Legal Theft In Norwood

Norwood, Ohio--in this town, which is surrounded by Cincinnati, there is a field surrounded by a high chain-link fence. Across a street on one side of the field is a residential neighborhood of modest homes. On another side is an upscale shopping center with a Starbucks, and Birkenstock and Smith & Hawken stores. The field used to be a neighborhood with 99 houses and small businesses, but almost all the structures have been destroyed. One of the homes that remain--the developer of the shopping center wants to level all so he can expand his domain--was for 35 years the first and only home owned by Carl and Joy Gamble, who are both in their mid-60s.

Now they live across the Ohio River in Kentucky, in the basement of their daughter's house, as they wait for the Ohio Supreme Court to decide their home's fate. Norwood's government seized it to enrich itself by enriching a taxpaying developer who has a $125 million project.

The Gambles say that when the city offered them money for their house, they were not interested. "We had everything we wanted, right there," says Joy, who does not drive but could walk to see her mother in a Norwood nursing home. "We loved that house--that home ."

Past tense. Norwood's government, in a remarkably incestuous deal, accepted the developer's offer to pay the cost of the study that--surprise!--enabled the city to declare the neighborhood "blighted" and "deteriorating." NEWSWEEK reader, stroll around your neighborhood. Do you see any broken sidewalk pavement? Any standing water in a road? Any weeds? Such factors--never mind that sidewalks and roads are government's responsibility--were cited by the developer's study to justify Norwood's forcing the Gambles and their neighbors to sell to the developer so he could build condominiums, office buildings and stores.

Norwood's behavior is part of a national pattern: From 1998 through 2002, state and local governments seized or threatened to seize more than 10,000 homes, businesses, churches and pieces of land, not for "public use" but to enrich private interests, some of whose enhanced riches can be siphoned away by taxes. Such legalized theft--theft by government--does not use a gun, it just abuses the power of eminent domain. And it was declared constitutional by the U.S. Supreme Court in Kelo v. New London last year.

The Fifth Amendment includes this clause: " ... nor shall private property be taken for public use, without just compensation" (emphasis added). The Framers of the Bill of Rights did not scatter adjectives promiscuously: They said public use in order to restrict government to "takings" only for things directly owned by or primarily used by the general public, such as roads, bridges and public buildings. In 1954, the concept of "public use" was expanded to include curing urban blight. The Kelo case arose in New London, Conn., where the city government empowered a private entity to condemn property--a modest middle-class neighborhood--and give it to a private developer who would pay more taxes. The court ruled 5-4 in favor of New London.

Kelo demonstrated that anyone who owns a modest home or small business owns it only at the sufferance of a local government that might, on a whim of rapacity, seize it to enrich a more attractive potential taxpayer. But occasionally a Supreme Court decision disgusts and alarms so many people that there is a political recoil and broad social stirring. Dred Scott v. Sanford (1857) and Roe v. Wade (1973) were such decisions. The Kelo decision is proving to be the best thing that has happened since the New Deal to energize the movement to strengthen property rights.

The Gambles' plight--a quiet, blue-collar couple's life in ruins just as they are entering retirement--vividly illustrates what happens when property rights become too attenuated to protect the individual's zone of sovereignty against government power. Because such abuses are proliferating nationwide, people are pressuring state legislatures to forbid the seizure of property simply to give local governments--who never say they have enough revenues--the revenues they say they need. And Congress may forbid the use of federal funds for projects benefiting from such seizures. BB&T, the nation's ninth largest bank, has said it will not lend to developers who benefit from the power of eminent domain wielded to enrich them.

Reeling from the life-shattering effects of an uncircumscribed power of eminent domain, the Gambles are hoping for rescue by their state Supreme Court, before which they are represented by the Institute for Justice, a merry band of libertarian litigators. The Gambles have the dignified stoicism of uncomplicated people put upon by sophisticated people nimble with complex sophistries. Carl says, "We're paying a lot each month for storage" of their possessions that do not fit in his daughter's basement near the town of Independence, Ky. Independence is what becomes tenuous when property rights become attenuated.