure

By Joan Biskupic, USA TODAY
February 22, 2005

WASHINGTON — Supreme Court justices expressed skepticism Tuesday about whether they should interfere with decisions by local officials to condemn property and turn it over to private businesses to try to boost the economy.

The justices heard arguments in a Connecticut case that tests whether local governments can use their power of eminent domain to seize property not just to clear the way for public projects such as roads and parks, but also for private developments aimed at increasing tax revenue. It's an issue that has arisen across the nation as cities have sought new ways to promote growth in depressed areas.

Susette Kelo and six other property owners in New London, Conn., are protesting the city's effort to seize their property to make way for a project that would include a hotel, conference center, offices and a marina along the Thames River.

Scott Bullock, representing the property owners, argued Tuesday that the city should not be able to force them off their land merely to make way for redevelopment to enhance city revenue. He urged the justices to rule that cities cannot seize property that is not blighted for private projects.

Justice Ruth Bader Ginsburg said New London, whose unemployment rate has been about twice the state's rate, is a "depressed community" trying to generate jobs. She suggested by her questions that the city could justify using eminent domain to redevelop 90 acres near Fort Trumbull State Park.

Justice Sandra Day O'Connor questioned whether judges should "second-guess" local officials. Justice David Souter suggested a city should have broad discretion to seize property. And Justice Anthony Kennedy asked how courts should distinguish between projects that involve only private economic development and those that could benefit neighborhoods that are not blighted.

Some justices, particularly Antonin Scalia, expressed sympathy for the property owners. He noted that some of them had been on their land for most of their lives and do not want to sell for any price. "Does that count for nothing?" he asked.

Two of the nine justices were not on the bench. Chief Justice William Rehnquist, who has not been in court since October, is being treated for thyroid cancer. And John Paul Stevens was not in court because his flight from Florida, where he has a home, was canceled.

The Constitution's Fifth Amendment allows government to seize property as long as "just compensation" is given and the property will be put to "public use." Past Supreme Court decisions have given local officials wide latitude to use the power of eminent domain.

In the Connecticut case, the state Supreme Court rejected a challenge from the property owners and endorsed New London's plan for the project, which would be near a new Pfizer research plant. The project would generate more than 1,000 jobs, the city says.

Wesley Horton, an attorney for the city, said elected officials should be able to decide the best "public use" for land, and that elections provide a check on such officials.

http://www.usatoday.com/news/washington/2005-02-22-court-domain_x.htm

Eminent domain abuse

By Timothy Sandefur
Published February 20, 2005

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You may not know it, but your home is for sale. Across America, government and big business are teaming up to condemn people's homes, and replace them with shopping centers and megastores such as Costco, Ikea, and Home Depot. In fact, from just 1998 to 2003, there were 10,000 reported cases of cities and states condemning or threatening to condemn homes and businesses to make way for private companies to expand.
Government's power to take property against the owner's will is called eminent domain, and it is the subject of a case the U.S. Supreme Court will hear on Feb. 22. In Kelo vs. New London, the court will consider whether the Constitution places any limits on eminent domain.
The Fifth Amendment says private property may only be taken for "public use," which in the past meant highways or government buildings. But in the Kelo case, a Connecticut town decided to "revitalize" by taking several properties and replacing them with a hotel, a health club and a marina, to accompany a new research facility for the Pfizer Inc., the pharmaceutical company. Health clubs and corporate research are private uses, not public uses.

But the city argues "revitalization" would increase tax revenue and "create jobs." And a public benefit, the city says, is all the Constitution requires. The problem with that argument is most businesses benefit the public.
If our homes can be taken away whenever bureaucrats decide somebody else would use them more effectively, our property rights are rendered meaningless.
Consider the infamous Poletown case. In the early 1980s, the General Motors Corp. persuaded the city of Detroit -- reeling from recession -- to condemn a neighborhood called Poletown (due to the many Polish immigrants there) and sell it cheap to GM to build an auto factory.
The Michigan Supreme Court held the condemnation was legal: If the government declared a condemnation would benefit the public, the courts would not stand in the way. In a whirlwind of litigation that lasted only a few weeks, neighbors watched as their community was pulverized.
The Poletown decision led to an epidemic of eminent domain abuse. In 1999, the city of Merriam, Kan., condemned a Toyota dealership to sell the land to a BMW dealer instead.
That same year, Bremerton, Wash., condemned 22 homes to resell the land to private developers. In one notorious case, billionaire Donald Trump convinced Atlantic City, N.J., to condemn an elderly widow's home so he could build a limousine parking lot.
Unfortunately, the victims of eminent domain are most often the elderly, the poor and minorities. They lack the money and political power to persuade the government to respect their rights. But corporate lobbyists are very effective at convincing cities to give them someone else's land on the pretense it will create jobs and improve the neighborhood -- especially when it will increase the city's tax base.
Fortunately, things may be changing. Last year, the Michigan Supreme Court overturned its Poletown decision:
"If one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, 'megastore,' or the like."
Now it's up to the U.S. Supreme Court to end eminent domain abuse nationwide. When the Kelo case is argued before the court, the justices will be asked a simple question: Does "public use" mean the government can take people's homes and small businesses and resell the land to Pfizer, Donald Trump or other private parties?
The answer should be no. All property owners, rich or poor, should have the same right to be secure in their homes and businesses. Otherwise, our property rights will be only permissions granted by the government -- revokable at will.

Timothy Sandefur is a lawyer with Pacific Legal Foundation, a public interest legal organization dedicated to defending private property rights and individual freedom. Mr. Sandefur wrote the Foundation's amicus brief supporting the property owners in Kelo vs. New London.

http://washingtontimes.com/commentary/20050219-092417-1856r.htm

Land war goes before Supreme Court

Homeowners ask justices to block city's use of eminent domain
From Bill Mears
CNN Washington Bureau

WASHINGTON (CNN) -- A fight by homeowners to save their New London, Connecticut, neighborhood from city officials and private developers -- an important property rights case with an unusual twist -- will reach the U.S. Supreme Court on Tuesday.

At issue is whether governments can forcibly seize homes and businesses, for private economic development. Under a practice known as eminent domain, a person's property may be condemned and the land converted for a greater "public use." It has traditionally been employed to eliminate slums, or to build highways, schools or other public works.

The New London case tests the muscle of local and state governments to raise what they see as much-needed revenue, which they argue serves a greater "public purpose." Legal analysts said they see the case as having major implications nationwide in property rights and redevelopment issues.

Eminent domain is a practice indirectly sanctioned by the U.S. Constitution. The Fifth Amendment's protection against unwarranted government interference adds a caveat: "Nor shall property be taken for public use, without just compensation."

A recent study by the property rights group Institute for Justice, which is representing the New London homeowners in court, found about 10,000 cases from 1998 to 2002 of local governments in 41 states using or threatening to use eminent domain to transfer home and properties from one private owner to another. Courts in at least six states have upheld the practice.

