The Buyouts Versus the Holdouts

Subject: The Buyouts Versus the Holdouts
Date: 6/30/2005 10:02:20 AM Eastern Daylight Time
From: kitchen@hellskitchen.net
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June 30, 2005
The Buyouts Versus the Holdouts
NY Times
By MOTOKO RICH

IN a suburb of Buffalo, a developer wants to knock down more than 300 homes
to make way for a traditional-style town that he says he believes will
alleviate blight. In Norwood, Ohio, three property owners are the lone
holdouts against a developer's plan to build shops and parking garages on
the site where some of them have lived for more than 30 years. And in
Brooklyn, recently converted lofts are in the path of a proposed basketball
arena.

In the week since the Supreme Court gave cities the right to buy out
residences to foster economic development, homeowners across the country
have been wondering whether they will be forced out to make way for malls,
hotels and even other residences. Historically, eminent domain has applied
to civic projects like dams and roads. This ruling more explicitly gives
cities the right to knock down houses in favor of private projects. The
controversial decision - allowing New London, Conn., to push ahead with
offices, a hotel, new homes and a walkway, generating tax revenue and jobs
- is fueling political and legal battles at the state and local levels.

Because the decision left states free to restrict government powers to
seize homes for economic development, the Institute for Justice, the
nonprofit law firm that argued the case in front of the high court on
behalf of homeowners in New London, yesterday vowed to take their campaign
to state and local courts and legislatures.

Local activists are already busy. In Long Branch, N.J., some homeowners are
fighting an effort to replace aging beachfront cottages with luxury condos
that would start at $550,000. "It's just un-American," said Lori Ann
Vendetti, who owns a house there. "How anyone's property could be taken for
someone else's profit is just ludicrous."

Not, of course, from the point of view of City Hall, which is confronting a
worn beachfront and a need for new tax revenue. "Governments never look
good when elderly people are being told 'You're going to lose your house,'
" said Adam Schneider, the mayor of Long Branch. "But what's a town
supposed to do? Are we supposed to just sit there and watch everything fall
down and collapse around us and watch a dilapidated area get bigger and
bigger every year and do nothing about it?"

Homeowners argue that "dilapidated" may be in the eye of the beholder. "The
mayor keeps calling our area a slum," said Ms. Vendetti, who rents out her
house across the street from the brick ranch house where she grew up and
where her parents, now in their 70's, still live. "But it's not a slum."

Denise Hoagland, who owns a three-bedroom house in the neighborhood with
her husband, Lee, said that even if the developers, Matzel & Mumford, pay
above-market prices for their house, which was assessed for tax purposes
two years ago at about $201,000, her family would never be able to afford a
new one near the beach.

Mr. Schneider said the city was working with the developer to help existing
homeowners buy into the new project with creative financing like reverse
mortgages.

Ms. Hoagland said she hoped attention generated by the Supreme Court
decision would rally other homeowners. "Maybe people will start doing
something about it because they will say, hey, that could affect me," she said.

Under the slogan "Hands Off My Home," the Institute for Justice, which is
financed by individuals and foundations, said it was asking governors to
sign a pledge to stop governments from taking homes and small businesses
for private development. It said it would also push for changes in state
constitutions to prohibit such actions.

The efforts would "turn what was a disastrous decision by the Supreme Court
into victories for private homeowners and small business owners," said
Scott G. Bullock, a senior lawyer at the institute.

This week John Cronyn, a United States senator and Texas Republican,
proposed a bill that would prevent the federal government, or any state or
local government using federal funds, from condemning homes and small
businesses solely for the purpose of promoting economic development.

Legislators in states including Georgia, Missouri and Oklahoma, as well as
local governments like Westchester County in New York, have said they are
considering similar bills.

Proponents of the court decision argue that governments need the power to
condemn homes and businesses if they are to revitalize cities and prevent
sprawl. "It's one of our most important economic development tools," said
Charles Gargano, chairman of the Empire State Development Corporation, New
York State's economic development authority. Without it, he said, projects
like the cleanup of Times Square would not have been possible.

For displaced home and business owners, such maneuvers can be devastating.

Carl and Joy Gamble, who retired from running a small grocery store four
years ago, have fled their home of 35 years in Norwood because they fear
eviction by developers of a retail, office and public parking complex.

