Tony Boccaccio is a small-business owner in Tempe, Arizona. Like many successful business owners throughout the country, he is planning additions and improvements to his property. Expanding his office and warehouse space is estimated to cost $1 million. As his business grows, you would think that Mr. Boccaccio has little to worry about as he lives the American dream. However, Tempe city planners have other ideas.
City bureaucrats want to build another shopping center. Their longing to reconfigure the industrial area where Mr. Boccaccio operates his successful business is so strong they are willing to provide over $30 million in subsidies to lure corporate developers to the project. The only thing standing in their way is Mr. Boccaccio and 30 other business owners who own property on the proposed site. As a result, Tempe is threatening to use eminent domain to force private property owners to sell their property for redevelopment purposes.
Constitutionally, there are reasons for government authorities to use eminent domain, such as to acquire property for public projects like roads. However, many local governments are increasingly using the power of eminent domain to turn areas that produce little tax revenue into tax revenue smorgasbords. The Castle Coalition reports that between 1998 and 2002, there were 10,000 instances nationwide of cities taking private property from one owner and transferring it to another private owner. This "fiscalization of land use" trend violates constitutional constraints on eminent domain.
Fortunately, the courts have begun to restrain government from abusing its authority. Last year, the Arizona Court of Appeals ruled in the landmark Bailey v. Myers case that taking private property from one party and giving it to another party for a private use is unconstitutional.
A new Goldwater Institute study outlining alternatives to eminent domain examines Seattle's Pacific Place, which demonstrated that eminent domain is not necessary to revitalization. In the early 1990's several major stores had abandoned the downtown area. Crime rose and the sidewalks emptied at night. A group of private developers, however, stepped in and rebuilt the retail district. By buying, rebuilding and trading various downtown properties, redevelopment occurred without condemning any private property. Also, the city opened some streets to vehicle traffic and new public safety plans were implemented. Local government ensured a clean and safe environment so that the free market, not the government, could bring about a revitalized downtown.
Now, downtown Seattle sidewalks fill at night and there is more than one million square feet of new retail space. Retailers have experienced a 15.8 percent increase in taxable sales, twice the previous average growth rate. Seattle's Convention and Visitor's Bureau advertises downtown as a visitor destination, and it's no surprise that Seattle ranks among the top cities of its size when it comes to retail, dining and entertainment, and attractions.
Seattle's experience demonstrates that development and revitalization can occur without abusing the power of eminent domain. And as courts reign in unconstitutional uses of eminent domain, local communities will need to reconsider the wisdom of relying on eminent domain for revitalization. As the case of downtown Seattle illustrates, free-enterprise alternatives can be used for development and revitalization purposes. Seattle's downtown has more to offer than a good cup of coffee.