Following an appearance by Dave Griggs and Mike Brooks of REDI on the 93.9 Tom Bradley Show, I sent Tom the following email.
I listened to today’s segment featuring Mike Brooks and Dave Griggs from REDI and I feel it is important to clarify a few of the significant statements they made regarding the EEZ proposal and blight prerequisite. I know you are a reasonable guy so I hope the information I provide herein will allow you to give your listeners a more complete picture of this matter. I also hope the evidence I have cited below will help you to see that the uproarious negative reaction from a large cross-section of the Columbia citizenry is far from knee-jerk.
President – Keep Columbia Free
I would argue that tax abatement schemes like the EEZ designation are merely crony capitalism which allows the government to pick winners and losers. This type of activity tips the playing field and distorts the market.
When one company’s taxes are abated, the government does not simply run on less money. When the government can’t get its money from one avenue, it simply gets it from another. Other businesses and individuals (you and me) pick up the slack. Really, when was the last time our gluttonous government ever trimmed its budget? If we really want to allow businesses to create jobs, taxes should be lowered for everyone and government red tape hurdles to entrepreneurship should be removed. Targeted tax abatements are simply unfair.
While the REDI representatives are correct when they list the number of EEZ zones across the state and the number of businesses benefiting from the tax abatement offered by these zones, there is no proof that the EEZ designations actually “created” jobs. While companies do look at their respective bottom lines, these abatements generally represent a small fraction of the overall operating budget. Are these tax abatements merely going to companies that would have located in these areas anyway? One thing is for sure, there is no evidence that the EEZ designation was responsible or will be responsible for job creation. Any claims made by REDI regarding the success of EEZ’s are pure conjecture.
Look at what California has learned about tax abatement for redevelopment http://www.youtube.com/watch?v=_3wXHjUyqLw&sns=em
Regardless of what Griggs and Brooks claimed to “believe” on your show, blanket blight designations can be and are used to take private property in Missouri. While the folks at REDI continue to point to HB 1944 as evidence of the eminent domain abuse protections provided individuals by the state, a mere cursory perusal of the law will demonstrate its impotence. Mike and Dave noted that Missouri law requires that property must be blighted individually and cannot be taken under blanket blight designations like the one needed for the EEZ. While the law does say that, their statement is only partially true. Good propaganda indeed. Here is what the law says.
HB 1944 523.274.
“Where eminent domain authority is based upon a determination that a defined area is blighted, the condemning authority shall individually consider each parcel of property in the defined area with regard to whether the property meets the relevant statutory definition of blight. If the condemning authority finds a preponderance of the defined redevelopment area is blighted, it may proceed with condemnation of any parcels in such area.”http://www.eminentdomain.mo.gov/documents/HB1944T.pdf
So if you are in a blighted area, your house can be taken regardless of the condition. Here is how the State of Missouri Ombudsman for Property Rights explains it.
“Under the new Missouri law, each parcel of land must be considered individually as to whether each meets the relevant statutory definition of blight. However, the area will be considered blighted if the condemning authority finds a preponderance of the defined redevelopment area is blighted. This means that you may have the nicest home in the state and still be in a blighted area and therefore be subject to condemnation” http://www.eminentdomain.mo.gov/faq.htm
But even if you are protected by law, you must be prepared for a lengthy and expensive legal battle. Most property owners, especially in lower income areas, don’t have the means to fight a blight-based condemnation and taking. The deep pockets and coercive power of government often wins, regardless of the legality of the proceedings.
Another point that is often emphasized by REDI and other EEZ proponents is the notion that Missouri law prevents eminent domain condemnation for private use. Again, these proponents site only part of the truth in an attempt to influence the public. Here is what HB1944 actually says.
HB 1944 523.271.
“No condemning authority shall acquire private property through the process of eminent domain for solely economic development purposes. For the purposes of this section, ‘economic development’ shall mean a use of a specific piece of property or properties which would provide an increase in the tax base, tax revenues, employment, and general economic health, and does not include the elimination of blighted, substandard, or unsanitary conditions, or conditions rendering the property or its surrounding area a conservation area as defined in section 99.805, RSMo”
Notice the word “solely.” Since the famous Kelo case, no eminent domain condemnation based on blight has ever been “solely” for private economic development. In fact, “the elimination of blighted” conditions is enough to make the taking of private property legal. And remember, your property doesn’t have to be technically blighted. It only needs to be in a blighted area to be subject to condemnation and “redevelopment”.
