The Arizona Court of Appeals on Wednesday struck down Mesa's highly publicized attempt to use eminent domain to seize Randy Bailey's downtown brake shop.
The three-judge panel ruled unanimously that the condemnation of Bailey's property does not satisfy the public use requirement of the Arizona Constitution.
Bailey jumped up and down and whooped at his brake shop at news of the ruling. His case has received national attention, including a "60 Minutes" feature Sunday that led to dozens of e-mails to Mayor Keno Hawker criticizing the city's efforts to force Bailey to sell his property.
"We won!" Bailey shouted. "It's awesome. So awesome."
City Councilman Mike Whalen said the city may appeal Wednesday's ruling to the Arizona Supreme Court, but a majority of the council would have to agree.
Hawker, though, said he was glad the appeals court clarified how eminent domain can be used in a redevelopment area.
Wednesday's 17-page ruling reversed an April 2002 lower court decision giving Mesa possession of Bailey Brake Service, 18 N. Country Club Drive.
The appeals court took issue with Mesa's plan to seize Bailey's property and package it with adjacent parcels of land, then sell it to private developers who intended to build retail and office buildings. In particular, the city planned to demolish Bailey's shop and transfer the land to Ace hardware store owner Ken Lenhart so he could relocate his operation. Lenhart could not be reached for comment Wednesday.
Judge John C. Gemmill, who wrote the opinion, stated that Bailey's land wasn't being sought for a traditional "public" use such as a street, park or governmental building. Instead, Mesa was proposing a primarily private development, the judge wrote.
"The anticipated benefits to the public do not outweigh the private nature of the intended use," Gemmill wrote. The other judges deciding the case were William Garbarino and Cecil Patterson.
Mesa was attempting to buy and clear about 5.22 acres on the northwest corner of Main Street and Country Club Drive, where Bailey runs his business. City officials have contended the corner is an eyesore.
The city demolished a number of businesses and homes from the corner, some in advanced stages of decay. Officials claimed the redevelopment project would provide an attractive and revitalized gateway entrance into the downtown area. They argued the public would benefit from the redevelopment project because a portion of the downtown area would be revitalized, property values would increase, jobs would be created, and city tax and utility revenue would increase.
These benefits met the public use requirement, city officials claimed in legal proceedings. City lawyers also argued that a previous court ruling found that taking slum or blighted property for private businesses qualified as public use.
However, the appeals court ruled that property within a designated slum or blighted area cannot automatically be taken for redevelopment.
"The constitutional requirement of public use is only satisfied when the public benefits and characteristics of the intended use substantially predominate over the private nature of that use," Gemmill wrote.
Bailey said the ruling clears the way for free enterprise to develop at the corner.
"This is phenomenal," Bailey said. "All I want to do is cherish this moment."
Hawker opposed expanding the redevelopment area boundaries to include Bailey's property, and voted against expansion in March 1999 when he was a city councilman. Six months later, though, Hawker voted in favor of the redevelopment project that would have forced Bailey to move.
On Wednesday, Hawker said he is glad the appeals court ruling restricted eminent domain to public use. The mayor said the council will have to decide whether to challenge the ruling, but that he may have to sit out future discussions because of a conflict of interest over land he owns in the redevelopment area.
Vice Mayor Dennis Kavanaugh, who also voted for the redevelopment project, declined comment on the ruling because he hadn't read it. He did say he felt as if the city was making progress in finding a new location for Bailey.
"From my perspective, that's the productive way to proceed," Kavanaugh said.
But Clint Bolick, one of Bailey's lawyers from the Institute for Justice, said Bailey doesn't want to move and a resolution that forces him to give up his property is no resolution at all. He called the appeals court ruling broad and well-reasoned.
"This should put an end to the widespread government practice of dressing up corporate welfare as economic redevelopment," Bolick said. "It's a big win for private property rights."
Councilwoman Janie Thom, an outspoken critic of the project, said she won't support a city appeal.
"I think the city should accept their lumps and sell the rest of the property on that corner for market value and go about our business and leave those people in peace," Thom said.