Condemnation Series

$79 per year • $1 per copy

MAXIMILIAN FRANZ

Friday, December 5, 2008 • Volume 120 • Number 56

This stretch of vacant storefronts along Washington Boulevard in Pigtown is one of at least 12 redevelopment projects in Baltimore that are highly dependent on condemnation.

A DAILY RECORD SPECIAL REPORT

Condemnation drives urban renewal Eminent domain has helped reshape much of city, but some say it’s no longer necessary BY ROBBIE WHELAN

| [email protected]

or many people, the words “condemned building” bring to mind a creaky, dilapidated house with boarded-up windows and caution signs posted: somewhere you don’t dare go without a hard hat. But in Baltimore, the use of condemnation powers — otherwise known as eminent domain — has become synonymous with urban renewal.

F

The government’s right to condemn and seize private property, sometimes perfectly intact and well-maintained, and convey it to another private owner is the engine driving many of the city’s most important development efforts. Despite several recent court cases and laws that check the powers of municipalities to take property, condemnations are accelerating in the city: More than $22 million in eminent domain seizures have been authorized this year, up nearly 250 percent from 2007, and nearly 12 times the inflation-ad-

INDEX A daily listing of content

Auction sales Calendar of events Marketplace

justed dollar amount of seizures authorized in 2003, The Daily Record has found. These statistics were determined as part of an examination of nearly 1,000 pages of public records covering the last five years. To put that number in context, $22 million is about seven times what the city expects to spend in fiscal 2009 to fight homelessness, and about 10 percent of what the city will spend on schools. Public records also show that at least 12 major redevelopment projects in the city, representing more than $2.5 billion in in6A 6B 1B

Public notice Real estate Sealed proposals

8B 2B 9B

CONDEMNED

Additional coverage to accompany our condemnation series:

Baltimore’s use of eminent domain

you already know about the government’s ability to exercise eminent domain. Embedded online with the main condemnation story.

A 3-PART SERIES

FRIDAY: In Baltimore, the use of condemnation powers has become synonymous with urban renewal. MONDAY: The issue of condemnation touches on one of the U.S. Constitution’s most fundamental rights — the right to own property.

TUESDAY: Small business owners in Baltimore affected by condemnation tell their stories.

vestment, depend on condemnations to move forward, and that the city continues to make liberal use of a controversial method of seizure known as “quick-take,” in which city agencies — chiefly the housing department — place a deposit in court and gain im-

c Online

Take an interactive quiz k Take our quiz to discover how much

Video glossary g Watch our video glossary to get the true meanings of eminent domain, quick-take, urban renewal and the process of condemnation. Embedded online with the main condemnation story.

Interactive area map c See the top sites where the Baltimore City government has used eminent domain as a development tool. Posted online as a separate story. This supplemental reporting is available on our Web site at www.mddailyrecord.com

SEE CONDEMNED PAGE 11A

On the RECORD blog

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FRIDAY, DECEMBER 5, 2008

THE DAILY RECORD

CONDEMNED Baltimore’s use of eminent domain

— M.J. “Jay” Brodie President, Baltimore Development Corp.

downtown skyline toward the Inner Harbor. “History is not unuseful,” he said. “If you need proof for why we need to use eminent domain, you need look no further than Charles Center or the Inner Harbor.” These two projects, which began in the late 1950s and early 1970s, respectively, with the support of civic and business leaders — one a cluster of office buildings surrounding a large green public space that fronts on Lombard Street in the middle of downtown, the other a huge swath of waterfront property filled with offices, museums, retail properties and hotels — are often cited as hallmarks of urban renewal in Baltimore. Both depended heavily on condemnation. More than 700 properties were seized, many of them seedy, dilapidated warehouses, and 300 businesses relocated, all to great success and benefit of the city, according to Martin Millspaugh, a former journalist and planner who, as CEO of Charles Center-Inner Harbor Management Inc. in the 1960s, was instrumental in getting both projects off the ground. “The mood was one of desperation, and the leaders of the community — public and private — were searching for a solution,” he wrote in a recent email to The Daily Record. “The process of acquiring all of the necessary parcels through voluntary negotiations would have required an unknown, uncontrollable amount of time, during which the market for any new use — or the fi-

Condemned Continued from page 1A

mediate title to a property, giving its owner only 10 days to contest the taking. The city authorized quick-take proceedings more than 1,000 times in the last five years, and, as of October, had approved its use more than 280 times in 2008. Hundreds of the city’s 1,676 eminent domain seizures over the last five years have been used to take vacant, derelict properties that have been abandoned by their owners or fallen into squalor due to speculating, absentee landlords. These properties have then been razed or rehabilitated and included in massive redevelopment efforts such as the East Baltimore Science and Technology Park and the residential projects surrounding it. But others have been takings of homes occupied by families and buildings occupied by small companies that are generally located in low-income neighborhoods or thinly populated industrial districts, for which the city spends millions more to relocate businesses and families against their will. So extensive is Baltimore’s use of eminent domain that the Institute for Justice, a libertarian public-interest law firm based in Arlington, Va., has dubbed the city the second-worst abuser of eminent domain powers in the country, trailing only New York. Defenders of the practice present a classic “but for” test as a key rationale for the use of condemnations: But for the city’s intervention, the argument goes, certain areas would lie vacant and inactive indefinitely and would never receive the investment they need to be remade as safe, healthy neighborhoods. Opponents argue that market forces should govern the transfer and redevelopment of city property, and that condemnation unfairly targets small-business people who cater to largely poor clientele. The city’s intervention, they argue, is a gross violation of private property rights and is based largely on a misinterpretation of the U.S. Constitution.

SEE CONDEMNED PAGE 12A

”

COURTESY OF URBAN LAND INSTITUTE

“

History is not unuseful. If you need proof for why we need to use eminent domain, you need look no further than Charles Center or the Inner Harbor.

Clearing the site of One Charles Center in 1961. The B&O Railroad headquarters can be seen in the right background. In center background is the old Hub department store, which was demolished shortly after this picture was taken to make way for the Blaustein Building.

Condemnations in Baltimore City, 2003-2008 The money for condemnations in Baltimore comes from two main offices connected with the city: the Department of Housing and Community Development and the Baltimore Development Corp. Housing condemnations by far outpace BDC condemnations, but the latter tend to be more expensive deals because they deal with commercial properties.

The case for condemning Standing before huge picture windows in a 16th-floor conference room of his downtown office building, Baltimore Development Corp. President M.J. “Jay” Brodie gestures out over the

Year

Baltimore City Department of Housing and Community Development

Baltimore Development Corp.

Quick take

Regular condemnation

Total properties targeted

Total monies authorized

2003

252

3

176

79

255

$1,593,419.00 $3,204,868.33

2004

270

3

101

172

273

2005

433

4

437

0

437

$5,117,028.65

2006

200

24

190

34

224

$7,067,767.78

2007

195

9

166

38

204

$8,053,234.39

2008

177

102

280

3

283

$22,241,408.00

Total

1,527

145

1,350

326

1,676

$47,277,726.15

Source: Daily Record research

Condemnations by project area in Baltimore, 2003-2008 The numbers below show where property seizures were authorized in Baltimore over the last five years. In 2005, the number of houses taken in EBDI, the area associated with the Johns Hopkins-driven East Side biotechnology initiative, spiked at 315, which accounts for most of the housing authority’s takings that year (Chart: Condemnations in Baltimore City, 2003-2008). Other areas of the city, including Gateway South, the Westside, and Washington Village, see condemnations carried out mostly by the BDC. Some condemnations authorized by city documents are not associated with a particular project or site acquisition, although most are.

Year

East Balt. Development Inc.

Park Heights

Westside

Gateway South

American Brewery

Uplands

Poppleton

Fairfield

Baker/ Division

Upton

Washington Village /Pigtown

Broadway Corridor

Total properties authorized

2003

5

0

2

0

0

0

0

0

1

79

0

0

255

2004

159

0

0

0

0

0

0

0

0

9

0

84

273

2005

315

0

3

0

0

0

0

0

0

0

0

9

437

2006

42

1

5

0

15

0

7

8

10

23

8

24

224 204

2007

11

12

2

6

12

5

26

2

11

7

0

3

2008

78

9

4

1

20

5

25

91

17

2

0

1

283

Totals

610

22

16

7

47

10

58

101

39

120

8

121

1,676

Source: Daily Record research

11A

12A T H E D A I L Y R E C O R D

FRIDAY, DECEMBER 5, 2008

CONDEMNED Baltimore’s use of eminent domain

“

The mood was one of desperation, and the leaders of the community — public and private — were searching for a solution.

