National City, Calif. - Background

 

Litigation Backgrounder

Knocking Out Eminent Domain Abuse: Youth Gym Files Suit Against National City, Calif.

 

The Issue in a Nutshell

Imagine you had to defend yourself right now for a battle that might not be waged until years in the future.

That is the dilemma the Community Youth Athletic Center (CYAC) faces as it goes to court now to prevent the city from taking its building and handing it over to a private developer.  That might not happen for another 10 years, but—like countless other Californians who face eminent domain for private gain—it has exactly three months to protect its rights for the next 10 years.  If the CYAC does not step into the ring now, it will be defenseless when, as seems inevitable, National City condemns the gym one day.

On September 25, 2007, the Community Youth Athletic Center (CYAC), represented by the Virginia-based Institute for Justice, filed suit in California Superior Court challenging a July 17, 2007 ordinance of National City, Calif., that renewed a bogus “blight” designation against hundreds of properties, including the gym, and reauthorized the use of eminent domain for ten years.  The purpose of the blight re-designation and eminent domain reauthorization is to enable National City to transfer so-called “blighted” property from its rightful owners to private developers for their for-profit use.

But is the city’s possible use of eminent domain against the successful gym really something to worry about?  In 2005, National City approved a luxury condo project on the gym’s land and immediately threatened it with eminent domain.  Now, in response to a firestorm of public outrage, National City Mayor Ron Morrison has been trying to assure the gym that the City will not use eminent domain.  That would be a lot more reassuring if the City had not just given itself the power to take the gym any time in the next 10 years.  It is also irrelevant that the developer is now promising to build around the gym.  Neither the promises of the Mayor nor of the developer are legally enforceable, and if the gym does not fight back now, it will not be able to when circumstances change and National City decides that it wants the CYAC’s property after all.

National City is merely doing what eminent domain abusers do all the time:  trying to convince fearful citizens not to exercise their legal rights by promising that eminent domain will never be used against them.  Unfortunately, people all over America regularly have their property condemned for a fancy condo development or big box store after these sorts of promises are forgotten and the right to mount a legal challenge has expired.

The CYAC’s lawsuit challenges the July 17, 2007, eminent domain ordinance under the U.S. and California Constitutions, as well as state redevelopment law:

  • National City violated its citizens’ constitutional due process rights by withholding important information from the public, so that CYAC and ordinary citizens would not have what they needed to challenge the ordinance before it passed.
  • National City enacted the ordinance to use eminent domain for the constitutionally illegitimate purposes of economic development and raising tax revenue.
  • National City violated California law by totally ignoring the dozens of requirements that it have actual evidence to support its blight findings.

The aim of this lawsuit is not only to defend the gym against eminent domain abuse, but also to establish precedent that will protect the property rights of all Californians.

Introduction

In a state already notorious for eminent domain and redevelopment abuse, National City, Calif., is distinguishing itself as among the very worst.  On July 17, 2007, after decades of keeping two-thirds of the city under a bogus “blight” designation, National City applied the bogus blight label yet again to nearly 700 properties and reauthorized the use of eminent domain against them for ten more years.[1]But, as any visitor can attest, National City’s sprawling “blight” zone includes countless flourishing small businesses, churches, schools, public buildings and service organizations.  Granted, the property of the low- and moderate-income residents in the city may not be the most stylish or fashionable, but parcel after parcel provides each of the property owners a foothold into the American Dream—a secure place to call their own and build their future.

The absence of widespread genuine blight reveals the true purpose behind National City’s serial blight declarations:  (1) exposing the property of its citizens to eminent domain so it is available to land-hungry private developers; and (2) keeping millions of dollars in debt and property taxes flowing to the municipal redevelopment agency.

The Community Youth Athletic Center (CYAC) is one of many National City property owners now in the crosshairs of eminent domain.  The CYAC is a non-profit, all-volunteer youth boxing and mentoring program serving at-risk kids.  A few years ago, with the help of generous sponsors, the CYAC bought a little building in National City in the heart of its “blight” zone.  Then, two and a half years ago, National City promised the CYAC’s property to an influential private developer who intends to build high-rise luxury condos for the wealthy.  The re-declaration of blight and re-authorization of eminent domain is a prelude to the inevitable condemnation of the gym, if not for the current developer then for someone else.

On September 25, 2007, the CYAC, represented by the Institute for Justice, filed suit in state court under the U.S. and California Constitutions and under California redevelopment statutes in order to invalidate the bogus blight designation and the threat of eminent domain.  The gym is fighting back not only for itself, but also to establish precedent that will protect property owners across California. 

