Government property seizure poses knotty issues

Daytona Beach wants to condemn property deemed blighted to make way for a $120-million private development.

DAYTONA BEACH - People across the nation were outraged when the U.S. Supreme Court ruled last month that a Connecticut town's government could take properties by eminent domain and bulldoze them for private development.

While experts say Florida's eminent domain law is different and makes it more difficult for governments to seize private property, a case in Daytona Beach highlights some of the thorny issues posed when a local government decides it wants a piece of property.

A circuit judge is determining whether Daytona Beach can use eminent domain to condemn three properties on its Boardwalk, Captain Darrell's Oyster Bar, Midway Fun Center and a go-cart track, in order to make way for a $120-million condo-shopping-hotel complex to be built by a private developer. A decision in the case is expected later this summer.

Florida law technically doesn't allow for the Connecticut kind of private development-fueled property seizures. It is one of eight states where the use of eminent domain for economic development is prohibited unless it is to eliminate blight - often crime-ridden areas with dilapidated buildings.

But the Daytona Beach case shows things are not that simple.

The three properties in question, along with others on the beachfront strip, were declared blighted by the city in 1981. Since then, some property owners have sold their land and a Hilton hotel, a movie theater and a Starbucks have been built.

Community leaders made it clear: They wanted the beach area to be less of a carnival and more of a genteel resort.

But when the city turned its attention to the land on which the bar, the arcade and the go-cart track stood, the owners refused to sell. The city took them to court.

Lawyers for the property owners questioned whether the seizures were necessary. And they questioned the blight designation. The blight has been eliminated since the 1981 report, they contend.

During the trial's closing arguments, attorney Frank Ford, who represents one of the property owners, stressed this point.

"In the 24 years since that blight study was done," he said,"all kind of things have happened. The city's own witnesses testified that nearly all these problems have been cured."

* * *

The Boardwalk is one of Daytona's most recognizable tourist attractions. Just a few steps from the famous beach, it was built in 1938, one of President Roosevelt's Works Progress Administration projects.

It reached its heyday in the 1960s and 1970s, with arcades and go-cart tracks, t-shirt shops and small bars. Bike Week roared in to town. College students claimed the beach each spring in an alcohol-fueled rite of passage.

"It was awesome," said Jeff Petrilla of Joliet, Ill. He and his family have been vacationing around Daytona since he was a baby. He remembers the salt water taffy shops as a kid, and later scenes from spring break: "I had a black Camaro Z-28 and girls would just be jumping in the back of the car."

According to the city, there was one problem with the Boardwalk: It never changed. Instead, it sank in to disrepair and attracted runaways, prostitutes and drug dealers. Bars and tattoo parlors seemed to dot every corner.

In 1981, a town planner deemed the area blighted.

"Decay set in," said attorney Jon Kaney, who is representing the California developer in the current court case. "It was the scummiest place in town."

* * *

That 1981 report was the beginning of the revitalization in Daytona Beach.

In the past two years, developers rebuilt the north side of the area, with a movie theater, condominium-hotel towers and an expanded Hilton Hotel. There's a candle store, a store specializing in body lotions, an upscale surf shop.

All along Daytona Beach, the mom-and-pop hotels were replaced by condos such as the Ocean Villas, where for $700,000 buyers enjoy amenities such as a meditation garden and an oriental soak bath.

Some of the parcels that made up those newer developments were taken by eminent domain, said attorney Kaney, while other landowners sold without a battle.

Kaney's client, California developer Bill Geary, wants to build two hotel-condo towers and a shopping area on the Boardwalk property, just south of the Hilton. He has bought several properties already, but says he needs three more: the oyster Bar, fun center and the go-cart track.

Those properties are smack in the area that the city deemed blighted in 1981. But attorneys for the property owners say that since then, the area has become substantially safer and less downtrodden.

In the U.S. Supreme Court case, blight was not an issue. Susette Kelo and several other homeowners in a working-class neighborhood in New London, Conn., filed suit after city officials announced plans to raze their homes for a hotel, health club and offices.

New London officials argued that the private development served a public purpose of boosting economic growth and that it outweighed the homeowners' property rights.

That case should have little impact on the judge's decision in Daytona, predicts Kaney.

Lawyer Mark Natirboff, who represents another of the property owners, said the Kelo case shouldn't "change the strict scrutiny that the city's proceedings are subject to under Florida law."

The city's reason for the eminent domain proceedings is for a private purpose, said Natirboff during his closing arguments.

"This is a gross abuse of discretion, this is bad faith and this is illegal," Natirboff said.

State Rep. Everett Rice, R-Treasure Island, wants to restrict eminent domain proceedings in light of the U.S. Supreme Court case, and hopes to place a question on the 2006 ballot, asking voters to decide whether local governments should have the power to condemn homes for private development.

The resolution would restrict the ability of local governments to use eminent domain to remove blight.

"Blight is a moving target," said Rice, who is running for attorney general in 2006. "It can be anything you want it to be."

Yet property rights experts say property owners don't have anything to worry about.

"The notion that private property owners are a group discriminated against is an absurd notion," said Michael Wolf, a law professor at the University of Florida.

If the judge rules in the city's favor in the Daytona Beach case, he said, the landowners will get fair market value for the properties - currently well over $1.5-million for each property.

Otherwise, it's not a God-given right that property won't be taken for the public good, said Wolf.

"There is a principle that is part of the law that we inherited from England, it's embedded in our Constitution, and that's the notion of eminent domain, where the sovereign has the power to take land for public use as long as the sovereign pays just compensation," he said. "An individual cannot stand in the way of a public use or public purpose."

* * *

One day this month, Glen Teschner hauled giant garbage bags of ice cubes out of his restaurant, Bernkastel Festhaus, and dumped the cubes on the lawn near Daytona's Boardwalk.

He didn't need the ice anymore. Or his barstools. Or the dozens of beers on tap.

After 14 years, the Festhaus had closed for good.

The Festhaus didn't close because of eminent domain; the lease was up and the landlord refused to renew it, said Teschner.

"This was part of the nostalgia of old Florida," said Teschner. "I would have liked to stay."

Teschner, 46, doesn't have much hope for the private property owners in the eminent domain case.

"I'd say the odds are pretty good against them," he said. "You can't fight city hall."

--Times researcher Carolyn Edds contributed to this report. Tamara Lush can be reached at 727 893-8612 or at lush@sptimes.com

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