Condemned Continued from page 11A

nancing of that use — could disappear. The solution was to invoke eminent domain to acquire the required properties in a predictable amount of time; since the property owners were entitled to appeal the price they received to a jury in court proceedings, before the city acquired possession.” In the 1950s, Baltimore was facing the prospect of municipal bankruptcy, and the Housing Act of 1949, which provided two-thirds federal funding for cities to acquire so-called slum areas through eminent domain, provided an incentive for cities to spur development of blighted land. In 1954, another housing act sweetened the deal for cities by allowing them to provide private developers with Federal Housing Administration-backed mortgages. This second act also popularized the phrase “urban renewal.” In Baltimore, this meant the razing and rebuilding of pre-World War II public housing projects, many of which were again cleared in the late 1990s to make way for more modern facilities, often at the expense of homeowners and other private citizens. “It is an ancient legal principle that private property which is needed for important public purposes may be taken by government, upon payment of fair compensation,” read a 1967 article titled “The Condemnation Division,” which was included in the annual report of Baltimore City Solicitor Joseph Allen. The report goes on to anticipate several required “quick-takings” of industrial and commercial properties to make way for Interstate 83’s passage through the city, the “Mt. Vernon Urban Renewal Project” and development along the Franklin-Mulberry Street corridor. According to Millspaugh, the takings were justified by the city having a “viable re-use” for hundreds of vacant properties that “stood for years as an argument against [redevelopment].” In the nearly 50 intervening years since Millspaugh’s massive downtown redevelopment plan began, the city has enacted dozens of urban renewal ordinances — laws that require approval

— Martin Millspaugh Former CEO, Charles Center Inner Harbor Management Inc.

A condemnation glossary Eminent domain – The power of a municipality to seize privately-owned property without the owner’s consent, also known as condemnation. Public use – The only reason, as defined by the Fifth Amendment to the U.S. Constitution, that a private citizen may be deprived of property. In subsequent court rulings, the definition of “public use” has come to include “public purpose,” a less broadly-defined concept that encompasses eminent domain takings for public purposes. Quick-take – An expedited version of condemnation, in which the city deposits compensation for a property in the register of the city circuit court and gains immediate title to the property. Under normal condemnation proceedings, a property owner has several months to contest the taking and to perform discovery for a legal action. Under quick-take, the property owners have only 10 days to contest the validity of a condemnation. Urban renewal – Popularized by the Housing Act of 1954, this term refers to the practice of revitalizing decaying inner cities using eminent domain, clearing slums and encouraging private development on publicly-assembled parcels of land. It was popular from the 1940s through the 1970s, and remains in use in Baltimore today. Urban renewal act – A city ordinance that enumerates acceptable uses, lays out specific development plans and identifies properties targeted for condemnation within a city-designated redevelopment area. Blight – The Maryland Constitution gives municipalities the right to carry out urban renewal activities in slums or a “blighted area,” which is defined as “an area in which a majority of buildings have declined in productivity by reason of obsolescence, depreciation or other causes to an extent they no longer justify fundamental repairs and adequate maintenance.”

by the mayor and city council — to condemn land and redevelop it, either by public or private means. Condemnations were used by the state of Maryland to build Oriole Park at Camden Yards and M&T Bank Stadium, to spruce up the area around the Hippodrome Theater and for Johns Hopkins’ $1.8 billion East Side initiative, among dozens of other projects. According to Brodie, this is a new kind of urban renewal — it pinpoints specific properties and takes a more piecemeal approach to redeveloping them, with the support of the communities in which they lie. Brodie has referred to condemnation, and in particular its expedited version, quick-take, as a “last resort” tool in redeveloping the city. “This is not the old-style Charles Center, Inner Harbor condemnation where we’re buying blocks and blocks,” he said. “It’s very targeted … Our process is not just us sitting here and saying, ‘Gee, condemnation is nice.’ We’re going out and talking to people and saying, ‘How do we help revitalize this area?’” But The Daily Record’s findings indicate otherwise: On a number of major redevelopment projects, including the

Charles North urban renewal plan, the West Side Superblock and the East Baltimore biotechnology park initiative, both the BDC and the city’s housing authority have assembled dozens of properties at a time on the front end, making use of eminent domain as a central tool in the push to renew Baltimore. The case for letting it be Critics of eminent domain in Baltimore and elsewhere generally don’t take issue with government seizure of private property when it is done in service of clearly defined public use. Taking a building and knocking it down to build a road, a school or a courthouse, for example, is not seen as terribly controversial in this country. This is because the Fifth Amendment to the Constitution, which outlines rather broadly the right to due process of the law, specifies that “nor shall private property be taken for public use, without just compensation.” Public byways and buildings constitute public use, so there is little legal ground to argue against that sort of condemnation. Problems arise, critics say, when property is condemned in the name of economic development, because urban renewal would lead to higher property

”

tax revenue, profits for handpicked developers or because a municipality simply does not approve of the appearance or inhabitants of a particular property — a rundown flophouse, a strip club, a liquor store. Baltimore’s West Side Superblock project, a large-scale redevelopment of several city blocks near Lexington Market, has been ground zero in this dispute. The city began threatening condemnation in the late 1990s, and in the last five years, at least 16 properties have been condemned and conveyed to private developers, and many more have been purchased by the city after lengthy mediations. “When they started eminent domain in ’98, [the Superblock] was a thriving pedestrian mall,” said John C. Murphy, an eminent domain lawyer who has been defending property owners in Baltimore for more than two decades. “It had the highest rents in the city … There were no vacancies. The problem was who was there. For the most part it was Korean business owners, and their customers were African-Americans … [The city] had no allegiance at all to the Korean business owners.” Today, the Superblock is eerily vacant: Shuttered storefronts alternate with uncrowded clothing retailers and wig shops. Foot traffic is scarce except for a few downtown workers who seem to be walking through the blighted blocks only to get to somewhere else. Murphy is quick to add that he does not accuse the city of racism — just an ingrained cultural inclination to integrate low-income retail strips at the expense of minority owners. “The whole process of suburbanization has had a great impact on the city,” Murphy said. “They think downtown should be a lot like a suburban mall. A guy like Jay Brodie looks at it and says, ‘This isn’t good because there aren’t a lot of chain stores like in Towson Town.’” But Brodie said this characterization is “absolutely not” how he looks at the city. The BDC, he said, has taken pains to keep several existing Superblock retailers, including the discount store Valu Plus, a wig shop and SEE CONDEMNED PAGE 13A

Condemnations were used by the state of Maryland on these projects

M&T BANK STADIUM

ORIOLE PARK AT CAMDEN YARDS

HIPPODROME THEATER

FRIDAY, DECEMBER 5, 2008

THE DAILY RECORD

CONDEMNED Baltimore’s use of eminent domain

surgery right away, then and there, instead of five years down the line.” Koo sometimes sounds like he’s arguing for the use of quick-take, but he is careful to say that he is not. At the end of the day, Koo said, the city would be better off abandoning eminent domain altogether. “I think if [the city] left it alone, it would have done fine,” he said. “I don’t think a Saks Fifth Avenue would have come here, but who’s to say we need a Saks? ... It should not be used at all. The private sector could probably do as good or a better job at redevelopment.”

Condemned a clothing boutique, as part of the new plan for the district. “Mr. Murphy is very mistaken about my view of the West Side, like 180 degrees mistaken,” he said. “I have said consistently that the West Side, in terms of retail, is not meant to imitate suburbia; it’s meant to reflect the neighborhood and the goods and services people in the neighborhood want, and the goods and services that people in Mt. Vernon and Bolton Hill want.” For the property owners, condemnation represents a tiresome, stressful ordeal that can ruin a business by taking away incentives to invest, buy new inventory or make capital improvements, because the threat of losing one’s property can be imminent for years or even decades. Nam Seo Koo, who emigrated from South Korea in 1978, has owned New York Fashions, a retail clothing outlet in the Superblock, for more than 15 years. In August, the city agreed to cut the final check — $300,000 to buy up inventory and fixtures in Koo’s shop and relocate to another site — as part of a condemnation settlement of more than

RICH DENNISON

Continued from page 12A

Linn Koo, whose father owned retail clothing outlet New York Fashions in the Superblock for more than 15 years, says he has seen firsthand how eminent domain can tax a business owner’s personal life.