Such battles have long been a staple of U.S. westward expansion. In the 19th century, farmers, railroads, miners and ranchers competed for the opportunity to exploit rural resources.

Today, the disputes have become more urban-based, focusing on stadiums, office parks and shopping centers. Courts and legislatures around the country have had widely differing standards on when eminent domain can be used.

City, homeowners square off
In the New London case, city officials there argue that eminent domain also should apply to "economic development" even if done privately since it would increase tax revenue and improve the local economy.

Susette Kelo and six other homeowners have said the move is more about enriching well-connected developers.

"It's obvious they don't want us here, and they've done everything in their power to make us leave," Kelo said. "They are simply taking our property from us private owners and giving it to another private owner to develop."

Kelo said she and her husband, Tim, bought their two-bedroom pink Victorian in the city's Fort Trumball waterfront neighborhood in 1997 for $50,000. The area is in a working-class section of New London, overlooking the Thames River and Long Island Sound.

"It was like I'd been here all my life. It was just a warm and inviting feeling," she said.

But city officials disagree with that label.

"New London has been and is classified by the state of Connecticut as a distressed municipality," City Attorney Thomas Londregan said. "When we lost the naval base, we lost about 18,000 jobs."

Londregan said that while the city has never claimed the Fort Trumball neighborhood is blighted, the area has suffered economically. It has been zoned since 1929 as industrial despite the presence of existing private homes.

"This area had a junkyard, which had to be cleaned up at great expense," Londregan said. "They had oil tanks, commercial big storage tanks. There is a railroad yard down there."

Pfizer plant spurred city action
In 1998, pharmaceutical giant Pfizer Inc. agreed to build a $270 million global research facility next to the area in dispute. Two years later, the New London City Council sought to accommodate Pfizer's investment and adopted a redevelopment plan to transform 90 acres of Fort Trumball.

The city and state would contribute millions of dollars. Eminent domain power was transferred to the New London Development Corp., a private, nonprofit group of citizens, business owners and community leaders.

It wants to build a conference center, hotel complex, offices, condominiums, and eventually, an aquarium in New London, which is about 125 miles east of New York City.

The day before Thanksgiving 2000, Kelo said, a notice was posted on her East Street home, informing her and her husband that they had four months to move out or police would remove them and their belongings.

"I really didn't want to sell my property so I wasn't interested at all in the offer," she said. "And they simply told me if you're not going to sell, we're going to take your property by eminent domain."

Most of Kelo's neighbors have moved on, leaving large parts of Fort Trumball bulldozed amid rubble. About 80 homes and businesses are gone, leaving only seven property owners and 15 parcels remaining.

The city government said it offered Kelo and her neighbors a fair price for their properties.

The Connecticut Supreme Court agreed with New London, ruling that promoting economic development outweighed private property rights. Homeowners argued that since their neighborhood is neither a slum nor crime-ridden, it does not meet legal standards for application of eminent domain.

The case is Kelo v. City of New London (04-0108). A ruling is expected by June.

Find this article at:
http://www.cnn.com/2005/LAW/02/21/scotus.eminent.domain

NOTE THE 'NEW LONDON DEVELOPMENT CORP.' IS A 'QUASI-PUBLIC AGENCY'

Supreme Court to Tackle Property Rights

Monday, February 21, 2005

NEW LONDON, Conn. - Fifteen houses are all that remain of Fort Trumbull, a once vibrant immigrant neighborhood flattened into expanses of rutted grass and gravel.

The homes stand in defiance of New London's plan to pave the way for a riverfront hotel and convention center, offices and upscale condominiums.

Refusing the city's efforts to get them to leave, seven families are going before the U.S. Supreme Court (search) on Tuesday, arguing that the city has no right to take their private property solely for economic development. The rebellious homeowners include an elderly Italian immigrant, a mechanic and a former deli owner.

"It's a case of the rich eating the poor," said Matthew Dery, who lives in one of four houses on a compound his family has owned since 1901. "Sometimes the poor are difficult to digest."

Leading the charge is Susette Kelo, a 47-year-old nurse who bought her home in 1997.

"They have over 90 acres now," Kelo said. "It's more than enough room to build on. We never said they can't build. We just said 'We want to stay.'"

But Kelo's apricot-colored house, with a decorative outhouse in the front yard and wind chimes made of silverware, doesn't fit in the city's development plans.

"They just would not be compatible with all the other uses," said Edward O'Connell, an attorney representing the New London Development Corp., (search) the quasi-public agency behind the redevelopment effort.

Whether building highways or public offices, laying railroad tracks or eliminating blight, governments have long relied on eminent domain laws to allow them to take private property.

The Fifth Amendment allows governments to take private property for "public use."

New York used eminent domain (search) to improve Times Square, expand the New York Stock Exchange and build the World Trade Center. Baltimore replaced a downtrodden waterfront with a bustling harbor development.

But Fort Trumbull is not besieged by blight, poverty or crime and New London is not building a highway or government building, and the residents' appeal asks if "public use" allows governments to seize unblighted taxpayer property solely to encourage private development.

The Supreme Court has given governments broad power to take private property through eminent domain, provided the owner is given "just compensation." But in recent years many cities and towns have been accused of abusing their authority.

New London officials say the taxes generated by redeveloping Fort Trumbull ultimately will benefit the public, and the state Supreme Court ruled that was enough to justify the condemnation.

City officials have worked to remake the area since 1996, when the Naval Undersea Warfare Center left town with its 1,400 jobs. When pharmaceutical giant Pfizer opened a $350 million research center nearby that year, city officials saw an opportunity to create high-end housing, retail shops, a business park and a hotel.

All that was standing in the way were 115 homes.

Most owners accepted the city's buyout offers. Those who remain fall into two categories - people who simply won't leave and people who feel they're being cheated out of the fair value of their homes.

"The sentimental holdouts are the more difficult to deal with," O'Connell said. "No matter what you offer, they won't consider that sufficient or appropriate. They're just not motivated by the logic of the marketplace."

Kelo says it's not about the money for her. She was raised nearby, and when her children moved out she wanted a house by the water. Her small but cozy house has a front porch with a a great view of the Thames River.

Dery is upset that the city wants to take his property before putting a developer under contract and deciding exactly what will replace his neighborhood.

"What they're saying," Dery said, "is that anything that we put there will be better than you."

http://www.foxnews.com/story/0,2933,148248,00.html

D.C. GOVERNMENT SPREADS DESPAIR ON GOOD HOPE ROAD

Skyland Shopping Center sits at Good Hope Road and Alabama
Avenue in southeast Washington, D.C., in Anacostia, named
after the river that separates it from the rest of the
Capitol. Skyland is a non-contiguous collection of 170,000
square feet of retail properties with fifteen different
owners that sprawl across twelve acres next to five acres of
woodland. More importantly, Skyland, which lies in a city
that has seen some tough times, is a place of hope.

