Residents of Charlestown, Indiana Fighting Home-Seizure by City

Charlestown residents fight for their homes while the city mayor and other government officials weigh a plan for demolishment to pave way for development of new city projects. What defense do homeowners and other residents have at their disposal? Could bankruptcy stop this property seizure? City officials do not think so.

Nearly 360 Homes To Be "Purchased," Then Demolished

Eminent DomainThe mayor of this Indiana town, Bob Hall, made plans public earlier in the year for the demolishing of nearly 360 homes within the Pleasant Ridge area of town. Hall contends that the Pleasant Ridge neighborhood has become "blighted," enabling the city to use this status and associated condemnation to qualify for money from Indiana's state fund for revitalization. In order to do so, they need to force purchase of homes from the homeowners for teardown.

The mayor's office makes the case that the homes were built by the army in 1940 for temporary housing accommodations for ammunition plant workers.

That said, these "temporary" homes are very much still there, and are obviously occupied with hundreds of homeowners. Many homeowners are simply not willing to sell the homes, at least not at a price the city might offer to them. Institute for Justice (IFJ), a nationwide economic liberty and property rights law firm, has taken the case to help the residents and has made it known that the Indiana fund which the mayor wants to use to pay residents would offer only a paltry $6,000 in exchange for their homes.

One resident noted that they are not transients. They're residents who have, in many cases, lived in the Charlestown neighborhood for upwards of 40 years. Clearly for some residents, selling these houses is off the table.

Legal Options for Pleasant Ridge Homeowners

What legal options do these residents have to prevent the seizure of their homes? Could bankruptcy stop this "Kelo condemnation" type of property seizure? Possibly not, but the answer to this question is unclear in the absence of further information regarding whether certain businesses in the affected area fall under chapter 11 protection and whether certain jobs could be preserved under bankruptcy law.

 Ultimately, if the city properly made its case that the total benefit to the city and the community as a whole outweighed the negative impacts to these particular residents, then it may be able to overcome restrictions on its power to seize property. Courts vary on the application of eminent domain when an automatic stay due to bankruptcy is in place. Hence, it is quite possible that this could be the case for which new clarifications for interpretation of the bankruptcy code could be made. Bankruptcy could stop property seizure in this instance.

"Blight Elimination" Plans Tabled For Now

Hall submitted an application totaling 17,000 pages to the State's Program for Blight Elimination in June. Indiana's decision was then supposed to be released the next month, July.

However, due to protests stemming from residents, Hall decided to temporarily table his efforts, requesting that the state put Charlestown's application on hold. Residents must now wait until the end of the year before they know if the city will move forward with its original plans.

Erasing Blight or Running Out Poor Residents?

Hall's office feels that the leveling of these houses is what will be best for Charlestown. Geneva Adams is Mayor Hall's spokeswoman. She points to a declaration in 2002 that the area was blighted and a revitalization grant was received at that time. The housing itself was originally only intended as temporary housing, purchased by the US army for ammunition factory workers during the lead up to WWII. "They were not intended to be permanent housing and the current rundown state of these houses is clear when you drive into the area."

Resident Ellen Keith believes that her neighborhood of Pleasant Ridge has been targeted because of its status as a low-income part of town. "I've never had any trouble in this neighborhood, not one problem, but the mayor wants to [incorrectly] say that [Pleasant Ridge has] a crime and drug problem, where we're actually just a poor neighborhood."

IFJ attorney Melinda Haring maintains that Charlestown is taking part in what will prove to be the "poster child" of so-called eminent domain law abuse. While local governments almost always cite eminent domain to seize houses, these are most commonly used for road projects and specific, desired developments. Haring says that with the economy showing signs of recovery, this type of land grab is on the increase.

Though the mayor claims that no specific plans are currently in place, time will tell whether this specific use of eminent domain is legal in Indiana. Following the controversial 2005 Supreme Court 5-4 ruling that is most commonly used to support the legality of eminent domain, Indiana lawmakers made sweeping reforms to eminent domain laws. They specifically limit eminent domain law to public use, which the Institute for Justice says specifically does not allow use for retail and private developer projects. Until then, homes in this working class neighborhood hang in the balance. 

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