How the Threat of Eminent Domain Harms Property Owners
An irony of urban redevelopment is that the purported goal of economic development is usually hampered by government’s insistence on retaining the power of eminent domain for a project. Forest City, a developer infamous for its Atlantic Yards dispute in New York, is involved in just such a situation in Fresno, Calif. Fresno decided in 2005 that the area south of Chukchansi Park, home of the city’s minor league baseball team, should be “revitalized.” The next year, the city hired mega-developer Forest City to begin the downtown redevelopment; unfortunately, the very plan designed to revitalize Fresno’s downtown is draining the area of not only its current tax base but hampering other future investments in that area.
Forest City’s plan for the 85-acre South Stadium area, which calls for a new shopping district and 700 new homes, has threatened more than 40 properties with eminent domain for private gain. 1Two years after the plan was first proposed, property owners and city officials alike are still waiting for development to begin. According to The Fresno Bee, Forest City must still conduct a yearlong environmental review and the city still has not come up with a public financing scheme for the project.
The Bee’s editorial summed up the situation: “The problem is that property owners in the area, and small business owners who wish to move in or expand in existing locations, are left on hold while the big developer jumps through the regulatory hoops. Few want to take a chance on an investment that might be swept away by some grander vision for downtown. Owners find it difficult to rent or see properties because of the uncertainty.” 2
The threat of eminent domain stifles native efforts to revitalize apart from the plan because entrepreneurs will not invest in a business that may not be around for more than a couple of years. Randy Miller and Robert Toman are two entrepreneurs in the area who want to open up a brewpub in a former furniture store owned by the family of Miller’s wife. Miller and Toman find themselves in limbo: because there is no council-approved plan, the city will not tell them whether it will be necessary to take the property for the Forest City development.
“It would be nice if they said, ‘We’re going to demolish you and move you,’ or, ‘You can stay here,” Miller told The Bee. 3
However, the potential threat or eminent domain is driving away businesses already established in the area. Pat Cody, who has owned Wilson’s Motorcycles for 18 years, could not even find a realtor to list his property after he decided that the survival of business depended on moving somewhere where his future prospects were more stable. Cody said realtors considered his property “a waste of their time.” Even though the city most likely would have bought the property, it cannot do so yet because the city council has not officially given approval for the final project.
Property owners are also having difficulty renting out properties to tenants because the city could come and condemn the property at any point once the final plan is approved. Octavia Diener told The Bee that the city actually discourages prospective renters.
“They go to the city,” said Diener. “And the first thing the city tells them is, ‘That’s under this redevelopment plan.’” 4
With businesses moving away, renters staying away, and potential new businesses unable to contribute to revitalization, the city of Fresno’s potential threat of eminent domain is creating the very blight factors that officials say they wish to remedy. Unfortunately, for small business owners and independent developers, city officials have chosen their favored developer, Forest City, and city officials will not allow anything other than Forest City’s vision in the area. Unlike nearly every other neighborhood that developed organically, with many neighbors creating the spirit and content of the area, Fresno is insisting on a centrally planned model for what should take place in this district.
City Council Member Larry Westerlund, who is also the chairman of the Redevelopment Agency board, defends Forest city this way: Forest City, “has always expressed an interest in working with property owners, if there’s a way to do so and make a project that’s unique and authentic.” 5
The fact that most redevelopments tend to be neither unique nor authentic aside, it is ironic that the city may not consider private residents and business owners of Fresno “unique” or “authentic” enough for the plan imposed upon the area by a Cleveland-area developer.
Given those circumstances, it is not surprising that city officials seem to be indifferent to the deleterious effects of their redevelopment procedures. Fresno citizens, who are already established and committed to the area and who sincerely wish to contribute to the economic revitalization of the area are being turned away because they do not conform to the city’s visions of the future, a future that may not ever materialize.
- 1. Jeff St. John, “Keeping the city on hold,” The Fresno Bee, February 11, 2008
- 2. The Fresno Bee, “Downtown visions collide in proposed Forest City area; Big projects and smaller efforts are crucial to revitalized success,” The Fresno Bee, February 13, 2008.
- 3. St. John
- 4. Ibid.
- 5. Ibid.
CastleWatch is the online publication of the Castle Coalition, the Institute for Justice’s nationwide grassroots property rights activism project. The Castle Coalition helps home and small business owners fight eminent domain abuse through the public and political processes and this is our way of letting you know what’s happening.