One of the owners is an African-American couple whose
business in northeastern Washington was burned down in the
1968 riots; they moved here a short time later, worked hard
and prospered. Another family bought their share of the
shopping center in the 1940's and, through the bad days
since, held on, pouring millions into their property. Two
men are more recent owners: long time employees of a liquor
store proprietor, they mortgaged their homes and bought the
store, pursuant to his will, after his death. Then there
are the tenants, each of whom demonstrates that the American
dream is vibrantly alive!

Moreover, Skyland is a thriving retail operation. Each day,
the parking lot that meanders among the buildings is a river
of traffic. Vendors, whose operations are illegal but that
flourish anyway, arrange their wares on the streets of
Skyland rather than before the upscale and multi-million
dollar redevelopment project across Good Hope Road.
Residents, 49 percent of whom come from households that earn
less than $35,000 a year, ride the bus to Skyland, shop at
the post office, grocery store, beauty shop, drug store,
check cashing store, and other outlets, then barter with a
freelance "taxi" to deliver them and their wares home.
Tellingly, the grocery is reputed to be the highest grossing
outlet of its regional chain.

To most folks, Skyland is a great success. A cross section
of Americans own and invest in property there. Tenants,
some newly arrived in this country, run businesses there.
Employees there believe they may one day own the boss'
business. And locals can shop there for an array of
reasonably priced goods and services.

But to the D.C. Council, Skyland is a "slum" that must be
condemned, razed, and, at a cost of $27 million, turned over
to a private developer for an unnamed retailer. In May,
after they passed "emergency" legislation, Council members
jetted off to a Las Vegas "big box" convention to shop the
property around; there were no takers. Experts say that the
numbers make no sense and that an economic disaster awaits,
which is nothing compared to what will befall people who
have poured their lives into Skyland. Some have decided to
fight back, but they face incredible odds.

In 1954, in a Washington, D.C. case, the U.S. Supreme Court
ruled that the federal government could condemn a store,
which was neither "blighted" nor a public nuisance but
merely in an "undesirable" area, and sell it to a private
developer. Thirty years later, the Supreme Court went
further, eviscerating the constitutional requirement for
"public use." Wrote Justice O'Connor, "that property taken
outright by eminent domain is transferred in the first
instance to private beneficiaries does not condemn that
taking as having only a private purpose. The Court long ago
rejected any literal requirement that condemned property be
put into use for the general public."

Change, however, may be in the wind. In 2001, a California
federal district court barred a city's efforts to condemn
property that rested "on nothing more than the desire to
achieve the naked transfer of property from one private
party to another." Then, days ago, the Michigan Supreme
Court, "in order to vindicate our Constitution [and] protect
the people's property rights...," unanimously overruled a 1981
precedent that provided a blank check to governments wishing
to seize private property to give to other private users.

After months of darkness, there may be some light on Good
Hope Road.

This article can be found at www.mountainstateslegal.org

U.S. Supreme Court Case Kelo v. New London

To read the latest on the case which begins February 22, 2005 click on this link

Conn. residents fight for homes

By Joan Biskupic, USA TODAY

Susette Kelo continues to touch up the paint on her clapboard house that overlooks the Thames River. She still tends to her garden. During a recent walk around the house, she noticed a few early flowers poking through the dirt.

She knows, however, that the 1893 Victorian cottage she bought eight years ago might not be standing much longer - and that its fate is in the hands of the U.S. Supreme Court

On Tuesday, the court will hear an appeal from Kelo and about a dozen other holdout owners of property near Fort Trumbull State Park. They are trying to prevent the city of New London from seizing their land to clear the way for a private development project that would include a hotel, a conference center and offices. The city has argued that redeveloping 90 acres along the river and near a new Pfizer research plant would give a much-needed economic boost to the city of about 26,000 people, where the unemployment rate of 7.6% is about twice the state's rate.

The dispute marks the first time the high court will rule on whether local governments have the power to condemn land for private enterprises aimed at boosting local tax revenue - rather than for traditional public projects such as bridges, roads and parks.

The Constitution's Fifth Amendment allows governments to seize private property in a process called eminent domain, as long as the owners receive "just compensation" and the property is for "public use." Kelo and the other property owners involved in the case say the city's plan does not represent a "public use" for the land. The city disagrees and says all the town's residents would benefit from the project.

Connecticut's Supreme Court ruled last year in favor of New London. It noted that the city's plan "is projected to create in excess of 1,000 jobs, to increase tax and other revenues and to revitalize an economically distressed city."

Mark Perry, a Washington lawyer and former clerk to Justice Sandra Day O'Connor (news - web sites), says state courts have been inconsistent in their interpretations of what constitutes a "public use."

A ruling in the New London case could have "ramifications for property owners and governments across the country," says Perry, who submitted a "friend of the court" brief for a California-based libertarian group, the Reason Foundation, that sides with Kelo.

New ground for high court

Governments have used eminent domain for private developments in recent years - in New York City's Times Square and at Baltimore's Inner Harbor, for example. But never has the Supreme Court, faced with an appeal from property owners, agreed to resolve the question of whether property can be transferred to private developers to boost tax revenue.

Those backing Kelo include the NAACP and AARP, which say the social harm can outweigh the public benefits when governments take property for private economic development. The groups say government efforts to lure business and spur greater revenue can disproportionately hurt the poor, the elderly and racial minorities.

Those backing New London include the National League of Cities and the National Conference of State Legislatures. They say cities should have wide latitude to take land to boost their economies and that money generated by redevelopment can help public agencies such as police and fire units.

In its ruling, the Connecticut Supreme Court emphasized that judges should give broad deference to local lawmakers. It noted that New London's development plan initially was approved by New London's City Council in 1998.

The state court cited two U.S. Supreme Court rulings, from 1954 and 1984. In the 1954 ruling, U.S. justices upheld the power of eminent domain for urban renewal in parts of Washington, D.C. Thirty years later, the high court allowed Hawaii's Legislature to condemn large tracts concentrated among a few owners - a vestige of the feudal system of the state's original Polynesian settlers - for distribution to many residents.

No amount of cash will do

In their appeal, attorneys for Kelo and the other New London property owners say the state Supreme Court "incorrectly equated 'public use' with the ordinary 'public' benefits - taxes and jobs - that typically flow from private businesses' enterprises."

Scott Bullock, an attorney for the property owners, wrote that they "do not want money or damages. They only seek to hold on to their most sacred and important of possessions: their homes."

Most owners of the 115 tracts that would be affected by the New London project took the money offered for their homes and moved.

Attorneys for the city and New London Development, a private, non-profit group established in 1978 to assist the city, said New London is "desperate for economic rejuvenation."

