Small Businesses Fight Abuse of Eminent Domain

Date: 1 Aug 2002 | posted in: Retail | 0 Facebooktwitterredditmail

Denver’s Asian stores are not alone in facing condemnation for a national chain. In a growing number of court cases around the country, small business owners are challenging attempts by local and state governments to seize their property for chain store development.

Traditionally, eminent domain—the power of government to take private property for public use, provided that the owner receive market value—has been used for schools, roads, and other public infrastructure. In recent years, however, state and local governments have increasingly used eminent domain to seize homes or small businesses for chain retail development.

In Pemberton, Pennsylvania, for example, officials want to seize an obstetrician’s office and a small clothing store to make way for a CVS pharmacy. In Wheeling, West Virginia, city officials plan to condemn several downtown buildings, oust the current businesses, and open dozens of outlet stores in the same buildings. In New York, the state redevelopment authority has moved to seize a 75-year-old Harlem woodworking shop to create room for Home Depot and Costco.

The government officials behind these projects claim that economic development is a “public use” that justifies seizing property.

“By that logic, anything goes,” contends Scott Bullock, senior attorney for the Institute for Justice, a libertarian public interest law firm that is representing small businesses in several lawsuits challenging the constitutionality of condemning property for private development. “Any business will create more jobs and tax revenue than any home, and a large business will create more than a small business. So there’s no end to it.”

Bullock says the tide is beginning to shift; courts are increasingly siding with small businesses and setting limits on the use of eminent domain for private development.

In the New York case, Bill Minnich, owner of Minic Custom Woodwork, lost in a federal district court on a procedural issue but has appealed the decision. In California, a federal court concluded that the city of Lancaster’s attempt to seize a 99 Cent Store for a Costco expansion was unconstitutional. The city has appealed. In Illinois, the state Supreme Court recently blocked a state agency’s attempt to seize property for a race track expansion. That decision could derail another eminent domain action initiated by the same agency for a Home Depot development.

Similar cases have been brought in Connecticut, Michigan, Minnesota, and New Jersey.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.