$3 million to seize Koo’s 25,000-squarefoot shop and warehouse. But Koo’s son, Linn Koo, who speaks for the business, said he isn’t sure his father wants to go through the trouble. He said he has seen firsthand how eminent domain can tax a business owner’s personal life. The first letter notifying Koo of the condemnation came in 1998, and a decade of uncertainty about his busi-

ness, combined with declining foot traffic on the streets outside, has left him less than enthusiastic about relocating his business and starting over again. Worst of all, he said, was the uncertainty of a long, drawn-out process. “What a lot of people don’t understand is the stress it puts on a person,” Linn Koo said. “There’s a right way to do eminent domain, and that’s quickly. It’s like going for a doctor’s visit and they do

‘Critical mass’ Condemnations are carried out in Baltimore mainly by two city entities — the BDC and the Department of Housing and Community Development — and each specific instance of eminent domain must be approved by the mayor and the city’s spending panel, the Board of Estimates. Once authorized, a condemnation must be filed in city circuit court, at which point an owner may challenge the valuation of the property. Public officials are quick to point out that authorizing a condemnation is not the SEE CONDEMNED PAGE 14A

N

Condemnation areas in Baltimore Park Heights

W

E S

The map shows where most condemnations in Baltimore take place. Our research shows that eminent domain use is not limited to one particular part of town; instead, large-scale site acquisition projects using the tool are spread out over a wide area. 83 domain seizures in the central part of the city, especially around the However, eminent downtown area, tend to be of commercial properties, while East Side and West Side properties tend to be houses.

140

Condemnations authorized: 22

139 American Brewery

26

Condemnations authorized: 47

41 E. North Ave. W. North Ave.

Westside

Baker/Division

Condemnations authorized: 16 2

Condemnations authorized: 39

66 1

66 1

83

Upton

66 40

Condemnations authorized: 120

66 40 EBDI Condemnations authorized: 610

295 144

Inn

Poppleton

Condemnations authorized: 10

Condemnations authorized: 58

St

.

Key Hwy.

395

Uplands

Bo st on

er H arb or

Broadway Corridor

to n

95

Condemnations authorized: 121

or

W as

hi

ng

66 1

Harb west North

Bl vd .

95

2

95

295 695

Washington Village/Pigtown Fairfield

Condemnations authorized: 8

Carroll-Camden Industrial Area/ Gateway South

Condemnations authorized: 101

Bl vd .

Condemnations authorized: 7 895

W as

hi

ng

to n

95

695

295 Scale= 1 mile

Source: Daily Record research, Google maps

13A

14A T H E D A I L Y R E C O R D

FRIDAY, DECEMBER 5, 2008

CONDEMNED Baltimore’s use of eminent domain

“

I think Baltimore is still caught in the 1960s with this whole urban renewal business. The rest of the world moved on and got over it. — John C. Murphy Baltimore eminent domain lawyer

Condemned

MAXIMILIAN FRANZ

Continued from page 13A

same as filing one, and that in many cases, mediation between property owners and the city results in a voluntary sales agreement. “Board of Estimates approval gets us near the goal line of crossing the case, but doesn’t cross the goal line,” said Andrew Bailey, an attorney for the city. “All that accomplishes is it authorizes the city to commence with the suit.” Indeed, records show that of 283 condemnations authorized this year, only 176 of them have been filed in court. In recent years, on average, about half of condemnations authorized actually reach the stage of being filed in court: Only 44 percent of the 204 takings authorized in 2007 became lawsuits; 75 percent in 2006; 50 percent in 2005; 38 percent in 2004; and 52 percent in 2003. But Murphy, the eminent domain lawyer, said that publicly announcing the city’s intention to seize a property by listing it on an urban renewal ordinance has essentially the same effect as condemning it. “Once the city has the authority to condemn, it’s not necessary to file a case,” he said. “Filing the court case is basically the last resort. But when they do it, they’re doing it under the threat of condemnation, because it’s already been established that the city has the right to take this property. … I think in a lot of other cities, they don’t do this to the same extent.” In Pittsburgh, a city with roughly half the population of Baltimore but a similar mid-century transformation story, it seems that eminent domain-driven urban renewal was once a great boon to the city, but has since been abandoned. In 1950, its mayor began the condemnation and demolition of more than 100 dilapidated properties in what is now known as the “Golden Triangle,” a pointed strip of land at the confluence of the city’s famous three rivers. It is now occupied by a public park with a picturesque fountain, surrounded by a striking downtown skyline filled with commercial office towers and a busy central business district. But in the last 10 years, redevelopment efforts have proceeded largely

”

“I think that in the city of Baltimore, the eminent domain tool is absolutely critical,” said Paul T. Graziano, the city’s housing commissioner. “I’ve worked in half a dozen cities in my career, and Baltimore is in many ways a special example because it has seen massive disinvestment and out-migration, and that has created vast tracts of largely abandoned property. “And in order to [start] redevelopment [of] these properties, one needs to assemble these properties and get a critical mass, and that’s not something that the private sector can do. It’s very, very cost prohibitive.”

Eminent domain attorney John C. Murphy, who has been defending property owners in Baltimore for more than two decades: ‘The whole process of suburbanization has had a great impact on the city.’

without the use of condemnation. Several projects, including a mixed-use retail effort called the South Side Works, have made use of former industrial sites, but only one, a large-scale downtown build-out known as Fifth and Forbes, proposed the extensive use of condemnation. That project lost steam in 2001 when then-Mayor Tom Murphy failed to woo Nordstrom to the area as an anchor, and eventually condemnations were threatened but never used. “The city of Pittsburgh has not officially used eminent domain since the early 1980s,” said Frank Gamrat, a research associate at the Allegheny Institute, a conservative, Pittsburgh-based public policy think tank. “Once Mayor Murphy left office, he kind of put eminent domain to rest. He tried with Fifth and Forbes and lost in the court of public opinion. It hasn’t come up for nine years, really.” Kyra Straussman, director of real estate for Pittsburgh’s development arm, the Urban Redevelopment Authority, said this is because it simply isn’t worth it to condemn since federal funding for eminent domain seizures has dried up. Instead, she said, Pittsburgh takes a less adversarial approach to assembling property — integrating city-owned properties with those acquired through purchase agreements by the developer, without using the threat of condemnation to bolster the developer’s

negotiating position. This way, the city avoids costly legal battles and relocations for businesses. “We look at projects differently than we did 50 years ago,” she said. “Don’t you get a better, more valuable project overall when you’re knitting it into the community fabric rather than laminating it onto the landscape?” By contrast, Baltimore has at least 12 projects that are highly dependent on condemnations. Chief among them is the East Side biotechnology initiative, which has displaced about 400 families so far, with hundreds more slated for relocation. The main commercial projects are the BDC’s Westside Initiative, which includes the Superblock; Gateway South, a site that will be adjacent to Baltimore’s coming slots parlors; Old Fairfield Industrial Area; Pigtown/Washington Village; and Charles North. Baltimore Housing has thousands of properties in line for condemnation, many of them blighted and vacant, for several projects, including the 1,000plot Poppleton renewal effort, major projects in Barclay, Upton, Park Heights and Oliver, and in the area surrounding West Baltimore’s Uplands housing project. In September, a judge ruled that the city could seize an entire block adjacent to Uplands even though some of the properties involved were not blighted and housed active, profitable businesses.

Moving forward Despite consistent legal challenges, the pace of condemnations in Baltimore seems to show no signs of slowing down. On Election Day this year, the city’s voters approved two bond issues of nearly $46 million to acquire more properties in the Westside Initiative and near Uplands. Multiple projects, including the East Side initiative and Old Fairfield, are entering later stages of site acquisition and may involve more condemnation proceedings. “I think Baltimore is still caught in the 1960s with this whole urban renewal business,” Murphy, the attorney, said. “The rest of the world moved on and got over it.” For the time being, Murphy is in one sense right: Eminent domain seems to not be a relic of the 1950s, the 1960s, or even five years ago. For some city officials, it’s industry standard. “How do we help the private sector do what it does in America, to get loans to get equity?” asks Brodie, of the BDC. “Our stepping in with any of the city’s powers is done with a judgment call that the private sector is not doing it. … In the long term, there are benefits — jobs, taxes — that you have to balance against the angst.”

MONDAY: The issue of condemnation touches on one of the U.S. Constitution’s most fundamental rights — the right to own property.

back! | Visit our Blog mddailyrecord.com e Talk

Voices on condemnation “How do we help the private sector do what it does in America, to get loans to get equity? Our stepping in with any of the city’s powers is done with a judgment call that the private sector is not doing it. … In the long term, there are benefits — jobs, taxes — that you have to balance against the angst.”

M.J. “JAY” BRODIE

“I think that in the city of Baltimore, the eminent domain tool is absolutely critical. I’ve worked in half a dozen cities in my career, and Baltimore is in many ways a special example because it has seen massive disinvestment and out-migration, and that has PAUL T. GRAZIANO created vast tracts of largely abandoned property.”