"That was our home and we had plans to just stay there," said Mrs. Gamble
from her daughter's home in northern Kentucky, where she and her husband
are now living. Their belongings are in storage and Mrs. Gamble mourns the
loss of peonies and lilies of the valley that she imported from her
grandmother's garden to her spacious yard.

The couple, along with two other property owners, have fought the city's
efforts to use eminent domain to force them out of an area it designated as
"deteriorating." A county and appellate court ruled against them, though
the county court awarded them a price of $280,000 for their house from the
developer, which the couple turned down. The Gambles say they are staking
their hopes on the Ohio Supreme Court, which issued an injunction in
February preventing the developer from tearing down their home. The
Institute for Justice is filing an appeal on their behalf with that court
next week.

Their house, meanwhile, is isolated in the middle of an empty plot where
about 65 other homeowners sold to the developer.

Bill Pierani took an offer of $230,000 for the two-bedroom house where he
and his wife, Polly, raised their two sons and lived for 28 years. Mr.
Pierani said they were willing to sell partly because an interstate highway
had cut through the neighborhood, and the traffic bothered him.

With the proceeds they bought a larger house in the town for $162,000. "It
came out real well," he said.

Richard Tranter, a lawyer who represents the developers, said their project
would generate $2 million in annual income tax in a city that is running a
budget deficit of about the same amount.

Arguments of civic good do not move some homeowners. Hank Dowski, who has
owned his home in Cheektowaga, a suburb of Buffalo, for 20 years, said a
developer's plan to demolish hundreds of houses and apartment buildings in
the Cedargrove Heights neighborhood was part of the "greed that's
permeating America."

Dominic Piestrak, the developer, wants to build apartments, brownstone town
houses, malls and offices. Starting from scratch, he said, would help
eliminate crime and abandoned homes. "If you're going to stop urban blight
you have to start somewhere and draw a line in the sand," said Mr.
Piestrak, who has enlisted the support of the town government.

Although Mr. Piestrak said he would offer homeowners 10 to 15 percent above
fair market value, some residents said it's not about the money. "We picked
this for our retirement," said Barbara Dunn, who with her husband, Stan,
moved back to Cheektowaga this year to a house near her parents and
sister's family. "It's a peaceful, nice community and it's just not a money
issue."

Pamela Walters, a Cheektowaga homeowner who has lived in Cedargrove Heights
for 25 years, said she understands such emotional attachments. But she
supports Mr. Piestrak's plan. "I think something drastic needs to be done
there," said Mrs. Walters, a pharmacy assistant who lives with her husband,
Robert, a tractor-trailer driver. "It is decaying before our eyes."

In Brooklyn, residents are fighting a proposal by the developer Forest City
Ratner Companies to build a new arena for the New Jersey Nets along with
retail shops, office space, a hotel and 6,000 condo and apartment units.
(Forest City Ratner is a partner with The New York Times to build its
headquarters near Times Square. As part of that deal, the state has
condemned 11 properties that housed some 55 businesses that included sex
shops, trade schools and fabric dealers.)

Daniel Goldstein, a condo owner in the footprint of the proposed arena and
a spokesman for Develop Don't Destroy Brooklyn, said he believes that
favoritism is involved. In the Supreme Court case, Justice Anthony M.
Kennedy, in a concurring opinion, said that projects could be questioned if
favoritism is suspected.

James P. Stuckey, an executive vice president at Forest City Ratner, denied
any preferential treatment. He said the developer was trying to work with
the community by offering to buy out homeowners at or above market rates,
adding, "We would like to not have to condemn anything as part of this
project." He said 92 percent of the condo and co-op owners who fell within
the area designated for the project had already sold their homes to the
developer.

Mr. Goldstein responded that "the threat of eminent domain, and the limbo
that that puts you in until that happens, is frightening and something that
nobody wants to live with." He added, "The way to avoid that limbo is to
accept a buyout."

Vince Bruns, a 53-year-old fishmonger who two years ago bought a loft just
steps from the proposed arena site, is one of the holdouts. A sign in his
window proclaims: "I love my home and my neighborhood. I intend to stay here."

He acknowledged he might someday be forced to sell. "I'm not going to stop
it by myself," he said.