 

Setting the Record Straight

On June 19, 2007, National City held a public hearing on objections to its proposed blight designation and reauthorization of eminent domain.  The CYAC filed a 31-page written objection along with a six-volume appendix.[2]

This objection letter set forth why the proposed 2007 Amendment violated the U.S. and California Constitutions and California redevelopment statutes.  In a nutshell, the CYAC explained:

  • National City withheld critical information from the public that was necessary to present a fully informed and effective objection.
  • The Report upon which the City Council relied in adopting the blight re-declaration and eminent domain reauthorization was so methodologically flawed as to be meaningless.
  • There was no evidence that purported blight could not be remedied without eminent domain.
  • The entire process was a sham in which the conclusion of “blight” had been predetermined.

The CYAC also explained to the public that it was objecting to the blight re-declaration and reauthorization of eminent domain because the gym had been continuously threatened with eminent domain since February of 2005 when National City gave developer Jim Beauchamp permission to build a luxury condo project for the rich on the gym’s land.

The CYAC’s plight attracted significant public support and media attention.  Sports Illustrated columnist Rick Reilly, one of America’s most respected sportswriters, wrote his August 13, 2007, column about the CYAC and eminent domain abuse.[3]

In response to this negative coverage, Mayor Ron Morrison claimed that National City had never threatened the CYAC with eminent domain.[4]

The Mayor’s statements are demonstrably false.[5]  On February 22, 2005, the National City Community Development Commission (CDC) approved Beauchamp’s condo project.  On February 28, 2005, the CDC sent the CYAC a letter stating that it “will now receive a final offer to acquire your property by the developer.”[6]  The letter then goes on to state that if the CYAC is “unable to come to terms with the developer on the sale of your property, under the approved Owner Participation Agreement, the developer may request that the CDC proceed directly with the acquisition of your property[.]”

Soon after the CDC sent this letter, Beauchamp’s private lawyers started their own series of eminent domain letters.[7]  The first of these, for example, was sent on April 25, 2005, and gave the CYAC one week to accept a below-market final offer or face immediate condemnation.  The letter concluded that “If I [Beauchamp’s lawyer] do not hear from you by May 2, 2005, I will assume that you are not interested in accepting Mr. Beauchamp’s offer and I will request, on behalf of the Beauchamp Family Trust, that the CDC proceed with appropriate steps under the law to acquire the Property."

After reviewing the evidence in black and white, the San Diego Union-Tribune concluded that the CYAC was right.[8]

Why The CYAC Must Fight Now

In response to a massive public backlash, both National City and the developer have retreated from their plans to demolish the CYAC for luxury condos.  Mayor Ron Morrison has said that National City will not use eminent domain against the CYAC and Jim Beauchamp has said that he will build around the gym.[9]  This has led some to question why it is necessary for the CYAC to file suit against National City.

The CYAC must file suit because it has one chance, and one chance only, to challenge a blight designation and the authorization of eminent domain.  Under California law, the gym has until October 15, 2007, to challenge the July 17, 2007, National City ordinance.[10]  If no suit is filed, then the ordinance, including its blight finding and authorization of eminent domain, are presumed valid for ten years.  This means that, for all practical purposes, neither the CYAC nor any other property owner in the blight zone will be able to challenge the use of eminent domain for a decade.

It is important to understand that Mayor Morrison’s promises and the promises of the developer—both of whom had no problem threatening condemnation against the CYAC until all of the negative publicity—are not enforceable.  Thus, if the developer changes his mind, or a new developer comes along in the future, nothing is to stop a different National City administration, or perhaps even the current one, from deciding that condemning the CYAC is a good idea after all.  In fact, assuming Beauchamp does build upscale condos around the CYAC, it is hard to imagine that the gym’s modest little building, and the low-income kids who use it, will not one day strike National City planners as incompatible with the “General Plan” or “Five-Year Plan” or whatever other master plan the City invokes in deciding to use eminent domain after all.

Consider the fate of the Fraternal Order of Eagles, a nationwide service organization.  Their National City chapter, which has been in town since the 1950s, is being condemned for luxury condos.[11]  National City initiated condemnation in 2006 under a 1995 blight designation.  There were no plans in 1995 to condemn the Eagles when National City enacted that designation.  The Eagles now have virtually no defense to the condemnation because the blight label is conclusive and blight eradication is a constitutionally established purpose for which eminent domain may be used.

The use of eminent domain against the Eagles shows that National City does condemn non-profits and does use eminent domain years after a blight designation is passed.  This is the fate the CYAC is trying to avoid.

Thus the CYAC cannot afford to trust the promises of the very same politicians and developers who, until very recently, thought that at least threatening eminent domain against the gym for luxury condos was a terrific idea. 

