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29-943 PDF 2006

EMINENT DOMAIN: ARE OHIO

HOMEOWNERS AT RISK?

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

AUGUST 18, 2005

Printed for the use of the Committee on Financial Services

Serial No. 109–52

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice Chairman 

RICHARD H. BAKER, Louisiana 

WALTER B. JONES, JR., North Carolina 

CHRISTOPHER SHAYS, Connecticut 

PATRICK J. TIBERI, Ohio 

GINNY BROWN-WAITE, Florida 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

STEVAN, PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

CAMPBELL, JOHN, California 

MICHAEL G. OXLEY, Ohio 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

BARBARA LEE, California 

MICHAEL E. CAPUANO, Massachusetts 

BERNARD SANDERS, Vermont 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

August 18, 2005—Morning Session ................................................................ 1

August 18, 2005—Afternoon Session .............................................................. 25

Appendix: 

August 18, 2005 ................................................................................................ 49

WITNESSES 

THURSDAY, AUGUST 18, 2005—Morning Session—Hebron 

Bubb, Timothy E., Commissioner, Licking County Board of Commissioners ..... 3

Gibbs, Hon. Bob, State Representative, 97th House District, Ohio House 

of Representatives ................................................................................................ 9

Grendell, Sen. Timothy J., 18th District, Ohio State Senate ............................... 5

Mason, Hon. Clifford L., Mayor, Village of Hebron, Ohio .................................... 11

Nutt, Steven, Director of Strategic Development, Citywide Development Corporation ................................................................................................................. 14

Platt, Richard J., Executive Director, Heath-Newark-Licking County Port Authority ................................................................................................................... 12

THURSDAY, AUGUST 18, 2005—Afternoon Session—Chillicothe 

Carey, Sen. John, 17th District, Ohio State Senate ............................................. 27

Evans, Hon. Clyde, State Representative .............................................................. 35

Finkle, Jeffrey A., President and CEO, International Economic Development 

Council .................................................................................................................. 31

Grendell, Sen. Timothy J., 18th District, Ohio State Senate ............................... 28

Smith, Dona, Executive Vice President, Ross County Community Improvement Corporation ................................................................................................. 34

APPENDIX 

Prepared statements: 

Ney, Hon. Bob—Morning ................................................................................. 50

Ney, Hon. Bob—Afternoon ............................................................................... 52

Bubb, Timothy E. ............................................................................................. 54

Carey, Sen. John ............................................................................................... 58

Finkle, Jeffrey A. .............................................................................................. 60

Gibbs, Hon. Bob ................................................................................................ 69

Grendell, Sen. Timothy J. ................................................................................ 73

Mason, Hon. Clifford L. .................................................................................... 86

Nutt, Steven ...................................................................................................... 88

Platt, Richard J. ............................................................................................... 97

Schlichter, Hon. John ....................................................................................... 102

Smith, Dona ...................................................................................................... 106

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Ney, Hon. Bob: 

Letter from the Jackson County Commissioners ........................................... 108

(1)

EMINENT DOMAIN: ARE OHIO 

HOMEOWNERS AT RISK? 

Thursday, August 18, 2005

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:10 a.m., in the 

Council Chambers, Village of Hebron Administration Building, 934 

West Main Street, Hebron, Ohio, Hon. Bob Ney [chairman of the 

subcommittee] presiding. 

Present: Representative Ney. 

Chairman NEY. The meeting will come to order. I want to thank 

everybody for coming here. Jeff Riley, who works for the ranking 

member, Barney Frank from Massachusetts, is on his way. 

My name is Bob Ney, I am the chairman of the subcommittee. 

We have had hearings in Washington D.C., on this issue. Mike 

Oxley from Ohio is Chairman of the full Financial Services Committee and he sends his regards. All members of the committee 

were notified today of the hearing, from across the United States. 

So, everything today, we will take for the record. It will be an official hearing and without objection, the record will be open for 30 

days in case people have things they want to add or delete. 

Before we start, I thought if we could, because we have other 

elected officials; if we just want to start over here. We will start 

with you, Grant, why don’t you stand up and show the elected officials that are here. 

Mr. DOUGHERTY. Grant Dougherty, County Commissioner, 

Coshocton County. 

Ms. PHELPS. Good morning, everyone, Marcia Phelps, Licking 

County Commissioner. Thank you. 

Mr. SMITH. Good morning, Doug Smith, Licking County Commissioner. 

Mr. MOORE. Good morning, Bob Moore, Morgan County Commissioner. 

Mr. GAINE. Dean Gaine, Morgan County Commissioner. 

Chairman NEY. Thank you. And I want to especially thank 

Mayor Clifford Mason, who is the Mayor of Hebron. The council 

chambers we are using today, I want to thank the Council and special thanks to Mike McFarland also, for Mike’s assistance. 

After the hearing I will have some—as a resident of Licking 

County—some complaints about roads and different things that I 

will talk to you about later. 

2

(Laughter.) 

On our first panel Tim Bubb was elected commissioner on the 

Licking County Board of Commissioners in November 2004. Previously Commissioner Bubb served as a Newark City treasurer for 

3 years. Tim Bubb was raised in Newark and graduated with honors from Newark High School in 1970, and from Ohio University 

in 1974 with a degree in communications. 

State Senator Tim Grendell represents the 18th District in the 

Ohio Senate. He just took office this past January. Senator 

Grendell is from Chesterland. Prior to his election he was an attorney and has been active on this issue that we are having a hearing 

on today, in the legislature. 

State Representative Bob Gibbs is serving his second term in the 

Ohio House of Representatives, representing the 97th District. 

State Representative Gibbs is from Lakeville. Before his election to 

the State House he was a small business owner. 

Clifford Mason, of course, is the Mayor of the Village of Hebron, 

and again we thank you for your and the staff’s time and attention 

and for helping us with this hearing. 

Rick Platt is the executive director of the Heath-Newark-Licking 

County Port Authority, a position he has held since August 2002. 

The Port Authority owns the Central Ohio Aerospace and Technology Center, which encompasses the property of the former Newark Air Force Base and is the 18th largest industrial park in central Ohio. Mr. Platt has experience from over 18 years in economic 

development in government working on a portfolio of projects totaling more than $750 million in capital investment, that has created 

or retained over 7,000 jobs. We knew him in eastern Ohio, Jefferson County, where he did a lot of work. 

And last but not least, is Steve Nutt. He is a director of strategic 

development for the Citywide Development Corporation located in 

Dayton. 

I just have a brief statement for the record. 

The Subcommittee on Housing and Community Opportunity 

meets in a unique setting today for its second field hearing of the 

109th Congress. Today, I will be holding two hearings, one in the 

18th Congressional District here of course. And the other will be 

down in Chillicothe, Ohio, to discuss the Supreme Court’s recent 

ruling in the case of Kelo v. the City of New London, and the serious implications this ruling could have on low income housing, 

family farms, and rural Ohio. And, of course, the Nation in general. 

The last of the U.S. Constitution’s Fifth Amendment liberties 

provides that ‘‘no private property be taken for public use, without 

just compensation.’’ Under this provision, government entities may 

invoke their power of eminent domain, or right of condemnation, to 

remove property from private ownership for public use. On June 

23, 2005, the United States Supreme Court held in Kelo v. the City 

of New London, that the city’s condemnation of private property, 

which was part of the city’s redevelopment plan aimed at invigorating a depressed economy, was a ‘‘public use’’ satisfying the 

United States Constitution—even though the property might be 

turned over to private developers. The majority opinion was 

grounded on recent Supreme Court decisions holding that ‘‘public 

use’’ must be read broadly to mean for a public purpose. The disVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
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senters, however, argued that even a broad reading of ‘‘public use’’ 

does not extend to private-to-private transfers solely to improve the 

city’s tax base and create jobs. 

While the Supreme Court’s decision does authorize governments 

to exercise greater eminent domain powers, the effect of Kelo on 

Ohio homeowners will depend upon Federal, State, and local laws 

deeming what land is appropriate for condemnation. It is important 

that, as stewards of the public’s tax dollars, we strike the appropriate balance needed between the government’s power to condemn 

land for ‘‘public use’’ and to maintain the rights of citizens who 

wish to retain their private property. Although the Court’s decision 

allows for a broader sense of private-to-private transfer, eminent 

domain is still limited by local and State regulations and statutes. 

Long ago, Sir William Blackstone in his Commentaries on the 

Law of England wrote that ‘‘the law of the land postpones even 

public necessity to the sacred and inviolable rights of private property.’’ Our founding fathers embodied that principle while drafting 

the United States Constitution, allowing the government to take 

property not for ‘‘public necessity’’ but instead for ‘‘public use.’’ 

Defying this understanding, the Court through its recent Kelo decision replaces the ‘‘public use’’ clause with a ‘‘public purposes’’ 

clause. 

And the rest of my statement will be put into the record. We do 

want to hear from you and this will be taken back to Washington. 

And as we go across the county, we will seek comments to see 

where this will balance out at the end of the day. 

So we will start with you, Commissioner. Thank you. 

STATEMENT OF COMMISSIONER TIMOTHY E. BUBB, LICKING 

COUNTY BOARD OF COMMISSIONERS 

Mr. BUBB. Good morning Congressman Ney, fellow panelists, 

elected officials, staff and others. Thank you for this opportunity to 

speak briefly on some of the past uses by State and local governments of eminent domain for public projects here in Licking County, Ohio. And also, Congressman, thank you for bringing this committee of the House of Representatives on this important issue to 

the grassroots level on the western side of your House District, 

Licking County. We appreciate the opportunity. 

Congressman, I do share your concern resulting from the Supreme Court’s June decision titled Kelo v. the City of New London. 

I believe most Americans who have read the split decision are concerned that the private property protections afforded in the takings 

clause of the Fifth Amendment could be placed at risk. Specifically 

that their homes, land, or even small businesses could be at risk 

for taking for something other than a clearly public purpose. 

I think it is safe to say here in Ohio, and across the Nation, that 

States are responding by considering amended laws or even constitutional amendments to prevent or restrict eminent domain powers for private development. 

While my term as a county commissioner here in Licking County 

began just this past January, my recollection is that the authority 

of eminent domain locally has been used only for public purposes. 

Specifically I think of a number of major highway projects in my 

lifetime including the development of Interstate 70 through the 

4

county in the late 1950’s; the development of the Newark Expressway beginning in the late 1950’s and continuing through the 1990’s 

for both Ohio Routes 16 and 79, that did involve the taking of land, 

with the resulting compensations and in some cases litigation over 

appraisal considerations and the amounts of compensation. 

Currently the redevelopment of State Route 161, which is an 11-

mile stretch from New Albany reaching to Granville, includes a 

number of takings to accommodate the widening, the realignment 

of that important roadway. The construction of phase one is set for 

2006. 

While there have been and will continue to be some disagreement over some of the specifics and amounts of compensation in 

the takings of some of the parcels involved, I do not believe there 

is any questions that these highway projects represented and represent needed public improvements. 

At the Licking County level, the two instances in my mind that 

involved eminent domain were the construction of the new Licking 

County Justice Center on Newark’s near east side in the 1980’s 

and also in that era the development of the Buckeye Lake Sewer 

Project. And I believe these were both clearly public projects with 

no private involvement. It should be noted in the case of the Justice Center that this public project also served to redevelop a 

blighted area near downtown Newark. Again, I am not aware of 

any use of eminent domain to assist a private development project 

here. However, this county office/jail project was in many ways 

similar to some of the urban renewal projects seen in other parts 

of the country. 

Congressman, while I have heard of both Federal and State legislation to address this concern, I would simply say to you that I 

would agree with the prevailing thought, simply do not move too 

quickly. I would certainly endorse the idea of a 1- or 2-year moratorium on the so-called private project eminent domain which would 

ease fears and I think prevent any additional private property 

takings. While I believe this has the potential to be a slippery 

slope, I would suggest that legislation could be crafted to allow a 

process for certain exceptions. In other words ‘‘never say never.’’ 

An outright ban on any takings for other than public purpose 

would make it very difficult, if not impossible, to ever redevelop the 

inner-city urban areas of Ohio and in many States. I could see a 

situation where redevelopment of a major industrial site and job 

creation, possibly in a ‘‘brownfield’’ area of an urban region could 

be nearly unattainable without some tools of eminent domain, possibly for access, a rail spur, or even port access. 

Again, such power in support of a public-private or private development certainly would have to have thorough public review to ensure that it is used sparingly and in an appropriate way. One way 

to evaluate such use of takings could be a regional review by a 

broad-based panel using as its guide local and regional land use 

plans and zoning districts. 

Congressman Ney, the preservation of green space and maintaining a healthy blend of land uses is a front burner issue for all of 

us here in Licking County. We are seeing a substantial relocation 

of residents from Franklin County into counties such as Licking 

and our neighboring counties such as Delaware and Fairfield. And 

5

while we welcome growth, we are also concerned about the rapid 

loss of easily developed farmland and woodlands to those looking 

to site new subdivisions for residential housing and commercial 

projects as well. 

I believe for our central Ohio region to remain healthy that some 

tools, such as eminent domain, may need to be available to allow 

for limited specific public-private redevelopment projects in the 

older cities. Such redevelopment has the potential to take some of 

the pressure off of the rural unincorporated areas in terms of 

growth. Without some relief in this area, I believe it will be impossible for county and township governments to keep up with the unfettered growth, and the resulting demand for infrastructure and 

public services in these large unincorporated areas. 

So, maybe it is possible to view Kelo v. the City of New London

as the Court’s way of spurring this discussion as to when eminent 

domain possibly could be a consideration for other than strictly 

public applications. It is possible that this is a discussion the framers never could have conceived. 

Congressman, I do thank you for the opportunity to speak to 

your subcommittee today and offer my thoughts, and again I appreciate you being here today. 

[The prepared statement of Mr. Bubb can be found on page 54 

of the appendix.] 

Chairman NEY. Thank you, Commissioner. Senator. 

STATEMENT OF STATE SENATOR TIMOTHY J. GRENDELL, 18TH 

DISTRICT, OHIO STATE SENATE 

Mr. GRENDELL. Thank you Congressman Ney, good morning. 

Good morning to all the public officials here. It is a beautiful building and thank you, Congressman Ney, for bringing Congress to 

Ohio and providing us an opportunity to testify before the subcommittee on an important constitutional property rights issue. 

In addition to the Fifth Amendment language that you stated 

Congressman, the Ohio Constitution even is more explicit. It says 

that ‘‘Private property shall ever be held inviolate . . . where private property shall be taken for public use a compensation therefor 

shall first be made in money, or secured by a deposit.’’ 

