SAN JOSE MERCURY NEWS - posted on on JUNE 30, 2002

"Power to seize property a political morass"

- Barry Witt

Redevelopment tactic has cleared wide swaths of S.J. – and now it issues an implied threat to neighborhoods

Eminent. It means lofty, or exalted.

Domain, signifying the territory of, well, the eminent.

Individually, the words are intimidating.

Together, they’re being read by some in San Jose these days to mean, “Run for cover.”

Mayor Ron Gonzalez and the city council want to shift more of the city’s redevelopment riches from downtown into the neighborhoods. That’s a political baby kiss. But in doing so, they’ve expanded their power to take private property through eminent domain. That’s a political tar pit.

Earlier this month, the council declared 20 neighborhoods – holding roughly a third of the city’s population – as blighted. The action made the neighborhoods eligible for redevelopment money, but it also put on notice 58,539 property owners – and many thousand more tenants – that their properties could be taken. The probability of that any particular parcel will be condemned is remote, but the council reserved that power just in case.

In a separate action last week, the council put in motion a plan to acquire the Latino-oriented Tropicana shopping center at King and Story roads and sell it to a new owner. The area has been under redevelopment jurisdiction for 20 years but only now is ht property takeover likely. Critics said the council had no business transferring the private property of one set of owners to an out-of-town private developer.

“When they give power to the redevelopment agency, the redevelopment agency will use it, and there’s no guarantee they will use it ethically." -Bader Kudsi

Because the words “eminent domain” are in the law, bureaucrats and politicians can’t avoid using them in favor of a sweeter-sounding euphemism. Instead, they’ve tried to ease the implied threat with repeated assurances to worried residents and business owners that it would be used only as a “last resort.”

Here's what Norm Matteoni thinks about that promise:

“I don’t believe it,” he said last week, taking a break from a trial in which he was defending a client facing eminent-domain lawsuit filed by San Jose’s redevelopment agency. Matteoni knows the turf pretty well. He’s had more than 100 clients whose properties were being seized by San Jose.

Indeed, eminent domain has been a part of San Jose’s economic development and revitalization strategy for decades.

In the 1960s and ‘70s, huge swaths of downtown were taken at a time when federal urban-renewal programs encouraged – and helped finance – such activities as a means of reducing inner-city blight.

The first results were the office buildings along Almaden Boulevard and in Park Center Plaza. Then came the eight-block San Antonio project – bounded by Market, San Fernando, Fourth and San Carlos streets.

For years after the redevelopment agency cleared out the old commercial buildings, the lots stood vacant until they were slowly replaced by state and federal buildings, the Fairmont Hotel, the Pavilion, the Knight Ridder Building, the San Jose Repertory Company, and the Colonnade and Paseo Plaza residences.

Cornerstone strategy

Those sorts of wholesale urban-clearance strategies fell into disfavor nationwide as neighborhoods ended up destroyed rather than improved. But targeted use of eminent domain has remained a cornerstone of the city’s redevelopment strategy throughout the ‘80s, the ‘90s and the past few years.

Eminent domain – or the threat of its use – created the parcels on which Compaq Center, the Children’s Discovery Museum and the San Jose McEnery Convention Center sit.

It’s been used to clear land for the proposed City Hall on East Santa Clara Street and the planned concert hall across the street for the San Jose Symphony that no longer exists. In the past few years, the agency has bought up land behind the convention center for a speculative expansion proposal; the property is used for parking and a winter skating rink.

Outside downtown, the redevelopment agency battled property owners in 1992 at Alum Rock Avenue and King Road to free up land for the Mexican Heritage Plaza.

City officials are, at best, technically correct when they say they use eminent domain as a “last resort.”

Adobe Systems got its second tower at Park Avenue and Almaden Boulevard downtown because the city was willing to condemn small buildings in 1994 on land that it had taken three decades earlier during the first urban renewal go-round. The pre-Adobe buildings weren’t blighted, but the city’s priority was to bring a high-tech headquarters downtown, and it wasn’t going to let some little bank building and radio station KEZR-FM stand in its way.

City officials are, at best, technically correct when they say they use eminent domain as a “last resort.” By law, they make an offer to buy a property before they file an eminent-domain lawsuit. The property owner can agree to a price – and thus be dubbed a willing seller – or wait for the city to file suit.

There’s virtually no chance of preventing the city from taking the property; at best, fighting it out in court will yield a higher price. The target knows the city has most of the power. The target also has to weigh whether the court fight – with its attendant headaches and the risk that attorneys fees would eat most of any gain – is worth the trouble.

The term “eminent domain” dates to the 17th century, according to Black’s Law Dictionary. It describes the government’s power to take private property for a public purpose, provided that the owner is compensated. The U.S. Constitution does not use the term, but the Fifth Amendment sates the government cannot take private property “for public use, without just compensation,” clearly implying that the power exists.

Although government is limited to taking property for a public purpose, courts historically have given government great leeway, allowing eminent domain for economic development even if there’s no traditional public project – a road, school or firehouse, for example – intended for the land.

Court cracks down

Recently, however, some courts have started to crack down, including a federal district court last year said that Lancaster, in Southern California, went too far when it tried to condemn a 99 Cents store to give the property to a neighboring Costco that produced more sales-tax revenue. That case is on appeal.

Despite its reputation, eminent domain is not always treated as a negative by those who come under its power.

“Sometimes it’s a blessing for the landowners that they get out of this, because their properties were going nowhere,” Matteoni said. The government steps in as a willing buyer when no one else will, sometimes offering a little over market price to avoid a fight.

In San Jose, the battles over relocating tenants that dominated the debate over clearance of the Guadalupe-Auzerais neighborhood for the Discovery Museum and convention center in the ‘80s faded in more recent moves, as city officials figured out that if they offer enough money, tenants will go quietly.

“It’s rare that when the final check is written that people aren’t ecstatic,” said Lew Wolff, the developer who built many of the downtown office buildings and hotels on previously condemned land. “The problem is people think they can get three times market value rather than 20 percent over it.”

But some who’ve had property taken aren’t so delighted with the experience.

Bader Kudsi, a 68-year-old retired IBM engineer, last year saw part of his property in Edenvale taken by the city for an extension of Hellyer Avenue. The extension was required to open up a 163-acre area east of Highway 101 for industrial development.

“When they give power to the redevelopment agency, the redevelopment agency will use it, and there’s no guarantee they will use it ethically,” Kudsi said. He was sued by the city, but settled out of court after realizing he wasn’t going to win much. “Having the power of eminent domain will give them the upper hand.”