Rise of the Redevelopment Machine

California enacted its first blight law in 1945.[12]  The purpose of what is now known as the Community Redevelopment Law[13] was to remedy unsanitary urban slums that posed a genuine threat to the health and safety of the public.  Like blight laws all over the nation, the Community Redevelopment Law grants local governments the authority to use eminent domain to seize private property and transfer it to another private owner in the hope that the latter will cure the purported blight.[14]

Since its inception, California’s Community Redevelopment Law has been in serious tension with rights guaranteed by the federal and state constitutions.  Both provide that government can only invoke eminent domain to take private property for a legitimate “public use,”[15] which traditionally meant something like a road or a public park.  Though blight eradication has been deemed a “public use” for which eminent domain may be employed, the first California case to consider the constitutionality of transferring “blighted” property to a different private owner warned that government planners should never apply the redevelopment power simply because they think they can make better use of a citizen’s property than he or she can.[16]  To do so, the court observed, would subordinate “fundamental rights” to whatever “currently attractive projects” had caught the fancy of government officials.[17]

Despite this stark warning, redevelopment in California often has little to do with true blight.  Instead, redevelopment mutated into a multi-billion dollar profit machine in which hundreds of redevelopment agencies and thousands of private developers, lawyers, consultants and bankers continually strip valuable property from people of modest means and give it to big business.  Blight eradication, in other words, is often just a pretext for doing precisely what the federal and state constitutions were designed to prevent:  taking property from Jack and simply giving it to Jill.

The scope of the California redevelopment machine is enormous.  There are 395 active redevelopment agencies in California (about 80 percent of municipalities have one) overseeing 759 blight zones.[18]  In fiscal year 2005-2006, these redevelopment agencies owned $12.9 billion worth of property (a $1.5 billion dollar increase over the previous year) and had $8.7 billion in revenues (up $1.5 billion from the previous year).[19]

The engine driving the redevelopment machine is debt and taxes.  Under California law, once a local government declares an area “blighted,” its redevelopment agency gets a property tax windfall.  In a scheme known as Tax Increment Financing, redevelopment agencies get 100 percent of the property tax revenue from a blight zone over and above the “baseline” amount of property taxes the area generated when it was first declared blighted.  For example, suppose that an area produced $100 million in property taxes in 1990 when it was first declared blighted, but by 2007, because assessed property values have risen, was generating $250 million in property taxes.  The county would still be eligible for only $100 million and the redevelopment agency would get $150 million, even if there is no evidence the redevelopment agency had anything to do with the increase in property values.

California’s redevelopment agencies now siphon off most of the property taxes from the hundreds of blight zones across the state.  In fiscal year 2005-2006, for example, the total assessed value of property in California’s blight zones was $537 billion.[20]  Because of Tax Increment Financing, however, redevelopment agencies received 100 percent of the property taxes on $381 billion of this total.[21]  Overall, redevelopment agencies capture about 10 percent of all property taxes collected in California.[22]

A redevelopment agency, however, is entitled to its property tax windfall only if it goes into debt to implement the redevelopment plan.  By 2004, redevelopment agencies in California had a total debt of $61 billion, and historical trends show that agency debts double about every 10 years.[23]  The addiction to debt and property taxes has caused outright financial insanity in some communities.  In fiscal year 2003-2004, for example, the redevelopment agency of La Quinta, Calif. (pop. 33,104), reported nearly $1.6 billion in debt.[24]  Overall, in fiscal year 2003-2004, about 45 cents on every dollar spent by a California redevelopment agency went to debt payments.[25]

The perverse financial incentives of California’s redevelopment laws mean that redevelopment agencies:  (1) want their blight zones to be as large as possible; (2) want their blight zones to last as long as possible; and (3) want to incur massive debt.

Cities, in this context, have perverse incentives of their own.  They always want to replace low-tax land uses, such as single-family homes and small businesses, with tax-intensive uses, such as high-rise condominiums and big box stores.[26]

The absence of any concrete proof that redevelopment does any good makes California’s redevelopment machine one of the greatest scams of all time.  Although redevelopment advocates like to point out shiny new box stores, there are a few things they do not like to talk about.  First, studies repeatedly show that redevelopment projects are net economic losers once the true costs are tallied in terms of jobs and businesses destroyed, and tax breaks and other subsidies to big business.[27]  They also do not talk about how the preference for sales tax-generating retail mega-stores creates low-skill service jobs and destroys small businesses that frequently require skilled labor, as is the case in National City where entrepreneur-operated businesses could be destroyed to make way for the same kind of homogeneous humongous development one finds in a growing number of communities nationwide. Redevelopment agencies also do not talk about the personal implications of taking away someone’s cherished home or an entrepreneur’s small business. Finally, the last thing redevelopment apologists don’t want to discuss is the fact that redevelopment overwhelmingly targets the poor and minorities.[28]

National City, Calif.:  National Poster Child for Redevelopment Abuse

The destructive incentives for cities and their redevelopment agencies have given rise to the ravenous redevelopment machine that every year takes more and more property from low- and middle-income California residents and transfers their land to big business.  Nowhere is this phenomenon more visible than in National City, Calif.

