All for the 'taking'

Jim Horton was 21 when he joined his father’s company, Applied Coatings and Linings, soon after the manufacturer moved to its present location at 3224 Rosemead Blvd. in El Monte.

“We’ve been at this location since 1970. [We've] been in business since 1950. We have EPA permits and air quality permits specific to this location,” Horton said proudly of his family’s business, which is a world leader in the manufacture and application of coatings for large equipment like water pumps, filtration systems, roof and sign trusses and holding tanks, and boasts customers such as Caltrans, the city of Santa Monica and the California Department of Parks and Recreation.

“We do a lot of work for cities and counties,” said Horton.

But despite all this, on July 29 Horton became an unwilling player in an evolving dilemma for landowners everywhere who now can have their properties seized by the government under provisions of Kelo v. New London.

In that case, the US Supreme Court ruled that the city of New London, Conn., could take the property of nurse Susette Kelo and her neighbors because the land in question was going to create an economic benefit for the small New England town with the opening a pharmaceutical plant, a hotel and a number of other revenue-generating businesses on those sites.

In Horton’s case, El Monte city officials have notified him that they wants the land that Applied Coatings and Linings now occupies to construct a Home Depot store.

“When you move a business you basically start over. We would have to build a new plant to move into,” Horton said.

Public use

Eminent domain has been around since the earliest days of the Republic. The final clause of the Fifth Amendment to the US Constitution states, “Nor shall private property be taken for public use without just compensation.”

In the 214 years since ratification of the Fifth Amendment, the Supreme Court has mainly concerned itself with four issues regarding the “takings clause”: 1. Preventing the use of eminent domain for the “private purpose” of punishing or impoverishing an individual or group (those forced to sell); 2. Preventing the use of eminent domain for the “private purpose” of benefiting or enriching an individual or group (those determined to buy); 3. Assuring that property taken would be taken for “public use”; 4. Assuring that economic benefit to the public would accrue from the exercise of eminent domain.

Of these four requirements, only the first two still seem to be strongly supported by the Supreme Court.

In California, the state Constitution provides that, “Private property may be taken or damaged for public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner. The Legislature may provide for possession by the condemnor following commencement of eminent domain proceedings upon deposit in court and prompt release to the owner of money determined by the court to be the probable amount of just compensation.”

It is around the definition of “public use” that this tectonic shift in legal opinion is now is occurring.

For most of the 19th and 20th centuries, American courts interpreted “public use” narrowly, meaning large-scale public works projects: railroads, dams and, later, highways.

In 1954, the legal confines of eminent domain shifted with the landmark Supreme Court ruling in Berman v. Parker, which redefined the Fifth Amendment “takings clause,” stating private property could be taken for a public purpose with just compensation.

In that case, the public purpose was the elimination of blight through a slum clearance program in Southwest District of Columbia. The controversy was actually not over the homes that were slated for destruction, but Frank’s Department Store, owned by Max R. Morris. Morris argued that his store was not blighted and that giving his property to private developers violated “public use.” Morris died before his case reached the Supreme Court, and his son-in-law, Samuel Berman, continued the case. But in the end, the Supreme Court ruled in behalf of the redevelopment agency.

A few years later, “taking” would tear apart Pasadena. The construction of the Foothill (210) Freeway, saw to that in 1963. The 210 severed north and south Pasadena, displaced more than 4,000 residents and caused the destruction of thousands of homes.

Then, along with 1981 came the notorious Michigan Supreme Court ruling in Poletown Neighborhood Council v. City of Detroit. Residents of the working-class Detroit neighborhood of Poletown protested the sale of their homes to General Motors for construction of a large plant.

Poletown Neighborhood Council members claimed the seizures violated the Michigan Constitution. The city argued that the jobs and taxes resulting from the General Motor’s plant would far outstrip those generated by Poletown. Poletown lost and some 1,400 homes and more than 100 businesses were razed.

The heavily subsidized GM plant that was built in their place produced 6,000 jobs, far fewer than originally predicted. And on July 30 of this year the Michigan Supreme Court unanimously overturned its original Poletown ruling, declaring it a “radical departure from fundamental constitutional principals.”

Public purpose

Now comes Kelo v. New London. Susette Kelo moved to the Fort Trumbull neighborhood of New London Conn. in 1997. The nurse had bought and extensively remodeled a home. Her neighbor, Wilhemina Derym, had spent all of her 87 years in her home in the area, known as Fort Trumbull. The ruling stated that Kelo, Dery and seven other petitioners owned 15 properties in the community.

