All Commentary
Friday, January 5, 2007

Extortion in Port Chester

The least appreciated form of tyranny in the United States goes by the names redevelopment and government-business partnership. While everyone knows about the threat of development-oriented eminent domain, thanks to the 2005 Supreme Court decision in Kelo v. New London (pdf), local tyranny goes much deeper than the mere taking of property in order to give it to another private party.

A case out of Port Chester, N.Y., illustrates the danger. In 1999 the Village of Port Chester and the development firm G&S Port Chester agreed to embark on a $100 million 27-acre redevelopment project in which dilapidated buildings would be torn down in favor of stores, a movie complex, and other amenities. Under the agreement the Village government gave G&S sole authority to obtain properties in the project area both through negotiation and eminent domain. Only Gamp;S can build there, and any profits from the project belong to the developer. (See the Christian Science Monitor story here.)

This smells bad enough already, but it gets worse because Bart Didden, who owns property that is partly in the project area, wants to build a CVS drugstore. The local Village planning board said okay, but under the redevelopment agreement G&S has veto power. Rather than vetoing the plan, however, G&S made Didden an offer: You can build your store if you fork over $800,000 or make G&S a 50 percent partner.

When Didden balked, G&S threatened to have his property condemned and to build a Walgreens drugstore there instead. Didden called the developer's bluff, and before he could blink, the Village moved to condemn his land. Didden went to federal court to stop the abuse, but the case was dismissed at the district and appellate levels because, the courts said, he filed too late. Now the Institute for Justice (IJ) is trying to get the case before the U.S. Supreme Court. The Christian Science Monitor says it could be the next big test of the power to seize property. The Court was to decide today it if will take the case.

Constitution-Free Zone

If the Supreme Court declines, says IJ lawyer Dana Berliner, it would mean that every redevelopment area in the country would be a Constitution-free zone. Any taking, no matter how private, would be okay as long as it was in those areas.

[Update, January 17: The Supreme Court, without comment, refused to hear the case.]

Village officials defend G&S, maintaining that in return for developing the area, the developer was assured all the profits from the project. If Didden were allowed to proceed, the agreement would in effect have been changed. A contract is a contract, says Mark Tulis, attorney for the Village.

There's just one problem: Didden was not a consenting party to the contract. The Village made commitments on his behalf without his permission. So G&S's ability to threaten condemnation if Didden refused to pay up is an outrage, all the more so because it was bestowed by the government.

This sort of thing is all too typical. Local planning entities and politically connected developers have been running roughshod over property rights for years. It has become so common that it's hardly controversial anymore. It's just the way things are done. Most people think economic development couldn't happen without such practices. (See Steven Greenhut's Freeman article Central Planning Comes to Main Street and George Leef's Kelo v. City of New London: Do We Need Eminent Domain for Economic Growth? [pdf].)

There's a word for what's going on in Port Chester, and Didden does not shrink from using it: My case is about extortion through the abuse of eminent domain; it is about payoffs and government run amok. It took me years of hard work to buy that property, pay off my mortgages and really feel like I own it. How dare the Village of Port Chester and this developer threaten me in this way.

How dare they, indeed?

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.