This second blog post of the two-part series features just a few of the tools of inclusionary eminent domain that can be retrofitted for purposes of constructing or preserving affordable housing on land condemned for economic development, or new development projects generally. The tools are interrelated and have the ability to operate in tandem to temper and reconcile the interests of various stakeholders.
Community Benefits Agreements (CBAs) are private, legally binding contracts between private developers, municipalities and various community representatives setting forth a range of benefits to be included in a development project. CBAs also help obtain the cooperation and participation of community organizations that might otherwise object to condemnation for development, or new development generally. For developers, a promise of support is important because it helps negotiate state subsidies and maintain good public relations. In most cases, the community carves out a list of benefits and negotiates the demands with the developer and municipality. Often times, a demand for a percentage of affordable housing is at the heart of the CBA. Some CBAs have been drafted in response to condemnation proceedings to ensure affordable housing is constructed on the new development site. The developer and municipality – in collaboration with the affected community – promise, among other things, to construct affordable housing within the development project to replace some the housing stock that may be reduced by condemnation.
Community Development Corporations (CDCs) are nonprofit entities that seek to improve economically depressed neighborhoods with, among other things, affordable housing to recreate the social fabric of distressed areas. The CDC board is usually elected by residents and empowers the board members to represent the interests of those living in a neighborhood. CDCs have played significant roles in collaborating with municipalities where eminent domain takings have threatened to raze affordable housing. In fact, CDCs are frequently one of many community representatives who sign onto a CBA. Significantly, the production of affordable housing in economic development projects may be more transparent with a local CDC involved in the post-condemnation development process.
Community Land Trusts (CLTs) are modeled on a landowner and property ownership scheme. The title to the land that sits underneath the property is held by the CLT, which retains ownership of the land and then leases the use of the property, such as an affordable housing development, to low- and moderate- income tenants or homeowners. To preserve affordability, the ground lease includes resale price restrictions. In some programs, the municipality runs the CLT. The CLT scheme, in the context of eminent domain takings for economic development, may help ensure preservation of affordable housing if the boundary of a CLT is designated and established within the development area prior to, during or after condemnation.
Neighborhood Improvement Districts (NIDs) are local governance and group property models enabled by state legislation designed to supplement, but not supplant, traditional municipal functions. After official authorization by the local City Council, a boundary is drawn that encapsulates the area of the neighborhood serviced by the NID. Commercial or residential property located within the NID boundary are assessed a fee that finances for economic development and a variety of other benefits such as street cleaning, managing parking lots, private security and other safety measures within a neighborhood. Further, some NIDs have expanded powers of zoning, land use planning and other authority in tandem with the local municipality. The governing body of the NID is created by group representatives from the community – called the neighborhood improvement district management association (NIDMA) – that levies the assessments on property owners and makes other decisions concerning the improvements of the neighborhood. Often times, however, the local CDC located within the NID is designated as the NIDMA. Significantly, the NID may also generate substantial economic activity that could spur affordable housing development by the issuance of bonds and other forms of monies, including the authority to appropriate and expend federal, state or municipal funds received by the NIDMA. Significantly, to preserve or construct affordable housing, a portion of the land condemned for economic development could be designated as a NID. This is an attractive tool for private developers and municipalities seeking to constructively invest in and construct affordable housing developments for low- and moderate- income neighborhoods and foster a working relationship with residents.
The model of development discussed in this blog series is an evolving paradigm in takings law. Inclusionary eminent domain is, in essence, an acknowledgment of the realization that a meticulous focus on the meaning of “public use” – in the most local community sense – is an integral part of the exercise of takings for economic development. The tools have been packaged into this new inclusionary framework to guide municipalities, private developers and communities help construct to preserve affordable housing developments.
For a comprehensive read on the concept of “inclusionary eminent domain” and its practical toolkit, download the recently published law review article at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2238898
Citation: Gerald S. Dickinson, Inclusionary Eminent Domain, 45 LOY. U. CHI. L.J. 845 (2014).