Blight Loophole Could Allow Cities to Grab Homes, Land

MI amendment won't stop eminent domain abuse

For most people, urban blight means crumbling homes, abandoned offices, and toxic waste sites. But for many municipal authorities blight is anything that comes in the way of their grand redevelopment plans.

The Michigan Senate today is likely to vote on a constitutional amendment to protect property owners from government seizures after the U.S. Supreme Court’s recent Kelo decision. This decision allowed New Haven city authorities in Connecticut to use their eminent domain powers to condemn property owned by poor homeowners and transfer it to rich developers.

But if supporters are serious about deterring property grab abuses in Michigan, they should allow only a narrow exception for blight.

Anyone who doubts this should consider the case of Nancy Kurdziel, president of Prime Housing Group Inc. in East Lansing.

A case of vibrant “blight”

For eight years, Kurdziel, a mother of two, has worked hard to maintain the seven apartment buildings she jointly owns with her parents and rents out to Michigan State University students. Some buildings were under receivership when her parents bought them. Keeping them profitable requires constant, daily attention, Kurdziel says.

But East Lansing city authorities have declared her properties blight. Why? Not because they are unsafe or unkempt: Rental properties have to pass city inspections to renew their license every year.

Rather, they are located in a 35-acre area near the university where authorities have decided property values of homes are not rising fast enough and the conversion of single-family homes to multifamily rental properties and commercial buildings is undesirable.

Most would regard such real estate fluctuations as a normal and necessary market response to shifting demographics and demand. Not East Lansing authorities. They see them as evidence of creeping blight.

This allows them to seize properties at appraised value from unwilling sellers such as Kurdziel and hand them to developers to build condominiums and shopping centers. However, East Lansing officials claim the blight designation allows them to help businesses by offering tax breaks.

Frankly, this sounds strange. One might have thought the potential seizure of Kurdziel’s property would not be possible after the Michigan Supreme Court last year reversed its 1981 Poletown ruling that sanctioned the bulldozing of a vibrant neighborhood in Detroit to make room for a GM plant. Although the court outlawed the transfer of private property from one owner to another for economic development, it left the door open for such transfers to eradicate blight.

Whole neighborhoods at risk

This would be acceptable when the issue is genuine blight. However, state blight law gives cities broad powers to condemn entire neighborhoods for reasons including “functional or economic obsolescence,” “improper or inefficient division or arrangement of lots” or “inappropriate” mixed-use character. Even scarier, it lets municipalities take action at the first sign of “blight,” without waiting for a neighborhood to naturally revive itself.

What this means is that cities can take away someone’s property and give it to wealthier people so long as they maintain the fiction that they are doing it to cure blight.

No Michigan homeowner or business can feel safe when cities have such powers. And the constitutional amendment crafted by Sen. Tony Stamas, R-Midland, takes the first step in restricting these powers. (It will go before voters on the November 2006 ballot if both chambers approve it by a two-thirds majority.)

Plan puts burden on cities

Under pressure from property owners, Stamas has revised the language he originally proposed to put the burden for proving that something is blight on the cities and not property owners.

That’s good. In addition, the amendment ought to define blight in sensible, public health and nuisance terms as the 1996 Brownfield Redevelopment Act does.

It should also require local governments to make site-specific designations of blight instead of condemning entire neighborhoods. This is a matter of fairness and limiting government’s powers, notes Patrick Wright, a legal analyst with the Midland-based Mackinac Center for Public Policy.

Finally, the amendment should require municipalities to pay for the legal costs of poor homeowners who want to fight the blight determination in court. This will prevent local authorities from targeting less affluent neighborhoods.

The amendment is supposed to codify certain protections in the Constitution so property owners don’t have to wait for sympathetic justices to arrive on the scene for their rights to be recognized.

This is a laudable cause. But it won’t be fulfilled until the blight loophole is plugged. Just ask Nancy Kurdziel.

Shikha Dalmia is a senior policy analyst at Reason Foundation.