National City is a predominately Hispanic, working-class city of 55,000 in southern San Diego County.[29]  It is also in a state of continuous and seemingly never-ending government-imposed redevelopment.

Between 1969 and 1978, National City declared four distinct blight zones within its boundaries.[30]  In 1981, National City merged these into a single mega-blight zone encompassing everything between Interstates 5 and 805.  This amounts to about two-thirds of the city.[31]  Then, following other intervening amendments, National City expanded its blight zone again in 1995 to capture everything to the west of Interstate 5.[32]  The National City Community Development Commission (CDC), which is the municipal redevelopment agency, has tens of millions of dollars in assets, including 30 or so properties.

The 1995 redevelopment plan authorized the use of eminent domain for 12 years.  That authorization was set to expire on July 18, 2007.  The expiration of eminent domain authority would present a serious problem to the CDC because it had agreements, and even deposits on hand, from various developers.  Without eminent domain at its disposal, it would complicate the CDC’s ability to fulfill its contractual obligations to the developers.

Sometime in early 2007, the CDC decided to initiate the process of amending the 1995 redevelopment plan to re-authorize eminent domain for another 12 years over nearly 700 properties.  Under California Redevelopment Law, a redevelopment agency like the CDC can only recommend to the city council to re-authorize eminent domain by ordinance if the agency determines, based on real evidence, that there is significant remaining blight that cannot be fixed without eminent domain.[33]

Instead of doing an objective analysis, in late March of 2007, the CDC simply instructed its longtime redevelopment consultant, Rosenow Spevecek Group (RSG), to “begin research to substantiate blight and fold into Report to [City] Council.”[34]  RSG employees then did a superficial survey of the 700 or so properties and spoke to some National City employees.[35]  The RSG employees plainly understood that their job was simply to go out and find evidence of blight to substantiate a predetermined conclusion.  For example, in an April 24, 2007, email, an RSG employee explains to a National City employee that RSG would like information about building, trash, and other municipal code violations because RSG is “trying to prove existing blight and [is] most concerned with code violations.”[36]  RSG prepared the CDC’s Report to City Council that became the basis of the July 17, 2007, ordinance enacting the amendment.

Before the City Council could act on the CDC’s recommendation to amend the 1995 redevelopment plan by re-declaring 700 properties blighted and extending eminent domain, National City and the CDC had to hold a public hearing on the proposal, which they scheduled for June 19, 2007.[37]  The purpose of the public hearing was to provide an opportunity for citizens to voice their objections to the proposed blight designation and extension of the eminent domain power.  This hearing was very important because it was the only time for anyone to object formally to the blight and eminent domain proposal.  In addition, a person could not file a lawsuit to challenge the redevelopment plan amendment after the fact unless he or she had made a specific objection at the public hearing.[38]

Despite the importance of the public hearing, National City would not provide the public with the information it needed to make an effective objection.  On May 23, 2007, the CYAC made a formal request under the California Public Records Act for the Report to City Council the CDC was doing and all of the data National City intended to rely on in amending the redevelopment plan.[39]  The CYAC was repeatedly told in the weeks leading up to the public hearing that this information was not available even though a CDC email indicates that RSG provided the CDC with the Report to City Council and other documents by June 5, 2007.[40]  The Report to City Council itself indicates that RSG finished its property-by-property survey of the amendment area by the end of April.[41]

National City never released the Report to City Council to the general public and gave it to the CYAC with only three business days before the June 19, 2007, public hearing.  The CYAC’s attorneys at the Institute for Justice, and two planning experts, worked around the clock to prepare the CYAC’s 31-page objection and six-volume appendix.[42]

Amazingly, it appears that the City Council only received the CDC’s Report to City Council on June 14, 2007, as well.  This could not possibly have been enough time to give the Report any meaningful consideration.  The failure of the City Council to exercise proper oversight of the redevelopment process is itself an independent violation of California Redevelopment Law.[43]

The CYAC’s objection letter identified serious breaches of constitutional and redevelopment law in National City’s proposed amendment.  The letter also explained that the methodological problems with the Report to City Council’s conclusions on blight were so serious as to render the conclusions meaningless.