The U.S. Supreme Court’s recent decision permitting the government sanctioned transfer of private property from a private citizen 

to a private developer has struck a constitutional nerve throughout 

the country. While the use of eminent domain for roads and utilities has long been recognized, the government taking and transferring of a well-maintained parcel of real property from one private 

owner to another private owner is fundamentally un-American. 

Trampling on one individual’s property rights for the speculative, 

collective good through a future development smacks of socialism. 

The Ohio legislature can and should take immediate action to protect Ohio’s private property rights from the intrusive impact of the 

Supreme Court’s ruling. 

Our Founding Fathers believed that private property ownership, 

as defined under common law, pre-existed government. They further believed that government, whether Federal or State, served as 

the contractual agent for the people and, unlike the English monarchy, was not a sovereign. Thus, protecting private property ownVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
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ership rights against unwarranted governmental appropriation motivated the inclusion of the takings clause in the Fifth Amendment 

of the U.S. Constitution and various State constitutions, including 

Ohio’s. Of course, by including the takings clause, the framers of 

the Bill of Rights also recognized the need for a limited public use 

exception to the sanctity of private right—private property rights, 

provided that the property owner was justly compensated. 

The takings clause buttressed the Founding Fathers’ respect for 

private property rights in two ways: private property can only be 

taken for public use; and such taking can only occur if the property 

owner is adequately compensated. The takings clause in the Fifth 

Amendment was intended to protect private property owners from 

arbitrary governmental power. 

The drafters of the Ohio Constitution emulated the Federal constitution recognition of private property rights in Article I, Section 

19, which declares that private property rights are inviolate and 

permits appropriation of private property in Ohio only for public 

use. 

For approximately 175 years, eminent domain was employed by 

government for obvious public uses such as roads, canals, railroads, 

military bases, fire stations, schools and parks. Then eminent domain became a tool for urban revitalizationists who invoked government taking powers to acquire blighted or deteriorated private 

property, often for private redevelopment as urban renewal 

projects. Courts upheld such actions, finding that eliminating 

blight was a legitimate public purpose. In hindsight, these cases 

started takings law down a dangerous and slippery slope. 

On June 23, 2005, in Kelo v. the City of New London, the U.S. 

Supreme Court, by a narrow five to four decision, issued one of the 

most controversial rulings in history. The majority of the Supreme 

Court expanded far beyond the traditional, limited view of eminent 

domain powers by holding that non-blighted private property can 

be taken, against the will of the property owners, by a governmental authority for ultimate ownership by another private entity, 

in the name of economic development. 

The majority of the Justices found that the City of New London, 

Connecticut, did not violate the Fifth Amendment by taking several 

unblighted residential properties clearing the way for a private office complex. The majority concluded that the economic benefits of 

such new development to the city, new jobs and increased taxes, 

satisfied the constitutional public use prerequisite to an eminent 

domain action. 

Justice Sandra Day O’Connor and three other justices disagreed 

with the majority’s more broadly defined concept of public purpose 

or pubic use. In her vigorous dissent, Justice O’Connor chastised 

the majority for abandoning the 2-century old principle of preventing the government from acting beyond its authority, warning 

that ‘‘nothing is to prevent the State from replacing any Motel 6 

with a Ritz Carlton, any home with a shopping mall and any farm 

with a factory.’’ 

To some, Kelo is the natural extension of the urban renewal 

eliminate blight cases where economic benefit equals public use. To 

others, Kelo is an affront to the fundamental protection of private 

property ownership guaranteed by the Fifth Amendment. A review 

7

of our Founding Fathers’ early writings supports the conclusion 

that Kelo is an affront to property rights. It is doubtful that Thomas Jefferson ever envisioned a government right to take his home, 

Monticello, and give it to a private developer for an office complex 

or a big box super center. 

Thankfully, the Supreme Court noted that the Kelo decision does 

not prevent States from adopting a more protective approach to private property rights. At least 34 States have initiated legislative efforts to negate the impact of Kelo. Presently, Ohio law governing eminent domain neither contemplates nor adequately protects private property owners should 

unblighted private property be taken by eminent domain under the 

banner of economic development. Courts have almost uniformly acceded to the government’s determination that a public necessity exists justifying the take. At least in the urban renewal cases, the 

taking authority had to obtain a blight study before it could proceed with the eminent domain. 

We have had two controversies involving that in Ohio; one, the 

Lakewood case where there was a question of the validity of the 

blight study which held that merely having a detached garage and 

one bathroom constituted a blight if you were within the boundaries of that particular take area, which was ironic because the 

mayor of the city who did not live in the take area had a home 

with one bathroom and a detached garage, which apparently was 

blighted but not taken. 

After Kelo, government officials merely need to conclude that the 

taking of property from one private owner to transfer to another 

private owner will be more economically beneficial to the public. 

But such economic socialism may not constitute public use. 

Eminent domain procedures under Ohio law do not properly address the private-to-private taking permitted by Kelo. Currently, 

under chapter 163, the private property owner bears a substantial 

burden with respect to establishing the value of the property to be 

taken. And in fact, is required to go first before the jury, which is 

an oddity in civil litigation in Ohio, and is usually limited to presenting evidence of the value based on the property’s current zoning. This could lead to a substantial inequity in a Kelo taking situation. For example, the owner of a house on one acre zoned residential worth a maximum of $150,000, in most cases, would be limited to offering evidence of that value. Should the acre be taken by 

eminent domain and subsequently transferred to a developer of a 

commercial complex, the ultimate value of that property could be 

$250,000 to $300,000. Such governmentally induced inequity cannot be condoned or considered just compensation. 

Additionally, the property owner has to absorb their own attorney’s fees and expert costs, even though the private developer will 

get the benefit of that take. 

Ohio must take action to protect Ohio’s property rights after 

Kelo. To that end, I, along with State Senator Kimberly Zurz, Gary 

Cates, and 23 other Ohio State Senators have sponsored Senate 

Bill 167 in the Ohio Senate. This legislation provides for a temporary statewide moratorium on governmental taking of unblighted 

private property for economic development by another private 

party. The moratorium would be in force until December 31, 2006, 

8

and would affect both State and local governmental projects involving eminent domain proceedings. In addition, Senate Bill 167 forms 

a legislative Task Force to conduct a comprehensive review of 

Ohio’s eminent domain laws and procedures. 

The task force, comprised of 24 individuals, will include representation from a broad set of interested parties, including property rights groups, State and local government, agriculture, commercial and residential real estate and the Legislature. The task 

force will conduct a comprehensive review of Ohio’s eminent domain law and procedures and make recommendations as to the 

statutory or constitutional actions needed to protect private property rights in Ohio in light of Kelo. The task force report will be 

due in the spring of 2006, giving the legislature time to take action 

on its recommendations in the current term. 

Senate Bill 167 protects Ohioans’ property rights in the short 

term, while providing a thoughtful and comprehensive approach toward a permanent change in Ohio’s eminent domain law. While 

eminent domain can be an important tool for State and local government when employed for legitimate public uses, the governmental powers should not be abused or exploited. To make way for 

new developments simply because such developments will generate 

more jobs and taxes or for some other speculative public good at 

the expense of a private property owner is fundamentally un-American. 

Under Article I, Section 19, of the Ohio Constitution, ‘‘private 

property rights are inviolate.’’ And despite the Kelo ruling and its 

overly expansive notion of eminent domain, ‘‘inviolate’’, in Ohio, 

still means inviolate. 

States have numerous options in response to Kelo. These options 

range from taking no action and letting the courts grapple with the 

problem to adoption of a State constitutional amendment prohibiting the taking of all private property or unbilighted private property that would ultimately be transferred by another property 

owner to a private property owner. In between, State law can be 

changed to redefine public use, but such statutory action could be 

circumvented by a municipality’s home rule powers. Such home 

rule concern can be avoided by way of a State constitutional 

amendment. States also should reexamine their definition of blight 

and deteriorated properties to prevent future circumvention of any 

Kelo responsive changes in the law through the abuse of those 

terms. 

Finally, if a total prohibition against the taking of unblighted 

private property is not adopted, State procedures for determining 

just compensation for property taken should be changed to allow 

the current private property owner to offer evidence demonstrating 

the value of the property based on its proposed future development 

after the take. 

Swift action is needed to protect Ohioans’ private property rights 

after Kelo. Senate Bill 167 will provide immediate relief, while proposing the appropriate long-term solution. This approach will protect Ohio private property rights now and in the future. 

Congressman, thank you very much for the chance to address 

you today. 

9

[The prepared statement of Mr. Grendell can be found on page 

73 of the appendix.] 

Chairman NEY. Thank you, Senator, for your testimony. Representative Gibbs. 

STATEMENT OF HON. BOB GIBBS, STATE REPRESENTATIVE, 

97TH DISTRICT, OHIO HOUSE OF REPRESENTATIVES 

Mr. GIBBS. Thank you, Congressman Ney, and welcome. Appreciate the opportunity to come and testify. I will try to paraphrase 

some of my testimony because it is very similar to Senator 

Grendell’s testimony. 

Just as a side note, one of the reasons why I wanted to get involved in this issue is because of my past. A few years ago, I was 

president of the Ohio Farm Bureau and I have seen takings by government agencies, regulatory type takings, which is a similar issue 

to this. Not exactly the same, but I can see the impact it does to 

private business and families and that is why I got concerned and 

concerned about private property rights. 

As you know, the Supreme Court decision in Kelo, the 5-4 decision, allows for eminent domain takings from the private sector for 

development. It provides for a wide range of discretion to State and 

local governments to decide how eminent domain powers should be 

employed in their jurisdiction. I believe that this decision opens a 

flood gate for eminent domain abuse. I and other members of the 

General Assembly realized this early on and we think that it is imperative that legislative action be taken immediately to ensure fair 

and uniform enforcement of eminent domain powers and protect 

private property rights in our State. 

Eminent domain has been a necessary tool to provide public infrastructure projects for public good. However, the Kelo decision allows for eminent domain proceedings for private sector development that ultimately enhances the tax base, making the argument 

it is for the public good because of increased tax revenues. This argument is appalling, essentially the government is saying revenues 

to a taxing jurisdiction are paramount to private property rights. 

This contradicts the founding principles this Nation was founded 

upon. 

Currently, Ohio law provides for eminent domain authority to be 

used to eliminate slums and blighted neighborhoods. A strong case 

can be made with this provision and the current law that the Kelo

type provision is not necessary, but only opens the door for eminent 

domain abuse. The Kelo decision will take our free market system 

out of private development projects. 

And it was just a couple of weeks ago I received a correspondence 

from a citizen in northeast Ohio, he stated that a large insurance 

company up there made an offer to the local land owners to buy 

their property to expand their office complex. And the landowners 

denied the request and I do not know if they do not want to sell 

or if it might be the free market system working here. But according to his correspondence, they have now pursued the local jurisdiction, since the Kelo decision, to pursue the use of the eminent domain. So that is the future concern for me that you are taking the 

free market system out of the process. 

10

Of course under the current system, you know, the judicial system and the juries will decide what compensation will be. I asked 

a question here when the private property remains in the private 

sector, you know, what is the basis for compensation. Since Kelo

takes out the free and open competitive market, who determines 

what the property rights are. 

Also, as stated, I have been working with Senator Grendell and 

others and as Senator Grendell stated, he has introduced the Senate Bill with the moratorium. I am introducing the identical companion legislation in the House. We had a little bit of a paper 

snafu, and it should be introduced today, along with about 30 some 

co-sponsors, a very bipartisan support. As Senator Grendell stated, 

it would put a moratorium on until December 31, 2006. And the 

study task force and I think we probably are looking at a constitutional amendment here in Ohio, next November to address this situation. 

However, I do want to caution that we need to be careful. We 

were working on this project or this issue with the Jobs for Ohio 

issue. There are a lot of complex issues and a lot of nuances and 

some questions came up between the attorneys and the government 

leadership here in Ohio. And that is why we need this task force 

to look at all the complexities and make sure that we do not something that is going to cause more problems in the future. And I 

would also caution at the Federal level not to have a knee jerk reaction, because I think most people can see that Kelo is a problem, 

the decision is a problem and raises some concerns, but then we 

do not want to do some things with eminent domain that causes 

some problems on the other side of it. 

As stated, there was the Lakewood case Senator Grendell talked 

about. Also in Norwood, Ohio, there was a similar case and in that 

case, my understanding is it was declared an emergency so a referendum could not take place as opposed to in Lakewood where the 

citizens overturned the eminent domain proceedings. And the 

Court of Appeals in Hamilton County upheld the lower court’s decision saying that the city council amended their laws and had a 

plan in place and they ruled unconstitutional and I had the opportunity to meet the person whose land was taken, and I think it 

goes against all our principles of government here in the United 

States. 

As I stated it is also an opinion of this working group that we 

have put together, an ad hoc group that Senator Grendell put together of many stakeholders that we should not rush into this and 

that is why a moratorium makes a lot of sense and I am happy to 

sponsor that in the House. 

I do feel strongly that an eminent domain authority should be 

used judiciously and only for public infrastructure projects and 

common carrier easements in question. 

I think also we need to address in Ohio the definition of blighted 

neighborhoods so that it is closely defined so we protect the private 

property owners’ rights. And we also, need to strengthen those 

rights. I think Senator Grendell alluded to it a little bit, you know, 

property owners do not have much—they have to hire their own 

legal counsel and the costs associated with challenging eminent domain action for public use grounds and we need to probably 

11

strengthen those protections for the private property owners when 

they are in eminent domain proceedings. 

So, again, I want to thank the Congressman for having the hearing and the opportunity to talk here. I would be happy to answer 

any questions you have. Thank you. 

[The prepared statement of Mr. Gibbs can be found on page 69 

of the appendix.] 

Chairman NEY. Thank you, Representative. Mayor. 

STATEMENT OF HON. CLIFFORD L. MASON, MAYOR, VILLAGE 

OF HEBRON, OHIO 

Mr. MASON. Honorable Chairman Ney, committee members, fellow elected officials, and guests. 

Thank you for allowing me the opportunity to address the committee this morning. As Mayor of the Village of Hebron, I would 

like to welcome everyone to our community for this important 

event. 

The Fifth Amendment to the Constitution of the United States 

allows for the government taking of private property for the public 

good through the application of due process and fair compensation. 

