Study Cites Eminent Domain Abuses

Posted on August 15, 2002 | Type: In the News
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East Valley municipalities have repeatedly used Arizona's eminent domain laws to seize private property for public redevelopment projects.

Often, those projects have led to battles among municipalities, businesses and homeowners. Just as often, the projects intended to blossom from eminent domain haven't developed as planned. Some haven't developed at all. With that as a backdrop, the conservative Goldwater Institute is releasing a study Friday claiming the state's eminent domain laws lead to abuses of private property rights.

The study spotlights actions by Mesa and Scottsdale, which have large downtown redevelopment areas, as examples of eminent domain abuse.

"Now is the time to stop this excessive government intrusion into private land deals and take this power away," said Jordan Rose, the study's author and a land use and zoning attorney.

The study calls for the Legislature to abolish a 1997 statute allowing the creation of redevelopment areas - places where municipalities can seize private property and turn it over to developers. Instead, according to the study, private land should be taken only for clear-cut public uses such as building roads and bridges.

It is in the redevelopment areas where property rights abuses are rampant, the study claims.

Mesa's challenges

Mesa's downtown redevelopment area covers a square mile and includes an additional 300 acres bordering downtown. Several projects slated for that area for which private land was seized have either stalled or fallen apart.

The city has captured national attention for its attempt to seize and raze two shops near downtown for a city-engineered redevelopment project.

Randy Bailey, owner of Bailey Brake Service, 18 N. Country Club Drive, and Patrick Dennis, owner of the Maaco Auto Painting and Bodyworks shop, 434 W. Main St., are fighting Mesa's plan to take their property on the northwest corner of Main Street and Country Club Drive and turn the land over to three other local businessmen who want to build a hardware store and an electronics store.

Lawyers for Bailey and Dennis argue that the city is violating their property rights guaranteed by the Arizona Constitution. The project is on hold while the courts untangle the legal issues. Maricopa County Superior Court Justice Bethany Hicks ruled this week that Mesa must wait at least six months to seize the Maaco property while the Arizona Court of Appeals rules on the Bailey property.

Mesa also spent $6 million and wielded eminent domain to help clear 30 acres near the southwest corner of University and Mesa drives for a proposed resort hotel and water park project that went belly-up. Today, only a handful of buildings remain on the dirt lots where entire neighborhoods once stood.

Joe Padilla of the Mesa City Attorney's Office said 90 percent of the houses on the 30-acre site were in rough shape, and all the property owners were fairly compensated for the property.

But not all Mesa eminent domain projects have ended up as vacant property.

"We've had a lot of successes of eminent domain," said Craig Crocker of Mesa's Real Estate Office.

Mesa officials point to the site of the planned downtown arts center at Main and Center streets. Eminent domain was used to acquire two properties at the site - including a motel on the property. Construction is under way on the facility.

Scottsdale's challenges

In Scottsdale, city leaders have taken enormous criticism for a once-promising redevelopment program that has largely fallen flat.

In nine years since the first boundaries were drawn, only two major projects have materialized within the redevelopment districts - the expansions of Scottsdale Healthcare Osborn hospital and Scottsdale Fashion Square mall. The city has four redevelopment areas that encompass more than 900 acres in downtown and south Scottsdale.

The redevelopment designation keeps property owners in a state of limbo, critics charge. Some merchants claim they are hesitant to reinvest in their properties for fear of a future city-endorsed project that would raze their buildings. Others claim the redevelopment designation lowers property values and makes it difficult to sell.

"The bottom line is they need to get rid of redevelopment so people can have a level of comfort for reinvesting," said Judy Peters, a downtown property owner.

A reconstituted City Council is scheduled to vote in September whether to scrap the boundaries in one area of downtown. The scheduled meeting follows a pair of formal protests by dozens of business owners who want the redevelopment boundaries scrapped.

"It's one thing to condemn land for a true public purpose," said freshman Scottsdale City Councilman Bob Littlefield. "It's wrong for the city to turn around and give it to another developer."

In addition to wielding eminent domain, municipalities that designate redevelopment boundaries can tap into other resources such as property-tax abatements. But even those tools have gone unused in Scottsdale while the redevelopment boundaries have remained.

"In a lot of ways, we really haven't taken advantage of some of the opportunities," said Dave Roderique, economic vitality director.

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