The June 19, 2007, hearing was so heavily attended that people overflowed into the lobby.  Many people spoke against the redevelopment plan.  No one supported it.  The City Council emphasized that the use of eminent domain was “necessary” to ensure National City’s economic development even though economic development is likely not a constitutional use of eminent domain in California.[44]

Despite the CYAC’s substantial written objections, National City simply had RSG, which is not a law firm, prepare a superficial response over two days.[45]

On July 17, 2007, a quorum of the City Council, with two members abstaining because of conflicts of interest, enacted Ordinance 2007-2295, which approved the proposed amendment with the small modification that eminent domain would be in effect only for ten years instead of 12.[46]

National City declared nearly 700 properties “blighted” despite the fact that property values have soared.  In 2001, the average National City home sold for $186,000.  By 2006, the average price had climbed to $443,000.  With respect to commercial properties, the average price in 2001 was $351,000, while in 2006 it was $1.2 million.[47]  Each of these pieces of property may not be put to its so-called “highest economic use,” but each provides the owner as well as those who work or live on that land the opportunity for a better life.  If that property is taken away, only to be handed over to someone else with more wealth and political influence, an entire community of industrious but relatively poor individuals will be disenfranchised.  They will be shamefully cut off from a future of hope and opportunity.

“Don’t K.O. Our Kids!”

The plight of the Community Youth Athletic Center (CYAC) in National City vividly illustrates what the California redevelopment machine does to people.

The CYAC began in 1991 in Carlos Barragan’s backyard, but over the years has opened its doors to more than 1,000 youngsters.  The program currently serves between 50 and 75 children, but at any given time the waiting list of kids wanting to join in is always huge.  Carlos and his son, Carlos, Jr., who goes by JR, had had enough of the drugs and gang violence in their neighborhood.  They saw too many boys lost first to the streets and then to the prisons.  They decided to do what they could to help.

But Carlos and JR were not lawyers or politicians or activists.  They were construction workers.  So they had to figure out what they could offer kids who had found surrogate families in the Latino gang subculture that prevails in many working-class neighborhoods throughout southern California.  The Barragans decided to teach something they knew well:  boxing.  Their aim was to use boxing as a way to instill values like discipline, respect and self-control.  They also wanted to give kids, especially those from abusive and dysfunctional homes, a safe place to go after school.

So Carlos and JR hung a punching bag in the back yard and discovered that if you build it, they will come.  Pretty soon they were overrun with kids, both boys and girls, who would crowd into their yard after school to jump rope, work the heavy bag, and dream of being Rocky Balboa.

It was not long before their boxing program outgrew the Barragan’s backyard, so they rented a two-car garage with their own money and set up a little gym.  Carlos and JR would work construction jobs all day and then spend two or three hours a night coaching.  The Barragans were soon joined by other volunteers and local law enforcement agencies donated equipment.  Everyone who works out with the Barragans must show Carlos and JR their grades and must commit to improving them.

In 2000, a local TV station ran a piece on the CYAC.  This coverage inspired UPS to award the gym a $100,000 grant for equipment.  The Barona Band of Mission Indians, a longtime supporter that regularly hosted boxing events for the kids at the tribe-owned casino, generously gave the boxing program $170,000.  This money, combined with the UPS money, enabled the new non-profit to buy a 3,700 square-foot building in downtown National City along National City Boulevard, the city’s main thoroughfare.  The building had previously housed a gun store.

In January 2002, after much volunteer labor and donated materials, the boxing club officially opened at its present location as the Community Youth Athletic Center.  Since then, the CYAC added a computer room and a mentoring program.  The CYAC holds one fundraiser each year at the Barona casino where regional law enforcement officers stage exhibition bouts in the “Battle of the Badges” (slogan: “To Protect, Serve and Pummel”), raising about $50,000.

The CYAC remains steadfast in its commitment to staying where it is and preserving what it worked so hard to build.

The CYAC’s Legal Claims

The CYAC intends to prove that National City’s re-declaration of blight and reauthorization of eminent domain violate the U.S. Constitution and the Constitution and laws of California.

First, National City violated federal and state constitutional rights to due process, as well as state redevelopment statutes, by withholding the Report to City Council until three business days before the June 19, 2007, public hearing and not releasing any of the underlying data at all.  These violations prevented the CYAC and other members of the public from making a fully informed objection to the redevelopment plan amendment.

Second, National City reauthorized eminent domain for the unconstitutional purpose of economic development and raising taxes.

Third, National City and the CDC violated literally dozens of redevelopment statutes in so haphazardly re-declaring almost 700 properties blighted and reauthorizing eminent domain.

Finally, National City violated the California Public Records Act by not turning over important public information concerning the redevelopment process that the CYAC repeatedly requested.

Eminent Domain Abuse:  An Overview

The California redevelopment machine is out of control because it lacks an effective constitutional brake.  During the past 50 years, courts at the state and federal levels have steadily abdicated their essential duty of enforcing constitutional limitations on eminent domain.  Instead, they have acted as a rubber stamp.

The demise of the U.S. Constitution’s “public use” clause began with the U.S. Supreme Court’s 1954 decision in Berman v. Parker in which Washington, D.C., used eminent domain to renew what were in those days called “slums.”[48]  Rather than rule narrowly that the city could condemn decrepit tenements that presented a genuine threat to public health, the Supreme Court instead decided that the constitutional term “public use,” which had a specific historical definition, actually means “public purpose.”  Worse yet, the Supreme Court also decided that local governments wielding eminent domain, rather than courts, get to decide what constitutes a “public purpose.”  Thus, a vital constitutional check on government power was lost.