Clearly, many of the roads, utility infrastructure, schools, flood control reservoirs, and numerous other projects that improve the quality of life for all would not be possible if it were not for this law. 

I believe that while the eminent domain process can yield great 

benefit for communities, it can also inflict significant hardship on 

private property owners who have their own vision for their property. The property owners have a right to that vision and the government should be hesitant to impose a different vision. The need 

to strike a balance between the public good and the property rights 

of the individual should always be uppermost in the minds of elected officials. 

It seems to me that the taking of private property from one private individual and giving it or selling it to another private individual or business is unlikely to be what the framers of the Fifth 

Amendment had in mind. When the taking is done solely to enhance the revenue stream for the government by expanding the tax 

base, I believe it is beyond the boundaries of expectation of the 

electorate. 

There is no question that any of our homes would produce more 

jobs and taxes if they were turned into an office building site, and 

every small business would produce more jobs and taxes if it were 

torn down and a Lowe’s or Wal-Mart were constructed. If that’s the 

definition of public good to be used, then everything we own as individuals is in jeopardy as soon as some private business delivers 

their plan or vision to the local council. 

Our country has always supported a strong system of protecting 

private property rights. I believe that the process of eminent domain is a necessary tool for the betterment of our communities and 

public safety and health, and should continue. As with many laws, 

the interpretation of this one seems to have expanded beyond what 

most Americans would consider common sense. I am one of those 

Americans. 

I support the efforts of your committee to investigate what may 

appear to some as abuses of the eminent domain process. I also 

12

would encourage our representatives at all levels that any restriction of the process be approached with great caution. This is a law 

that has helped provide an American infrastructure that is the 

envy of most of the world. It will continue to be needed as we move 

forward as an innovative and progressive society. 

Those of us who have the privilege of serving our communities 

simply cannot forget that we have a responsibility to protect and 

defend the rights of the private individual as we strive to improve 

the quality of life for all. 

Thank you for this opportunity to share these comments. 

[The prepared statement of Mayor Mason can be found on page 

86 of the appendix.] 

Chairman NEY. Thank you, Mayor. Mr. Platt. 

STATEMENT OF RICHARD J. PLATT, EXECUTIVE DIRECTOR, 

HEATH-NEWARK-LICKING COUNTY PORT AUTHORITY 

Mr. PLATT. Good morning. I appreciate the opportunity to offer 

testimony. I will paraphrase my written remarks. I thank you, 

Chairman Ney, for listening to your constituents and for conducting this hearing outside of Washington. Eminent domain is a 

local issue and it is entirely appropriate that these hearings be conducted in the seat of a local government. 

My remarks today are based on my past professional experiences 

and observations over the last 18 years in economic development 

and government. My current employer, the Port Authority, has not 

exercised eminent domain powers and has no current plans to exercise those powers. 

My experience, though, tells me—and it is my personal opinion—

that the Supreme Court got it right. My contention is that local 

governments can, and should, be trusted to continue to have power 

to use eminent domain for economic development and other public 

purposes. 

Many want to portray this decision in Kelo as a battle of big 

business winning while mom and pop are losing. However, I fear 

legislation aimed at countering Kelo might actually end up with 

unintended consequences. 

My thinking comes from observations on several sides of this 

issue. In 1999, while serving as the head of a public/private economic development group in Steubenville, Ohio, my employer 

earned this Pittsburgh Post-Gazette headline. ‘‘Alliance 2000 to 

Heinz: You’ve Got a Friend in Ohio.’’ 

Jefferson County, Ohio, a suburb of Pittsburgh stood to gain a 

baby food and soup plant expansion by Heinz if the City of Pittsburgh could not successfully acquire properties adjacent to the existing inner city Heinz plant. Heinz had proposed a $40 million expansion and desired to stay in Pittsburgh but was hemmed in by 

surrounding built-out properties. 

Though eminent domain was not ultimately used in this Pittsburgh case, it was central to the discussions aimed at keeping 

Heinz, its jobs, and its economic impact in the inner city. The possible condemnation of properties was enough to get negotiators to 

the table and make it possible for Pittsburgh to gain the expansion 

and retain this legacy business in their city. 

13

The unintended consequence of tying the hands of urban areas 

is continued flight of businesses and people to greener pastures in 

the suburbs. Had the local government officials in Pittsburgh found 

themselves unable to consider using eminent domain powers in this 

case, it is quite possible Heinz would have gone to a suburban site 

west of Steubenville. 

The big business in this case, Heinz, would not have lost. Their 

costs were not much greater relocating the whole plant to Steubenville. The losers would have been the hundreds of moms and pops 

who would have lost their jobs in Pittsburgh. 

Do not think suburban communities are lining up to suggest the 

end to eminent domain for economic development though. Steubenville faces eminent domain issues itself. The south end of town, 

once a thriving ethnic neighborhood with a flourishing mix of industrial, retail, and housing development, is dilapidated. Overgrown vacant lots, absentee landlords, and economic despair are 

the only things flourishing in the south end now. 

But, replace the name Steubenville with the name of many of our 

large and medium size cities around Ohio and the Nation and the 

same exact story could be told. The only way for most of these cities to turn this dire economic situation around is through government-led land assembly aimed at attracting private, capital investment. 

Some years ago, the city crafted a redevelopment plan that called 

for assembling dozens of parcels into four distinct sites. During 

that planning process, there were strategy discussions of using 

eminent domain powers as a last resort to acquire vacant properties. 

Eminent domain powers are a critical part of any redevelopment 

plan. It is necessary to assemble land, clean it up and get the 

area’s property values pointing in a positive direction before there 

is any hope of inviting the private sector in to turn it around. 

It is quite possible in this case that eminent domain never has 

to be used. The mere ability to use it though, is enough to tilt the 

balance in the favor of redevelopment. Restrict eminent domain 

powers to just building a new government building or new highways in places like Steubenville, Ohio, and you might as well write 

off neighborhoods like the south end forever. 

Again, unintended consequences and really the reverse of protecting mom and pop could result. 

The national discourse on this issue has been so strong that I 

fear a pendulum-like swing of public policy could bring us to restrictions on eminent domain powers so great that a single individual could be empowered to stop a project expected to impact 

hundreds of families. Local governments will have their hands tied. 

In an era of global competition for the economic benefits of private 

capital investment we need to give a long, hard look to anything 

that ties our hands and local officials’ hands more than our global 

competitors. 

Every time we look at public policy measures that could tend to 

make the job of those who are tasked with attracting economic development more difficult, we need to ask the question: Will this legislation make it easier to bring new jobs and new investments to 

the United States? In the Pittsburgh case, the Heinz case, there is 

14

a point where it gets easier to do your expansions outside of the 

borders of the United States. That is the time that we need to be 

concerned about our country. 

There exist today eminent domain policies and practices that 

allow us to compete but are not displacing mom and pop for big 

business. Thomas Jefferson was right. Government is best which is 

closest to the people. 

The International Economic Development Council publishes what 

it calls guiding principles for land assembly and economic development. Those principles are in my testimony. These principles make 

sense. Eminent domain should always be a last resort and the local 

community should carefully review, in a public forum, the benefits 

of redevelopment versus displacement of occupied homes and businesses. 

Additionally, the Federal Government already properly restricts 

the power of eminent domain. When Federal funds are used, relocation of individuals is greatly protected. 

The rhetoric following the June Supreme Court decision continues to be strong. We need a cooling-off period, and we need to 

explore with great care the potential consequences of restricting 

eminent domain powers. 

Again, Mr. Chairman, thank you for the opportunity to share my 

personal thoughts and experiences. 

[The prepared statement of Mr. Platt can be found on page 97 

of the appendix.] 

Chairman NEY. Thank you. Mr. Nutt. 

STATEMENT OF STEVEN NUTT, DIRECTOR OF STRATEGIC 

DEVELOPMENT, CITYWIDE DEVELOPMENT CORPORATION 

Mr. NUTT. Good morning, Chairman Ney. I thank you for the opportunity to be with you today. I appreciate the opportunity to 

share the experiences of economic development professionals with 

you. And I hope that our experiences will help you and your colleagues as you review eminent domain. 

Eminent domain is an economic development tool which allows 

local communities to acquire and assemble land for new development projects. It generates new jobs, new investments, and taxes. 

For example, Dayton is a landlocked community without space for 

businesses to grow. As a result, those businesses often choose to locate outside the city. Without eminent domain as one of our tools 

that we use in economic development, we do not have the ability 

to create the space that is necessary for those companies to grow. 

I can tell you that, in the City of Dayton, we use eminent domain 

very judiciously; in fact, we have not used it for the purposes of 

turning a property over for private development in the last 10 

years. 

The Ohio legislation—the proposed legislation of the Ohio General Assembly—would prohibit the use of eminent domain for economic development. Ohio law as it exists now keeps the economic 

health of the communities in the hands of local leaders who are not 

out to destroy communities but rather who work for the best interest of their communities at large. 

Unduly constraining eminent domain would eliminate an entire 

category of projects from the redevelopment tool box of local offiVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
15

cials. And it, in fact, would thwart job creation and job retention, 

particularly in landlocked communities like Dayton. This would 

mean that no municipalities in Ohio could use eminent domain to 

carry out an economic development project. One person could veto 

the redevelopment of the entire distressed community. This would 

have the practical effect of making such properties virtually impossible. 

State or Federal bills prohibiting the use of eminent domain for 

economic development are job killing pieces of legislation. Though 

167 comes in response to the Supreme Court’s decision in the case 

of Kelo v. the City of New London, the Supreme Court’s case affirms eminent domain as an important tool for local government 

and leaves eminent domain where it should be; in the hands of the 

States and localities. The Supreme Court did not in any way expand the power of eminent domain. Rather the Court simply 

upheld the long-standing inclusion of economic development as a 

public use. It is therefore highly unlikely that the Supreme Court’s 

decision will result in city officials exercising eminent domain randomly or without a balanced consideration. They will come to use 

eminent domain as they have in the vast majority of cases, judicially and in the light of day. 

Judicious use of eminent domain is critical to the economic 

growth and development of cities and towns throughout the country. Assembling land for redevelopment helps to revitalize local 

economies, create much needed jobs and generate revenues that enable cities to provide essential services to their customers. 

Many of our urban communities were developed in the late 

1800’s and the early 1900’s. These cities have small lot sizes and 

were developed in an era of horse and buggy. It is very difficult to 

redevelop in these communities without the ability to assemble 

land. Big box retailers, shopping malls, new office buildings, etc., 

often choose to locate in greenfields and suburbs where large parcels of land are available, especially if they are not available in the 

city. We have a number of industrial customers for example, that 

need to expand and without having those types of land assemblies 

available for them, they will move to a suburb and hurt the City 

of Dayton’s income tax base. 

Each time those development decisions are made, the tax base 

and jobs are going to those other places. There is no question that 

eminent domain is a power that like any other government power 

must be used prudently. And there are many built-in checks. One 

such check is the public nature of the takings process. Probing 

questions should be raised about any complex undertaking financed 

by taxpayers. And nothing in local government attracts more scrutiny or more criticism than eminent domain. 

Few government or elected officials are willing to risk their position and political stability in pursuit of a project that is overwhelmingly opposed by the community. 

In another check on abuse, the Fifth Amendment requires that 

anyone whose property is taken for public use be fairly compensated. And in practice, most takings are compensated generously. Local officials use eminent domain to achieve the greater 

good when holdout landowners think their property is worth far 

more than ever could be achieved. If governments have to wait for 

16

holdouts, communities will see jobs and market opportunities disappear. 

At a time when so many of our businesses and communities are 

being confronted with intense competition from oversees and areas 

of our cities and rural areas are in decline, Congress should be expanding its efforts to solve the problems of economic deterioration, 

not imposing restrictions on community growth. 

I thank you again for the opportunity to speak to you today and 

I would be happy to answer any question you have. 

[The prepared statement of Mr. Nutt can be found on page 88 of 

the appendix.] 

Chairman NEY. Thank you, Mr. Nutt. 

Mr. Riley is here, he works for the ranking member Barney 

Frank with the committee, and he may have some questions. 

I want to go to the legislators for a second. So your bill would 

have a moratorium in place and then you would have a task force 

that comes back with recommendations. Would those recommendations—would they be making recommendations of how to carry out 

the Supreme Court’s decision with restrictions or how would you 

envision that they would—not what they are going to decide, but 

is their task to find out how to do this considering Supreme Court’s 

decision stands? 

Mr. GRENDELL. Congressman Ney, first of all if I may clarify an 

issue. The legislation that Representative Gibbs and I have proposed does not prohibit the use of eminent domain for economic development. It restricts for a 17-month period the taking of 

unblighted, in other words, well-maintained, not your usual urban 

renewal situation property, to go from one private owner to another. And the task force charge is sort of unlimited, on one end 

they can recommend doing nothing and letting this process continue under Kelo and sort of work its way through some judicial 

interpretations that may fall from that under Ohio’s Constitution. 

At the other end could be a constitutional amendment that could 

either prohibit all private taking that ends up in private use or private taking of unblighted, or maybe just say taking of occupied personal residences that are unblighted. There is a lot of variety at 

that end. And in between the task force is going to look at totally 

overhauling Ohio’s eminent domain procedures as to how we determine compensation. There may be a different form of compensation 

calculation for one that is going to end up in private use versus for 

a road or a public use, based on what I alluded to in my testimony, 

the potential increase of value that the taking will add to the property itself. We are not going to tie the hands of the task force. They 

will be able to go from one end of that spectrum to the other and 

make their recommendations. 

And the only other thing that we are asking the task force to do 

is re-look at this definition of the words ‘‘blight’’ and ‘‘deterioration’’. Because to the extent there has been any abuse of eminent 

domain power in Ohio, it has been the Norwood and the Lakewood 

situations, particularly the Lakewood situation, where arguably the 

concept of blight was taken to its farthest extreme to try to justify 

the take. And we do not want people to circumvent whatever we 

do to address Kelo by being clever in how they define blight. 

17

But the task force will have that entire area to look at, Congressman. We are not going to try to tie their hands or give them a predisposed conclusion. 

Chairman NEY. So there would be a moratorium in effect and 

then they can come back and they will have whatever recommendations? 

Mr. GRENDELL. Correct, they are—the way the statute now reads 

or the legislation reads is that by April they have to come back 

with a report. That report could be anywhere along that line of potential recommendations. There are some who hope there will be 

a constitutional amendment. There are some who hope that there 

will be nothing, and there are some, I think, who hope it will fall 

somewhere between. The task force will be able to look at all those 

and make a report by April and then the legislature will have to 

make a decision how it wants to address the Kelo situation. 