Wesley Horton, who will argue the case for New London, painted a bleak economic picture in his filing to the justices. He noted that the city's population has declined almost a third from about 34,000 in 1960. He also cited the city's high unemployment rate and said the area lost about 1,500 jobs when the federal government closed the U.S. Naval Undersea Warfare Center here in 1996.

In an interview, Edward O'Connell, an attorney for New London Development, said Kelo was offered $123,000 from the city, roughly fair market value for her property.

Kelo, 48, said she simply does not want to move. The nurse and mother of five grown boys said that when developers first approached her, "I had just bought the place. I never even wanted to negotiate."

This article can be found at http://story.news.yahoo.com/news?tmpl=story&cid=676&e=15&u=/usatoday/20050221/ts_usatoday/connresidentsfightforhomes

NAC input important in the City's planning???

Neighbors take swing at stadium plan

By Barry Witt and Janice Rombeck

Mercury News

San Jose Mayor Ron Gonzales has put major league baseball atop his agenda, and the city already is trying to acquire property for a ballpark.

But whether the plan for a park makes any sense -- particularly in light of the speculative nature of ever securing a team -- has never been the subject of public discussion.

That's got some community leaders, who for years thought they were going to be included in deciding what went into their neighborhood, more than a little perturbed.

``It's a condescending, patronizing way of doing business,'' said Randi Kinman, president of the Burbank/Del Monte Neighborhood Advisory Committee, home to the former Del Monte Cannery on Auzerais Avenue, which city officials are eyeing for a ballpark.

In his State of the City speech Wednesday night, Gonzales promised he would ``submit a proposal to Major League Baseball to bring a team to San Jose.'' City officials expect that the Oakland A's will fail to reach a deal to build a new ballpark in Oakland and will want to look to the South Bay again.

The mayor's speech follows a closed-door meeting in December at which the city council authorized negotiators to attempt to acquire the option on the cannery now held by KB Home, which is pursuing a 385-home development on an 11.1-acre portion of the land.

For at least five years, the city has been planning for a housing development at the cannery site, with community leaders participating in dozens of planning meetings on the future of the property and surrounding area. Those leaders were shocked to learn in December that the council suddenly had decided it wanted to buy the land for a ballpark.

Kinman complained in a letter to Gonzales on Dec. 15 about his failure to contact any neighborhood leaders concerning the change in plans. As of Thursday, nearly two months later, Kinman said she still had not received a response. The mayor's office on Wednesday released a response to the Mercury News that was dated Tuesday, saying the delay was caused by ``an internal mix-up in our office.''

The mayor's letter made no specific commitment to including community input prior to the city making a final decision to acquire the cannery. This week, city administrators made their first appearance at a neighborhood meeting concerning the property, saying no decision had been made on whether a ballpark would be pursued there.

Activists were dissatisfied with what they heard.

``Wnen you start negotiating behind closed doors for a site, it's way beyond when neighborhoods should be involved, even when you tell us it's one of many sites,'' Ed Rast, a Willow Glen neighborhood leader, told Redevelopment Agency Director Harry Mavrogenes and Economic Development Director Paul Krutko at a meeting Wednesday night.

City officials say there's no guarantee San Jose will be able to strike a deal with KB Home to acquire the option. The two sides are discussing a possible swap of the cannery property for other property the city owns along North San Pedro Street.

Councilman Ken Yeager, who represents the district that includes the cannery, supports housing on the cannery site and believes it won't work for baseball because it's too far from downtown to be convenient for pedestrians.

``To me, the Del Monte site has never made any sense,'' Yeager said.

What also has been missing from the public discourse is whether the city ought to spend resources -- be it cash or a land swap -- to preserve a site for a ballpark when Major League Baseball officials say they will not allow the city to get a team while the Giants are in San Francisco.

While Gonzales on Wednesday night argued San Jose's status as the nation's soon-to-be 10th-largest city merited it getting a team, Bob DuPuy, baseball's president and chief operating officer, dismissed the idea Thursday at a luncheon in San Francisco.

``We have a major league team in San Francisco, we have a major league team in Oakland and we intend to keep it that way,'' DuPuy said. Baseball has granted the Giants territorial rights to Santa Clara County, and the Giants said they won't allow a team to move to the county.

In a recent interview, Gonzales compared San Jose's speculative pursuit of baseball to the decision by city voters in 1988 to build an arena, two years before a National Hockey League team agreed to move there.

--------------------------------------------------------------------------------
Mercury News Staff Writer Chris Haft contributed to this report. Contact Barry Witt at bwitt@mercurynews.com or (408) 920-5703. Contact Janice Rombeck at jrombeck@mercurynews.com or (408) 920-5944.

City to seize land

Wednesday, February 09, 2005
By Serdar Tumgoren

Gilroy - Negotiations to acquire land for the future arts center have reached a stalemate, according to Gilroy officials, and city attorneys will move forward with the use of eminent domain to seize the property.

City Council authorized the use of eminent domain last year in anticipation of a deadlock, but had delayed actually filing the lawsuits in hopes that property owners and the city could reach settlements with each owner.

“I’m not wild about it,” Councilman Bob Dillon said. “But I don’t think they’ve been very reasonable about the prices - especially a few of the people.”

The city has negotiated sales with two of the five property owners, according to Gilroy’s Facilities and Parks Manager Bill Headley, who has sat in on the discussions.

“For the other three property owners, however, we have reported that we have been unsuccessful in reaching an agreement,” he said. “It would appear that we’re headed to the next step of the eminent domain process.”

That will involve filing lawsuits in coming days to seize property from the Oyao family, Loi Dong, and Marko Gera.

The Oyao properties, at 57 and 67 W. Seventh Street, lie on the area slated for the future arts building. The Dong property is planned for use as an art gallery, gardens, and parking. And the Gera property, which makes up half of the 2.33 acres needed for the arts center, includes a piece of land needed for the arts building as well as much of the vacant land along Eigleberry Street that will provide the majority of parking.

“We certainly would like to settle without having to go in front of a judge, but we have certain limitations in terms of what we can do with land price,” Headley said. “We have to do fair market [value] and the debate is over what’s fair market.”

The city first approached the Oyao family about buying the land several years ago, when Oyao’s grandmother Baleriana still lived in and owned the property. Her grandson Francisco Oyao, a disabled veteran who is 56 years old, said his grandmother died in July. Oyao, a disabled veteran, now shares the home with his brother.

A July 2003 memo between city officials set the combined purchase price for the Oyao properties at $310,000, along with an additional $50,000 in “relocation benefits.”

“My grandma didn’t want to sell at the time,” said Oyao. “The family didn’t feel the money they had offered is enough.”

He said they now hope for at least $600,000 for the two homes and the .2-acre plot of land on the north side of Seventh Street.

To date, Dong and Gera have also rejected the city’s offers.

“When you go to trial, the issue is what’s the value?” City Attorney Andy Faber explained. “You have an appraiser, and the jury or judge decides the value. In effect it’s a forced sale to the city.”

