The legislator behind a new law that matches tax-increment financing authority with federal opportunity zones in Pawtucket says the change it makes to existing statewide eminent domain regulations is limited to the city, and is not intended to be permanent.
The conservative-leaning Rhode Island Center for Freedom and Prosperity in Cranston is considering ways to block the change, though at least one legal scholar believes it will be difficult to challenge in court.
The new law requires a 100% reimbursement rate for property taken by eminent domain within three recently designated opportunity zones downtown and near the former Memorial Hospital in the city. That’s a departure from Rhode Island law that requires a 150% reimbursement for any property taken by eminent domain for private use.
The change will last for about 15 years, said Rep. Carlos E. Tobon, D-Pawtucket.
“We want to work with the [property] owners, we want to make sure they get what’s fair, but we also want to make sure our community gets a square deal,” Tobon said.
The zones, which were announced early last year, are designed to spark economic growth by rewarding developers with tax breaks after seven to 10 years. But while officials say the new law is meant to spur action in blighted areas, the Cranston-based nonprofit, which describes itself as a nonpartisan, pro-growth research and advocacy organization, is concerned about possible ramifications for property owners.
Center for Freedom and Prosperity founder and CEO Mike Stenhouse says he’s looking at several issues within the law, including the expansion of eminent domain to property that qualifies for tax-increment financing, questions on due process and reimbursement rates.
So far, though, there’s been no decision about filing a lawsuit, because no land has been seized.
‘When you take the opportunity zone out, [no developer] is looking at Pawtucket.’
REP. CARLOS E. TOBON, D-Pawtucket
He believes the new law is directed at redevelopment of the former Apex department store property in Pawtucket, in a prominent area overlooking Interstate 95. Tobon has denied the change is directed at one property.
Arguing in court against the new law may be difficult, says Jonathan Gutoff, a law professor at Roger Williams University School of Law, because proponents’ claim it is meant for public good will likely be a strong position.
“I guess an argument could be made that this is depriving property owners in Pawtucket of equal protection,” said Gutoff. “The problem is that unless they have a [discriminatory] reason for taking the property … all that’s needed is they have a rationale for making this decision under the 14th Amendment [which forbids states to restrict basic citizen rights].”
The new law supersedes the 2008 Home and Business Protection Act, enacted in Rhode Island in response to a 2005 U.S. Supreme Court decision allowing private property to be leased to a private developer for a use that would generate economic growth, according to Providence attorney Harris K. Weiner. That 2008 act put in place the statewide 150% reimbursement rate for land taken by eminent domain for private use.
So far, it’s not clear what the impacts of carving out an exception to the rule could be.
“It’s a question of policy, a question of equity, perhaps a constitutional question,” Weiner said, adding that legal action taken by property owners may begin with an injunction rather than a lawsuit.
As to Stenhouse’s fears that the exemption for parts of Pawtucket may eventually be extended to other communities, Weiner said he has heard similar concerns, but is not convinced a wide-reaching impact is imminent.
“They have made the law pretty specific to Pawtucket in terms of the criteria,” he said. “How this law defines the contours of the growth-center district, the ballpark district and the arts district could be challenged by property owners, but the legislative intent here is quite clear, and that will be a key factor in any judicial consideration of the matter.”
Tobon maintains that by reducing the reimbursement rate, officials hope to attract investors and developers who have their pick of thousands of federal opportunity zones, created in 2018, across the country.
“When you take the opportunity zone out, nobody is looking at Pawtucket,” he said, adding, “The people who are going to start putting money in are looking to do it now. The first-born in a litter is usually the strongest, and we don’t want to be the runt, that’s why we’re acting quickly.”
The Pawtucket exemption is a safeguard in case property owners aren’t amenable to selling their land to ambitious developers or making changes to align their property’s use with Pawtucket’s vision for revitalization, Tobon said.
“If you’re just sitting on something and you don’t really have a plan, or your plan is not really something that someone would salivate over, at what point does that infringe on the residents of the community?” he said.
Elizabeth Graham is a PBN staff writer. Contact her at Graham@PBN.com.