What we did not want to have happen in the interim is to have 

people get what I refer to as ‘‘Kelo-ized’’, that, you know, while we 

are studying the problem people who may want to expand the use 

of eminent domain rush out and use it before we can find a final 

State approach to the situation. That’s why the moratorium we felt 

was important, again, for unblighted property, the traditional Kelo

situation, where your property is perfectly habitable, perfectly valuable but it is now going to be taken not for a road or a fire station, 

but to go to some private development. 

Mr. GIBBS. Congressman, I would just like to, you know, imply 

that this moratorium only applies to the Kelo type takings and the 

blighted definition. It does not apply to public infrastructure 

projects, like roads that most people are accustomed to under eminent domain. I think a precursor of what this task force might look 

like is the working group that has been working on this—it is an 

ad hoc working group because around that table there are about 

30-some people, the stakeholders are involved, there are developers. There are the people who have had eminent domain, Lakewood, Norwood, legislators and—so I think that as Senator 

Grendell states, that task force is going to be wholly encompassing 

the whole picture and there will be economic development people 

obviously on that task force. So all sides will be heard and I think 

that is the best part of our governmental process, is when that 

process works that way, we will come up with a solution that will 

work and protect private property rights. But also not hinder economic development in a detrimental way. 

Chairman NEY. Mr. Nutt, you had said that it has not been used 

for 10 years in Dayton, why was that? 

Mr. NUTT. It has not been used in a situation where we have 

turned the property over to a private developer for development. A 

couple of reasons for that, one being that eminent domain takes a 

lot of time; it is very expensive. Another reason being that in the 

City of Dayton, we have a more restrictive definition of slum and 

blight than the State definition. So it is much more difficult for us 

to use eminent domain in those cases. 

Chairman NEY. So Dayton passed—approximately when did Dayton pass the more restrictive laws, do you know? 

Mr. NUTT. Congressman, I am not sure. I can find out for you. 

18

Chairman NEY. I am curious, if you could find out. Somebody’s 

answer dealt with it, but once a property is condemned and the 

area developed, the land value rises. Does that play a role in the 

compensation, do you know, of eminent domain use, Senator? 

Mr. GRENDELL. Congressman, having defended on behalf of property owners numerous eminent domain actions, and having been on 

the other side representing some governmental authorities, generally speaking, the Ohio law deals with the property as of its 

value on the day of the take, which means the way it is zoned and 

the way that it is used on the day of the take. The appraisals that 

are offered both by the governmental taking authority and the private individual, generally speaking, reflect one’s view of that property. They can be widely disparate as one who is more generous on 

how they apply appraisal practices to the other. But generally 

speaking, you are tied with the value and the use at the take. 

That has proven to be a problem. We have attempted in some 

cases to try to show the increased value, because we have had some 

situations where the property has been taken from blight and 

turned into a private development. Most times the probate court 

has not been overly generous to the property owner and allowed 

that expanded—what they refer to speculative—evidence of its future value. And so as a rule, in my experience, it has not allowed 

a lot of evidence of that future prospective value post-take. And 

that has been the problem. 

And as I said in my testimony, that is where the person with the 

residential property will lose value to a private individual who will 

convert that to a Wal-Mart store, for example, where the price is 

substantially greater. Yet in most cases, they are not going to get 

that testimony in front of the jury. Albeit, the big argument in 

takings cases is to at least try to appeal to the sympathy of the jurors that they are a fellow property owner, like the rest of us. And 

that they should be generous to the person who owns the land. The 

converse is a good governmental attorney would argue that it is 

taxpayers’ money we are dealing with to try to get the jurors who 

are all taxpayers not to be that overly generous. 

Chairman NEY. The ones that I have seen or been involved with 

has been for public use. And I know when I was in the State Senate we could not give buildings away, government buildings away 

to people, you know, and the people that wanted to use one of them 

up near Cleveland one time and they would say—what is that big 

place? 

Mr. GRENDELL. Rehab center on Conquest. 

Chairman NEY. Yes, and we were arguing about that, somebody 

said well, it is worth $6 million. Nobody would have bought it for 

a dollar, because you had to go in and there was asbestos and the 

whole nine yards. So in a lot of cases that I have seen—a prison 

in Belmont County, where they came in and took one parcel of land 

for public use. That land really usually does not rise in value, because if the prison shuts down who is going buy it, you know. We 

have a situation like that down in Hawking County area. 

So, that is one whole concept for the public. The private is a different world, because, you know, instantly that can easily escalate 

a price. Has there been any—would there have to be rules set up? 

Let us say nothing happens and the Supreme Court decision stands 

19

and somebody comes in and their small business is taken and there 

is a strip mall developed. Could there be rules or local laws maybe, 

or county, that would come into effect that that person would have 

a right to be in that strip mall, as a small business owner that 

was—whose property was taken. Do you think it would get to that 

point if nothing changes with this decision? That maybe local governments would have to get to that point of getting it all the way 

down to that level or would it be just broad open? 

Mr. PLATT. In Steubenville, on the South End, I mean, to get a 

4-acre parcel together you had to take about 40 parcels to do it. 

And so, yeah, there would be times where you would look on a map 

and say that makes sense, we would love to if we could keep some 

businesses in the location and maybe attract a multi-tenant building to be developed on that property. So that is something that you 

would try, but again, I think if you do not have eminent domain 

capability in that case you will never get anybody to the table to 

even have it be a part of the dialogue. 

Mr. GRENDELL. Congressman, I mean, there was a comment before about negotiating and that is very true. In a lot of the cases 

in the negotiations—Representative Gibbs called free market system, which is very true. In the free market discussion in an eminent domain case it is not unusual to negotiate yourself a cash 

amount and space in the new center. That is part of the negotiating process. I would not like to see us get to the point where government dictates that a landlord is required to take anybody as a 

tenant and would prefer to address increasing the compensation for 

the person who is being displaced before I want government dictating who should be tenants in shopping centers. That is taking 

government a different path that could be dangerous. 

Mr. GIBBS. I wanted to address I think, a little bit, the previous 

question about the economic compensation and deciding that. You 

know, notwithstanding the increased tax revenue, let us set that 

aside and, you know, eminent domain for public good for a road, 

you know, society benefits from that road, and so that is the economic benefit. But when it stays in the private sector and notwithstanding the tax base increase, the only economic benefit is to a 

sole beneficiary, you know, the person that owns that and I think 

that goes to the root of the Kelo problem. You know, the economic 

benefit under what normally we would think as eminent domain, 

you know, the whole community benefits and when only a sole—

only one beneficiary of that economic benefit, I think that is the 

problem that we have. 

And like I said in my testimony, how do you decide what the 

compensation is. What it was worth yesterday, today, or what the 

speculative value is. And when it is only—when only Senator 

Grendell is going to benefit when he does economic development 

and not the community, then that is where they use the argument 

about the economic tax base. I think that is a flawed argument, because it goes against the constitutional principle. 

Chairman NEY. I wonder if the local elected officials—the legislation the legislators have, would that be considered a cooling off period that you both have mentioned about not moving too fast, any 

opinions on that legislation? 

20

Mr. BUBB. My opinion is that I agree with this point, that maybe 

sort of ‘‘de-Kelolizing’’ the whole process. Maybe taking it out of the 

frenzy sort of part of the argument that all of a sudden people are 

very fearful of their private property that is not blighted being 

taken. Kind of putting that into a more introspective process, I 

think, is very valuable. I do not think that people really need to 

be worried about this, and I think that the moratorium would 

guarantee that and it would allow for that thoughtful discussion. 

So that we, again, as I said, never say never, but leave ourselves 

the option to do thoughtful things that might really make a big differences in some areas that are blighted. 

Mr. MASON. I would certainly support the moratorium to give 

time for the committee to discuss that and see what is in the best 

interest of the parties. 

Chairman NEY. One thing I wanted to mention, the community 

development block grant, which the Financial Services Committee 

and our subcommittee, as authorizers, we are involved with that. 

Recently, I did not support taking the CDBG over into the Commerce Department, because during the hearings it came out that 

Commerce would completely undo all the rules and create all new 

rules on CDBG. So you can imagine California fighting New York 

versus Ohio versus West Virginia, etc. You would have one huge 

battle out there. We would not recognize CDBG probably after it 

came out of there. So we fought, you know, a pretty good battle to 

keep CDBG intact as it is. 

But the one thing that we did is we authored legislation. Maxine 

Waters is our ranking member of the subcommittee, and Congressman Waters and I and Congressman Bachus and I do not know if 

we have any other co-sponsors yet? Do we? 

Mr. RILEY. Not on the legislation. 

Chairman NEY. We just introduced it and this is kind of one of 

the first pieces dealing with the Supreme Court decision. But I 

wanted to mention this. It would prevent CDBG funds from being 

used for this eminent domain under Kelo decisions. So in other 

words, we are not restricting the State, but if a local government 

would attempt to somehow use CDBG funds, we then would restrict those funds to not be used under the new Supreme Court decision. 

I think one of the rationales behind trying to make this move is 

that we have had enough of a battle and if all of a sudden CDBG 

funds are used to take somebody’s farm or whatever, for a store, 

you know, a business, you would have an outcry that CDBG needs 

to be altered and changed. So that is the one thing that we have 

done. 

And one question that I guess I have asked all of you and I think 

I might know the answer to this, you know, because we do not 

know what to do yet in the Federal Government and maybe we 

should not do anything right now. Maybe the States should act. If 

the Federal Government did anything, what would you see—a national moratorium would that work? The only thing that I am 

afraid with the Federal Government getting into this, although I 

do not like the Supreme Court decision, I am afraid that at the end 

of the day if we actually passed law, we would put eminent domain 

under the EPA or something. 

21

[Laughter.] 

And then hire 25,000 people and our entire lives would be upside 

down across the county. That is a fear I have. How would you regulate eminent domain? 

Mr. GIBBS. Congressman, I have been giving that a lot of thought 

and I think I concur with you. I am concerned about the Federal 

Government taking an action here, because, you know, I have seen 

in my past capacities how things are handled differently in different States. And the State constitutions are not identical. We 

have some questions that came up here in Ohio, you know, we have 

universities that have eminent domain authority and they also 

have non-profit foundations. And the question is does that foundation have eminent domain authority? I do not know the answer to 

that. And so, there is probably some difference between States and 

the current Constitution and regulations in Federal law to preempt 

some of that and cause some problems in local jurisdictions that we 

do not anticipate. 

So I think from the outset, from here it is better addressed by 

individual States and see how we work through this. It is kind of 

like the sales tax issue. The States are trying to work through that 

because for Federal legislation to address that issue with all the 

complexities between the different States, it creates a myriad of 

problems. So, I think you are probably right, let us wait to see 

what the States can work up and see if there is any commonality. 

Mr. GRENDELL. Congressman, I am a big Tenth Amendment fan 

and I certainly hope that we have not reserved the power of the 

property takings to the Federal Government somewhere else. While 

the Constitution protects the compensation clause, I think the Supreme Court got one thing right in Kelo, it is that States need to 

address this issue to protect the private property rights. We have 

taken the part of your legislation in the legislation that Representative Gibbs and I did. Our carrot and stick to any community that 

might think that their home rule power circumvents Senate Bill 

167, is they will lose their funding if they implement any violation 

of the moratorium. And so, we borrowed that from the Congressional language and we thank you for that. Because we felt that 

we needed some sort of back stop in case home rule came around 

the corner. 

But we do commend the thought that Federal money should not 

contribute to the problem. And so, where you are heading is the 

right direction although, we would ask that Congress look at this 

issue, because there is this balance that needs to be struck. There 

is this issue of unblighted private property that somebody is living 

in should not just be taken because somebody decides they want a 

Wal-Mart store versus there is a role for eminent domain in the 

area of our blighted urban areas that we do not want to lose that 

ability. 

And so, I think the thing we all can agree up here is that while 

we want to address this issue, we do not want to go so far over that 

the law of unintended consequences has a negative impact longterm on Ohio. And that is why we think the moratorium which 

Commissioner Bubb, I think, correctly said will give us a coolingoff period so that we can look at this in a rational long term soluVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
22

tion that protects private property rights, but also understands the 

need for still having eminent domain in the right circumstances. 

We do not have a solution there but that is where we should go. 

And we hope that whatever Congress is going to do will also reflect 

long term that there might be a time when that eminent domain 

does have a right play in the blighted situation that it does not 

have in the unblighted situation. 

Chairman NEY. Like I said, we were trying to do that so that the 

CDBG funds, there would not be some outrageous case where they 

were used. Then people would come through the back door saying 

well you have got to change it now and the CDBG is going in working in the right way. The—I think your approach eases some fears 

because what is happening to Members of Congress, you know, 435 

people, I am sure they are hearing it when they are back home, 

there is in the letters that we are getting and the immediate phone 

calls a fear out there that, you know, a few very, very wealthy people are going to start to seize what they want and have a lot of 

influence and get property and take farms. So there is a a lot of 

the unknown. So maybe the moratorium makes sense to give at 

least a little bit more calmer atmosphere until we can find out 

what to do. 

Questions? 

Mr. RILEY. I have a question on behalf of Mr. Frank and Ms. Waters. Mr. Frank and Ms. Waters, like Mr. Ney, are strong housing 

advocates. They have a concern for renters. Are there any examples 

of what has happened to renters that are in, you know, affordable 

housing units. Is there any consideration taken for them when the 

property is taken? 

Mr. NUTT. I am not the definitive source on that particular topic, 

but I do think that we pay relocation for renters as well. 

Mr. RILEY. You pay for relocation of renters? 

Mr. NUTT. Yes. 

Mr. GRENDELL. Under Ohio law, the renter, if a lease is in effect, 

does have some rights vis-a-vis their leasehold interest, because 

you are taking not only the fee interest of the property owner, the 

landlord, you are taking the leasehold interest of the tenant. There 

are provisions, some provisions for making an accommendation. 

This situation actually is part of like the Norwood situation. More 

of the property involved there was rental property rather than occupied property. At least the ones that are in controversy. But 

there are some protections in place. 

I think again, going back to that concept that if we are throwing 

somebody out of a perfectly good place, we need to be more attentive to what that does value wise. Because the tenant’s value there 

would be different than the tenant whose value may be in a less 

valuable property. So the concept applies both to the owner and the 

tenant at some point. 

Chairman NEY. Any other statement that you have? 