The erosion of the “public use” clause in the U.S. Constitution culminated in the 2005 ruling in Kelo v. City of New London, justly one of the most reviled decisions in U.S. Supreme Court history.[49]  In Kelo, the City of New London, Conn., decided to seize non-blighted homes and turn them over to another private party in the hope that the new owners would use the land in a way that could create jobs and pay higher taxes.  The U.S. Supreme Court upheld the taking, ruling that even a mere promise of generating “public benefits,” whether those benefits are likely or not, justifies taking someone’s home and turning it over to another private party for that party’s private profit.  Under Kelo, a city can measure its citizens’ worth in how much they pay in taxes, meaning that a family can be uprooted, cast aside, and its home destroyed if someone richer comes along who can be taxed more heavily.  And so, just as “public use” was blurred to mean “public purpose” in Berman, “public purpose” was further blurred into “public benefit” in Kelo.  And with each of these steps, the fundamental right to own property, which was so important to the Founders and has been essential to our liberty and prosperity, was undermined.

In her pointed dissent, Justice O’Connor explained the grave implications of what the majority had done:  “Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”  National City’s actions demonstrate clearly the “fallout” that Justice O’Connor had in mind when she wrote in her dissent, “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random.  The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.  As for the victims, the government now has license to transfer property from those with fewer resources to those with more.”  The Institute for Justice documented this in a recent study called “Victimizing the Vulnerable:  The Demographics of Eminent Domain Abuse” that employed U.S. Census data to show that the poor and minorities are disproportionately targeted with eminent domain for someone else’s private gain.[50]

The backlash against Kelo was swift and nearly unanimous.  Public opinion polls consistently show that more than 80 percent of Americans disapprove of using eminent domain for private gain, as is going on in National City.[51]  As of this writing, 42 states, including California, have reformed their statutes to some degree to afford property owners greater protection against the wrongful seizure of their property.[52]  Finally, the two state supreme courts that have squarely considered the Kelo question unequivocally rejected the use of eminent domain for economic development.[53]

The California Supreme Court, for its part, has not taken a case in three decades addressing statutory and constitutional limitations on redevelopment.[54]  With so many Californians, many of them economically disadvantaged and minority, facing gross eminent domain abuse, the time is ripe for the California Supreme Court to consider this important issue and rein in this awesome power of government.

The Institute for Justice Steps into the Ring

The Institute for Justice has stepped into the ring with the CYAC to vindicate not only the gym’s rights, but also the similar rights of everyone in California who is threatened by eminent domain abuse.

The Institute for Justice is the nation’s leading law firm on the issue of eminent domain abuse.  In the 1990s, IJ successfully defended Atlantic City homeowner Vera Coking when Donald Trump had convinced a state agency to take her home so he could use the land for private limousine parking for his casino.  In 2005, the Institute for Justice argued the Kelo v. City of New London eminent domain case before the U.S. Supreme Court, and continues to try to roll back that decision in courts and state legislatures nationwide.  In 2006, the Institute for Justice won the Ohio eminent domain case of Horney v. City of Norwood, the first state supreme court case to be argued and decided post-Kelo, which unanimously restored significant and commonsense restrictions on government’s power of eminent domain.[55]

Defending the CYAC is part of the Institute for Justice’s commitment to strategic litigation that will help restore judicial protection for private property rights.  The U.S. Constitution and every state constitution include explicit protections for property rights because they are the foundation of all our rights.  Indeed, for most Americans, ownership of a home or business is the cornerstone of the American Dream and their efforts to provide for their families.  Thus the wrongful use of eminent domain to transfer property from one private owner to another does not simply destroy a home or business.  It very often destroys a life, one patiently built through years of hard work.  The Institute is especially concerned about how private-to-private transfers, as in the case of National City, almost always target people of relatively limited economic means and almost always benefit people of considerable economic means.

Litigation Team

The lead attorney will be Institute Senior Attorney Dana Berliner, who was co-counsel in the Kelo case and who successfully argued on behalf of Norwood, Ohio, property owners before the Ohio Supreme Court.  Joining her is Staff Attorney Jeff Rowes, who is currently litigating on behalf of Long Branch, N.J., property owners in defense of their homes.

Richard M. Segal, Brian D. Martin, and Nathaniel R. Smith of Pillsbury Winthrop Shaw Pittman, L.L.P., ably serve as local counsel.  Segal and IJ worked together in a successful constitutional challenge to California's former requirement that African-style hair-braiders obtain cosmetology licenses to be allowed to braid hair. 

