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Eminent Domain: City Held the Cards; Victims Hold the Bag

The Richmond Times-Dispatch
November 20, 2009
By A. Barton Hinkle

Jay and Stephanie Burkholder never had much of a chance, really. They held title to a building in Roanoke that housed a flooring company, where fewer than 50 people worked. And they were going up against Carilion -- a $2 billion health system that wanted to build a biomedical complex on their land.

They also were going up against the City of Roanoke, whose former economic developer was employed by Carilion to scope out locations for the center -- not to mention Virginia Tech and UVa, each of which had a hand in the project, as well as the Commonwealth of Virginia, which kicked in $59 million in case Carilion ran short of cash.

Oh, and the law. Virginia law did not lean in the Burkholders' favor. Judge William Broadhurst made that clear the other day when he ruled that Roanoke was entitled to seize the Burkholders' property by power of eminent domain. The Burkholders, he wrote, "carried the burden" of proving the seizure was unjustified.

In this case, so reminiscent of the infamous Kelo, the cards were stacked against the Burkholders from the beginning -- back when, Broadhurst notes, Carilion "decided to contact City officials to explore the idea of redeveloping the area [around the Burkholders' property] for use by CBI," the Carilion Biomedical Institute.

As detailed in earlier columns in this space, Roanoke officials leaped at the opportunity. "The city of Roanoke has developed and refined the following proposal in response to the needs of CBI," wrote the city manager in 1999. The proposal was "truly exciting," she went on, because it would bring "new uses" to property that "generates inadequate tax revenues." (Inadequate by whose standards?)

Roanoke and Carilion soon entered into a performance agreement stipulating that the Roanoke Redevelopment and Housing Authority would acquire property within the designated redevelopment zone, clear it, and sell the land to Carilion. If Carilion decided it wanted any other property, then Roanoke would acquire that, too.

In his ruling, Broadhurst continues the story: "Obviously desirous of having the CBI project located within its borders, the City approached RRHA and requested that it initiate an investigation into whether the area qualified for redevelopment due to blight." Not surprisingly, the expert retained by RRHA found a majority of the area was indeed blighted -- or at least "improperly developed." Pause for a moment to consider the pregnant meaning of that term, and the further abuses to which it could give birth.

The Burkholders' building was not deemed blighted -- indeed, Judge Broadhurst terms it "in fine condition" -- but that did not matter: Under state law in effect at the time, all that was necessary to condemn their property was a finding that it was located in a blighted area.

As Broadhurst notes, "meetings were held periodically between representatives of the City, RRHA, Carilion, and some members of the evaluation team while the evaluations and inspections were underway." Moreover, the Burkholders "produced documentary evidence of correspondence between the City Attorney's office and RRHA clearly suggesting that the City was pressuring RRHA to come up with findings that would correspond with the terms the City had reached with Carilion." All of this "gives substance to [the Burkholders'] accusation that the blight conditions found by RRHA did not exist."

But none of that matters -- because, according to the Supreme Court of Virginia, "all presumptions are in favor of the validity of the exercise of municipal power." Broadhurst says his hands are tied: "The court is not free to substitute its own findings of fact." So Roanoke may seize David's property and hand it over to Goliath.

In the years since the Burkholders' saga began, the General Assembly has tweaked the state's condemnation law so that a property cannot be condemned merely because it lies in a blight zone; it must be blighted itself. But in light of what has come to pass in Roanoke, lawmakers might want to consider how much courts should have to defer to municipal authorities' power. They might ask whether the burden of proof shouldn't rest with the condemning authority rather than the property owner. They also might ponder whether the experts who make blight determinations should be hired by the very municipal authorities that stand to benefit from a finding of blight.

Otherwise, in the high-stakes poker game of eminent domain, property owners in Virginia could continue to face what's known as a Tijuana royal flush: any five cards and a knife.