Mr. GRENDELL. I want to thank you very much, Congressman 

Ney, and the committee. This is great to have Congress come to 

Ohio; I mean that on behalf of my constituents. And on behalf of, 

I think, everybody in Ohio, it is nice to see this kind of activity 

right here in our State and we truly appreciate it. 

23

Chairman NEY. Thank you. I actually introduced a bill—moratoriums tend to work. I did it in Ohio years ago on an emergency, 

the board reconstituted you know, stopped the rules until they 

could get going. But I was thinking one of the concepts we ought 

to carry out is to require Federal agencies such as used to be called 

HCFA, CMS, that makes all these rules as we sit here and speak, 

require them to go out and do their hearings around the country 

versus doing the hearings in Washington. And you know, you cannot—500–600 people cannot get to D.C., but 500–600 people could 

get into an auditorium. 

So, I appreciate your comments. It is important what we are 

doing, and we are going down like I said to Ross County. I appreciate all your time in this because this gives us a good way to officially go back for the record and to give some thought to what has 

happened here. 

And I am sure that other Members will be coming in and, you 

know, after the recess we will be having future hearings. But I 

wanted to just show some of the ideas of how you approached the 

hearing in Ohio, which I think is a good local approach. 

I want to thank all of you for your time and again, the Mayor 

for hosting us, and the Village of Hebron, thank you very much. 

The record will remain open for 30 days. Some Members may 

have additional questions. Or some Members of the House reviewing the transcripts may want to ask you some questions, so without 

objection it will be open for Members to submit questions for the 

record. 

And thank you all again for your time. 

[Whereupon, at 10:15 a.m., the Subcommittee was adjourned.]

24

25

EMINENT DOMAIN: ARE OHIO 

HOMEOWNERS AT RISK? 

Thursday, August 18, 2005

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:00 p.m., in the 

Ohio University-Bennett Hall Auditorium, 101 University Drive, 

Chillicothe, Ohio, Hon. Bob Ney [chairman of the subcommittee] 

presiding. 

Present: Representative Ney. 

Chairman NEY. I want to thank everyone for coming today. The 

Subcommittee on Housing and Community Opportunity meets in a 

unique setting today, for its second of two field hearings in the 

18th Congressional District to discuss the Supreme Court’s recent 

ruling in the case of Kelo v. the City of New London and the serious 

implications this ruling could have on low-income housing, family 

farms, and rural Ohio. 

With us today is Jeff Riley, who works for the Ranking Member 

of the Financial Services Committee, Barney Frank of Massachusetts. The Chairman of our Committee is Mike Oxley of Ohio, and 

I am the Chairman of the Subcommittee. Our Ranking Member of 

the Subcommittee is Maxine Waters of California, and Tallman 

Johnson also is here today. I want the two of you to introduce yourselves. 

Mr. KANGAS. I am Paul Kangas, I work on the committee for 

Chairman Mike Oxley. 

Mr. SCARDENA. My name is Frank Scardena and I work for 

Chairman Ney. 

Chairman NEY. And these are the fine staff who put the bits and 

pieces and nuts and bolts together. 

The last of the U.S. Constitution’s Fifth Amendment liberties 

provides that no private property be taken for public use without 

just compensation. Under this provision, government entities may 

invoke the power of eminent domain or right of condemnation to 

remove property from private ownership for public use. 

On June 23, 2005, the United States Supreme Court held in Kelo 

v. the City of New London, that the city’s condemnation of private 

property which was part of the city’s redevelopment plan aimed at 

invigorating a depressed economy, was a public use, satisfying the 

United States Constitution, even though the property might be 

turned over to private developers. The majority opinion was 

grounded on the recent Supreme Court’s decisions holding the public use must be read broadly to mean for a public purpose. 

The dissenters, however, argued that even a broad reading of 

public use does not extend to private-to-private transfers, solely to 

improve the city’s tax base and to create jobs. 

26

In the other hearing, we heard again from elected officials and 

people involved in development. There is a bill, a piece of legislation authored by Maxine Waters, myself, and Spence Bachus of 

Alabama in a narrow area, it takes the community development 

block grant funds and if they are used by a community under the 

new Supreme Court ruling, we will pull those funds. And one of the 

reasons we did this, community development block grant has been 

under the gun and under fire and we kept it where it is at versus 

the Department of Commerce. And we felt if those funds were 

used—several reasons, but if those funds were used, it really may 

not be real supportive of the fund and lead to controversy that 

could hurt CDBG. Or on top of it, we just felt those funds should 

not really be part of private-to-private use. 

I have another statement I am going to just put in for the record 

because I want to start with the witnesses; we want to hear what 

you have to say. 

And again, we have our hearings in Washington D.C., we do go 

throughout the country, Democrats and Republicans on the committee, and it is a pleasure to be here. And bringing government 

here locally and the subcommittee is, I think, a good thing to do. 

So we really look forward to seeing you. 

And today, we have State Senator John Carey, who represents 

the 17th District in the Ohio State Senate, having taken office in 

January 2003. Previously, Senator Carey served as a state representative and before that as the Mayor of Wellston. 

On his way is State Senator Tim Grendell, he represents the 

18th District in the Ohio Senate. He took office just this past January. Senator Grendell is from Chesterland, and prior to his election 

he was an attorney. 

Jeff Finkle is the president and CEO of the International Economic Development Council located in Washington, D.C. The Council is a non-profit organization dedicated to helping economic developers do their job more effectively and thereby creating more high 

quality jobs, developing more vibrant communities and generally 

improving the community’s quality of life. He also graduated from 

Ohio University and is originally from Licking County. 

Dona Smith has been the executive vice president of the Ross 

County Community Improvement Corporation for 15-and-a-half 

years. During that time she has been involved with major industries for expansion projects, worked with new business development bringing new jobs into Ross County, and worked the city and 

county for infrastructure improvements such as roads, gas lines, 

water and sewer lines, some of which utilized Federal and State 

grants. 

And also with us is our State Representative Clyde Evans, who 

has done a wonderful job working with Senator Carey for our region and has excelled in a lot of areas including education, being 

of the education background that he was prior to his arrival in the 

legislature. 

And with that I want to thank you. And we will start with Senator Carey. 

27

STATEMENT OF STATE SENATOR JOHN CAREY, 17TH 

DISTRICT, OHIO STATE SENATE 

Mr. CAREY. Chairman Ney and the members of the subcommittee, thank you for allowing me the privilege of testifying before you today here in Chillicothe. It is nice to see our officials from 

Washington. Congressman, we see you quite often, but we are glad 

to meet the staff of other Members. And we appreciate you taking 

the time to let us have our voices heard. 

Let me start by saying that as a former Mayor, I vehemently oppose the use of eminent domain to take unblighted, private property for the sole purpose of passing that property to a developer for 

private development. While I can understand how the promise of 

increased revenue and jobs could make this option palatable for 

some officials, I feel the safety and security that our constituents 

feel in their own home is more important. In fact, when I was 

Mayor, I did not use eminent domain at all but I certainly understand that it is sometimes needed for road, sewer, or water improvements. And I believe that is where eminent domain powers 

should stop. 

As I am sure is the case across the country, the Ohio Legislature 

has had to act quickly in the recent Kelo decision by the U.S. Supreme Court. Just 2 weeks ago Senator Grendell, whom you will 

hear from today, introduced Senate Bill 167, which I will outline 

later in my testimony. Considering this bill has been co-sponsored 

by 26 of the remaining 32 senators, including myself, I think it is 

safe to say that this issue has resonated here in Ohio and that 

something will be done about it. 

In addition to Senate Bill 167, the issue of expanded eminent domain powers came up during the recent deliberations on House 

Joint Resolution 2, which will be Issue 1 on the ballot this November. House Joint Resolution 2 would authorize $1.35 billion for public infrastructure, $500 million for research and development, and 

$150 million for shovel-ready sites. Due to the fact that Issue 1, if 

passed by the voters, would go to the Ohio Constitution, the legislature did not get specific in terms of language in HJR 2 but I believe 

there is an understanding that none of the $500 million for research and development and the $150 million for shovel-ready sites 

will be used for eminent domain. This will be addressed in the implementation language, if approved by the voters. 

Senate Bill 167, of which the sponsor now is sitting beside me, 

creates a moratorium on the use of eminent domain by the State 

or any political subdivision of the State to take without the owner’s 

consent, private property that is in an unblighted are when the primary purpose is for economic development that will ultimately result in the property being owned by another private person. This 

moratorium would last until December 31, 2006, while a 25 member legislative task force, with a wide range of interested parties 

represented, conducts research and provides recommendations to 

the General Assembly on how to best update Ohio’s eminent domain statutes by April 1, 2006. 

While I am not generally the biggest proponent of legislative 

study task forces, I believe in this case this is the right approach 

to take. I believe the worst thing the Ohio Legislature can do is 

rush this process. While I think most legislators in Ohio do not 

28

want to see unblighted, private land taken for private development, 

it is also important that we do not make the problem worse by 

rushing legislation through before all the possible ramifications are 

known. Having a moratorium in place until we can receive recommendations from the task force will allow Ohio to protect property owners while the legislature comes up with a more permanent 

solution to this problem. 

That is a brief outline of how the Ohio Legislature has responded 

to the Kelo decision to this date. I am sure this topic will remain 

in the spotlight for the near future and other proposals will be 

made. But I think it is safe to say that here in Ohio the idea of 

taking unblighted private property through eminent domain for 

private development has not been received well. I would be happy 

to answer any questions you may have. 

Mr. Chairman and members of the subcommittee, this concludes 

my testimony. Again, thank you for the opportunity to testify here 

today. I would be happy to answer any questions. 

[The prepared statement of Senator Carey can be found on page 

58 of the appendix.] 

Chairman NEY. Thank you, Senator Carey. I appreciate your attendance here. And we read your bio. Senator Grendell is here, he 

was also up in Hebron, Ohio. We sure appreciate the drive and 

time that you took for this important issue. 

STATEMENT OF STATE SENATOR TIMOTHY J. GRENDELL, 18TH 

DISTRICT, OHIO STATE SENATE 

Mr. GRENDELL. Thank you, Congressman Ney, good afternoon to 

the local officials and guests. And thank you, Congressman Ney, for 

bringing Congress to Ohio. I think this is a wonderful thing to do, 

to give folks in Ohio an opportunity to speak to their Congressman 

without having to travel all the way to D.C., for this opportunity. 

I am going to echo and paraphrase some of my written testimony, because I am going to echo my good friend Senator John 

Carey’s thoughts. And one thing I want to do is to thank him, in 

the process of doing the ballot initiative for jobs in Ohio, working 

with Senator Carey and Senator Harris, we did address language 

to protect private—unblighted private property for the Kelo effect. 

And I think that was an important first step. 

Like the Fifth Amendment, the Ohio Constitution in Article I, 

Section 19, provides that private property shall be held inviolate 

and shall not be taken for public use without proper compensation. 

The U.S. Supreme Court’s recent decision permitting the government sanctioned transfer of private property from a private citizen 

to a private developer has struck a Constitutional nerve throughout 

the country. 

While the use of eminent domain for roads and utilities has long 

been recognized, the governmental taking of a well maintained parcel of real property from one private owner to another private 

owner is fundamentally un-American. 

Our Founding Fathers believed that private property ownership 

as defined under common law pre-existed government. They further believed that government, whether Federal or State, served as 

the contractual aid for the people and unlike the English monarchy 

was not the sovereign. Thus, protecting private property ownership 

29

rights against unwanted governmental appropriations motivated 

the inclusion of the takings clause in the Fifth Amendment. Of 

course they included the takings clause and in including the 

takings clause the framers of the Bill of Rights also recognized the 

need for a limited public use exception to the sanctity of private 

property, provided that the private property owner was justly compensated. 

The drafters of the Ohio Constitution included similar language. 

For approximately 175 years, eminent domain was employed by 

governments for obvious public uses, such as roads, canals, railroads, military bases, fire stations, schools, and parks. Then eminent domain became a tool for urban revitalizationists to invoke 

government’s takings power to acquire blighted or deteriorated private properties, often for private redevelopment as urban renewal 

projects. Courts have upheld such actions finding that eliminating 

blight was a legitimate public purpose. But in hindsight, those 

cases started the takings law down a different slope. 

On June 23, 2005, the Kelo case expanded the definition for public use or public purpose for the first time to look at non-blighted 

private property. The majority of the Justices found that New London, Connecticut, did not violate the Fifth Amendment by reaching 

that conclusion. 

Justice Sandra Day O’Connor and three other justices disagreed 

with the majority’s broadly defined concept of public use and in her 

vigorous dissent, Justice O’Connor chastised the majority for abandoning the 2-century old principle of preventing the government 

from acting beyond its authority, warning that there is nothing to 

prevent the State from replacing a Motel 6 with a Ritz Carlton, or 

any home with a shopping mall, or any farm with a factory. 

To some, Kelo is the natural extension of the urban renewal 

eliminate blight concept of economic benefit equals public use. To 

others Kelo is an affront to the fundamental protection of private 

property ownership guaranteed by the Fifth Amendment. A review 

of our Founding Fathers’ early writing supports that latter position. It is doubtful that Thomas Jefferson ever envisioned a governmental right to take his home, Monticello, and give it to a private 

developer for an office complex or a big box super center. 

Thankfully, the Supreme Court, the U.S. Supreme Court, noted 

that the Kelo decision does not prevent States from adopting a 

more protective approach to private property rights. And 34 States 

have initiated such legislation. 

Under Ohio eminent domain law, however, as it is currently on 

the books it neither contemplates nor adequately protects private 

property owners should unblighted private property be taken by 

eminent domain under the banner of economic development. Courts 

have almost uniformly acceded to the government’s determination 

that a public necessity exists, justifying the take. 

At least in the urban renewal cases, the taking authority had to 

obtain a blight study, determining that the property in the area 

was blighted before it could proceed with the eminent domain. 

After Kelo, government officials merely need to conclude that the 

taking of the property from one private owner to transfer to another private owner will be more economically beneficial for the 

public. Eminent domain procedures under Ohio law, however, do 

30

not properly address this private-to-private taking as permitted by 

Kelo. Currently the private property owner bears a substantial burden with respect to establishing the value of the property to be 

taken and is usually limited to presenting evidence of value based 

on the property’s current zoning. 