City officials have said all properties must be acquired by March to stay within the 2008 opening date for the new arts center, slated for construction just north of Seventh Street between Eigleberry and Monterey streets.

If the city needs to obtain property on shorter notice, it can go to court and deposit the amount of appraisal and get an order of immediate possession.

“The court will have to balance the interests of whoever is using the property,” Faber explained

A court-ordered property seizure requires the city to relocate people living at the home, Faber said.

Officials have successfully negotiated the purchase of two properties so far. The city paid $300,000 for the .17 acre at the corner of Seventh and Monterey streets, where a taqueria now stands. For the Salvation Army property next door, the city paid $723,540 for the half-acre property plus $429,282 to move from its current location at 7341 Monterey Street.

The city has used eminent domain sparingly in the past, according to Headley. The few cases in recent years that actually reached a courtroom involved instances in which the city required private property to expand roadways. Headley still held out hope for a settlement, but it appears such a resolution may only come in a court room.

“If you can’t agree on a market value, you can’t agree on a market value,” Headley concluded. “And I think we’re there.”

This article can also be found at http://www.gilroydispatch.com/news/contentview.asp?c=143735

--------------------------------------------------------------------------------
Serdar Tumgoren covers City Hall for The Dispatch. Reach him at 847-7109 or stumgoren@gilroydispatch.com.

P.A. may weigh redeveloping neighborhood around Fry's

By Dan Stober

Mercury News

With car dealers leaving town and landmark hotel Hyatt Rickeys closing, Palo
Alto is keen on keeping happy one of the city's biggest generators of sales
tax revenue: Fry's Electronics.

City Manager Frank Benest is exploring an idea to turn the area around
Fry's, along El Camino Real a couple of blocks south of Page Mill Road, into
the city's first redevelopment zone.

Benest said the designation might give the city the flexibility to help
Fry's renovate or rebuild its sprawling store at 360 Portage Ave., or gain
more visibility to drivers on busy El Camino Real.

The redevelopment idea, which Benest stressed was preliminary, is part of a
special effort to support the relatively few businesses that supply the city
with the bulk of its tax money, he said.

The city council would have to declare the area around Fry's ``blighted''
for it to be declared a redevelopment zone. Redevelopment critics have
questioned whether any part of wealthy Palo Alto could accurately wear such
a tag. But Councilman Bern Beecham said the city should not let that seeming
contradiction stand in the way of redevelopment if it would prove
beneficial.

Manny Valerio, a spokesman for Fry's corporate headquarters in San Jose,
said the redevelopment talks were news to him. But in general, he said, ``My
understanding is that we're pleased to be in Palo Alto.''

The giant Fry's store is not only ``probably as important as any retailer in
town'' when it comes to sales tax revenue, said Beecham, but its rows and
rows of every conceivable electronic widget have made the store a cultural
landmark.

``We've had people visit from Japan, and the one place they wanted to see
was Fry's,'' he said.

The Palo Alto store was one of the first of the company's 29 outlets. Each
has its own decorative theme -- Palo Alto's is the Wild West.

Benest and his staff are exploring whether a redevelopment plan for the area
near Fry's would generate enough additional property tax money from new
development to make the program work. If the plan looks good, he may bring
it to the city council within the next few months.

Redevelopment agencies operate on property tax funds generated in
redevelopment areas. The money often is invested in roads, parking lots and
other infrastructure that aid businesses, Beecham said.

Redevelopment also could bring affordable housing -- a city priority -- to
the area, Benest said.

School districts often question the formation of redevelopment zones because
they restrict the amount of property tax money funneled to schools. The city
is aware of that problem, Beecham said. ``We need to make sure that we
protect our school district.''

Palo Alto has a redevelopment agency but has never had a project. Benest
pushed for a redevelopment zone for Edgewood Plaza, an aging shopping center
near the Embarcadero Road exit off Highway 101. But a number of
complications, including neighborhood opposition, killed the idea in 2003.

The blocks around Fry's crowded parking lot contain a Mercedes-Benz dealer,
car repair shops, a granite dealer and Gryphon Stringed Instruments, sellers
of guitars and banjos.

On the northern and southern edges of the area are neighborhoods of small
homes, dotted with a few much larger new homes.

Lakiba Pittman, a member of the city's Human Relations Commission, lives on
one of those streets. She said Friday that her first reaction to a potential
redevelopment zone was to wonder whether the city would use its power of
eminent domain to buy homes from residents unwilling to sell.

``For me, I would like it to be a neighborhood,'' she said.

Years ago, the city declared that the Fry's property should be used for new
homes by 1999. But in 1995, the city council reconsidered, finding it
difficult to vote to close the store seen as an electronics heaven to many
denizens of Silicon Valley.

The council extended the deadline to replace Fry's with housing to 2019, but
that would presumably have to be reconsidered if the redevelopment plan
takes shape.

----------------------------------------------------------------------------
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Contact Dan Stober at dstober@mercurynews.com or (650) 688-7536.

Wolff could make S.J. pitch

MOVING TEAM NO SURE THING FOR PROSPECTIVE A'S OWNER

By Barry Witt

Mercury News

If Lew Wolff completes his proposed purchase of the A's, the team's new owner would be a man who spent more than a decade trying to bring a major sports franchise to San Jose, but also one who lives in Los Angeles and has business interests around the world.

Boosters of efforts to bring the A's to San Jose believe Wolff would help the city's chances of getting the team, but Wolff would face the same resistance to such a move as the current owners do from the Giants, who say they will never give up their territorial rights to Santa Clara County.

Wolff said last week that he would know by March whether he would buy the A's. He has had an option to buy into the team since 2003, when he was brought in by owners Steve Schott and Ken Hofmann to attempt to strike a deal for a new stadium. If he buys the A's, Wolff will have a team whose stadium lease in Oakland has an inexpensive buyout clause. The A's are also coveted by a number of cities.

``It's possible he could take the team somewhere else,'' acknowledged Dave Cortese, a San Jose city councilman and a leader of the effort to bring baseball to the city.

Like Schott, Wolff has longstanding business ties to the South Bay. But unlike the current A's owner -- who lives in Los Altos Hills and whose entire career as a home builder has been spent in the Bay Area -- Wolff is a developer with hotel interests stretching from the Caribbean to Australia.

``Lew Wolff does know the geography down here, just like Steve Schott,'' said Mike Fox Jr., chairman of Baseball San Jose, a group promoting the city's interest in getting a team. ``I think Lew knows the politics of the city better than Steve. He's more of a deal-maker. He wants to make a deal happen.''

Wolff has been developing properties in San Jose since the late 1960s, when he began working with the city's redevelopment agency to build office projects along Almaden Boulevard. He is a partner in downtown's Fairmont and Hilton hotels, both of which were built with redevelopment agency subsidies, and he announced plans in 1999 to build a Courtyard by Marriott on West Santa Clara Street. That plan remains on hold.

