Under the heading of There’s More to This Issue Than Property Rights, Savin suggests that local governments may need protection from themselves as much as property owners need protection from them. “Cities sometimes think of eminent domain as an easy and inexpensive way to obtain property,” he says. “A city that condemns a business property that it views as out of date or substandard can convince itself [perhaps with a developer’s help] that the property isn’t worth much. But owners [of a business property] are much shrewder about how they could maximize its value.” When the case goes to an impartial judge or commission, he says, the city can find itself on the hook for a lot more money than it anticipated. He suggests that some projects in downtown Minneapolis have followed that pattern, though he declines to specify them.
Since the Kelo backlash began, local developers say they’ve been astonished to learn of the cozy relationship they enjoy with local governments and of their power to crush helpless neighborhoods. They are more inclined to see themselves as victims of city councils than as partners in crime. Developers complain that money, land, and time are routinely extorted from them by cities in the form of environmental buffers, fees, and development moratoria.
For example, Lally cites “park dedication fees” as a way “to extract additional money from developers. The fee might be $6,000 an acre, and that money doesn’t go to build parks, I don’t think.”
Coyle says that developers of residential subdivisions that he represents frequently discover late in the game that “they need to give up a [building] lot or two [called a subdivision extraction] because some neighbor showed up at a city council meeting and said a project is too dense, despite meeting all the city’s requirements.”
He says one recent client had a seven-lot subdivision in the northern Minneapolis suburbs. “It met every standard of the code. But the price was that we lost two lots due to pushback from the neighborhood. The developer looks at me and says, ‘How can [the city council] do this?’ Well, you can sue them or you can suffer the blow.”
Which is pretty much the choice Susette Kelo had.