This could lead to a substantial inequity in the Kelo taking situation. For example, the owner of a house on one acre zoned residential worth a maximum of $150,000, in most cases would be limited 

to offering evidence of that value. Should that acre be taken by 

eminent domain and subsequently transferred to a developer of a 

commercial complex, the ultimate value of that property could be 

$250- or $300,000. Such governmentally induced inequity cannot be 

condoned or be considered just compensation. 

As Senator Carey mentioned, myself, Senator Carey, Senator 

Zurz, Senate Cates and 22 others have introduced Senate Bill 167 

in Ohio which would place a moratorium on the taking of 

unblighted or Kelo type taking of private property. This legislation 

provides for a temporary statewide moratorium to the end of December of next year and forms a task force with 24 individuals 

from a broad set of interested parties including property rights 

groups, State and local government, agriculture, commercial and 

residential real estate, and the legislature. The goal is to do a comprehensive review of Ohio’s eminent domain law, particularly looking at the impacts of the private-to-private taking allowed by Kelo

and also look at the definition of blight and deterioration to see 

where Ohio law needs to change to protect private property rights 

in light of the Kelo decision. 

The task force report will be due in spring of 2006, which will 

give the legislature time to take the necessary actions whether 

they are statutory or constitutional to address the issue. 

Senate Bill 167 protects Ohioans’ private property rights in the 

short term, while providing a thoughtful and comprehensive approach towards a permanent change in Ohio’s eminent domain law. 

While eminent domain can be an important tool for State and local 

government when employed for legitimate public uses, that governmental power should not be abused or exploited. 

Under Article I, Section 19 of the Ohio Constitution, private 

property rights are inviolate. And regardless of what the U.S. Supreme Court’s notion of eminent domain is we must strive to make 

sure that it stays inviolate in Ohio. 

In conclusion, States have numerous options in response to Kelo. 

These options range from taking no action and letting the courts 

grapple with the problem as to where Kelo hits in a State-by-State 

base to adopting a State constitutional amendment prohibiting the 

taking of all private property or all unblighted private property 

that will ultimately be owned by another private property owner. 

In between, State law can be change to redefine public use, but 

such a statutory action can be circumvented by a municipality’s 

home rule powers. Such home rule concern can be avoided by way 

of a constitutional amendment. States also should re-examine their 

definition of blight and deteriorated properties to prevent circumvention of the Kelo responsive changes by the legislature. If a 

total prohibition against unblighted properties is not adopted, State 

procedures for determining just compensation for private takings 

31

should be changed to allow the current private property owner to 

offer evidence demonstrating the value of the property based on the 

proposed future development after the take. Since there will not be 

public ownership but the private ownership, that would only be equitable. 

Swift action is needed to protect Ohioans’ private property rights. 

Senate Bill 167 will provide a balance by giving immediate relief 

on unblighted property owners concerned about a taking, while proposing the appropriate long term solution to still protect the State’s 

economic well being. This approach will not only protect private 

property owners rights now but also in the future. 

Congressman, thank you very much. I will be glad to answer any 

questions. 

Chairman NEY. Thank you, Senator. Mr. Finkle. 

[The prepared statement of Senator Grendell can be found on 

page 73] 

STATEMENT OF JEFFREY A. FINKLE, PRESIDENT AND CEO, 

INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL, 

WASHINGTON, D.C. 

Mr. FINKLE. Congressman Ney, thank you very much for giving 

me the opportunity to speak before you today. I have submitted formal comments and so what I am here to say is just some subset 

of those comments. 

I appreciate the opportunity to talk about the issue of Kelo in the 

context of economic development, the role of communities as they 

try to create, retain, expand jobs, develop a tax base, and enhance 

wealth in the communities where they work. 

As you know, I represent economic developers from across the 

country and I work for the International Economic Development 

Council. We have 4,000 members who each and every day are trying to improve the quality of life for people in the communities 

where they live and work. 

I have worked in the field of economic development for over 25 

years. Five years working for the U.S. Department of Housing and 

Urban Development working on the community development block 

grant program, of which your legislation in fact, attempts to 

change. 

To digress for a second as I talk about the issues around Kelo

and eminent domain, I would point out that the statutory challenge 

for the Congress, particularly in light of the community development block grant program, you have set out the block grant program, you have set out the block grant program to meet three 

pressing urgent needs of communities. One, to meet the needs of 

low and moderate income people. Two, to meet a pressing local 

need and third to eliminate the slum and blight. To limit the use 

of CDBG dollars and not allow it to be used for dealing with the 

elimination of slum and blight in fact, would jeopardize one of the 

three tenets of the community block grant program. 

Congressman, as you noted, you were in my home county this 

morning, which I understand you are becoming a Licking Countian 

as well. And it is wonderful to be at a branch campus of Ohio University where I graduated in 1976 and have remained a part of the 

32

Ohio University family serving on the Institute of Local Government Administration and Rural Development Board for some time. 

So what is it that we are talking about? We are talking about 

the Kelo decision which affirms economic development as an important tool for local governments and leaves eminent domain where 

it should be—in the hands of State and local governments. The Supreme Court decision did not change anything, and that is one of 

the concerns that I have had, is I have listened to people talk about 

the Kelo decision. There was absolutely no changes from what the 

practice of using eminent domain has been for many years. What 

it did was it gave the Institute for Justice, a libertarian think tank 

law firm, an opportunity to espouse the issue of property rights and 

use that bully pulpit in a very loud way to scare the heck out of 

all of us. 

At the end of the day, most communities do not use eminent domain for the taking of owner-occupied homes. They do not go out 

and take viable businesses from people. For the most part when 

they use eminent domain, they use it to take—for the elimination 

of slum and blight. 

In fact, only 11 States have statutory language or constitutional 

languages similar to what Connecticut has. As they propose the use 

of eminent domain for economic development purposes in New London, Connecticut. 

It is very unlikely that as a result of the Kelo decision that we 

would have much change in terms of how eminent domain is used 

across the country. I have been to Congresswoman Water’s district 

and have met city council members there after the actions that 

were taken in south central L.A. As I talked to city council members in Los Angeles, they refer to the issue of eminent domain as 

there was a desperate need for grocery stores in south central L.A., 

and they specifically said we would not take homeowner-occupied 

housing. And so, this is not a radical change from a position many 

communities have taken. In fact when Senator Carey was Mayor, 

you know, he kind of had a personal guidepost in terms of how he 

would use eminent domain and I hear that constantly as I travel 

around the country. 

But judicious use of eminent domain is critical to the economic 

growth and development of cities and towns throughout the country. Assembling land for redevelopment helps to revitalize local 

economies, create much needed jobs and generates revenues that 

enable cities to provide essential services. When used prudently 

and in the sunshine of public scrutiny, eminent domain helps 

achieve a greater public good that benefits the entire communities. 

Many of our urban communities were developed in the late 

1800’s and early 1900’s. Those cities have small lot sizes and were 

developed in an era of horse and buggy. It is often difficult to redevelop these communities without the ability to assemble land. Big 

box retailers, shopping malls, and new office buildings often choose 

to locate in greenfields and suburbs because of the lot sizes that 

we are dealing in our urbanize centers. Each time these development decisions are made, the tax base and jobs are also going to 

those places. 

Let me give you some examples of where eminent domain has 

been used. In Columbus, there is a famous chocolate company 

33

called Anthony Thomas Chocolates, which is located or used to be 

located on West Broad Street in Columbus. Eminent domain was 

used to allow that facility to remain located on West Broad Street 

for many years. They needed to expand, most of their employees 

were poor, most of them walked to work. And as a result when 

they needed to expand, the City of Columbus demised an alley behind the business and relocated the alley taking in a homeowneroccupied home in order to maintain those jobs in what is referred 

to as the hilltop district in Columbus, one of the lowest income 

neighborhoods in the City of Columbus. 

When BMW wanted to locate a facility in South Carolina, the 

State of South Carolina used their powers of eminent domain to 

create a site for BMW to locate in South Carolina. The same was 

true in Toledo, Ohio, when the Jeep plant went into an urbanized 

area of Toledo. The city used eminent domain to allow the Jeep 

plant to go forward. When the City of New York, tried to clean up 

Times Square, they used the power of eminent domain to take New 

York City’s ugliest place with strip joints and massage parlors and 

various pornographic venders in what was Times Square. And they 

used the power of eminent domain to revitalize Times Square. It 

is now a family friendly area with Disney stores in the Times 

Square area. 

The City Center Mall in downtown Columbus, when the City of 

Columbus tried to ready that site for Toddman to take that project 

over. The city used eminent domain to acquire that site, as the City 

of Indianapolis did when they prepared their downtown mall as 

well. 

I worry about places like my hometown of Newark, Ohio. We all 

know where the Owens Corning fiberglass plant would be—currently is. What would happen if the city fathers and mothers were 

told we have to remain in this place but we also need to expand 

and we have no sellers on our borders. What is the City of Newark 

going to do? Are they merely going to say we can do nothing any 

longer, and we understand that if we cannot do anything, you are 

going to have to shut your doors and hundreds of people that live 

in Licking County would loss their jobs. This puts central cities—

the judicious use of eminent domain allows places like Newark, Columbus, Cleveland, Cincinnati, etc., to have the ability to expand 

jobs in their current locations. 

There is no question that eminent domain is a power that like 

any government power must be used prudently and there are many 

built-in checks. One such check is the public nature of the takings 

process. Many of us watched 60 Minutes as the people just east of 

downtown Cleveland tried to use eminent domain and came up 

with a silly definition of what eminent domain is. I am here to report that no member of that city council nor the Mayor survives at 

this point as a result of the public outrage for the eminent domain 

and the potential takings there. 

We obviously have checks on the use of eminent domain, as the 

court requires just compensation when it is taking. But I worry 

about a rule of unintended consequences assuming that each and 

every homeowner can be a developer and can take what might be 

a value of $150,000 and magically turn it into $250,000 if we take 

a presumed appraisal in terms of what its future use might be. 

34

Unduly constraining eminent domain would work job creation by 

eliminating an entire category of projects from the redevelopment 

tool box of local officials. 

Should Congress act to prohibit the use of eminent domain for 

economic development purposes, the economies of many Congressional districts might suffer. No municipalities in America could 

use eminent domain to carry out an economical project. One person 

can veto the redevelopment of the entire distressed community. 

This would have the practical effect of making such projects virtually impossible. At a time when so many of our businesses and 

communities are being confronted with intense competition from 

the global economies and areas of our cities and rural areas are declined, Congress should be expanding its efforts to solve the problems of economic deterioration, not imposing restrictions on community growth. 

Thank you, for allowing me to have the opportunity to testify before you today. And I look forward to answering any questions. 

Chairman NEY. Thank you. Ms. Smith. 

[The prepared statement of Mr. Finkle can be found on page 60 

of the appendix.] 

STATEMENT OF DONA SMITH, EXECUTIVE VICE PRESIDENT, 

ROSS COUNTY COMMUNITY IMPROVEMENT CORPORATION, 

CHILLICOTHE, OHIO 

Ms. SMITH. Congressman Ney, thank you very much. And we appreciate you bringing part of the Federal Government to Ohio’s 

first capital. We look forward to seeing you any time. 

The Ross County Community Improvement Corporation, the CIC, 

is a private non-profit economic development agency. The CIC has 

been involved in economic development on a full time basis for the 

past 20 years. During those years we have worked to develop industrial parks, located sites for business growth, and worked to 

bring many jobs into the Ross County area. 

We have also looked at and worked on smart growth initiative. 

This would be a development plan for the entire county, locating 

areas that would be appropriate for future developments such as 

housing, commercial and industrial growth. These types of plans, 

developed by broad based community members, provide directions 

on developments within communities and supported by citizens and 

elected officials. 

The recent ruling by the U.S. Supreme Court concerning eminent 

domain has brought forth many questions and concerns not only to 

local citizens, but also to elected officials and economic development 

professionals. It jeopardizes the efforts of economic development 

professionals and severely puts these efforts at risk. The goals of 

development are to bring increased investment and job opportunities to local area. However, there needs to be trust and understanding within communities to assure that everyone is protected. 

Eminent domain has been available to local governments in Ohio 

for the taking of land for public purpose or for necessary purposes. 

Landowners are to be justly compensated. Public purpose and necessity are not intended for profit-making. Giving local governments a much broader power to take property for the purpose of 

generating more tax revenue opens up a potential Pandora’s Box. 

35

Our public officials need to be protected. Most of Ohio has been 

experiencing the pressures of lower tax revenues, higher cost of 

services, and the loss of jobs. Economic development has become 

very competitive with many thousands of economic development organizations across the State competing for projects, investments, 

and jobs. Allowing local governments to take land for economic development purposes puts undue pressure on these elected officials. 

These pressures could come from different directions: like developers who offer jobs and increases tax revenues; property owners 

who feel that they could hold out for higher dollars if eminent domain is used; and lengthy legal battles. 

Recently I have seen recall elections brought about by just a few 

disgruntled citizens over frivolous things. Ohio law allows recall petitions to be presented with a very small number of signatures and 

without just cause. This can severely affect communities as they 

can become fragmented and disorganized. These communities will 

suffer significant setbacks, creating a lack of vitality and economic 

growth. 

Our Constitution was written to protect citizens and government. 

The ruling by the U.S. Supreme Court, to give government more 

powers of eminent domain, could lead to more irate citizens recalling government officials. We could create a revolving door of elected officials with the end result being qualified people will not seek 

offices due to the fears of association with public service. 

Congressman Ney, we thank you for your interest in hearing how 

your constituents view the eminent domain ruling. We hope our 

U.S. Congress protects the rights of landowners and protects our 

elected officials who are facing increasing scrutiny and financial 

pressures. 

Thank you. 

Chairman NEY. Thank you very much. Representative Evans. 

[The prepared statement of Ms. Smith can be found on page 106 

of the appendix.] 

STATEMENT OF CLYDE EVANS, STATE REPRESENTATIVE 

Mr. EVANS. Thank you very much, Congressman. I just want to 

take a couple of moments to thank you for the diligent and efficient 

work that you and your staff have done to service my clients in the 

87th House District when we have been able to work with you on 

issues for them. And also, many times that you have come into my 

district to talk with people about problems and issues that we have 

had there. 

I guess to save time, I am going to be very much like my youngest daughter—when my three daughters were young, the first 

would say well I am going to do this and the second one would say 

well I will too, and the third would say me too. Basically, I agree 

very much with most everything that has been presented here. 

Senator Grendell, when he asked for legislators who would like 

to join the group that he put together to study this issue, I joined 

and met with him. And when, he called for co-sponsors I co-sponsored the bill. I think that it is very important that these issues 

be left to the States, to each of them to study on their own. And 

to make a thorough study of blighted areas and decisions that 

would be best for the public as a whole. 