“The process of acquiring all of the necessary parcels through voluntary negotiations would have required an unknown, uncontrollable amount of time ... The solution was to invoke eminent domain to acquire the required properties in a predictable amount of time; since the property own- MARTIN MILLSPAUGH ers were entitled to appeal the price they received to a jury in court proceedings, before the city acquired possession.”

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December 8, 2008 • Volume 120 • Number 58

Land-use attorney John C. Murphy, in the middle of the West Side Superblock: ‘…there has been a general change in attitude towards government. The general public is much more sympathetic to property rights.’

A DAILY RECORD SPECIAL REPORT

The people v. eminent domain Opponents of condemnation are fighting a power that they say has been widely abused BY ROBBIE WHELAN

| [email protected]

n Maryland, as in many parts of the country, the discussion over eminent domain, or the government’s power to condemn and seize private property in the name of “public purpose,” is mainly a legal debate rather than a policy one. The issue, after all, touches on one of the U.S. Constitution’s most fundamental rights — the right to own property — which is protected by the Fifth Amendment. No citizen, the amendment says, can be deprived of his or her property unless for “public use” and without being justly reimbursed for its value.

I

Over the years, several landmark court cases have broadened the definition of public use to include the economic wellbeing of a city, state, county or national government, significantly broadening eminent domain’s use as a policy tool. Several cases have held, for example, that it is perfectly legal to take property from one private business owner and give it to another, if it means more jobs and a more robust tax base. In Baltimore, where the dollar value of

INDEX A daily listing of content

Auction sales Calendar of events Marketplace

condemnation authorizations is expected to increase more than 250 percent between 2007 and 2008, legal battles over condemnation are often pitched and prolonged. As of October 15, 176 condemnation cases had been filed in city circuit court this year, up from 91 in 2007. The West Side Superblock, one of the Baltimore Development Corp.’s highpriority projects, has been stalled for years by several major lawsuits. In the city’s nascent Charles North district, two 2007 2A 19B 1C

Public notice Real estate Sealed proposals

6C 2C 7C

CONDEMNED

Additional coverage to accompany our condemnation series:

Baltimore’s use of eminent domain

in cases dealing with eminent domain. Embedded online with the main condemnation story.

A 3-PART SERIES

FRIDAY: In Baltimore, the use of condemnation powers has become synonymous with urban renewal. MONDAY: The issue of condemnation touches on one of the U.S. Constitution’s most fundamental rights — the right to own property. TUESDAY: Small business owners in Baltimore affected by condemnation tell their stories.

decisions delivered blows to the city’s widely used “quick-take” procedure, which gives property owners just 10 days to contest the validity of the taking. All this, some lawyers say, represents a major change in the public’s attitude

c Online

Historic court rulings m Take a look at some of the court rulings

Interview with a lawyer g Watch an interview with a lawyer who has litigated historic eminent domain cases. Embedded online with the main condemnation story.

Historic photo slideshow i View a series of photos documenting several Baltimore City development projects that were completed with the use of eminent domain. Posted online as a separate story. This supplemental reporting is available on our Web site at www.mddailyrecord.com

SEE CONDEMNED PAGE 5A

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MONDAY, DECEMBER 8, 2008

CONDEMNED

THE DAILY RECORD

Baltimore’s use of eminent domain

— John D. Echeverrian Lawyer and land-use specialist, Georgetown University’s Environmental Law and Policy Institute

”

RICH DENNISON

“

In the context of the national debate, the Baltimore waterfront was exhibit A in the argument in favor of the eminent domain power.

The West Side Superblock, one of the Baltimore Development Corp.’s high-priority projects, which has been stalled for years by several major eminent domain lawsuits

Condemned Continued from page 1A

toward property rights and the government’s role in real estate development: Emboldened by recent legal victories, property rights advocates are fighting back against a government power that they see as widely abused, and state lawmakers are listening. Gaining traction The concept of “urban renewal” first became prevalent in the early 1950s, after the 1949 Housing Act provided federal incentives for cities to clean up their im-

ages by condemning properties and redeveloping them. It gained further traction in 1954, when the Supreme Court ruled in Berman v. Parker that Washington, D.C., could condemn a supermarket to transfer it to another private developer simply because the area around it was, in the eyes of city officials, “blighted.” Many of the big-city urban renewal plans of the 1960s — in New York, Pittsburgh, Baltimore — depended on the latitude allowed city governments by Berman, and many downtowns transformed over the course of a decade using eminent domain powers. “In the context of the national debate, the Baltimore waterfront was exhibit A in

the argument in favor of the eminent domain power,” said John D. Echeverria, a lawyer and land-use specialist at Georgetown University’s Environmental Law and Policy Institute. “If there’s an essential rationale for the use of eminent domain, it’s the holdout problem, and it’s the difficulty of overcoming the problem that one or 100 owners won’t agree to sell on any reasonable terms. There are a variety of instances in dealing with downtown development. Where that arises, eminent domain is the natural tool for dealing with it.” But in the decades that followed, as federal money for cities dried up, eminent domain-based urban renewal fell out of fashion.

New urban theories, expressed in books such as Jane Jacobs’ “The Death and Life of Great American Cities” and Herbert J. Gans’ “The Urban Villagers,” mounted the first serious intellectual challenges to urban renewal. This, paired with public backlash against projects such as the razing of Boston’s West End for an economic development initiative that never materialized, made Charles Center-style urban renewal seem like a thing of the past. “Urban renewal replaced small streets, high density, mixed-use city environments with these sterile plazas and superblocks,” said Paul S. Grogan, direcSEE CONDEMNATION PAGE 6A

COURTESY OF URBAN LAND INSTITUTE

COURTESY OF URBAN LAND INSTITUTE

Before and after

INNER HARBOR BEFORE REDEVELOPMENT, 1965

INNER HARBOR AFTER REDEVELOPMENT, 1990

5A

6A T H E D A I L Y R E C O R D

MONDAY, DECEMBER 8, 2008

CONDEMNED Baltimore’s use of eminent domain

“

It’s a push and pull effect. Kelo was at first seen as a great boon to cities and developers. Shortly after [it] was handed down, you saw a rush in the use of eminent domain.

”

— Scott G. Bullock Senior attorney, Institute for Justice

“Two things have changed [in the past decade],” he said. “One, there has been a general change in attitude towards government. The general public is much more sympathetic to property rights. When I started on the West Side in 1998, I looked at this and said, ‘I don’t want to get into court because I don’t want to lose.’ ... The second thing was that Kelo came. It really opened up the door to challenging eminent domain takings ... because it set up a firestorm of protest.” Scott G. Bullock, a senior attorney at the Institute for Justice, and one of the team that argued Kelo all the way from Connecticut’s Superior Court to the highest court in the country, called it “the most universally despised decision in recent memory,” but echoed Murphy’s feelings that change is in the air. “It’s a push and pull effect,” he said. “Kelo was at first seen as a great boon to cities and developers. Shortly after [it] was handed down, you saw a rush in the use of eminent domain. But in the Kelo backlash, you’ve seen this tremendous reaction which has led to putting the brakes on eminent domain through state decisions that reject or cast doubt on the decision.”

Condemned tor of the Boston Foundation and author of a 2000 book on the policy called “Comeback Cities.” “The kind of urban renewal that [former New York City planner] Robert Moses and others practiced required a kind of supine powerless public that didn’t have the clout to oppose this type of things. Through community organizing and the civil rights movement ... there began to be a great deal of opposition to these kinds of projects.” Still, Grogran added, there is a place for eminent domain use as a “last resort” in cities like Baltimore, Philadelphia and Detroit that have failed to reclaim the residents and work force they lost to the suburbs in the 1950s and 1960s. In the 1980s and 1990s, Baltimore saw very little eminent domain use. “I don’t recall city policy involving an over-reliance on eminent domain,” said Kurt L. Schmoke, who was mayor from 1988-1999. “We engaged the private properties in discussions about plans. Our view was, let’s tell people what we have in mind, try to bring them into the discussion, and see if we can come up with the private-public joint partnerships.” But takings entered the spotlight once again in 2005, when nearly a half century after the Berman decision, the Supreme Court ruled on Kelo v. City of New London, its first major land-use decision in decades. In that case, a Connecticut nurse named Susette Kelo fought the local government of New London, which proposed taking her waterfront home to build a $300 million research facility for pharmaceutical giant Pfizer Inc. A divided decision held that the city was within rights to take the house, and Kelo lost her home. In the majority opinion, Justice John Paul Stevens wrote that the idea that there should be “any literal requirement that condemned property be put into use for the general public” had “eroded over time” since the 19th century, and that the creation of jobs and higher taxes could be

COURTESY OF INSTITUTE FOR JUSTICE

Continued from page 5A

Susette Kelo stands in front of her New London, Conn., house. In 2005, a divided Supreme Court said the city was within its rights to take her house to make way for a $300 million research facility for pharmaceutical giant Pfizer.

construed as “public purpose,” which has come to be regarded as the same as “public use.” “The takings before us, however, would be executed pursuant to a ‘carefully considered’ development plan,” he wrote. “[T]he City’s development plan was not

adopted “to benefit a particular class of identifiable individuals,” — i.e. a particular private business interest. Kelo was a turning point in the eminent domain debate in Baltimore, said John C. Murphy, a land-use lawyer who has litigated dozens of condemnation cases.

