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| CRBJ Home > August 2006 | |||||
Neighborhoods in the balanceMichael May
All governments have the power to condemn, or take, private property. The U.S. and state constitutions require, however, that the government pay "just compensation," and the property must be taken for a "public use." The recent Wisconsin legislation was in response to a U.S. Supreme Court decision in Kelo v. City of New London. The case involved a Connecticut law, unlike any we have in Wisconsin, that allowed a city to condemn private property solely for the purposes of redevelopment. All that Connecticut required was a redevelopment plan and a finding that it would improve the municipality. The Kelo decision upheld the Connecticut law against a claim that this was not a taking for "public use," provoking a firestorm in response. Property rights advocates began urging state legislatures and Congress to place broad limits on condemnation authority. They argued that it is unfair for the government to take property from one private person and turn it over to a big company solely to increase tax base. In Wisconsin, the response was passage of Act 233, which was approved by wide margins in both the Assembly and Senate and signed by Gov. Doyle. It took effect April 13. The new state law does three things. First, it restricts the definition of "blighted" so that fewer properties qualify. Second, it requires that any property to be taken must be blighted. (Under existing state law, if an area was blighted, the government could still take unblighted property within the area in order to pursue some change.) Third, the law places a strict limitation on the ability to take anyone's residence. The law did not change the longtime requirement that the government pay fair market value when any property is taken. There is some misunderstanding that the government can set whatever price it wants in condemnation. In fact, there is a right to appeal to court and a wide body of precedent establishing that the property owner must be paid the fair market value. Under Wisconsin law, if the government's offer is judged to be 15 percent below fair market value, the government must pay all of the property owner's legal fees. This last provision has proven to be a strong incentive for municipalities to make offers that are reasonable. At Landmark Gate, the two properties affected by the new law were an adult entertainment store and a convenience store. Because those two properties had not been found to be blighted -- back when the law said the question was whether an area was blighted -- the developer lost the leverage of condemnation and there was no way for the developer to obtain the properties at any reasonable cost. The immediate result is that a $22 million development plan that would have brought new investment and jobs to Madison's South Side was killed. The future impact, however, is likely to be felt everywhere. The private-public efforts that were used so successfully at Overture Center in Madison and Grand Avenue Mall in Milwaukee would be unlikely to take place under this new law. In fact, with these new restrictions, the powers given to municipal development authorities may become a useless tool for the revival of troubled areas in a city. The change in state law expressed a desire to limit the use of condemnation power for these redevelopments. The argument that the city shouldn't take somebody's home and turn it over to Wal-Mart is one with which many people sympathize. I suggest two ideas that would help address that concern, while still allowing the municipal use of the redevelopment tool for blighted areas. First, restrict the law to residences. Many found the Kelo decision offensive because it would force people to move from their homes. While small business owners or other non-residential property owners may not see this as a significant distinction, it would provide protection for residences, while not allowing non-residential uses to block a redevelopment. Second, increase the payments to nonblighted properties. A property that is not blighted but that is located in a blighted area may have its fair market value depressed by the deteriorating neighborhood in which it is located. If these properties were paid at 125 percent of fair market value, there would be a greater incentive for those entities to take part in a redevelopment effort. The response to the Kelo case, Act 233, represents a desire to place limits on condemnation when redevelopment by a private third party is part of the plan. The Legislature should look at these limits again and consider potential fixes to the legislation that strike a better balance between individual property rights and the community interest in improving troubled or blighted neighborhoods. Otherwise, there is a significant chance that redevelopment efforts for these neighborhoods will become a thing of the past, to the detriment of all. Michael May is the Madison city attorney. madison.com ©2009 Capital Newspapers. All rights reserved. |
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