Donna Matias, director and adjunct professor of the Entrepreneurship Clinic at the University of San Diego School of Law, previously assisted in the early stages of the case.

The Institute for Justice has litigated eminent domain cases nationwide, successfully preserving the rights and properties of the politically and financially disenfranchised.  Among IJ’s victories are:

  • Wells v. City of Riviera Beach—In May 2007, the Institute for Justice successfully defeated an attempt in Riviera Beach, Fla., to displace more than 5,000 residents for a massive private development project that included a yacht marina, luxury condominiums and upscale hotels.
  • City of Norwood v. Horney—In a resounding repudiation of the U.S. Supreme Court’s decision in Kelo v. City of New London, the Ohio Supreme Court unanimously ruled in July 2006 that the city of Norwood acted unconstitutionally by taking the homes of the Institute for Justice’s clients.
  • Brody v. Village of Port Chester—In December 2005, the 2nd U.S. Circuit Court of Appeals ruled that the Village of Port Chester violated IJ client Bill Brody’s constitutional rights by condemning his property for private development without giving him notice of his one opportunity to challenge the condemnation. 
  • City of Tempe v. McGregor—In October 2005, as a result of the Institute for Justice Arizona Chapter’s legal defense, Arizona courts rejected the city of Tempe’s attempt to condemn private property for the benefit of a wealthy private developer.
  • Kelo v. City of New London—Just two years after the landmark U.S. Supreme Court ruling in Kelo v. City of New London that allowed private property to be taken for economic development, 41 states have tightened their restrictions on eminent domain.  In 2007, IJ client Susette Kelo’s little pink cottage—the home that became a national symbol of the fight against eminent domain abuse—was moved rather than allowing it to fall to the government’s wrecking ball.
  • Saleet v. City of Lakewood—In 2004, as a result of an IJ lawsuit representing 17 home and business owners, citizens from the city of Lakewood voted down an eminent domain abuse project that would have demolished an entire neighborhood for high-priced condominiums and an upscale mall.  Shortly afterwards, Lakewood voters rejected the bogus blight designation, which applied to 93 percent of the city.
  • City of Mesa v. Bailey—In September 2003, the Arizona Court of Appeals unanimously struck down the City of Mesa’s use of eminent domain for private gain.  The city attempted to seize a small car repair shop so a privately owned hardware store could relocate.
  • Mississippi Major Economic Impact Authority v. Lonzo Archie—IJ represented the Archie family in their successful fight to save 24 acres of property and several homes they owned since 1941.  The state tried to seize the Archie family’s private property in 2001 for the benefit of Nissan Motor Corporation, to which it had already given more than $290 million in subsidies and tax breaks and approximately 1,300 acres of land.
  • Pittsburgh Fifth and Forbes—IJ helped saved more than 120 small businesses in downtown Pittsburgh in 2000 from the mayor’s plan to abuse eminent domain.
  • Casino Reinvestment Development Authority v. Banin—In a classic David versus Goliath battle, the Institute for Justice scored a major victory for property rights in July 1998 when the New Jersey Superior Court ruled a state agency cannot condemn widow Vera Coking’s home of 37 years and give it to Donald Trump for his private development. 

For more information, please contact:

John Kramer (Vice President for Communications)
Institute for Justice
901 North Glebe Road, Suite 900
Arlington, VA  22203                                               

(703) 682-9320 ext. 205
jkramer@ij.org



[1] Ordinance 2007-2295.

[2] This document is on file with the Institute for Justice.

[3] This document is on file with the Institute for Justice.

[4] Tonya Sierra, Developer Won’t Oust Popular Gym; he’ll build around it, San Diego Union-Tribune, August 30, 2007 at B-1.

[5] In addition to saying that National City never threatened the CYAC with eminent domain, Mayor Morrison has also inconsistently claimed that the CYAC always knew when they moved in that they were in a “redevelopment zone,” which the Mayor apparently thinks is a synonym for “National City can take your land whenever it wants.”  See Tonya Sierra, Developer Won’t Oust Popular Gym; he’ll build around it, San Diego Union-Tribune, August 30, 2007 at B-1.

[6] This document is on file with the Institute for Justice.

[7] Copies of these letters are on file with the Institute for Justice.

[8] Editorial, Just Who’s ‘Sleazy’?: National City Mayor can’t handle the truth, San Diego Union-Tribune, August 31, 2007 at B-8.  Mayor Morrison claimed in a letter to the editor that the February of 2005 eminent domain letter should not count because it is just a form letter.  See Ron Morrison, Letter to the Editor, San Diego Union-Tribune, September 13, 2007 at B-13.  But all this means is that express threats of eminent domain are considered so routine in National City that they are part of the redevelopment agency’s form letters.  This is a greater indictment of National City, not an exoneration.

[9] Tanya Sierra, Developer Won’t Oust Popular Gym; he’ll build around it, San Diego Union-Tribune, August 30, 2007 at B-1.