Giants talks died

Wolff's advocacy of major league sports for San Jose stretches at least back to 1985, when he and his San Jose business partner, J. Philip DiNapoli, led an effort to bring the Giants to the city. With the encouragement of then-Mayor Tom McEnery and Tony Ridder, then publisher of the Mercury News and now chief executive of Knight Ridder, the newspaper's parent company, Wolff and DiNapoli proposed building a stadium for the National League club. Those talks died after Dianne Feinstein, then the mayor of San Francisco, threatened to sue San Jose for interfering with the Giants' lease at Candlestick Park.

Wolff later bought interests in the St. Louis Blues and the Warriors, and in 1994 he attempted to take control of the NBA team and move it to San Jose Arena. That effort failed when Chris Cohan, also a part-owner of the Warriors, sued his partners to gain control of the team.

Wolff was not involved with the A's formally until 2003. But in 1998, as Schott talked about the need to escape the Coliseum, Wolff told the San Francisco Chronicle that the A's should focus on San Jose.

``It's the difference between a big-league city and a non-big-league city,'' he said. ``I wouldn't spend five minutes on any other city besides San Jose.''

Keeping A's put

Since joining the A's, Wolff has said his focus has been on trying to build in Oakland. Last summer, he told Oakland officials the best location would be in the Coliseum's north parking lot and said the A's would be willing to put $100 million toward what was expected to be a $400 million project. Talks since have progressed slowly, with Oakland and Alameda County officials showing little interest in spending more public money on sports teams while paying $20 million a year in debt service associated with the Raiders' relocation in 1995.

San Jose, meanwhile, moved last month toward preserving what many baseball boosters consider the best potential stadium site, the former Del Monte cannery on Auzerais Avenue. Three city officials -- Joe Guerra, a top aide to Gonzales; redevelopment boss Harry Mavrogenes; and Paul Krutko, the city's economic development director -- held their first formal talks with housing developer KB Homes on Monday to discuss the site. KB holds an option to buy the cannery property and has applied to build a 385-home development there.

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Contact Barry Witt at bwitt@mercurynews.com.

Randal O'Toole Presentation - February 23, 2005

Silicon Valley Taxpayer's Association presents The Costs of San Jose's Urban Growth Boundries and Light Rail Transit.

Wednesday, February 23, 2005
7:00 - 9:00 pm
Alicia's Banquet Room

San Jose's urban-growth boundary and other land-use rules caused the increase of housing prices to be tenfold over the last 25 years. Housing prices in many less-regulated but faster-growing areas have increased only fourfold. Light-rail transit carries so few people that it increases congestion, relative to alternative uses of the space and resources. Santa Clara County light rail is the nation’s second-worst-performing light-rail system, with high operating costs and low ridership. Government intervention has reduced livability and made the poor suffer.

Randal O'Toole is senior economist with the Thoreau Institute, a non-profit organization dedicated to finding ways to protect the environment without big government. As a resident of the Portland area, he began working on urban planning issues in 1995 by studying Portland's "smart-growth" plans for higher-density housing and light-rail transit. This led to his book, The Vanishing Automobile and Other Urban Myths. In recent years, O'Toole has been invited to teach at Yale University, the University of California at Berkeley, and Utah State University. O'Toole currently lives in Bandon, Oregon, on the southern Oregon coast.

SVTA members - $20.00 per person / $35.00 per couple
Nonmembers - $25.00 per person / $45.00 per couple
Mexican Dinner Included

Directions:

Corner of Camden and Union in South San Jose to the left of the grocery store in the Cambrian Plaza shopping center. From Highway 880 take the Camden exit, follow Camden Ave. east to Union, turn right onto Union, then left into the shopping center. From Highway 85 take the Union exit, go east on Union Ave. about one mile, turn right into the shopping center at the light.

Help the Gambles in Norwood

Dear Friends:

The City of Norwood, Ohio and Rookwood have finally done it. As you probably know, Joy and Carl Gamble were kicked out of the only home they have ever known. The Gambles and one of our attorneys, Bert Gall, appeared on NBC's The Abrams Report yesterday to talk about the issue, and they were joined by Norwood's mayor and attorney.

Since it aired, it is our understanding that the City of Norwood has been flooded with emails and telephone calls today as a result of the television appearance - and they don't like it. We want the deluge to continue, so Norwood knows what it's doing is wrong. We urge you to call or write Norwood, to denounce their despicable actions. You can also contact MSNBC to weigh in on the issue.

Click Here for contact information for Norwood or The Clerk of Council's number is (513) 458-4594

You can contact the Abrams Report at abramsreport@msnbc.com

Below is a copy of the transcript which can also be found at http://www.msnbc.msn.com/id/6915745/
You have to scroll down to find where this portion of the show begins.

ABRAMS: We‘re back. Picture this. You‘ve lived in your home for over 30 years. Your children were—where your children were raised. Your grandchildren run through the backyard. Every year the holidays are celebrated in your living room. You recently retired. You‘re looking forward to having more time to spend with your neighbors, enjoy your garden.

Then, you get word that the big bad developer wants to expand his nearby mall and build chain stores, office buildings and condominium and your home, among others, is in the way of the expansion. You will be forced to pack up your life and move out. How is this possible? Under a law called imminent domain, which is the power of a governmental entity to take private real estate for public use, with or without permission of the owner.

Joining me now, Joy and Carl Gamble, Jr. who are fighting to keep their Norwood, Ohio home from becoming part of a shopping mall expansion and their attorney Bert Gall with the Institute for Justice. Thank you all for coming on the program.

All right, Mr. and Mrs. Gamble, give me a sense of—let me start with you Mrs. Gamble, where do we stand in this battle and what‘s happened. What‘s the latest?

JOY GAMBLE, HOME SEIZED: Well, we have been forced to pack our belongings and we have been forced to move out of here. But we‘re not through fighting. There is still an appeal in the courts. We do hope to come back here to our home. We do hope to save our home. But right now, we have to vacate it.

ABRAMS: And Mr. Gamble, how do they determine how much money you got for the house?

CARL GAMBLE, JR., HOME SEIZED: They determined the money through the court system.

ABRAMS: And how much did they give you?

C. GAMBLE: Two hundred and eighty thousand.

ABRAMS: And you weren‘t interested in selling at all, right?

C. GAMBLE: Right, not interested in that money at all.

ABRAMS: All right, Mr. Gall, where do we stand legally?

BERT GALL, GAMBLES‘ ATTORNEY: Well, legally, what the city of Norwood is doing is unconstitutional, it is wrong, and it is outrageous. The Constitution only allows cities to take property for a traditional public use like a road or a bridge or a courthouse. But the founding fathers never envisioned that developers could get cities to take land so that they could build a shopping mall or condominiums. I mean that is just unconstitutional.

ABRAMS: And the Supreme Court is considering this issue, as well, right?