What I really find odd is that there is evidence that our Mayor, Mike Brooks, and REDI do understand the dangers of blanket blight designations. On Feb 27th, 2011, Mr. Brooks emailed State Representative Chris Kelly, urging him to change the state statutes regarding the blight requirement for EEZ formation. While changing a state statute, even if Kelly tries, is a pipe dream, this email indicates that REDI understands the danger and is mounting a propaganda campaign which misrepresents these dangers.
From: “Michael Brooks” <JMBROOKS@GoColumbiaMO.com>
Date: February 27, 2012 12:24:51 PM CST
To: “Chris Kelly” <firstname.lastname@example.org>
Cc: “Dave Griggs” <email@example.com>, “Bob McDavid” <firstname.lastname@example.org>, “Bernie Andrews” <BKA@GoColumbiaMO.com>, “Fred Boeckmann” <FAB@GoColumbiaMO.com>, “Michael Matthes” <MEMATTHE@GoColumbiaMO.com>
Subject: Proposed Changes for Enhanced Enterprise Zone statutes
Thanks for your concern with this issue.
I have attached two documents to this email with proposed language/changes for Chapter 135, and are highlighted below.
In Section 135.953, I would request adding this language
(5) A finding of blight under Chapter 135 cannot be used to meet the conditions for blight under any other state statute.
In Section 135.960, I would propose eliminating under 135.960-2: (1); (2); and (6). I would guess that these points were part of the original enterprise zone legislation and they are not germane to the existing program and add confusion to people who are trying to understand the program. May give some reason for the concerns being expressed regarding what can be done with the finding of blight under the program!
J. Mike Brooks
Regional Economic Development Inc. (REDI) 500 East Walnut Street Suite 102 Columbia, MO 65201 Main Phone Number: 573-442-8303 Phone Direct: 573-441-5542
Web Site: https://www.columbiaredi.com/
If you’d like to hear and present to your listeners the other side of this issue, Jeff Rowes from The Institute for Justice would be a good guest for your show http://www.ij.org/clinic/?option=com_content&task=view&id=626&Itemid=165
I’d also highly recommend Dave Roland from the Freedom Center of Missouri http://www.mofreedom.org/about/ He has been in the 93.9 studios several times. Ferguson knows him and Nolan likely does as well.
Below is the text of a letter Dave wrote in response to this piece in the Tribune http://www.columbiatribune.com/news/2012/mar/03/eez030312/
My name is Dave Roland and I am the director of litigation for the Freedom Center of Missouri, a non-profit, non-partisan law firm that has a particular focus on the constitutional protection of property rights. My wife and I formerly worked for the Institute for Justice, which litigated Kelo v. New London and many other important eminent domain cases over the past fifteen years. I was part of the litigation team that fought on behalf of Ms. Kelo and her neighbors, and my wife was IJ’s legislative affairs attorney, tasked with helping state legislatures all over the nation work to protect their citizens from the threat of eminent domain in the wake of the U.S. Supreme Court’s decision in Kelo. We have extensive, first-hand experience with the way that cities and states have used blight designations to erode their citizens’ property rights – and we also have experience in helping citizens fight back.
I’m glad you are interested in exploring how blight designations may be used to enable the use of eminent domain. I’m afraid, however, that your article in today’s paper was not complete. While you did accurately describe the statutes that should afford some protection for Missourians, the truth is that statutes mean only what courts say they mean – and at least one appellate court has already eviscerated the requirement that cities must look at parcels individually to determine if they are blighted, as well as the requirement that a preponderance of the targeted area be blighted.
In Allright Properties, Inc. v. Tax Increment Financing Commission of Kansas City, 240 S.W.3d 777 (W.D. App. Mo. 2007), the Western District Court of Appeals ruled that the statute at issues did not require municipalities to evaluate whether each individual property in an area was blighted. The court also ruled that when the statute referred to a “preponderance” of the targeted area being blighted, it was referring to square footage, not to the number of properties. Here are the quotes directly from that case:
“Allright argues that the General Assembly intended for the requirement in Section 523.274’s first sentence to mandate that the condemning authority make a specific finding as to whether or not each individual parcel is blighted. Under this interpretation, a blight study would be flawed if it did not contain a list of the parcels and specific findings as to whether or not each parcel was blighted. Although the statute requires a condemning authority to evaluate each parcel, we see nothing in the statute that requires the authority to make a specific finding for each parcel. The General Assembly mandated that the condemning authority “consider” each parcel in making a finding that the entire area was predominantly blighted-not that an individual parcel was blighted. If the General Assembly wanted the condemning authority to make express findings for each parcel, surely it would have used the term “finding” or its equivalent in the first sentence. Although the condemning authority is not required to make an express finding for each parcel, it still must consider each parcel and evidence must establish that it do so…
“The second sentence of Section 523.274 declares that, “[i]f the condemning authority finds a preponderance of the defined redevelopment area is blighted, it may proceed with condemnation of any parcels in such area.” Allright argues that this sentence means that the condemning authority can proceed with condemnation only if it finds that a preponderance of the individual parcels is blighted. TIFC, on the other hand, contends that the sentence means that the condemning authority can proceed only if it finds that a preponderance of the overall area is blighted… [W]e agree with TIFC that the General Assembly wanted the condemning authority to determine whether or not the defined redevelopment area was blighted by considering its total square footage and not whether a preponderance of the individual parcels were blighted.”