“There is no allegation that any of these properties is blighted or otherwise in poor condition,” wrote Supreme Court Justice John Paul Stevens, “rather, they were condemned only because they happened to be located in the development area.”

The pharmaceutical company Pfizer, Inc. recently built a multimillion-dollar research center near Fort Trumbull which the New London Development Corp. plans to surround with a conference center, a hotel complex, offices and condominiums.

Justice Stevens delivered the opinion of the court, stating, “Promoting economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.”

Justices Ruth Bader Ginsburg, David H. Souter, Anthony Kennedy and Stephen G. Breyer concurred, making way for the demolition of Fort Trumbull.

Justices Sandra Day O’Connor, Antonin Scalia, Clarence Thomas and William H. Rehnquist dissented, with O’Connor arguing that, “Even if there were a practical way to isolate the motives behind a given taking, the gesture toward a purpose test is theoretically flawed. If it is true that incidental public benefits from new private use are enough to ensure ‘public purpose’ in a taking, why should it matter, as far as the Fifth Amendment is concerned, what inspired the taking in the first place?”

More surprising were the dissents from Scalia and the even more conservative Thomas, who reacted to Kelo as might a card-carrying member of the NAACP: “Public works projects in the 1950s and 1960s destroyed predominately minority communities in St. Paul, Minn., and Baltimore, Md. … Urban Renewal Projects have long been associated with the displacement of blacks,” Thomas wrote.

Since it was decided on June 23, the ruling has created a firestorm of controversy around the country.

More than two dozen groups and individuals filed amicus, or friend of the court briefs on behalf the Fort Trumbull residents, among them the NAACP, the Southern Christian Leadership Council, The American Association of Retired Persons and the Farm Bureau.

And politicians have reacted quickly to the public outrage. In California, state Sens. Tom McClintock, R-Northridge, and Dean Florez, D-Shafter, have introduced a state constitutional amendment prohibiting eminent domain for anything other than public use. Republican Assemblyman Doug LaMalfa of Chico introduced the same amendment in the state Assembly.

Pasadena lawyer Christopher Sutton has worked on behalf of homeowners and business fighting eminent domain and considers the reaction to Kelo v. New London overblown. “My reading of Kelo is that it’s a draw, even though these particular property owners lost,” said Sutton. “Very few people reported on the Kennedy concurrence, and he was the swing vote. Justice Kennedy said this is a case-by-case analysis. He is going to rule with the city because the trial judge said this is a ‘public use.’ In another case, he may rule another way.”

‘A tool to be used’

Pasadena has reversed its thinking somewhat in the 40-plus years since construction of the Foothill Freeway. The last high-profile use of eminent domain was Plaza Pasadena, proposed in 1971, completed in 1981, then partially demolished in 1998 and reconstructed into the Paseo Colorado mall.

According to Pasadena Mayor Bill Bogaard, “The whole tide of political thinking has changed.” Bogaard dismisses eminent domain as an engine for economic development in Pasadena, but for the construction of public works such as a school or post office, it is “a tool that would be rarely used but not completely given up.”

Pasadena seems like a haven for property rights advocates, but throughout California, attitudes and government action differ radically. During 2000, The Wall Street Journal’s Real Estate Journal cited 1,090 eminent domain cases filed in California.

The Coalition for Redevelopment Reform cites at least 223 California properties that have been condemned “for the benefit of other private parties” between 1998 and 2002, with affected communities ranging from affluent Diamond Bar to working class Garden Grove.

On its Web site, Garden Grove boasts that it is home to the Rev. Robert Schuller’s “Hour of Power” and lists six proposed major development projects. However, the site fails to state that the Orange County Register recently named Garden Grove as one of the worst abusers of eminent domain in the US.

Meanwhile, back in El Monte, Horton has some concerns about the coming confrontations with Home Depot and city officials over his property of 35 years.

“There are very few locations for this [business]. We need close freeway access,” said Horton, referring to the many trucks that drop off and pick up goods and equipment.

Then there is the matter of what would become of the company’s 22 workers.

“We have a great group of people. The average employee has been here 15 to 20 years. There is virtually no employee turnover,” Horton said.

Only time will tell whether “takings” for “public use” and “public purpose” become routine, or if the courts side with home and business owners in different cases?

In the meantime, Jim Horton and thousands of Californians wait with worry for those answers.