Maryland v. Kelo Since it was handed down, Kelo has been challenged by legislation passed in 42 states — much of it in the first few months after the decision was made — including Maryland. A few states, like Florida, have passed aggressive laws that effectively ban eminent domain for economic development purposes. Florida requires condemners to wait 10 years after filing their case to transfer property to private developers, effectively making it not worth it. Other states have passed laws that simply bolster private property owners’ rights. In 2007, a Maryland Senate bill passed, putting a four-year shelf-life on condemnation authority: if the condemning authorities don’t use it, they lose it. The bill seems to be a legislative response to a 2004 state Court of Appeals SEE CONDEMNED PAGE 7A

Key dates: An emine 1950s

1940s 1 1949

1

Federal Housing Act provides federal funding for two-thirds of the cost of eminent domain acquisitions in cities like Baltimore

1954

2

In Berman v. Parker—the Supreme Court unanimously upholds the right of the District of Columbia to seize a department store as part of a massive redevelopment plan to fight blight, even though the store was not blighted. This is the first case to specify that the constitution’s “public use” clause includes “public purpose” in its definition, allowing government to condemn privately owned property and convey it to another private owner.

1960s

2 1958

3 3

Baltimore planners present Charles Center urban renewal plan to mayor, the first major building project in the city since before World War II.

1962

4

One Charles Center, the iconic Mies van der Rohe office tower, opens.

1963

5

Mayor Theodore McKeldin announces the Inner Harbor urban renewal plan. A master plan is accepted four years later, and acquisition by condemnation and clearance of downtown properties begins.

1975

197

4 5 6

In Prince George’s County v. Collington Crossroads Inc., the Maryland Court of Appeals upholds eminent domain takings for the purposes of economic development. The county successfully condemns a pricey parcel of private land for the purpose of building an industrial park. This case would be used as precedent in a number of significant decisions, including Poletown v. Detroit, a 1981 appellate court decision that upheld that city’s seizure and clearance of a residential neighborhood to build a General Motors assembly plant on the site.

1984

7

Hawaii Housing Authority v. Midkiff finds the Supreme Court ruling in favor of the state’s right to condemn massive swaths of privately-owned property and redistribute it to multiple private owners. The case was meant to break Hawaii’s “land oligopoly” — a situation in which a tiny number of property owners controlled the vast majority of Hawaii’s land, thus inflating prices and skewing the housing market.

MONDAY, DECEMBER 8, 2008

THE DAILY RECORD

CONDEMNED Baltimore’s use of eminent domain

Condemned case, Reichs Ford Road Joint Venture v. State Highway Administration, which found that private owners whose land is seized or threatened with seizure must be compensated for losses other than the value of their property. In this case, a Frederick County gas station operator refused to renew his lease with the property owner after finding out that the state planned to condemn the property and build a highway interchange. That plan never came to fruition, and the condemnation was left hanging in the air for nearly a decade, resulting in major lost profits for the landlord. In March 2007, state Sen. Allan H. Kittleman, R-Carroll and Howard, was joined by a dozen other Senate Republicans in sponsoring SB 294, a measure that would have banned condemnation takings for economic development. The bill died in committee. Kittleman said in a recent interview that in practice, eminent domain produces a “reverse Robin Hood effect,” in which properties are taken from the poor and small business owners and given to the rich and well connected. A poll that he commissioned in 2005, he said, showed broad support from Democrats and Republicans alike for a measure banning economic development takings. “The Democratic majority doesn’t like a law that says you can’t have eminent domain for economic development, but they don’t want to be on record as having opposed it, so they just decided not to have a vote,” he said of the measure. Also in 2007, two Baltimore City cases were decided in the state’s highest court, leading to two key victories for anti-condemnation activists. The first, Mayor and City Council of Baltimore v. Valsamaki, dealt with the Magnet Bar, a tavern on North Charles Street owned by George Valsamaki, which was condemned as a “quick-take” as part of the city’s Charles North Urban Renewal Plan. The Court of Appeals ruled that without a specific, detailed plan like the one presented by the city of New London in Kelo, and without demonstrating an immediate need to seize the property, the city could not use quick-take. A few months later, the Court of Appeals handed down another decision, Mayor and City Council v. Sapero, which dealt with the Chesapeake Restaurant site, just down the street from the Magnet Bar, which the city was also trying to seize by quick-take. The high court ruled that there was no immediate need for the city

RICHARD SIMON

Continued from page 6A

Attorney James Thompson: ‘The city has used quick-take condemnation over the last 50 years to basically bulldoze major blocks of Baltimore City. It’s been a major tool, used sometimes unfairly at the expense of property owners.’

to possess the restaurant and several adjacent buildings, which had sat unused for more than a decade in the heart of an emerging commercial district near Baltimore’s main train station.

From the negotiating table to the court When the city authorizes a condemnation seizure, it doesn’t always file an action in Baltimore City Circuit Court to actually take the property. Often, the city will come to an agreement to purchase the property from the owner after lengthy mediation. In some cases, a property will be placed under the city’s receivership after repeated and unresolved housing code violations. Over the past five years, about half of the condemnations approved by the city’s Board of Estimates have been filed in city courts. Most of these have been residential properties, and Daily Record research shows that so far this year, more than 60 percent of condemnations authorized have gone to court.

‘You don’t know how we do it over here’ James Thompson, an attorney with Rockville-based Miller, Miller and Canby who litigated Valsamaki, said the case was important because it was the first time the city had ever lost a quick-take case. “The city has used quick-take condemnation over the last 50 years to basi-

Year

Condemnations authorized

Condemnations filed in court

Percent of authorized condemnations that have gone to court

2003 2004 2005 2006 2007 2008

255 273 437 224 204 283

133 104 219 170 91 176

52% 38% 50% 76% 45% 62%

Total

1,676

893

53%

Source: Daily Record research

SEE CONDEMNATION PAGE 8A

ent domain timeline

70s

1980s

6

7 1998

8

Baltimore begins condemnation proceedings for two major West Side urban renewal projects, Centerpoint and the Superblock. Centerpoint will be built within a few years, coinciding with the renovation of the Hippodrome theater. The Superblock is still stalled today.

1990s

2000s

8 2005

9 10 11 9

Kelo v. City of New London, the first federal court challenge to eminent domain in more than two decades, upholds the central tenet of Berman, that a city can condemn property for the “public purpose” of economic development, when the Connecticut town condemns Susette Kelo’s house for the construction of a pharmaceutical company’s corporate campus. Protesters suggested that a local condemning authority take Justice David Souter’s “blighted” New Hampshire vacation home and replace it with a “Lost Liberty Hotel,” as a symbolic act of defiance.

2005

10

Reich’s Ford Joint Venture v. State Highway Administation establishes that the threat of condemnation can lead to major losses for a small business that are recoverable as damages to the business owner. A Frederick County gas station owner lost his anchor tenant when the operator refused to renew a 10-year lease agreement because the state was threatening to condemn the site for a new highway interchange.

2006 - 2007

11

Two high-profile condemnation suits, Mayor and City Council of Baltimore v. Sapero and Mayor and City Council of Baltimore v. Valsamaki, find that the city has abused its “quick-take” condemnation powers, and rules that the city must demonstrate immediate need for taking a property by this aggressive, expedited method, and have a plan in place for the future of the property.

Source: Daily Record research

7A

8A T H E D A I L Y R E C O R D

MONDAY, DECEMBER 8, 2008

CONDEMNED Baltimore’s use of eminent domain

“

The use of eminent domain has got a dirty reputation in recent history. If you look around the city at where eminent domain happens — Fairfield, Poppleton, Washington Village — these are really destitute areas.