36

There has been much testimony to indicate that good can come 

from eminent domain if it can provide jobs for poor people in 

blighted areas and areas of social decay. But this is a very tricky 

area and that is why I very readily joined with Senator Grendell 

in asking for a moratorium to give us a chance to study in more 

detail the definition of blighted areas and some other kind of legal 

terms that we need to take a look at over the next year or so. I 

think it is a mistake when some of these issues come up and the 

newspapers of course give them a lot of hype that we jump in very 

quickly and try to make quick decisions in an emotional state. 

So therefore, basically again, I guess my main emphasis would 

be let us take some time and study this issue and make sure that 

we made the right decisions, during this period of moratorium. 

Thank you. 

Chairman NEY. I want to thank all of you for your testimony 

today. And also, the elected officials for your public service that has 

been many long hours helping people. 

I had a question, Mr. Finkle. What do you think of the actual 

bill, the moratorium? I know where you are at on the Supreme 

Court case. What do you think about the moratorium approach in 

itself? 

Mr. FINKLE. Well, I think that is a far better approach than what 

we have seen in Alabama and Texas. In both Alabama and Texas, 

they have done what I would refer to as a rush to judgment. In 

Alabama, the Governor has already signed a new law that bans 

eminent domain. And the Governor has a bill in Texas on their 

desk. The interesting thing is, they are chock full of what one 

might refer to as pork barrel because they excluded a great number 

of different types of projects that were coming up. 

As we all know, in Texas, there in Dallas, they are getting ready 

to build a new sports stadium. And they planned to use eminent 

domain, that is excluded in the Texas statute. And as many of us 

know, when President Bush was the owner of the Texas Rangers, 

they used eminent domain to acquire the site for the current Texas 

Ranger stadium. 

But it is always good to see the pragmatism that is found in my 

home State and that moratorium seems to make a lot more sense 

when you are sitting back and saying, you know, there are a lot 

of potential good uses that we need eminent domain for. And you 

do not want to have what would be a rule of unattended consequences, you rush out there and you do something and then you 

find that you really messed things up. 

Chairman NEY. I had a question about—anyone can answer this 

that has been involved with eminent domain. Most of the cases, as 

I was telling Senator Grendell, we have all have served in the legislature, try to give them—when you do public private taking for 

public use, those buildings that you have, you practically cannot 

give them away when they get old. Nobody wants them and usually 

somebody gets them off of the State and then has to spend a lot 

of money for them. 

The issue arose today too, about taking private property for private use and all of a sudden that piece of property that was worth 

$50,000 escalates into, you know, a $400,000 to $500,000 piece because the private entity is building something there. So, did the 

37

person really get value out of the taking? Anybody like to comment 

on that? 

Mr. FINKLE. Congressman, I happened to be on a radio station 

the other day. This was a call-in show in Indiana on this issue of 

eminent domain. And the water resource people in the greater Indianapolis area took land 25 years ago. And over the next 25 years 

they finally determined that they had more land than they needed. 

And in the meantime, the value of that land had increased over the 

time period. They sold off some of the land that they needed and 

they built million dollar homes on it. Now one of the families whose 

farms that had been taken for—and this was clearly a public use. 

This was not under what would have been a Kelo decision type 

property. 

Some of the farmer families were saying well, we should get the 

appreciated value. One, they did not have a water resource when 

they had the land there in the first place. Second, 25 years had 

transpired. At what point, do you determine an appropriate appraisal of that property and at what point can you say what their 

action was actually caused the appreciation in value? 

Now, I am not one to argue that maybe there ought to be a 

standard that says if you are taking land for an economic development purpose just compensation is 150 percent of value. But to 

leave it open ended that person has somehow to be given equity in 

that project or that the enhancement that a developer, a bank, a 

builder, a construction company, put into the property, envisioning 

the concept and taking the market risk should be shared with the 

property owner seems to be a stretch in what would be considered 

an appraisal process. Give them a greater value just compensation, 

but do not have people as part of a deal. 

Chairman NEY. Do you ever consider—and I will move on to the 

Senator. Is there ever consideration, there is a family farm, maybe 

it is not worth so much per acre, but it has been in the family 125 

years, is there any considerations given for that? 

Mr. FINKLE. Clearly, emotional value is attached to a great deal 

of the properties that we are talking about. And I do not know how 

an appraiser deals with emotional value as they appraise property. 

But typically what happens to hold-outs and somebody who has 

emotional value attached to a property, a hold-out is generally 

going to get more money than somebody who sells early. And so, 

they are going to get a greater value because they are the ones that 

are going to take a community closer to court as the community is 

trying to gather that property for whatever purposes they are going 

to take it for. 

Chairman NEY. Senator Grendell. 

Mr. GRENDELL. Thank you, Congressman Ney. Let me answer 

the second one first, the emotional value issue. Right now in Ohio 

law, if you are the landowner you have two ways of trying to establish value. First of all, under Ohio law, the owner always gets to 

testify as to their opinion if it is privately owned. Corporate does 

not have the same. But if you are a farmer, you have the right to 

stand up there and say my farm is worth this to me. It has been 

in my family 100 years and you need to hope the jury hears that 

loud and strong and ultimately the jury makes the decision. But 

38

the court has to let the owner give their view of the value under 

Ohio law. 

The second form of evidence the owner can propose is some sort 

of expert, an appraiser who gives a value. But as I mentioned this 

morning, one of the problems with Ohio law on that value, and this 

is where that concept of Kelo runs afoul of private-to-private versus 

Ohio law. Right now, the valuation is based on the value of the 

property as of the date of the take. And it is what it is zoned at 

the date of the take. And many courts will not allow you to have 

an appraiser who comes in and says—and it is not magical, residential property is worth less than commercial, farm land is worth 

less than commercial and industrial. I mean, that is just the way 

it works in the real world. And your appraiser has to say it is 

based on the residential zoning or based on the farm land. 

And the farm acreage may be $3,000 an acre. A Wal-Mart is not 

$3,000 an acre. The house may be $50,000 an acre, I have represented Wal-Mart, I have been involved in eminent domains all 

over northeast Ohio, I will tell you there is no magic to this valuation. It is pretty well established in any mark of what commercial 

land is worth versus residential and versus farm land. And more 

importantly in many cases, the developers will know because he is 

going to lease based on the valuation that he places on the property, based on his total project. That number is not necessarily 

going, if he is trying to set his rents with a high end retailer, is 

not going to represent the lowest value he can put on an acreage, 

it is going to represent the highest value. 

All we are suggesting is that when you take private property for 

a true public use, a fire station or a road, the value is not going 

to appreciate. In fact, I think you are correct, Congressman Ney, 

the value tends to get flattened or depreciate because there is not 

a whole lot of market out there for used government buildings 

these days. 

But when it goes to a private development, I believe that the 

landowner should be entitled to offer expert evidence as to what 

the ultimate value of what that land will be in that newly increased developed use. When you are taking unblighted property 

from somebody, because that person is literally contributing some 

equity that they are not getting compensated for to the good of a 

project that is ultimately going to held by a private owner. I think 

that is why it is important we have the moratorium so we can 

study that issue, see how in Ohio we can best protect property 

owners on that issue. And maybe it has to deal with how we value 

it, bonus value, the fact that in Ohio that you have to pay your own 

attorney’s fees if you are the property owner. Where the government usually is using taxpayers’ money. Maybe we should change 

the law so that not only do you not get some bonus in the value, 

but if it is a private-to-private take, should that be where the legislature ends up, that legal fees and expert cost get reimbursed to 

the private property owner as part of trying to stabilize the equities of that situation. 

Chairman NEY. This question is for the legislators, are you hearing a lot via letters or phone calls from constituents or farm groups 

on this issue, I was curious? 

39

Mr. EVANS. I have received very few, but in talking with people 

in my district, of course they are very concerned and I think a lot 

of people do not understand the Supreme Court’s decision and how 

it relates. Once I talk them a little bit, and explain a little bit to 

them, they understand a little more. But they still of course are 

very, very much concerned about taking anyone’s private property 

and they very well should be. I have not had a lot of correspondence coming to my office about it, but there is concern. 

Mr. CAREY. Congressman, I have had some contact and especially 

since we are in Appalachia today, private property rights are a 

very strong sentiment in Appalachia. Even in traditional zoning 

that we see in cities and towns, it is very hard to accomplish in 

the Appalachian part of the State. So, the idea that some one can 

come in and take their land for private enterprise would be not 

welcome in this part of the State. 

Mr. GRENDELL. Congressman Ney, I put together with the blessing of Senator Harris, the president of the Ohio Senate, a working 

group. In fact, Representative Evans is on the working group and 

we have had calls, letters, e-mails, and interesting enough, we have 

had people come and show up at the working group meetings, citizens who have had problems with the Lakewood take, west of 

Cleveland, people from Norwood who have concerns about the Norwood situation, as well as representatives of the Farm Bureau and 

several other citizen groups who certainly do think that we need 

to at least review the situation and do what we have to do to protect the private property rights that are now subject to the Kelo decision. 

Chairman NEY. On the CDBG, I wanted to mention, I mentioned 

earlier, but as you know, it is designed to serve families at the very 

low-income level and try to get them up into self-sufficiency. So it 

tries to protect them so they continue to serve those families most 

in need. That was again one of the theories of not allowing those 

to be used for this purpose, because they are an intended fund. But 

Mr. Finkle, you had mentioned the third provision though that 

CDBG—I was trying to follow that? 

Mr. FINKLE. Yes, as you may remember, I was the Deputy Assistant Secretary in charge of the CDBG program during the Reagan 

Administration. There are three fundamental legs to the CDBG 

program. And those are meeting the needs of low and moderate income people, meeting a pressing, urgent need, and the elimination 

of slum and blight. 

Admittedly the majority of the funds used by the CDBG program 

are meeting the needs of low and moderate income. But the CDBG 

program, in both in its original construct, its legislative intent, its 

current use, allowed for meeting a pressing urgent need. Say for 

instance a small community loses its water system after a major 

flood. That is an allowable use of CDBG dollars for meeting a 

pressing urgent need. But the last part, the elimination of slum 

and blight, anticipates the government using CDBG to take down 

dilapidated buildings, sometimes occupied buildings, sometimes 

commercial properties that are a blighting influence on the community. 

When the community takes those buildings, they are often going 

to turn them over in some type of redevelopment plan, in some 

40

type of allowing another private sector user to take those properties and reuse them in some way. 

Chairman NEY. What is the definition of blight, because Senator 

Grendell had an interesting—what was the one car attached? 

Mr. GRENDELL. Congressman Ney, up in Lakewood, Ohio. in a 

desire to try to take an area where they wanted to eliminate some 

apartment buildings, the developer had a grander scheme. And to 

get to that scheme, you have to take out several blocks of occupied 

primary residences that were not in any, what you or I would call, 

blighted condition. 

They got some experts to come up with the concept that within 

this geographic area blight was having a detached garage and one 

bathroom. The problem with that, as the mayor of the city found 

out when she was on 60 Minutes, is when they confronted her with 

that, she did not live within that geographic area that they wanted 

to develop, but she indeed lived in another part of the city in Lakewood with a detached garage and one bathroom. 

And so, that is probably the most egregious case of abuse of the 

definition of blight that I have ever seen and certainly the most 

egregious in Ohio. And while it is true that the folks ultimately 

undid that by going to referendum, there are some problems with 

that as the ultimate solution. Those people had to spend a lot of 

money—they did get some outside help—but they also had to hire 

lawyers, while the city continued to use taxpayer dollars to pursue 

their development plan. I do not think Ohio citizens should have 

to pay twice to defend their homestead. 

And so I think we do have to take a look at the definition of 

blight as part of what we are doing here. And with Kelo, you do 

not even have to get to blight. That is the concern. With Kelo, those 

councilmen no longer have to even go through the facade of a one 

bathroom, one car detached garage. They can just claim it is good 

for the city because it is going to generate jobs and taxpayer dollars 

and get past that issue and just start taking those homes. 

I do think there is a real legitimate concern that we need to find 

that line. And there is a line that I think hopefully with the moratorium we will be able to find between true economic needs and 

true use of eminent domain for public purpose, real public purpose, 

versus what I refer to as economic socialism, that we just decided 

to tear down some houses because we want a Wal-Mart store. I just 

think that is un-American. 

Mr. FINKLE. Congressman, to answer your question—the Federal 

Government has blight definitions that Lakewood would not fall 

under. I would agree with the Senator that Lakewood was an 

abuse of the process. But those homes would not meet the blight 

definition the Federal Government has laid out for CDBG use. It 

is a much, much tougher standard. You and I both know Washington D.C. and we both know Columbus very well. When we saw 

blight, we would know it is blight. 

Chairman NEY. The national standard on CDBG is set for blight? 

Mr. FINKLE. That is correct and I do not have that definition or 

standard memorized unfortunately. 

Chairman NEY. Do you think there ought to be a national standard on— 

41

Mr. FINKLE. No, for the purposes of the way eminent domain is 

carried out across the country now, the Federal Government has 

left that up to the States to decide. So, I would not encourage the 

Congress to set a national standard, but rather leave it to the 

States to allow them to make the decision as to how they want 

eminent domain to be used within their specific States. That is how 

it is currently done. There are, as I indicated in my testimony, 11 

States that have statutes similar to Connecticut. If they choose to 

change it, even in the decision by the Supreme Court, they said essentially that this was an issue for the State to grapple with. 

Chairman NEY. I wanted to ask Dona Smith, you have been in 

the development arena a long time, did you ever have any situations where it was going to be a hairy issue of taking somebody’s 

property? Was it re-thought to do it another way, or was this ever 

approached? 

Ms. SMITH. We have never really been involved in any eminent 

domain situations. As I see it, if a developer—you know, I work 

with a lot of developers who have offered ‘‘X’’ amount of dollars for 

a property, but have also said if we develop that site and sell it, 

you know, the property owners will share in the wealth in the future. I think there are ways that you can work with, rather then 

taking it just by eminent domain. I think there are ways you can 

work. If developers are upright and forthcoming, they should be 

able to. And as you said, when they rent it they use a high value, 

well if the person could share in some of that income, based on 

both the value of the land, I mean that is one way of looking at 

it. We have to make it safe. But no, we really have not been involved in anything to that point, but we are getting close. 

Chairman NEY. Because I thought you took an interesting point 

of view, for somebody involved with the CIC. 

