Allentown, PA Plans to Use Eminent Domain to Take Property for a Hockey Arena

The city of Allentown, Pennsylvania plans to use eminent domain, or at least the threat of it, to forcibly acquire downtown property for the construction of a minor league hockey arena [HT: my father-in-law Bruce Schmauch, a longtime Allentown resident]:

It was drop-the-gloves time in Allentown City Council chambers Wednesday night.

A parade of downtown merchants, their attorneys and supporters laid into city officials, saying their heavy-handed efforts to pressure them into selling their properties under threat of eminent domain to make way for a hockey arena would kill their livelihoods.

That didn’t stop council from voting 6-1 to authorize city officials to use eminent domain to acquire the holdouts….

One after another, merchants said they need more than just a few months to make a life-altering decision on whether to sell their properties and more information about the arena plan itself. They said they were given little information and inadequate offers of relocation assistance.

“Are you going to relocate my business, are you going to take care of my family, are you going to take care of my livelihood?” said Chong Lee, who operates New York Fashions on Hamilton Street.

In March, Pawlowski’s administration began approaching landowners with property in the one-block footprint of the arena between Hamilton, Linden, Seventh and Eighth streets with offers to buy their buildings. About half have cut deals with the city.

Pawlowski hopes to build a sports and entertainment complex centered on an $80 million to $100 million hockey arena that would be home to the minor league Phantoms, the farm team for the National Hockey League’s Philadelphia Flyers.

As is often the case, city officials are defending the use of eminent domain on the grounds that it will produce economic benefits for the community. However, as Kelo v. City of New London and many other cases show, such condemnations often destroy far more economic value than they create. In addition, numerous studies show that public subsidies for sports stadiums routinely fail to promote economic growth. This is true even of stadiums that house popular major league teams, much less minor league facilities like the one planned for Allentown.

The proposed Allentown taking may also run afoul of Pennsylvania’s post-Kelo eminent domain reform law, which forbids most takings that transfer property to a “private enterprise,” unless the land in question is “blighted” in tightly defined sense of the word (unlike the extremely broad definitions of “blight” that continue to prevail in many states, such as New York). I have seen downtown Allentown and it is clearly not blighted, as defined by the new law.

Unfortunately, Pennsylvania’s law has a crucial loophole that excludes the area around Pittsburgh and Philadelphia until 2012. But Allentown is probably too far from Philadelphia to be covered by that exception, though I welcome correction by experts in Pennsylvania law on this point.

I can’t make a definitive judgment about the legality of the proposed Allentown condemnation without knowing more about the details of the plan. But my initial impression is that it’s probably illegal under Pennsylvania’s post-Kelo reform law. Legal or not, the Allentown plan is yet another example of a dubious economic development taking that is likely to harm the community far more than it benefits it.

UPDATE: This story suggests that the new arena may be publicly owned, in which case it would not violate the post-Kelo eminent domain reform law. However, the same story and previous reports indicate that the development plan may include privately owned facilities and that the arena could be controlled by a private developer. Currently, the Allentown Economic Development Corporation, a private organization, is trying to acquire property for the arena, using the threat of eminent domain as leverage. If the AEDC is to be the owner of the arena, it would not qualify as a publicly owned stadium. We may not know whether the plan is legal or not until it becomes clear who will ultimately own and control the arena.