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Ball State use of eminent domain spotlights rare but potent tool of state universities

Change Is Eminent
September 19, 2012

At a time when public university leaders regularly point to the advantages that private institutions have enjoyed over them in recent years – such as freedom from most state regulations, freedom to raise tuition, and often significant financial resources -- it’s easy to forget that the public universities still have one significant advantage. They are parts of the state, and that comes with a lot of powers.

Earlier this month, Ball State University’s board of trustees authorized the use of eminent domain – the power of the state to seize private property without the owner’s consent so long as the owner is compensated – to take a piece of property on which it plans to construct a hotel, conference center, restaurants, and dormitory for hospitality students.

If the university does follow through with the plan – and administrators stress that they are trying to reach an agreement with property owners to avoid actually using the power – it will be a rare example of a public university invoking eminent domain, and it could generate controversy, particularly given that the property wouldn’t be used for “traditional” educational purposes.

Most instances of institutions invoking this power in recent years have generated some form of public backlash. “You pay a price when you do this as an institution,” said Kim Griffo, executive director of the International Town and Gown Association at Clemson University. “You pay a price with alumni, with donors, and with state legislators.”

But no recent case has been as contentious as when the state of New York invoked the power in 2008 on behalf of Columbia University, a private institution. States, unless restricted by their own laws, can legally invoke eminent domain on behalf of private institutions, but as the Columbia case indicates, that tends to be even more contentious than the use by a public university. The Columbia case led to protracted litigation, and resentment still lingers.

What’s Going On

The property Ball State administrators hope to acquire is slated to be developed into a teaching-oriented hotel for students in its hospitality and food management program, which has grown in recent years. Several of the country’s top hospitality programs, such as Cornell University and the University of Nevada at Las Vegas, have such facilities.

Because the Muncie, Ind., university is “landlocked,” as administrators say -- surrounded by development on all sides -- it doesn’t have much other space to develop. Administrators also said that, given the nature of what they were building, it would need to be close to other amenities.

The university zeroed in on a piece of property near the campus about a year ago. Administrators said they picked the block because it was close to the school that housed the hospitality department, university-owned parking decks with excess capacity, and a shopping and dining district called “the Village.”

Over time the university acquired most of the property it hopes to develop, mostly from buying the land when it came up for sale. There was only one parcel the university needed, a parcel of land occupied by a printing business called Hiatt Printing.

Since deciding on the piece of land, the university has spoken both informally and formally with the owner of the property, which is a trust, not the owner of the printing store, to acquire the land. The owner of the printing store, Chris Hiatt, said the college has not offered to compensate him for his business in a way that “doesn’t render it worthless and assure its ultimate demise,” according to a statement he released.

Hiatt, who has been outspoken about taxation issues in the region, has not been shy about mixing the debate with his political beliefs. “Condemnation and the seizure of private property is, as it should be, reserved for the most serious of circumstances for which there are no reasonable alternatives and is absolutely necessary for the overall general public welfare or good,” he said in a statement. “It is not a convenient vehicle for pseudo-government entities such as Ball State to use to seize private property for their own ‘capitalistic wish-lists’ for which there are many alternatives."

Ball State administrators said they hope they will not have to invoke eminent domain but are moving ahead on the process. The university’s legal counsel is in communication with the trust’s legal counsel and is working on the filing. “The board did not want to use this power,” said Randy Howard, vice president for business affairs and treasurer at Ball State. “We’re at a point of last resort.”

So far there has not been much negative pushback from the public, though Hiatt’s arguments have been taken up by some national anti-eminent domain groups, such as the Castle Coalition.

Problems of Domain

Eminent domain experts and higher education observers argue that it is probably better for Ball State and other universities to acquire property by alternative strategies such as purchasing the property outright to avoid the use of eminent domain.

As Griffo said, the use of eminent domain can strain relations between the university and city residents, the local chamber of commerce, city leadership, and state lawmakers. “It looks like they’re not playing fair,” she said, noting that similar problems emerge when other entities such as the state or local governments invoke the authority.

There is already some sentiment against the use of the power by state universities in Indiana. Earlier this year, a state lawmaker who represents the district that includes Muncie and Ball State introduced a bill that would have made it more expensive for colleges and universities to take property currently owned by businesses – requiring them to compensate not just the property owner but also any businesses on the property for “future earnings.” The bill did not end up becoming law.

The University of Wisconsin system invoked eminent domain in 2009 to seize a local bar near the Madison campus. The university hoped to use the property to build a music performance facility. The bar’s owners, who bought the property after the university announced its plans to acquire it, questioned the necessity of seizing the property. They tried to drum up public support by waging a public relations fight and endorsing legislation that would have reined in the state’s power.

But the push never caught hold and the property owners ended up accepting the university’s offer for the property and relocation expenses.

That incident was only the third time in roughly 50 years that the 26-university system invoked eminent domain. David Giroux, a spokesman for the system, said it is a power the system uses judiciously.

Empire Building

The relatively subdued reaction to the Madison case contrasts sharply with that of Columbia University, which in 2009 asked the state of New York to use eminent domain to seize property in a 17-acre zone in New York City to allow Columbia University to expand.

The university had purchased much of the property it hoped to develop, but a few owners in the area held out.

The significant difference between the Columbia case and others is that Columbia is a private entity, so the state had to take the property from one private owner and give it to another. A 2005 Supreme Court case, Kelo v. City of New London, upheld states’ authority to do this if the end result was for the public benefit.

That case generated significant public backlash, a sentiment that got tied up in the Columbia case and another New York City case in which the state condemned private property for the purpose of building a basketball arena and apartments. Courts eventually decided in favor of the state and university.

Ilya Somin, a law professor at George Mason University who said he doesn’t think the 2005 Kelo case was decided correctly, has argued that even if the law permits states to condemn land for the purposes of private university development, the policy rationale for doing so is dubious. (This paragraph has been updated to correctly reflect Somin's statement.)

“Condemnation of property is rarely if ever actually useful for the purposes of advancing research or educating poor students. In general, research can be undertaken and students educated just as well on voluntarily purchased land,” he wrote in a 2006 blog post about the Columbia dispute. “If universities wish to pursue these goals by acquiring additional land, they should do it by competing with other potential buyers in the real estate market.”

Even in cases such as Ball State, where the legality of the university’s action doesn’t appear to be in question, Somin said universities should still avoid use of the power. “It might well be legal under the state law and under the federal constitution, but that does not mean it’s good idea,” he said. “It does tend to destroy economic value.”

In many states, because of rigorous legal requirements and the potential for litigation, the use of eminent domain isn’t any cheaper than buying the property outright, said Cynthia Baker, a law professor at Indiana University-Purdue University Indianapolis. But that doesn’t mean it isn’t a good power to have.

“More and more as the burden of the cost of higher education is placed on the backs of students, eminent domain is something the state can do for higher education,” Baker said. “It’s a different kind of relationship.”

 

 

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