Ms. SMITH. Yes, I look at it this way. We have to protect people 

from—our government, you know, in Ohio, we are just seeing people recalled and stuff like that. And this is just another opportunity 

for disgruntled people to say, you know, a few hundred signatures 

and you are out of here if you do not. It is costly, you know, things 

like that. So, I think there are other ways, there are other things 

to look at down the road as to what this could mean. There is too 

much pressure right now. We have to figure out how we can all 

work together. 

Chairman NEY. A question I had, people have mentioned 34 

States are moving to enact laws. Let us say that in ‘‘X’’ amount of 

States, it is up to the States and let us say, you know, 45 States 

enact some type of law, like the one you have, the legislators, or 

something effective, Texas or whatever. And there are a handful of 

States that do not enact that type of law, would that be a situation 

more prone for developers to go to those States that have not enacted that law or would it be insignificant thinking towards that? 

Anybody speculate? 

Ms. SMITH. My personal opinion, I would think, you know, not 

everybody has to be in a certain location, but certain people have 

to be in a certain location. So, if ABC company has to be in Texas 

because that is where their customers or their suppliers are and 

Texas does not have a law it is probably, you know, or they do have 

a law, they are probably not going to go next door. 

42

I do not, economic development is not fair anywhere, I mean it 

is a shot in the dark and it is the luck of the draw so, I do not 

see it affecting—now I may be wrong and you probably have a better handle on it, Jeff. 

Mr. FINKLE. Where I think the issues are going to be the greatest, I see the issue as being somewhat black and white. The places 

which are experiencing a great deal of growth are going to be the 

places where if they enact this type of legislation, there is nothing 

going to be felt because they are growing like crazy anyhow. So, 

California, Arizona, Texas, Alabama, and Florida are still experiencing a great deal of job growth. They are still getting a great deal 

of population growth and they are experiencing revenue increases. 

And as a result, they can pass darn near anything to limit growth, 

to limit economic development, and it would not hurt them. 

Places like New York, Pennsylvania, Ohio, Rhode Island, Connecticut, places that are stagnant both in economic growth, and in 

population growth, and in tax revenue are going to put themselves—any time that they limit one of their economic development 

tools, they put themselves at an inherent competitive disadvantage. 

Now, I am not saying that you will loss a major factory if you 

limit eminent domain. I am not going to say—I do not know where 

that particular facility might want to go. But the more restrictions 

you put that limit your ability to grow either in place in a business 

retention or the ability to attract and acquire land, it is going to 

put a community at a disadvantage. 

I do want to step back though from this issue and say, in many 

cases, and fortunately I have heard from all three of the members 

of the legislature that they have been very careful in saying nonblighted versus blighted property. Because a lot of Ohio has a fair 

amount of blight in it. And particularly in our central urban centers. But often times the impetus for these redevelopment project 

is a community looking at a blighted neighborhood or a distressed 

inner city downtown and they say we need to clean this up and we 

need to prepare for some future use of an area of land. So that the 

community uses their eminent domain power. They ultimately do 

turn that land over to a private sector developer for a mall, for a 

new industrial plant, for an inner city grocery store, which is missing in many communities across the country. 

So it seems to me, at least the discussion that I have heard 

today, at least positions Ohio in the right ways when they make 

the difference between blighted and non-blighted properties. 

Mr. GRENDELL. Congressman Ney, if I may, in those five States, 

two things will happen; you will have opportunists who will show 

up because they think they have a benefit that they might get land 

cheaper if they can convince the local government to do an eminent 

domain. And you will have some people who specialize in maybe 

urban redevelopment who will see an opportunity in States that do 

not take any action about Kelo, because there are folks who do 

make specialties out of these sort of urban projects. Ultimately 

though, the market is going to drive the issue. It those States are 

not attracting business, this is not going to do much to attract business in those States. 

And I do appreciate Mr. Finkle’s comment. I mean one of the 

things that I am very cognizant of, I know Senator Carey, RepVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
43

resentative Evans, is that we know if we go off the cliff too quickly 

the unintended consequences are going to be very difficult to deal 

with, especially when you start talking about constitutional 

changes. And that is why we do recognize there is a role for eminent domain particularly when you are talking about true blight. 

But there is also a role not to let eminent domain take away people’s private property rights when there really is not a blighted situation, a true Kelo situation, and the struggle we have the next 

couple of months is to try to clarify how you identify and define 

that parameter. And I do not have that answer today. That is why 

we think we need the moratorium to calm everybody’s concerns 

about Kelo while we work on the bigger issue and come up with 

an ultimate solution. 

Chairman NEY. We have had a lot—I said this earlier up in Hebron, we have had a lot of inquiries into the Congress in offices, 

we have had them in the urban areas and the rural areas. Also, 

in the urban areas I talked to my colleagues that represent cities 

and there is also a feeling that maybe the cities can do this a lot 

quicker then we could. After all we are in small communities. You 

do something, you take somebody’s land or family farm, or something, or try to do it for a landfill, you have got to live here and 

you know just about everybody in these communities. When you 

are in a large city of a million people, things could maybe be done 

and not as much emotion would be there. 

So, I have heard from the urban legislators too, you know, the 

concern on that. With the volume of inquiries that we have had, 

we had also thought about some type of national language on it, 

settled on after discussions on the small niche with CDBG because 

that I think is our role on the subcommittee, to do something with 

those funds. But after listening earlier and today, and you know, 

I said this up in Hebron, if the Federal Government tried to come 

in—and I am worried about the Supreme Court decision, I think 

we have to watch it. I think the purposes that you all are doing 

are pretty balanced. I think it is something to be watched and to 

be concerned about, and people’s property rights is something I feel 

very strong about. 

But if the Federal Government were to try to set up something 

to define blight, and I used the EPA as an example, and create the 

United States Department of Eminent Domain in our 12,000 or 

16,000 people and have everybody’s life, you know, a nightmare. 

That fact would be worst then having the Supreme Court decision. 

So I think we have got to be very careful on a generic broad—personally I think on generic broad Federal approach. But I think it 

is of great concern. Jeff? 

Mr. RILEY. Yes, sir, I would just repeat what I stated this morning, Mr. Frank and Ms. Waters, the ranking members of the Housing Subcommittee and the Full Committee are concerned about 

renters. Particularly the poor when it comes to government takings 

and I guess it was just Senator Grendell answered the question 

this morning, I guess that is provided for in the legislation. 

Mr. GRENDELL. As I mentioned this morning, under Ohio law, 

when you go to take, you take both the fee, the ownership interest 

and if somebody has a leasehold interest you are taking their lease, 

too. And you have to make provisions for dealing with that in the 

44

process. But it is probably more so again with this valuation issue 

that we have to look at, that we are going to have to include that 

we will include looking at the tenants’ rights as well as the landlords’ rights as we get this task force going, hopefully in September 

if all goes well. 

Mr. CAREY. If I could add to that, I mean the issue that eminent 

domain ultimately goes to is the hold out. And oftentimes you are—

I mean in the case in Norwood, you had about 90 to 100 individual 

landowners and there were only about seven or eight holdouts. 

That was about similar in the New London case. So, there are people who are emotionally attached to their homes. They do not think 

enough money has been put on the table or they are trying to get 

rich quick and be the ultimate key parcel that, you know, is the 

trigger to allow the project to go forward. 

What I think the real issue in my mind regarding tenants is that 

I would worry that as somebody is trying to acquire property that 

you end up having a slumlord who wants to be the holdout. And 

that they are, one, using as an interim use their housing parcels 

and at the same time being a slumlord just waiting for the time 

that somebody is going to take their land. If they use eminent domain maybe the benefit ought to go to the person who is a renter, 

not necessarily to that slumlord who is ultimately trying to be that 

key parcel and hoping just to get rich quick in the process of holding up other community projects that are necessary. 

Mr. RILEY. Do you know if any of those 11 State statutes expressly provide for renters? 

Mr. CAREY. I do not know. 

Chairman NEY. I wonder if we could find that out. That raises 

another issue that I want to ask about. You know, there is sort of 

the bartering process. Because you have mentioned, and rightfully 

so, there is always maybe one person holds out, other people go 

along. With the new Supreme Court decision codifying being able 

to take property, does it not kind of change the scope of things because now you can come in and it is not a public use, but people 

know that their property can be taken after all by eminent domain? 

Does that cause a little bit more of a psychological problem on the 

part of the people with the property? I am not talking about low 

income, I am just taking about property? They feel at the mercy 

of— 

Mr. FINKLE. If we go back to my testimony, and my testimony 

is that Kelo changed nothing. And that if we go back to the early 

1980’s and you go to Detroit and what General Motors did with 

Poletown, which was a project we founded in the Reagan Administration, we funded the Poletown or the General Motors plant in 

inner city Detroit. They used eminent domain for turning over a 

project to other private sector uses, General Motors. 

The Kelo case only affirms what State law or State constitutions 

currently allows. If the State constitution does not allow an economic development taking which most do not, it does not somehow 

grant those States new powers. It only grants them what they already have under their State constitution or their State statute. If 

they prohibit it, it is still prohibited. It was not dealing with what 

is already covered by various States. 

45

Now, I have heard the argument that you make Congressman, 

that in fact, somebody feels less power, but I guarantee you their 

attorney would not feel more inhibited now that the Kelo case has 

been settled. 

Mr. GRENDELL. Congressman, I am going beg to differ with Mr. 

Finkle on this one issue. The Kelo decision did change something. 

And I am going to give you two examples. Three years ago, I represented an owner of an 1950’s motel on Morane Avenue in Fairview Park, Ohio. Fairview Park decided that those motels which 

they loved in the 1950’s and 1960’s because it is close to the Cleveland Airport, they no longer liked in the 21st century, because it 

became of a sub par tenancy than the traditional motel. They wanted to eliminate these motels and put in some tax generating offices, 

because everybody wants that income tax dollars from offices. 

There was nothing wrong with this motel, this motel was about 70 

percent occupied, albeit some of them were more permanent occupants than in the past. But the city went out and got a blight 

study. Based on the age of the motel and the nature of some of the 

occupants they claimed the property was blighted. Under Kelo they 

would not have to take that step. They would just say, it is going 

to generate jobs, forget the blight study. 

The reason why the blight study was important is in Ohio law, 

when you do an eminent domain case there are two procedures, 

two steps. The first step is as the landowner you can challenge the 

public necessity. You have a right to challenge—except it is takings 

for roads, you have the right to challenge the public necessity. That 

is decided only by the probate judge who hears your case. And you 

have a hearing on that and we presented three days of hearings 

on this issue with this motel. And when it became clear that the 

issue of whether this was blighted was a little murky, the ante 

went up and we settled the case quite favorably to our client. 

Under Kelo, that event never would have happened. They would 

have said it is going to generate jobs, they would have had somebody show up with the number of jobs that office building was 

going to generate and the taxes that it was going to generate 

versus the transient nature of a motel. We would have no negotiating. The judge would have dropped the gavel and said, public use 

because of Kelo. And that would have been the end of the story. 

We would have then gone to the second step in Ohio. Which is 

the jury decision of the value of the property taken. Well, needless 

to say most of these cases settle, because a good eminent domain 

lawyer will position his case to try to up the valuation, because the 

juries are sometimes, you know, seen as a gamble. Sometimes you 

go because you have no choice, but often you are trying to get a 

certainty before you get to that phase of the litigation. 

Kelo would have changed that and now changes that whole situation. You no longer have a blight study issue that you can debate 

whether the take is a valid taking, before you even get the valuation. 

Second in my district, and Representative Gibbs raised it this 

morning, we do have a 9-acre parcel that is located between two 

parcels which are occupied by Progressive Insurance, the largest 

employer in my Senate district, with about 21,000 employees. ProVerDate 0ct 09 2002 10:52 Oct 02, 2006 Jkt 029943 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 F:\DOCS\29943 HFIN PsN: TERRIE
46

gressive wants to expand their campus and connect the two parcels. 

Prior to the Kelo decision, they did not have a chance to buy the 

9 acres in between. They attempted to purchase it but they could 

not take it because there is nothing blighted. There is nothing on 

it and the last I checked, trees and grass still do not constitute 

blight. 

Now, the Village of Mayfield Heights has started the eminent 

proceedings based on Kelo to take the 9 acre parcel of land to ultimately transfer to Progressive, to keep Progressive happy. Which 

is something that I also want to see done, to keep them in the district, which is important, but they are taking advantage of Kelo

that they did not have an opportunity to do 90 days ago. 

Now, I have to say in that case, they also offered the property owner $3 million, which in my opinion was a substantial offer for 

the property in question. 

Mr. FINKLE. If I can, Congressman, they could have done this before Kelo. Kelo merely at best confirmed what they could have already done prior to the Kelo decision. 

Mr. GRENDELL. Well, the lawyers would disagree with that. 

Chairman NEY. Do you have any other observations or anything 

that you want to say? 

[No response.] 

Chairman NEY. If not, I really do appreciate your time. 

Mr. GRENDELL. Congressman, if I can just add one thing from 

this morning. You had talked about the Federal, and I mentioned 

this morning, I am not a big fan of getting the Federal Government 

involved in this, because I think it is a Tenth Amendment issue. 

However, if there is a desire of Congress to look at something, I 

would like to leave you with a thought—42 United States Code 

1983, sometimes known as the Civil Rights Act, prohibits the violation of a civil right under color of law. If you are looking at a way 

that the Federal Government could take a position to influence this 

process, it would be that the violation of a private property owner’s 

right, by taking his property for ultimate transfer to another private property owner would be considered a valid cause of action 

under 42 USC 1983, which would allow that landowner access to 

Federal courts to argue over the validity of the taking, which removes it from the politics of the local situation and enhances their 

property rights and chances in the Federal forum. 

Chairman NEY. That is not a bad idea. 

(Laughter.) 

I thank you for that observation, that is great. 

Again, I want to thank all of you for your time, your opinions, 

I think it is a good hearing. We will be able to take this back to 

Washington and we will be able to, you know, definitely share with 

our colleagues and see what they are hearing from across the country. 

And also, without objection, the statements by State Representative Clyde Evans, Jackson County Commissioner Ed Armstrong, 

and State Rep John Schlichter, who had called and could not make 

it today, will be placed in the record. Again I thank you for your 

time and your attention to this issue. 

With that, the committee is recessed. 

47

[Whereupon, at 3:25 p.m., the subcommittee was adjourned.] 

(49)

A P P E N D I X

August 18, 2005

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