GALL: Yes. This February the Supreme Court will be hearing arguments on the issue of whether economic development, the idea that taking somebody‘s home, bulldozing it so that it will create more jobs and more taxes is a public use...

ABRAMS: Right.

GALL: ... and it can‘t be a public use because, you know, everyone‘s home could generate more tax dollars if you bulldozed it and turned it into a business. And everyone‘s business could generate more tax dollars if you bulldozed it and turned it into a big box store. By that standard, no one‘s or no one‘s business is safe.

ABRAMS: All right. Well it sounds, you know, in its face like a pretty straightforward argument. It is not. Joy and Carl Gamble are going to stick around, as is their attorney.

The mayor who has forced the Gambles essentially to leave their home joins us, along with his lawyer.

And later, brawling on the court not confined to NBA fans. There‘s a tape out there that could mean the Michigan authorities really did the right thing by charging fans and players in Detroit. It‘s my “Closing Argument”.

Your e-mails abramsreport@msnbc.com. Please include your name and where you‘re writing from. I respond at the end of the show.

(COMMERCIAL BREAK)

ABRAMS: You‘re living in a home for 30 years, then you‘re kicked out for a shopping mall. We‘ll talk a little bit more with a couple who‘s fighting their city. First the headlines.

(NEWS BREAK)

ABRAMS: We‘re back. We‘re talking about a case where a couple lived in a house for over 30 years are being kicked out so they can build a shopping mall. Before we go to talk to the mayor who comes across as the big bad mayor in this case, but I‘m sure he‘s got an argument on this one. We‘ll debate it. Here‘s Anne Thompson with a little more.

(BEGIN VIDEOTAPE)

ANNE THOMPSON, NBC NEWS CORRESPONDENT (voice-over): On Atlantic Avenue, two visions of the future are on a collision course. The city of Norwood, Ohio sees an upscale mall and apartment complex here...

UNIDENTIFIED FEMALE: Match them up in there.

THOMPSON: ... as Joy and Carl Gamble see the rest of their lives in the house they bought 35 years ago.

UNIDENTIFIED FEMALE: It‘s my home. It‘s my only home. The only home I ever had.

UNIDENTIFIED MALE: We got a little castle.

THOMPSON: But it may not be theirs much longer. The city has ordered them to leave by February 3, buying 99 homes and businesses to make way for the mall, declaring the neighborhood deteriorating.

THOMPSON (on camera): What makes it deteriorating?

UNIDENTIFIED MALE: The noise, the congestion. This used to be a quiet neighborhood. It‘s not anymore.

THOMPSON (voice-over): The Gambles say this is an abuse of government power.

UNIDENTIFIED FEMALE: They are taking one piece of private property, taking it away from us and giving it to somebody else who is a private individual and that‘s not fair.

THOMPSON: How is this possible? Using a law called eminent domain governments have long been able to force the sale of private property for public use, such as courthouses and highways, but the practice now includes making way for private developments.

RICHARD BRIFFAULT, COLUMBIA UNIVERSITY PROFESSOR: It could be office parks, industrial parks, big box stores on the theory that these will provide bigger tax base and more jobs.

THOMPSON: While most of the Gambles neighbors want to sell, the Gambles are holding on...

UNIDENTIFIED MALE: Where‘s the article with our picture in the paper?

THOMPSON: ... taking their fight to court.

(on camera): If the development fails, Mayor Williams says the city of Norwood will lose big time, one to $2 million a year in taxes. But if the development goes through, the Gambles say what they will lose is priceless.

(voice-over): A judge upheld the city sale of the property and awarded the Gambles $280,000 for the three-bedroom house.

(on camera): Is there any amount of money that could get to you move?

UNIDENTIFIED FEMALE: No. No.

THOMPSON (voice-over): Two visions with no room for compromise that will change forever the future of a city or a family.

Anne Thompson, NBC News, Norwood, Ohio.

(END VIDEOTAPE)

ABRAMS: And back with us now are Joy and Carl Gamble, Bert Gall, who is their attorney. And now joining us is Norwood‘s mayor, Thomas Williams, and special counsel for the city of Norwood, Tim Burke.

All right, so we‘ve heard from the Gambles. Mayor Williams, you know that you come across in this as sort of the big bad guy taking away their home. Lay out your case for us.

THOMAS WILLIAMS, NORWOOD, OH MAYOR: Well, it‘s been going on for two and a half years. Here‘s the situation in our city. Over the past years, we‘ve lost industry and it‘s just changed. Manufacturing has diminished and left. And this is not the first urban renewal project this city has done over the past 10 or 15 years.

This is an area that has been deteriorating the quality of life with traffic and everything else. And 65 homeowners have decided that they want to sell and move on with their lives because they were uncomfortable in the area. And it‘s more than just a shopping mall. It‘s 300,000 in office space, retail and 200 units—living units. So it‘s a little more than that.

And it‘s—our city, as most other cities in our area, are facing a deteriorating income and an increased call for services. And it‘s one of those things. It‘s a decision that you have to make for the benefit of 20,000 other residents.

ABRAMS: Mr. Burke, Mr. Gall makes a legal argument, which essentially says, you start doing this with private property, he says essentially we get the highways. We get the use of purely public use. But he‘s saying once you start getting into the business of taking private people‘s homes and using it for other private purposes, then every city is going to make a determination, not based on who owns the home, but what‘s best for the finances of that particular city.

TIM BURKE, NORWOOD, OH SPECIAL COUNSEL: Mr. Gall is ignoring 50 years of American jurisprudence because urban renewal started in Washington, D.C. and the Supreme Court has long upheld doing exactly what the city of Norwood is doing here, and that is acquiring property that has deteriorated or is deteriorating and turning it into something better for the benefit of the entire community.

ABRAMS: But that‘s republic. I mean there is a difference...

BURKE: No...

ABRAMS: ... is there not?

BURKE: No, look around American cities and you will find that for the last 50 years, most urban renewal projects, particularly in downtown cores, have been done using urban renewal and where necessary using eminent domain. And it‘s not just for roads and bus stations and that type of thing. It‘s been for hotels and office buildings and the other kinds of things which bring in jobs, which create opportunity for people and their families and which do produce tax revenue for their community.

ABRAMS: So Mr. Gall, this has been happening all the time.

GALL: Unfortunately, the abuse of eminent domain for the benefit of private parties does happen all the time. But that‘s no reason that it should continue. And that‘s why courts across the country are starting to clamp down and make sure this kind of abuse won‘t occur. And that‘s why the Supreme Court we hope is also going to stop this abuse. Because it is fundamentally wrong to take one private person‘s property, transfer it to someone who‘s richer and more powerful for their private use...

(CROSSTALK)

GALL: ... and that‘s what‘s going on...