”

— Elva E. Tillmann Attorney, specializing in land-use

Condemned Continued from page 7A

cally bulldoze major blocks of Baltimore City,” he said in a recent interview. “It’s been a major tool, used sometimes unfairly at the expense of property owners. ... When this begins to be a stretch is when you go in and take property that’s not blighted. There’s no health, no safety issues. It’s just some guy’s house, or the Magnet Bar.” Furthermore, he said the notion of “RFP condemnation” — the city’s issuance of a “request for proposals” to redevelop an area, then awarding development contracts to private entities before the city even owns the property — may be commonplace in Baltimore, but it’s not elsewhere in Maryland. “This is unheard of outside of Baltimore,” he said. “Here in Montgomery County, we have the largest political jurisdiction in the state. We have 900,000 people, the biggest tax base in the state. The idea of taking someone’s property and spinning it off to a private developer is unheard of.” Thompson recalled a 2006 phone conversation with Paul Dombrowski, at that time the head of the BDC’s Charles North initiative, in which he asked Dombrowski what the city’s plans were for the Magnet Bar site. The BDC said, according to Thompson, that a plan had not yet been formulated. “Dombrowski said, ‘Mr. Thompson, you don’t know how we do it over here,’” Thompson said. “Well, the Constitution applies in Baltimore City as well.” Dombrowski said he remembered a phone conversation with Thompson in which he “explained the law process they follow for condemnation,” because Thompson “didn’t seem clear on how we do things,” but added that he did not remember making that specific remark. Since Valsamaki, the BDC’s authorization of quick-takes has all but ceased. Most quick-takes are carried out by the housing department on smaller, vacant properties. However, in September, the city’s Department of Housing and Community Development, using money from BDC-controlled city accounts, authorized the quick-take seizure of 80 lots in Old Fairfield, a South Baltimore industrial district to which city

officials hope to attract renewed commercial investment. The city’s law department, which files condemnation actions, changed its policies after Valsamaki, said City Solicitor George A. Nilson. “We sharpened our pencils and took a closer look at regular condemnation proceedings,” he said. “The agencies we represent worked harder to anticipate the needs to acquire the property, making it less necessary to use quick-take.” So far this year, his office has not yet actually filed a quick-take in circuit court, although 280 of them have been authorized. In February, the city used quicktake to seize several properties — using BDC money — on Warner Street in South Baltimore as part of the Gateway South project. At the time, The Daily Record reported that the owner of a large architectural salvage and antiques business located on the site was happy with the arrangement after the city renegotiated to give him a better price for his property. For Gateway South, city officials said, the issue was that financing for the project was contingent on the city taking immediate title on the property, and they emphasized that land acquisition only reaches the point where condemnation is necessary after mediation and fair-market offers have failed. “The use of eminent domain has got a dirty reputation in recent history,” said Elva E. Tillman, an attorney with the city who specializes in land-use. “If you look around the city at where eminent domain happens — Fairfield, Poppleton, Washington Village — these are really destitute areas.” And for now, the power to condemn a property — destitute or otherwise — and give it to another private entity, remains intact, invaluable to city leaders and developers eager to remake the city, but a thorn in the side of independent property owners who are not eager to pick up and move to make way for the next good thing.

How the condemnation process works

Urban renewal area identified (either by the city, a particular neighborhood community, or a business interest)

Urban renewal ordinance passed by City Council, specifying, among other things, properties the city is authorized to condemn

Monies authorized by the Mayor and city’s Board of Estimates for acquisition costs of private property.

Two assessments of the property’s value commissioned by independent appraisers; city required by law to use the highest of two appraisals

Purchase offer made to property owner

Offer accepted

Offer rejected

Condemnation suit filed in Circuit Court City takes title to property

Property owner disputes city’s taking of property

Based on city’s appraisal of property value

Based on city’s right to take

Litigation proceeds; fair market value determined by a judge

Owner disputes legitimacy of Urban Renewal ordinance

City takes title to property

Judge rules either for or against owner, decision may be appealed to a higher court

If for; the owner keeps the property

TUESDAY: Small business owners in Baltimore affected by condemnation tell their stories.

back! | Visit our Blog mddailyrecord.com e Talk

Source: Daily Record research

If against; the owner disputes city’s appraisal and starts the process over again at the city’s taking of property

Voices on condemnation “I don’t recall city policy involving an over-reliance on eminent domain. We engaged the private properties in discussions about plans. Our view was, let’s tell people what we have in mind, try to bring them into the discussion, and see if we can come up with the private-public joint partnerships.”

KURT L. SCHMOKE

“Urban renewal replaced small streets, high density, mixeduse city environments with these sterile plazas and superblocks. Through community organizing and the civil rights movement…there began to be a great deal of opposition to these kinds of projects.”

“The Democratic majority doesn’t like a law that says you can’t have eminent domain for economic development, but they don’t want to be on record as having opposed it, so they just decided not to have a vote,” he said of the measure. PAUL S. GROGAN

ALLAN H. KITTLEMAN

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December 9, 2008 • Volume 120 • Number 59

Fleet Transit owner Kevin McNeil: ‘My biggest issue is, if I own a thing, and I want to develop it, and you want to take it away from me and give it to someone else, that doesn’t seem fair.’

A DAILY RECORD SPECIAL REPORT

Condemning what stands in the way City’s liberal use of eminent domain poses threat to independent property owners BY ROBBIE WHELAN

| [email protected]

here is a white dry-erase board in the conference room of Fleet Transit Inc.’s main offices in the Fairfield industrial district of Baltimore, with notes left over from a business strategy meeting scrawled on it: “The 3-Year Plan: Growth — Better Than the Alternative — Death…Employer growth attracts new people.” Between Growth and Death, Fleet’s owner Kevin McNeil has clearly chosen the life-affirming option, but because of a recent fight with the city over condemnation, things aren’t working out the way he thought they would.

T

CONDEMNED

Additional coverage to accompany our condemnation series:

Baltimore’s use of eminent domain

– and his life – to Prince George’s County after his liquor store on Howard St. was condemned. Hear him tell his story at www.mddailyrecord.com. Embedded online with the main story.

A 3-PART SERIES

FRIDAY: In Baltimore, the use of condemnation powers has become synonymous with urban renewal. MONDAY: The issue of condemnation touches on one of the U.S. Constitution’s most fundamental rights — the right to own property. TUESDAY: Small business owners in

McNeil built his petroleum product shipping company, which employs 140 with a payroll of about $6 million, on the site of an old South Baltimore oil terminal over more than 30 years. Located in an area across the Hanover Street Bridge from Federal Hill that is populated mostly by chemical plants and auto shipping terminals, he had planned until recently to expand his operation north of Chesapeake Avenue, to a

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site known as Old Fairfield. There, he owns about 80 small lots that are interspersed with city-owned lots. His dream, he said, is to expand Fleet Transit, and at the same time, attract several port-related tenants and develop the land as a small business park. But in September, the city of Baltimore took steps to seize the 80 lots owned by McNeil and redistribute them as part of an Ur5A 2B 1B

Public notice Real estate Business services

8B 2B 8A

Baltimore affected by condemnation tell their stories.

ban Renewal Plan for Old Fairfield. Under the city’s plans, McNeil would be awarded about four of the 25 acres seized from him, but at least eight acres of it would be conveyed to another private developer with a similar plan: to build a business park.

c Online

Audio Story o George J. Herrmann moved his business

Audio slideshow h After relocating their retail hat store twice, Lou and Judy Boulmetis’ business is finally prospering. Hear Lou share the ups and downs of his business. Posted on our blog On the Record.

Download the series a Download the entire three-day series as a single PDF file. Posted online as a separate link. This supplemental reporting is available on our Web site at www.mddailyrecord.com

SEE CONDEMNED PAGE 9A

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TUESDAY, DECEMBER 9, 2008

CONDEMNED

THE DAILY RECORD

Baltimore’s use of eminent domain

— George A. Nilson Baltimore City Solicitor

”

RICH DENNISON

“

There are also always going to be circumstances in which you need eminent domain to really make a project work. The Superblock is an example.

Baltimore City Solicitor George A. Nilson stands in front of City Hall. City officisls say the legal formalities of acquiring large assemblages of property often require that eminent domain be used on the front end of a project.