[10] Cal. Health & Safety Code § 33500, et seq.

[11] The information about the Eagles is based on several conversations Institute attorney Jeff Rowes had with the Eagles’ Board of Trustees and the Eagles’ attorney.

[12] Cal. Stats. 1945 Ch. 1326, § 1.

[13] Cal. Health & Safety Code § 33000, et seq.

[14] Id. at § 33391.

[15] U.S. Const. Amend. V; Cal. Const. Art. I, § 19.

[16] Redevelopment Agency of San Francisco v. Hayes, 122 Cal. App.2d 777, 812 (1954).

[17] Id.

[18] Redevelopment Agency Fact Sheet for FY 05-06 of the California Redevelopment Association. http://www.calredevelop.org/AM/Template.cfm?Section=Facts_and_ Reports1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=3109

[19] Id.

[20] Id.

[21] Id.

[22] Redevelopment: The Unknown Government by Municipal Officials for Redevelopment Reform (MORR) (2006) at 6.

[23] Id. at 12.

[24] Id. at 13.

[25] Community Redevelopment Agencies Annual Report, Fiscal Year 2003-2004, California State Controller’s Office at 252.

[26] Redevelopment: The Unknown Government by Municipal Officials for Redevelopment Reform (MORR) (2006) at 18 (describing a survey showing that city managers overwhelmingly prefer retail land uses and place residential land use at the bottom, down with heavy industry).

[27] E.g., Subsidizing Redevelopment in California, Public Policy Institute of California (1998).  This study compared 114 redevelopment project areas to similar areas not in redevelopment zones.  The study concluded that the redevelopment effort was not responsible for any economic development and was a net drain on public resources.  See also, Redevelopment: The Unknown Government by Municipal Officials for Redevelopment Reform (MORR) (2006) at 22-25; Redevelopment Wrecks: 20 failed projects involving eminent domain abuse by the Castle Coalition (2006) http://www.castlecoalition.org/publications/ redevelopment-wrecks/index.html.

[28] Victimizing the Vulnerable: the demographics of eminent domain abuse by Dick M. Carpenter, Ph.D. and John K. Ross (a report of the Institute for Justice) (2007) /index.php?option=com_content&task=view&id=1528&Itemid=194.

[30] Redevelopment Plan for the National City Redevelopment Project, July 18, 1995 at 3.  http://www.ci.national-city.ca.us/Departments/CDC1/pdf/RDPLAN70.pdf

[31] Id.

[32] Id.  National City amended the redevelopment plan again in 2001, and tried unsuccessfully to do so once more in 2005.

[33] Cal. Health & Safety Code § 33333.2.

[34] This document is on file with the Institute for Justice.

[35] See Draft Report to the City Council: 2007 Amendment National City Redevelopment Plan.  This seems to indicate that all RSG did was drive around and look at buildings, and then speak to some National City employees, who perhaps turned over some limited information.  This document is on file with the Institute for Justice.

[36] This document is on file with the Institute for Justice.

[37] Cal. Health & Safety Code §§ 33451, 33454 & 33458.

[38] Cal. Health & Safety Code § 33501.2.

[39] This document is on file with the Institute for Justice.

[40] This document is on file with the Institute for Justice.

[41] See Draft Report to the City Council: 2007 Amendment National City Redevelopment Plan at 7.

[42] These documents are on file with the Institute for Justice.

[43] Cal. Health & Safety Code § 33363.

[44] Sweetwater Valley Civic Ass’n v. National City, 18 Cal.3d 270 (1976).  A recording of the June 19, 2007, proceedings is on file with the Institute for Justice.

[45] RSG prepared this response between July 10, 2007 and July 12, 2007.  RSG’s response is on file with the Institute for Justice.

[46] The ordinance is on file with the Institute for Justice.

[47] Residential real estate prices were obtained through the Multiple Listing Service.  Commercial real estate prices were based on information recorded with the San Diego County Recorder.

[48] 348 U.S. 26 (1954).

[49] 125 S. Ct. 2655 (2005).

[50] Victimizing the Vulnerable: the demographics of eminent domain abuse by Dick M. Carpenter, Ph.D. and John K. Ross (a report of the Institute for Justice) (2007).

[51] See http://www.castlecoalition.org/resources/kelo_polls.html for links to various opinion polls.  See http://www.castlecoalition.org for continuously updated information on eminent domain reform.

[53] City of Norwood v. Horney, 110 Ohio St. 3d 353 (2006); Bd. of County Comm’rs v. Lowery, 136 P.3d 639 (Okla. 2006).

[54] Sweetwater Valley Civic Ass’n v. National City, 18 Cal.3d 270 (1976).

[55] Norwood v. Horney, 110 Ohio St. 3d. 353 (2006).


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