The declaration itself can kill property values, scholars have decried
COLUMBIA, 3/14/12 (Beat Byte) -- "A declaration of blight is not a compliment,"
says former Missouri appeals court Justice and eminent domain expert Harold Lowenstein
, who authored a seminal 2009 Missouri Law Review article
analyzing blight designations as part of economic development incentives.
After thanking the Columbia Heart Beat for a "well-laid out and presented factual background," Lowenstein answered questions about Columbia's Blight Decree and what it means for local residents. He started off contradicting a central part of lobbying group REDI's case: that the associated Enhanced Enterprise Zone (EEZ) would be good for property owners in the zone.
"Such a governmental finding would probably not increase land values," Lowenstein -- now a practicing attorney in the Kansas City office of Armstrong Teasdale
-- told the Heart Beat. Many scholars, in fact, have "decried the practice" of publicly declaring a property blighted or publicly announcing that a property may be acquired through condemnation, he explained.
The negative publicity "begins a slide in the market value of the property," Lowenstein said. "Using market or arms-length transaction valuation methods, the announcement makes any future sale not possible. The land is going to the government (or developer), period."
Lowenstein says he became interested in home and business condemnations while presiding over TIF proceedings in Jackson County Circuit Court. While EEZ requires a blight designation, TIF -- or tax increment financing -- requires either blight or conservation zone designations. Conservation zones are less toxic to property rights than blight decrees.
Lowenstein noticed "the seeming unfairness of announcing land to be taken was blighted, and the time lapse until the eminent domain case was tried" and court-ordered compensation determined.
Under Missouri law, even non-blighted properties can be declared blighted. Left to gestate with such properties, public blight declarations become self-fulfilling prophecies
. Property values fall, and property owners -- as Columbia Tribune cartoonist Darkow sketches
-- let their properties go to seed.
"The Missouri Law Review article and the sources cited in it are unhappy about the definitions of blight used for TIFs" and other programs to "rehab the land," Lowenstein said. "Many folks want to give the courts more authority to look into government declarations of blight."
About Enhanced Enterprise Zones -- the tax abatement scheme connected to Columbia's Blight Decree -- Lowenstein says he "must plead no knowledge on the success of these zones" or whether being in such a zone needs be stated on a title insurance policy.