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State Property

State Legislators Appear Prepared To Alter Eminent-Domain Laws

Jefferson Jackson Steele
OUT BY LAW: Albert Lambert was so concerned about the city's use of eminent domain that he filed a lawsuit.

By Lawrence Hurley | Posted 3/15/2006

When city officials told Albert Lambert two years ago that he would have to move his long-established business to make way for an ambitious urban-renewal project, he couldn’t believe it.

He has run his independent insurance company from a storefront on the 4600 block of Edmondson Avenue for 26 years and is worried that his largely elderly clientele may not follow him to a new location if he is forced to move. Furthermore, it’s a matter of principle for him to stand his ground.

“I felt like my property rights were being violated,” Lambert says.

So, with a group of fellow business owners, he filed suit in December 2004 against the city over its proposal to seize a number of private properties on and around Edmondson Avenue as part of the $300 million Uplands Renewal Area project, which will turn the now-vacant Uplands apartment complex into a mixed-income community of 700 houses. The plan has been mired in legal troubles since the beginning, and the city has yet to enter into an agreement with developers. Meanwhile, the business owners’ suit is languishing in the courts.

But it’s starting to look as if legislators in the General Assembly may tackle this issue before Lambert’s suit comes to a conclusion. Echoing a national trend, state politicians are moving to reform the law, known as eminent domain, that allows governments to seize private property for redevelopment projects. There are more than 40 different bills in circulation in Annapolis right now containing a number of proposals—ranging from instituting a constitutional amendment to ban certain types of property seizure to altering the compensation offered to individuals whose property is seized—seeking to curb muncipalities’ ability to condemn private property using eminent domain.

Traditionally, eminent-domain powers have been reserved for public projects, such as highway construction. But more and more often, local governments have been using eminent-domain seizures to make way for economic-development projects. Last year, a Supreme Court decision in the case Kelo v. New London endorsed the right of government bodies to take private property when the only stated purpose is economic development. The decision has caused a flurry of activity in Annapolis and in statehouses across the country.

Some legislators believe that Maryland counties and Baltimore City should be stopped from using eminent-domain powers for economic development. Others simply feel that residents and businesses forced to give up their properties should be given more money and greater say in negotiations pertaining to the property seizure. Under current Maryland law, compensation for an eminent-domain condemned property is calculated based on a determination of the land’s fair market value, which is the highest possible price a willing seller would accept for the best use of the property. If property owners are dissatisfied with the amount offered, they can seek redress in the courts.

Baltimore City wants to keep its right to use eminent domain and has argued that successful projects like the Inner Harbor redevelopment were dependent on a broad interpretation of eminent-domain powers. The city opposes major changes to the state’s eminent-domain law but is more receptive to some of the less aggressive bills being opposed, city solicitor Ralph Tyler says.

“Our essential point is that eminent domain has been critically important to the economic redevelopment of Baltimore, and continues to be,” he says. “It would be a mistake to enact laws that would radically change the law.”

One area where the city is open to possible change is compensation of property owners, Tyler says, and the city would support an increase in relocation allowances for those forced to move from their homes or businesses. This was one of the proposals suggested by a task force set up by the General Assembly in 2004 to focus on businesses affected by eminent-domain condemnation.

Lambert’s attorney, John C. Murphy, who specializes in representing businesses in eminent-domain cases, is pleased that the General Assembly is taking up the issue.

“The existing law is inadequate in a number of respects,” he says. It does not, for example, offer business owners the opportunity to relocate within the new developments they are being displaced by as an alternative to moving elsewhere. That’s something Lambert and other business owners affected by the Uplands plan would welcome, Murphy says. Although he rarely represents homeowners, Murphy also believes they would benefit from potential changes to the law, citing instances that he believes show that the city has a poor track record when it comes to urban-renewal projects.

“The history of urban renewal has not been a happy one,” he says.

As for the Inner Harbor, Murphy notes that although city officials say it needed to use eminent domain for it to succeed, the city already owned some of the land used for the initial redevelopment. Baltimore did, however, use eminent domain to add to its portfolio.

Murphy says he thinks the city’s experience with eminent domain on the east side, to make way for an 80-acre biotech park, has shown that the city is acknowledging that those being displaced deserve greater compensation for their property than the law requires (“Moved and Shaken,” Feb. 22). In East Baltimore, the nonprofit managing the development project, East Baltimore Development Inc., has offered homeowners more money than it is required to under the existing eminent-domain law.

While that’s good for the residents affected by that project, Murphy says, it’s unfair (not to mention “an admission that the law is inadequate”) that residents and business owners in East Baltimore are getting more favorable terms than those living in other areas of the city, such as Uplands, being displaced by economic development.

Hearings have been held in the both the state House and Senate on the various bills addressing the eminent-domain issue, but none of the proposals has progressed beyond the committee stage.

That could change imminently, although there is no guarantee anything will pass. Sen. Brian E. Frosh, a Montgomery Country Democrat, believes that it is possible that some kind of reform will be instituted this year. As chair of the Senate Judicial Proceedings Committee, which has jurisdiction over the issue, he has a major say in what bills could go forward. He agrees with critics of the existing law, who say governments have too much power to seize private property. Frosh is supportive of proposals that would “balance the bargaining positions of property owners.”

Frosh does not, however, support a ban on using eminent domain to make way for economic-development projects. “The calls for a constitutional amendment are strident, but not necessarily warranted,” he says.

If any legislation does pass the General Assembly this session, Frosh does not believe it will hamper Baltimore City’s use of eminent domain; rather, he says, he thinks the legislation would be geared toward giving homeowners and businesses a better deal when their properties are affected.

And that’s all Lambert and others like him are asking for.

Lambert is especially concerned that the existing law doesn’t take into account the length of time a business has been operating or the particularities of its location. He points out, for example, that his senior-citizen customers can reach his office relatively easily because there is public transportation nearby. This might not be the case if he moved to a new location, Lambert says.

He also frets that if he is forced to go to court to win increased compensation for his property, a good portion of what he wins will be eaten up by legal fees. Some of the bills in Annapolis would take that into account, as well.

Lambert just hopes that some kind of reform passes soon, because otherwise he’ll be stuck with negotiating under the current law.

“It’s flawed,” he sighs. “It’s very flawed.”

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