In the wake of this case, a municipal government can condemn someone’s property – even if the property itself is immaculately maintained – as long as the city designates the property as part of a larger “blighted area.” Additionally, cities have almost completely unfettered discretion when it comes to deciding what constitutes “blight,” and courts simply refuse to reconsider these blight designations. Only once in the entire history of this state has a Missouri appellate court reversed a city’s determination that a property or area is blighted – and that was because the city of Clayton neglected to include one perfunctory finding when it tried to declare blighted a well-maintained, fully-occupied, tax-generating downtown office building that the Centene corporation wanted removed to make way for its new headquarters. In other words, had Clayton merely dotted its “i”s and crossed its “t”s, the condemnation would have been permitted. Once a city has made a finding of blight – no matter how absurd or specious! – it is virtually impossible for property owners to defend themselves against an eminent domain action that the city may later conclude is desirable.
I would be happy to discuss these matters with you (or anyone else there at the CDT) at any time. I have attached for your consideration a copy of a brief that Jenifer and I authored discussing the use (and abuse) of “blight” and eminent domain in Missouri; it provides a useful overview of this subject. I am actually planning to be in Columbia on Tuesday and Wednesday of next week – perhaps there would be some interest in setting up an editorial board meeting? If so, please let me know and I’ll be happy to put it on the schedule.
Director of Litigation
Freedom Center of Missouri
Invest in Liberty!
Here are a few more links of interest.
Don’t forget that Vicky Russel, publisher of the Tribune, sets on the REDI board. http://www.keepcolumbiafree.com/blog/beata-of-blight/
This is Ron Calzone’s group, Missouri Citizens for Property Rights http://www.mo-cpr.org/victims.html
Owners Council of America http://www.ownerscounsel.com/Eminent-Domain-Condemnation/Private-Redevelopment-and-Blight.shtml
Eminent Domain and Blacks http://www.castlecoalition.org/pdf/publications/Perspectives-Fullilove.pdf
The Castle Coalition http://www.castlecoalition.org/
Let There Be Blight – Dave Roland http://issuu.com/davidroland/docs/let_there_be_blight?mode=a_p&wmode=0
Dave Roland Eminent Domain Video http://www.mofreedom.org/2011/03/eminent-domain-abuse-in-missouri/
Missouri Western District Judge Harold Lowenstein on Blight http://law.missouri.edu/lawreview/docs/74-2/Lowenstein.pdf
I just heard from Harold Lowenstein, the retired Missouri appellate court justice who wrote the law review article I quoted at our first meeting.
He is careful to separate the Blight Decree from the Enterprise Zone, noting that legally, they are separate entities. As redevelopment tools, he says he has heard very little about EEZ or its effectiveness. He has more experience with TIF.
“A declaration of blight is not a compliment, and such a governmental finding would probably not increase land values,” Lowenstein told me. This comment rebuts a note by REDI chairman Dave Griggs, who told the Council the EEZ would probably increase property values because of all the opportunities it might open.
Justice Lowenstein also says that in all these programs, from TIFs to EEZ to Land Clearance, etc., what “scholars have decried” are two primary things: the declarations of blight; and a slide in property values that occurs after the declaration or an announcement of any possible takings, i.e. eminent domain.
“Using market or arms length transactions (the market value method), the fact that when the announcement happens, it makes any future sale not possible,” he says, to anyone but the government or the private developer with the initiative (TIF, EEZ, Chapter 100, etc.).
Finally, the scholarly take on blight decrees is that they are a bad deal as presently configured under Missouri law.
“As you will note, my article and the sources cited in it are unhappy about the definitions of blight used by those who want to ‘rehab the land,'” Lowenstein explained. “You will also note that many folks also want to give the courts more authority to look into government declarations of blight.”
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