Domain Game

Joe Horney owns–or used to own–one of the three houses still standing in the Rookwood project site, a house he rented to two tenants. He recalls the September 2002 meeting at which the developers laid out their plan. They offered a compensation package to each property owner. But even then, Horney claims, the whiff of eminent domain action was in the air. “I stood up at that meeting, and I said, ‘What you’re doing is wrong.'”

Horney, 37, felt the offer was below fair market value, but, he insists, it wasn’t really about the money. It was a matter of principle. And Horney just didn’t want to sell. This meant little to the Norwood city council, which has been battling periodic fiscal emergencies at least since 1987, when the closing of a GM plant cost the city some 4,000 jobs and 35 percent of its tax base (according to the Cincinnati Enquirer). Such budget woes gave Norwood a powerful incentive to favor the economic development idea put forth by Rookwood Partners. Indeed, Norwood let the developer bankroll an “urban renewal” study of the Edwards Road neighborhood, on which basis the city declared the area “blighted” and “deteriorating.”

By the city’s definitions, however, huge swaths of the United States could easily be considered “blighted” or “deteriorating.” The Rookwood-funded study identified a hodgepodge of minor maladies affecting the neighborhood: light pollution (from the nearby Rookwood mall), sidewalk cracks, weeds, dead-end streets (an alleged hazard for fire trucks), its proximity to the interstate highway, and, most bizarrely, the “diversity of ownership” in the community (i.e., there were too many small property owners). But not a single property was tax delinquent. None was dilapidated. Nor did the area have a crime problem–quite the opposite. As one local merchant told me, the Edwards Road location borders on some of the safest neighborhoods in Cincinnati.

If you stroll farther down Edwards Road, just a few blocks past the project site, you will find a stretch of retail businesses, including a Thai restaurant, a wine store, a tailor, hair salons, a dental office, a fish market, sports bars, a piano store, an antiques store, an electronics store, a cat clinic, and other shops. The adjacent streets–part of an old Cincinnati neighborhood called Oakley–are lined by leafy trees and modest to hefty middle-class homes, most of which have backyards, sizable porches, and well-kept front lawns. But, again, if you apply the Norwood city council criteria, you could conceivably declare this vicinity “blighted” and “deteriorating” as well.

After Norwood paved the way for redevelopment of the Rookwood Exchange lot, an angry band of property owners teamed up with the Institute for Justice, a libertarian law firm that works pro bono, to challenge the finding. Most of the owners eventually caved, however, and accepted the developer’s offer. One family who did not was the Gambles, a couple in their late 60s, who had lived at 2641 Atlantic Avenue for over three decades. “The developer was offering good money,” admits Joy Gamble. Neighbors began pressuring each other to sell. Pretty soon, there were only five sets of property owners still resisting.

In June 2004, a Hamilton County court ruled that the neighborhood was, in fact, “deteriorating,” but not actually “blighted.” The court held that the five remaining properties could be seized via eminent domain to spur private commercial development. Several months later, while that decision was being appealed, another county court ruled that Rookwood Partners was free to raze the property of Joe Horney.

“That is really a radical interpretation of the law,” laughs Scott Bullock, an Institute for Justice lawyer working with the appellant group. Even if Horney eventually won his challenge, what good would it do? “You can get your property back–but your home is gone!” In January 2005, the county court made a similar ruling against the Gambles: Their home could also be torn down during the appeals process. Luckily for Horney and the Gambles, the Ohio State Supreme Court enjoined Rookwood from bulldozing their properties.

Today, just three sets of property owners are left fighting the Norwood city council. Some of their former neighbors think what they’re doing is just plain silly. “Joe Horney and the other holdouts are fools for not taking the money,” James Lee Patton told the Cincinnati Enquirer in April. “No property is worth holding on to for the sums the developer was offering.” An Enquirer analysis of real estate records concluded that “on average” the vast majority of property owners who sold to Rookwood “received more than double the fair market value most recently estimated by the Hamilton County Auditor.”

None of which surprises Joy Gamble. “When people are faced with principle versus money, 99 percent of them will take the money.” The principle she refers to is this: Cities should not be abusing the “takings clause”–the passage in the Fifth Amendment that says seizure of private property is only warranted “for public use” and with “just compensation”–to enrich private developers and boost city revenues. But that is exactly what has been happening across the country for decades.

The problem received little public notice until last June, when the Supreme Court ruled in Kelo v. New London that confiscating private property to promote economic development was indeed constitutional. The majority opinion, penned by Justice John Paul Stevens, did however encourage states to take action if they wanted to protect property rights. Stevens wrote, “The necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate.”

Since Kelo came down, Ohio has placed a moratorium–effective until December 31–on cities’ deploying eminent domain in an “unblighted area” when the primary purpose is private economic development. But it was not retroactive; it merely applied to new eminent domain takings. The state has also commissioned a task force to study the matter. The Ohio High Court must now resolve whether Norwood went too far in the Rookwood case–and whether it is legal to raze a piece of property while the owner is waging an appeals battle through the courts. Joe Horney and the Gambles are not the only ones waiting anxiously for the decision.

Duncan Currie is a reporter at The Weekly Standard.