July 26, 2001
By Mike Krause
At a recent dinner party, the talk turned to the City of Denver’s use of condemnation to allow Mile High Development to get the property Ilios restaurant occupies to build a parking garage.
One friend asked, “How can they get away with that?” “They” referring to Mile High Development and their real estate agents in the Denver City Council.
The short answer is, “We let them.”
The taking power of government is supposed to be heady stuff, exercised with caution and with the humility such power confers. Using condemnation to facilitate the transfer of perfectly good privately-owned real estate housing perfectly good businesses to another private interest is simply reprehensible and endemic of politicians’ zeal to satisfy the wants of moneyed special interests all the while claiming to be operating in the public interest.
But that the Denver City Council has taken to this methodology should come as no surprise. Such twisting of government ‘taking’ power has been rapidly evolving. And pushing the envelope of condemnation is simply a test of the limits of confiscation already implied by the power to tax property and income. If eminent domain or condemnation is only supposed to be used for public purposes, government simply tries to expand the definition of a public good. Hence the notion of ‘public/private development’, which in the case of the art museum/condominium project is better termed ‘moneyed special interests backed by government muscle.’
Government has become accustomed to a claim on an ever-expanding chunk of our income. The total tax bill including local, state and federal now runs between 40-50% of a typical earner’s income (largely dependent on which state you reside in).
Here in Denver, that claim has become authority to transfer part of that money back to special interests in the form of corporate welfare. There is even a city agency, the Denver Urban Renewal Authority (DURA), whose job it is to give out public subsidies to private interests (to the tune of over $200 million over the last decade).
This notion was nicely defined by the wooing of Boeing, where there was never really any question on the part of city officials but that people’s hard-earned tax money was theirs to offer as a subsidy to a giant corporation, including lying about the size of the subsidy with no fear of reprisal. Should anyone be surprised that the next step is to use the condemnation power of the city to facilitate the development plans of another corporation?
There is even a term for this state capitalism where above and beyond zoning and use restrictions, local government also decides the ‘best use’ of otherwise private property.
Last year in New Rochelle, New York, Mayor Timothy Idoni sought to condemn an entire neighborhood (34 homes, 28 businesses and two churches) to hand over to Ikea Furniture for a new outlet. The plan was dropped after being profiled on a John Stossel ABC news special, but the Ikea story is telling nonetheless.
Asked to justify the condemnation, the Mayor Idoni responded, “No urban planner would ever design a neighborhood like that, with a house next to an industrial site next to a bus depot.” (Sounds like some areas of Denver.) “That’s not a neighborhood, in my opinion,” the mayor concluded.
This is a prime example of the underlying arrogance of the government as judge of ‘best use’ of property. The security and expectations based of the foundation of ownership and lease agreements are as important to the occupants of a marginal neighborhood as the residents of the swankiest gated community.
This arrogance shows through in Denver’s disregard for Ilios’ lease with the current property owners. Councilwoman Cathy Reynolds contends “It is not our job to negotiate some sort of deal with someone who is not the owner of the land.” Recall that when a citizens’ group gathered the signatures to place a $60 million corporate welfare subsidy to the convention center hotel on the referendum, the same Councilwoman Reynolds argued that the subsidy was a contract that “had to be honored.”
What about the notion that people enter into business leases (a form of contract) with the feeling of security that it is government’s job to enforce them through contract law, not subvert them to enrich special interests? There is no shortage of voters who are willing to help along this warping of what constitutes a ‘public good’. Miss D. Diamond herself, the owner of Ilios, admits she fully supported the art museum expansion, until Mile High’s garage threatened to steamroll her own business.
But the irony aside, Ilios matters. The next piece of private property or small business to be swept aside by the grand schemes of Denver government officials and their special interests may well be yours.
Research Associate Mike Krause wrote this article for the Independence Institute, a free market think tank in Golden; https://i2i.org
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