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Blight Costs MO Money
by Ron Davis

A lengthy delay in condemning a “blighted” shopping center in Gladstone, MO, may end up costing local government much more than the worth of the property. That’s because the shopping center, Gladstone Plaza, continues to deteriorate and simultaneously lose tenants and potential tenants as a result of government inaction. And such a decline in value and income would likely be passed on for the city to pay.

Gladstone city officials first declared the shopping center blighted in 2003, then spent the next two years soliciting proposals for a financing plan. But officials have continued to delay approving a plan and have taken no formal steps toward condemnation of the property.

The owners of Gladstone Plaza finally sued, arguing that the delay has been undue and has resulted in numerous tenants refusing to renew leases. Moreover, the owners add, they have been unable to attract new tenants. They therefore charge the city with the taking of their property without properly paying for it. And such taking violates the Missouri constitution, they add.

In fact, the state’s constitution guarantees that “private property shall not be taken or damaged for public use without just compensation.” And the Gladstone Plaza owners claim that the delay has been an “inverse condemnation,” for which they have not been compensated.

The city has responded that the elapse of time between an area’s being declared blighted and the start of condemnation proceedings is common. Moreover, they point out that property values during such times typically decrease because tenants often vacate properties without other tenants moving in. The law, they add, does not provide a procedure for compensating property owners for such a decline in property value. Finally, they contend that only when government has caused “aggravated delay or untoward activity” in condemning property can owners initiate legal action.

But that’s the point that the owners of Gladstone Plaza make: that the delay has been aggravated and untoward.

A Missouri appellate court ruled, however, that the position taken by the center’s owners has merit, but is premature. Explained the judges, “That the damages are continuing renders their legal action not ripe for judgment.... To maintain a ripe cause of action for precondemnation damages, the shopping center’s owners must wait until the city grants an organization or agency the right to redevelop the land and it condemns the lands and officially take it, or abandons the project. Only then will the precondemnation damages stop accumulating and permit the courts to grant specific relief of a conclusive character.” (Clay County Realty Company v. City of Gladstone, 2007 WL 2592239 [Mo.App.W.D.])

Decision: September 2007 Published: September 2007



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