Condemned “My biggest issue is, if I own a thing, and I want to develop it, and you want to take it away from me and give it to someone else, that doesn’t seem fair,” McNeil said. “I can’t do anything with the land because it’s all tied up. I can’t bring somebody down here, look them in the eye, and tell them to put all their money into it and then have the city take it away from me.” McNeil’s story is emblematic of the city’s attitude toward the property rights of small business owners over the past five years: If a business stands in the way of a city development plan, the city will not hesitate to condemn the property occupied by the business, seize it, and sell it to a new developer that city officials see as more capable or with more appropriate plans. In more than a dozen interviews with small business owners and legal counsel representing them, The Daily Record has found the city frequently solicits plans for property redevelopment from the private sector before it owns the property in question. The practice underscores the fact that redevelopment efforts in Baltimore depend heavily on eminent domain seizures and the threat that eminent domain powers pose to independent property owners. Indeed, threatening a business with condemnation, even without filing legal action to take the property, is often enough put a business owner under or convince land owners to abandon their plans for the plots that they own. And in Baltimore, eminent domain

RICH DENNISON

Continued from page 1A

Kevin McNeil works at his Fleet Transit headquarters in Fairfield, which houses 90 trucks and moves about 1.5 to 2 million gallons of petroleum-based products per day.

use is becoming more widespread, rising more than 250 percent in the dollar value of condemnations authorized in 2008 over 2007, and calling into question the city’s attitude toward small-business owners. If eminent domain is used widely as a front-end tool for development, does that mean the city’s interests are more important that the property rights of small-business owners? ‘Different ways to renew’ The details of Kevin McNeil’s problems in Old Fairfield are hardly unique. He has owned the properties since 1980, when the area still had a small, mostly black residential community that dated to the 19th century adjacent to its factories and scrap yards. A small white clapboard church still stands on Fairfield Road as a testament to the community’s existence. It was surrounded by poorly maintained

roads and air thick with industrial fumes until its last houses were cleared in the early 2000s. McNeil said he had to wait until all the people who lived in Old Fairfield were gone before even considering trying to buy more land for his industrial park idea. In the meantime, he said, the Baltimore Development Corp. decided that he was stalling, and the reason was that he wasn’t capable of developing such a large parcel. “The only thing I’ve heard is that I’m not a developer — I don’t develop land,” he said. “Well, I built this place from scratch,” he said, gesturing out the window of his office at the Fleet Facility, which houses 90 trucks and moves about 1.5 to 2 million gallons of petroleum-based products per day. “I think it was all political.” BDC President M.J. “Jay” Brodie said in a recent interview that McNeil’s pro-

posal for the land simply wasn’t the best one. “We’ve worked with Mr. McNeil and we’ve encouraged him,” he said. “Our judgment was that … he can’t do it by himself.” In 2006, the BDC issued a request for proposals — the normal procedure when redeveloping city-owned land — for five plots in Old Fairfield. The catch was that much of the land was owned by McNeil, not the city, so the BDC was effectively making economic development plans for parcels that it did not own. Or rather, that it did not own yet. After McNeil bid on the RFP and rejected a purchase offer from the city in 2007, the city moved to seize the properties and pay McNeil $2.2 million. The plan selected by the BDC offered McNeil a portion of the land to develop himself, but also brought in Chesapeake Real Estate Group, a developer that has had previous relationships with the city. Chesapeake redeveloped the Bagby Building in Little Italy, a former furniture factory that has now become a handsome commercial retail property with a Verizon store. In July, the BDC approved Chesapeake’s plans to build 400,000 square feet of industrial space on the Bowley’s Lane landfill site, which it sold to the developer. In September, Jim Lighthizer, a principal with Chesapeake, told The Daily Record that he had hired a broker and was sending out mailers trying to attract tenants, and that he was trying to convert “a dumpy area to a nice business park setting.” But McNeil called Lighthizer and his SEE CONDEMNED PAGE 10A

9A

10A T H E D A I L Y R E C O R D

TUESDAY, DECEMBER 9, 2008

CONDEMNED Baltimore’s use of eminent domain

— Yun O. Park Owner, Modern Mode

”

RICH DENNISON

“

This is my retirement plan, this building, and just to kick us out, it’s not fair. It’s like something in a communist country.

Lou Boulmetis, left, works with a customer at his Hippodrome Hatters, a 78-year-old haberdashery: ‘In my case it’s so far so good, but not in everybody’s case.’

Condemned partners speculators. Three years ago, Chesapeake bought 22 acres at an adjacent site and built a 25,000-square-foot truck repair facility on it. Their property was never listed for condemnation. McNeil said the only thing keeping him from developing his land, besides the fact that many of the lots scattered among the ones he owns belong to the city, is the threat of condemnation. “People come down here and say it looks awful, you know? Give me two guys, a couple of bulldozers and a few days, and I’ll have it cleaned out,” he said. “If [Chesapeake] gets to speculate, why can’t I?” Similar situations — in which the city tires of waiting for redevelopment to happen and uses condemnation to speed up the process — can be found all over the city. In September, the BDC moved to seize the Parkway Theater, a 93-yearold movie house in the Charles North Urban Renewal Area, which had been on a condemnation list for most of the time since its owner, Charles Dodson, purchased it in 2002. Dilapidated buildings in the West Side’s Pigtown neighborhood were seized earlier this year after years of disuse, under another urban renewal plan. The legal formalities of acquiring large assemblages of property, city officials say, often require that eminent domain be used on the front end of a project. “There are different ways to renew,” said Baltimore City Solicitor George A.

RICH DENNISON

Continued from page 9A

Hippodrome Hatters was moved twice by the city, in March 2001 from the unit block of N. Eutaw Street to the 400 block of W. Baltimore Street, then to its current location at 318 W. Baltimore Street.

Nilson. “Sometimes one lot or one property at a time works. There are also always going to be circumstances in which you need eminent domain to really make a project work. The Superblock is an example.” West Side stories The “Superblock” project is a 3.6-acre parcel of land between Liberty Street and Howard Street that falls under the city’s Market Center Urban Renewal Act. Since the late 1990s, the city has condemned or threatened to condemn the property of at least six small businesses, in many cases paying thousands of dollars to relocate them to other parts of the city. Yun O. Park, a Korean-American who since 1994 has owned Modern Mode, a women’s apparel store on Lexington Street in the heart of the Superblock,

learned that her building was listed for condemnation in 2006. She said she plans to retire in 10 years, and that she doesn’t want to relocate because she has a good customer base and the area is safe. “This is my retirement plan, this building, and just to kick us out, it’s not fair,” she said. “It’s like something in a communist country.” Park hired attorney John C. Murphy, who said he showed BDC officials the inside of the store to show them that the business was not blighted — rather it was clean, professional and thriving. The city backed down and removed Park from the condemnation list. Still, Park says business has suffered since the talk of condemnations began. Her store is flanked by two empty retail storefronts, one that was taken last year by the city and the former A.M. Fashions,

owned by Nam Seo Koo, another KoreanAmerican property owner on the West Side who has been in a pitched legal battle against the city over condemnations for the better part of a decade. “If we had to depend on this store, we’d starve to death,” said Park, who added that the last time business was good was at least three years ago. “If there are more stores around here, it will be a good spot.” More businesses are exactly what the city has in mind. The BDC issued a request for proposals for 51 Superblock properties in 2003, and has since issued two more RFPs, for 15 additional properties in and around the project. In late 2004, the BDC entered an exclusive negotiating agreement with Lexington Square Partners, a development team made up of companies from New York and Atlanta, for the properties in the first RFP. But some business owners, like Koo, whose 25,000-square-foot clothing store and warehouse space, New York Fashions, had been under threat of condemnation for nine years before the city finally took it in August, were not so lucky as to stay in business. Linn Koo, who speaks on behalf of his father’s business interests, said that Superblock businesses were doing quite well until the city intervened, starting in the late 1990s. By 2005, he said, New York Fashions’ sales, for which he declined to give a dollar amount, were down by 50 percent. “Look at this place — there’s no people,” he said, standing at the corner of Park and Lexington Streets. “Once the city started taking the buildings, there SEE CONDEMNED PAGE 11A

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THE DAILY RECORD

Baltimore’s use of eminent domain

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RICH DENNISON

Yun O. Park, left, owner of Modern Mode, a women’s apparel store on Lexington Street in the heart of the Superblock, talks with land-use attorney John C. Murphy. The city listed her building for condemnation in 2006.

George J. Herrmann stands in front of the shuttered People’s Wine & Spirits store on Baltimore Street. In 2004, the city said it was going to condemn the building and redevelop the property, but it has yet to do so.

