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Next big test of power to seize property?

The US Supreme Court will examine whether a private company can demand payment in exchange for not seizing private property.

By Staff writer of The Christian Science Monitor / January 2, 2007

Bart Didden wanted to put a CVS pharmacy on his property in Port Chester, N.Y. He even obtained approvals from the local planning board.

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But because a portion of the CVS site was in a blighted redevelopment zone, Mr. Didden was told that planning board approval wasn't enough. He'd have to reach an understanding with a private company that had been selected by Port Chester officials to control all construction inside the renewal zone.

The developer, Gregg Wasser of G&S Port Chester, told Didden he'd have to pay $800,000 or give G&S a 50 percent stake in the CVS business. If Didden refused, Mr. Wasser said, he would have Port Chester condemn and seize his property and instead of a CVS he'd put a Walgreens drugstore on the site.

Didden refused. The next day, the Village of Port Chester began legal proceedings to seize Didden's land by eminent domain.

Lawyers for Didden took the matter to federal court. They even went to the FBI – all to no avail. Now they are asking the US Supreme Court to examine whether a private company can demand payment in exchange for refraining to seize private property in an urban renewal zone.

Property rights activists are hoping that a majority of the justices view Didden's case as an opportunity to clarify a portion of the high court's controversial decision in its last big eminent domain case, Kelo v. New London. In that June 2005 opinion, the court ruled 5-to-4 that local governments could seize private property and turn it over to a private developer when the action was part of an economic development project of benefit to the public.

Rebellion in the states

The decision sparked a national backlash. Since then, 34 states passed laws restricting the use of eminent domain for private development. New York is not among them.

The US Constitution forbids government officials from taking the property of one person and giving it to another. But if the overall purpose is a public benefit, such as economic transformation or urban renewal, transfers of private property to a private developer are permissible, the high court has said.

At issue in the Didden case is whether a developer selected to carry out an urban renewal project in the public interest can use the government's eminent domain power in a way that maximizes the developer's profit.

"The 'public use' clause may encompass a lot of public purposes after [the high court's decision in] Kelo, but it does not mean that eminent domain can be used to make the most money possible for one particular person," says Dana Berliner, an attorney with the Institute for Justice, which is asking the high court to take up Didden's case.

Lawyers for G&S and the Village of Port Chester hold a different perspective.

For taking the risk, a reward

For decades Port Chester tried to persuade various developers to launch urban renewal projects in the village. None did. Then in 1999, G&S agreed to undertake the challenge – and risk. The company proposed a 27-acre, $100 million project to replace run-down buildings with new retail stores, new roads, utilities, and a multiplex movie theater.

In exchange, the village agreed to give the developer exclusive power to decide which properties within the redevelopment zone would be acquired through negotiation and which would be seized by eminent domain. It also gave the developer the exclusive right to build – and profit from – the project.