High court overturns city's blight declaration in eminent domain case

Wednesday, June 13, 2007

JEFFERSON CITY, Mo. -- The Missouri Supreme Court rejected Tuesday an attempt by a St. Louis suburb to use eminent domain to condemn buildings and turn them over for private development.

The Clayton Board of Aldermen in 2005 voted to allow Centene Plaza Redevelopment Corp. to use eminent domain after an urban planner determined most of a downtown block that was not already owned by Centene was blighted. The city then asked for redevelopment plans.

Centene, which has an office on the opposite of side of that block, already had purchased land that bordered the newly blighted buildings and proposed developing the blighted areas along with its newly acquired property.

The state's highest court ruled Tuesday that Clayton's blight declaration didn't prove the downtown properties had a "social liability." To be declared blighted, state law requires that areas pose an economic and social liability because of "age, obsolescence, inadequate or outmoded design or physical deterioration."

It's one of the few times that a Missouri court has overturned a decision by elected city officials to declare an area blighted.

Gerard Carmody, an attorney who represented property owners contesting the blight finding, said the case makes clear that using eminent domain requires proving that the property has economic and social problems. Nonetheless, he said, the case dealt with defining blight -- not eminent domain.

"I think the court intentionally narrowed the impact of this decision," Carmody said. "I think there was a lot of concern in the development community that the court would go beyond the narrow confines of the facts of our case and make a broader pronouncement of the use of eminent domain for redevelopment."

A spokesman for St. Louis-based Centene said the ruling is "a loss for Clayton and the St. Louis region." Spokesman Robert Schenk said the company would consider other expansion options.

"I think that any project that looks to bring 800-plus new jobs and invest 210 million new dollars would be a very attractive project to communities," he said.

Although the court rejected Clayton's blight finding, judges said they did not consider whether the project met the constitutional criteria for using eminent domain to take private property. The state constitution allows private property to be taken only for public uses, such as eliminating blighted areas.

Instead, a divided Missouri Supreme Court focused on what constituted blight, often a subjective standard that has prompted controversy. The court said proof of an economic liability does not also mean there is a social liability.

Dale Whitman, a law professor at the University of Missouri-Columbia who helped with changes to the state's eminent domain laws in 2006, said the ruling should make it harder for redevelopment projects based only on economic potential.

"I think it will have some impact in slowing down the purely economic type of redevelopment projects," Whitman said. "I don't know for sure if it will stop it completely, but it's one string that's no longer on the bow."

According to court documents, the city said the "social liabilities" came from the loss of potential tax revenue.

Judge Ronnie White, the only judge who would have upheld the blight finding, wrote that a decline in economic value is linked to social problems.

In the unsigned majority opinion, Chief Justice Michael Wolff and judges Stephen Limbaugh Jr., Richard Teitelman and Mary Russell said the court focused on the historical use of eminent domain to redevelop areas that created a "menace injurious to the public health, safety, morals and welfare" of others because the blighted areas are a "breeding ground for juvenile delinquency, infant mortality, crime and disease."

The majority said the condemned properties had fewer police, fire and emergency calls than nearby buildings and thus didn't pose a greater risk than neighboring properties and shouldn't be blighted.

In a separate opinion that agreed with overturning the blight finding, Judge Laura Denvir Stith said a "social liability" goes beyond its traditional uses but not so far as to include lost potential taxes. Gary Lynch, a judge in Missouri's Southern District Court of Appeals, who heard the case in place of Supreme Court Judge William Ray Price Jr., concurred in Stith's opinion.

Stith said buildings don't need to deteriorate to actually pose a social liability; just being "conducive" to crime and ill health is enough. Thus, she wrote, "the city can declare blighted an area it believes is conducive to such conditions as a means of avoiding them."

Opinions varied on the fallout from the court's ruling.

The Missouri Municipal League had urged the Supreme Court not to supplant city officials' judgment. But by overruling Clayton's blight designation, the court may have lessened the push to further tighten Missouri's eminent domain laws, said executive director Gary Markenson.

"I will say that it ought to take the sails out from anyone who wants to change the eminent domain laws," he said.

The chairman of Missouri Citizens for Property Rights, a group pushing for constitutional amendments to prevent using eminent domain to give private property to another private entity, said the ruling shows why changes are needed.

Ron Calzone said under state law, "blight is still a moving target," and that there are still other ways for cities to use eminent domain that aren't affected by the ruling.

Case is Centene Plaza Redevelopment Corp. v. Mint Properties, et. al., SC88487.

On the Net:

Supreme Court: http://www.courts.mo.gov

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