Senate Bill 3, which passed in 2007 and became part of the state code, did just that, urging local authorities to condemn only when absolutely necessary, and requiring them to compensate businesses for losses in value in order to preserve “goodwill.” The pen that O’Malley used to sign the bill into law hangs behind a frame of a glass plaque in Boulmetis’ shop. But the uncertainty of the future of one’s business, a product of the moving ordeal, was very stressful, the couple said. “I would never buy property again in Baltimore City,” Lou Boulmetis added. RICH DENNISON

The small business shuffle Other small businesses have been hurt almost as much by being forced to relocate as by the condemnation threats on their property. George J. Herrmann owned People’s Liquors, a carryout business on the corner of Howard and Fayette streets, which said he did brisk business with customers coming and going from the nearby light rail stop, from 1995 to 1998. He received notice from the city that he would have to relocate. The building was being condemned, and as a tenant, he’d have to move out to make way for the $85 million Bank of America-financed Centerpoint project, a mixed-use retail and residential complex which opened in 2006. The city paid him $10,000, he said, to move to a new store across Baltimore Street from the recently restored Hippodrome Theater. There, he said, he no longer had access to the bus and light rail traffic he once got, and his customers no longer knew where his store was located. Business immediately fell off 60 percent, recovered slightly, and then stayed flat for four years. “It became pretty obvious, pretty quickly, that [the city] did not want a liquor store there,” he said. In 2004, Herrmann decided to sell his business and found a buyer to pay $400,000 for it. The same year, the city decided to condemn his new location, as part of a related effort to beautify his part of the Westside, and added the property to an urban renewal plan list. “If I don’t have a location, I can’t sell my business,” he said. “When I tried to sell the business, the potential buyer who put a contract on the business, the BDC told him they were ultimately going to condemn the property. They didn’t tell him when. I don’t blame the guy. I wouldn’t have bought the business, either. Just the word that the BDC was going to condemn those properties, it queered the deal I had on selling the property.” But Nilson, the city solicitor, speaking of the West Side urban renewal efforts, said everything that was done was done with good cause. “There is a very strongly held view that you need the impetus of these large assemblages to really make a project work,” he said. Herrmann took a 40 percent loss on the sale of the business, and most of the money went toward paying debts to his suppliers and moving costs. He now owns a home improvement business in Prince George’s County. Four years later, the city has still not yet seized and redeveloped the property — the “People’s Wine & Spirits” sign (he changed the name of the store after his first move) still hangs today over a steelshuttered storefront, and Herrmann has not yet settled all his debts on the business. “I’m still paying it off,” Herrmann said. “That was going to be my retirement.” Other businesses, however, have landed on their feet after a condemnation-related move, but only after suffering serious hardship and stress. Lou and Judy Boulmetis, who own Hippodrome Hatters, a 78-year-old haberdashery near the theater that shares its name, were relocated in March 2001 from the unit block of North Eutaw Street to the 400 block of West Baltimore Street to make room for the Centerpoint project, and then again to their current location in the 300 block of West Baltimore Street, a high-ceilinged showroom within the Centerpoint complex itself. “Each time, you cross your fingers, you

MAXIMILIAN FRANZ

was no reason for people to come around anymore. The percentage of people walking around really dropped off.”

Charles Dodson sits on the stairs at the Parkway Theater, a 93-year-old movie house in the Charles North Urban Renewal Area that the BDC moved to seize in September.

hold your breath and hope you do better,” Lou Boulmetis said. “In my case it’s so far so good, but not in everybody’s case. We grew the first time and we grew the second time we moved.” Sales have more doubled, he said, since the first move, due in large part to their new location, which is on a busy block of Baltimore Street next to a Starbucks. Still, their condemnation ordeal

has made an activist out of Judy Boulmetis. She collects photocopies of arcane laws having to do with eminent domain and newspaper clippings related to West Side development in a thick blue binder. The couple has lobbied Gov. Martin O’Malley, who they know from his days as a Baltimore City councilman, for more stringent laws to protect properties owners that have been relocated. Maryland

A variety of businesses The small businesses that suffer as a result of condemnation are not limited to retail storefronts in central downtown business districts. Office-based employers, industrial producers and service industry businesses have also been targeted in the last year in Baltimore. In September, a city circuit court judge dismissed a 4-year-old lawsuit brought against the city by a handful of property owners on the Uplands Triangle, a three-sided block off Edmonson Avenue in West Baltimore that the city wants to redevelop as a “gateway” to a SEE CONDEMNED PAGE 12A

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[Old Fairfield] would develop fine if the city would just leave it alone. The idea that the city needed to do this is just lunacy. — John C. Murphy Baltimore land-use attorney

Condemned

$200 million affordable housing development nearby, known as Uplands. Arthur W. Lambert, owner of Lambert Insurance Agency Inc., is one of the business owners under threat, and the main claimant in the lawsuit. He said the city should not have to right to take his business because it’s not blighted — it’s just near several properties that are — and that the prospect of having to move has driven clients away and made his life more difficult. Investors have expressed interest, he said, in buying up the nearby blighted commercial properties, which would make Lambert’s own office more attractive. But the looming possibility that the city will condemn the properties has driven those investors away. “It’s been a long, drawn-out thing,” he said. “Even during the process, it’s been inconvenient. … It’s taken away from my business. … People have contacted me about purchasing property, and I have to tell them what’s going on, and they back away very quickly. It is the threat of these properties being taken over by the city that has kept this area from being what it could have been.” Yoo Young, another Triangle business owner who is being forced out by the city, has run an auto repair shop with a loyal Asian-American customer base, on the same site since 1985 — seven years after he immigrated from South Korea. The profits from his business, he said, have allowed him to give his three children college educations at New York University, the University of Pennsylvania and University of Maryland. “I’d like a fair relocation,” he said. “All fair is fine. All my clients say, ‘Young, please stay here. Maybe [move] half a mile!’” Others aren’t so hopeful about moving. Razaq Raja, who owns a pizza and carryout shop around the corner from Young, said that if forced to move, his business would not survive. “We’ll lose the business if we go somewhere else,” he said. “My customers are around here. … I feel it’s really very sad for me. … I built this business from zero up. Four years I’ve been here.” The city’s position, according to Housing Commissioner Paul Graziano, is similar to the decision handed down in Berman v. Parker, a 1954 U.S. Supreme Court decision: The businesses at Uplands Triangle may not be blighted themselves, but because many of the properties around them are, it’s necessary to take them. “It was very clear that in order to address that area, we needed to address the entire frontage on Edmonson Avenue,” Graziano said. “I would argue that the Triangle is a mix of some very viable and very appropriate uses and some very troublesome uses. There’s a liquor store out there where a police officer was murdered. … It’s a mixed bag.” Elsewhere, it’s the same story. In Poppleton, a West Baltimore neighborhood that abuts the University of Maryland’s rapidly growing biotech campus, the city has condemned property owned by the J.M. Gillin Corp., which manufactures the aluminum enclosures that are attached to telephone poles as switch boxes. Owner James Gillin and a nearby church, also under threat of condemna-

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Yoo Young, in front of his auto repair shop at the Uplands Triangle in West Baltimore. He said the profits from his business, which has been on the same site since 1985, have allowed him to send three children to college.

tion, sued the city to challenge the validity of the urban renewal ordinance that authorized his condemnation. That case was litigated in November and awaits judgment. Gillin and a city lawyer involved with the case declined to comment for this story. Also in September, the city added property belonging to three businesses located in West Covington, a waterfront region on the Middle Branch of the Patapsco — Schuster Concrete, Ruppert Homes and Allied Waste Services — to the West Covington Urban Renewal Plan, a city law authorizing the city to seize the properties and redevelop them as a mixeduse complex. The city’s original plan was to locate a facility for sportswear company Under Armour Inc. on the site, but that fell through last year. Scott Woods, the CFO for Ruppert Homes, one of the companies under threat, said that as of late November, condemnation was still looming for his business. The three West Covington businesses have hired an attorney from Gildea & Schmidt LLC, to represent them, and help them present a plan to

the city that they hope will be a suitable alternative to condemnation. In the meantime, however, a plan by Ruppert Homes to build a set of townhouses with waterfront views is stalled. “We’re still in limbo,” Woods said. “[Condemnation] has not been withdrawn, but it hasn’t been acted upon. It’s still out there. … Obviously, that would need to be resolved before we started anything.” Same place, different perspective When the U.S. Supreme Court ruled in 2004 on the most important recent case surrounding eminent domain, Kelo v. City of New London, Conn., the city of Baltimore’s legal department filed an amicus curiae brief in support of the decision to uphold a city’s right to condemn property for purposes of economic development. “Petitioners’ arguments, if accepted, would threaten the ability of Baltimore and other cities to use the power of eminent domain to stimulate economic development in places where, for many decades, there has been little or no such development,” the document read. “If cities are prohibited from using the

power of eminent domain to stimulate economic development, then cities will not develop; and if cities do not develop, if they do not adapt to changing times and changing economic circumstances, city residents suffer.” Back in Old Fairfield, where Kevin McNeil’s land lies overgrown and strewn with trash, undeveloped and threatened with condemnation, it’s easy to see what the city lawyers who wrote those words might mean — it’s a patch of earth that has not adapted to changing times. In fact, it looks as if changing times have long since forgotten and abandoned Old Fairfield. But John C. Murphy, McNeil’s lawyer, looks at the same place and sees something completely different. “To me, [Old Fairfield] is like the greatest place in the world. It’s pure heavy industry, next to three superhighways and great port facilities,” Murphy said. “And the best part is, there’s not one thing there. No one to complain about it. It would develop fine if the city would just leave it alone. The idea that the city needed to do this is just lunacy.”