ABRAMS: Look, as I said before, it sounds like the mayor is sort of the big bad guy in this story. But what about the practical reality that this one home could hold up so many other people in the community from benefiting. I mean the bottom line is if you‘re going to do a cost benefit analysis, I think there‘s no question that the community is going to benefit as a whole—all those individuals are going to be able to utilize that property, that land much more productively, if they are allowed to use this property.

GALL: What the community is going to benefit from is knowing that their property rights are secure and what they are going to be insecure about is knowing that their city council is going to give up their land and give it to a private developer whenever it thinks that somebody can make more money with that land. So how is economic development achieved by that kind of situation where no one‘s home or business is safe?

ABRAMS: Mayor Williams, I‘ll bet—and you tell me. I don‘t know the answer to this—but I‘ll bet that the majority of the members of the community probably support you on this one.

WILLIAMS: That‘s true. The council that voted on this originally, I was a member with—all were elected. And one of the things I think you got to remember that if you remember what Mr. Burke said, this is done all across the country. And I can‘t help but to feel that for some reason there are certain organizations that are trying to generate feelings to gain revenue or attention for themselves. And for some reason, once again, it‘s landed on the city of Norwood. What‘s been done is perfectly legal and upheld by the courts.

ABRAMS: But you can understand why Mr. and Mrs. Gamble are frustrated, right?

WILLIAMS: Absolutely. And I probably know—and I‘ve probably talked to Mr. and Mrs. Gamble more than the people who want to push their agendas, who come into our city and voice their opinion and then leave. I‘ve probably talked to them and cared just as much, if not more about them, than they do who are using them to further their own agendas and that‘s as simple as I can put it.

ABRAMS: All right, Mrs. Gamble, your response?

J. GAMBLE: I don‘t recall talking very much to Mr. Williams. A few things—I think just a few things. I think I remember him saying you people are asking too much for your homes. I heard him say that one time.

ABRAMS: What is the value of the home, Mayor Williams? I mean we know the court has said $280,000. Do you know what the value would be were you not to be using it for a mall, et cetera?

WILLIAMS: I‘m certainly not a real estate appraiser...

ABRAMS: I would have thought that would have come up in court. Mr. Gall, do you know?

UNIDENTIFIED MALE: There were—no, Mr. Gall was not involved in the evaluation trial.

ABRAMS: I‘m sorry. I meant Mr. Burke. Sorry. I apologize. Go ahead Mr. Burke.

BURKE: There were a variety of different opinions given by expert witnesses in the case. But the fact of the matter is the $280,000 that the Gambles were paid far exceeds the purchase price for any single family home in that section of Norwood ever before.

ABRAMS: Mr. And Mrs. Gamble, what do you do now, in addition to fighting in the courts?

C. GAMBLE: I‘m retired. That‘s all I do.

ABRAMS: Well, you got $280,000 now. Are you going to go buy a new home?

C. GAMBLE: I don‘t have it. I don‘t want it.

ABRAMS: But, you know, but let‘s assume that things continue to go, are you just going to—as a matter of principle, do what? Go to—how are you going to deal with it?

C. GAMBLE: It‘s a matter of the way I feel.

ABRAMS: No, I‘m not...

C. GAMBLE: I want my home.

ABRAMS: All right.

C. GAMBLE: This home.

ABRAMS: Fair enough. Joy and Carl Gamble, thanks for joining us on the program. Bert Gall, Mayor Williams, Tim Burke, it‘s an interesting issue and we‘ll see what the U.S. Supreme Court determines on this issue as well. It‘s going to be a fascinating argument.

Problems cloud S.J. deal to lure firm

By Scott Herhold

Mercury News

It was a beautiful morning Wednesday in Edenvale, a day that made you realize that February can be our best month. Certainly the politicians were in a festive mood: They were celebrating a publicly subsidized deal to bring Integrated Device Technology to San Jose.

San Jose Mayor Ron Gonzales noted with some pride that the city had the ``financial tools in its cabinet'' to bring companies like the semiconductor firm to this industrial area in its southeast corner.

When you opened that cabinet, however, you saw that the tool Gonzales described was double-edged -- which is to say it demands careful handling by a qualified adult.

Basically, the San Jose Redevelopment Agency is paying for jobs. For each of the 600 jobs that it expects IDT to place in Edenvale, it's paying $5,292. Total cost over 18 years: almost $3.2 million.

You can make a good case for that subsidy in terms of San Jose's fortunes. But you have to wonder what it means for the valley as a whole.

Now 25 years old, IDT wasn't lured from Portland or Seattle. It isn't a start-up with fresh venture money. It hails from a site off Central Expressway in Santa Clara, 15 miles away.

Who benefits?

From the perspective of the valley as a whole, the ceremony Wednesday outside IDT's flashy new glass-and-granite quarters -- the former home of Electroglas -- was a feast of well-behaved cannibals.

In fighting one another to lure companies, Silicon Valley cities are behaving much like valley landlords, dropping the rent to steal tenants from the apartment house across the street.

The companies benefit from this, just as tenants do. The difference is that there's a third party in this equation: the taxpayers, who provided the extra bucks to get the IDT deal done.

How is this done? The redevelopment agency is delivering the bulk of the subsidy by renting the IDT parking lot at night and on weekends. The agency is going to pay $60 a month per space to reserve the lot for public access on weeknights between 6 and 9 p.m. and on weekends between 8 a.m. and 3 p.m. Agency officials say this will help hikers and park users.

Now I've checked. And there is not a big parking problem in Edenvale. In fact, there's a parking lot across the street for at least 30 cars for the Coyote Creek Park, which has a trail.

Terms of engagement

Accept the deal for what it is: a subsidy. You can construct a persuasive rationale. Like many industrial areas, Edenvale suffered when the dot-com bubble burst. Ru Weerakoon, the agency's director of industrial development, says the area's vacancy rate is about 25 percent.

``This is going to be the catalyst,'' she told me. ``This is about generating jobs, and giving our residents economic opportunities.''

It's also about money. Weerakoon estimates the city will get about $120,000 a year in additional sales and business taxes, which goes a long way toward defraying the estimated $176,000 yearly subsidy.

But there are at least two problems with all this. The smaller one is that the IDT deal sets a benchmark for what San Jose is willing to do. If I'm running a business, I am going to want my parking lot rented. I want $5,292 per employee. (IDT spent $29 million to acquire the Electroglas campus.)

The bigger problem is that the deal doesn't do anything for the larger valley. We're giving a public subsidy to a company that's moving employees 15 miles down the freeway. You can understand San Jose's motivation. But in the long run, it amounts to publicly subsidized poaching. Will Morgan Hill grab the San Jose Giants next?

``In the last three years, there's been an ebb and flow among cities,'' says Ron Garratt, assistant city manager in Santa Clara, which tried hard to keep IDT. ``Unfortunately for the valley as a whole, it's a zero-sum game.''

This article can also be found on the San Jose Mercury News Website.

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Contact Scott Herhold by e-mail at sherhold@mercurynews.com or call (408) 920-5877.