Some call it racism. Others label it environmental extremism. But no matter what term you choose, the U.S. Army Corps of Engineers is unfairly stripping property rights away from a Detroit developer.

Almost two years ago, real estate developer "Made in Detroit" proposed The Gibraltar Bay development at Humbug Marsh, on the Detroit River. The 406-acre community would include 325 luxury houses, a golf course, a marina and retail stores.

At first, the Michigan Department of Environmental Quality denied Made in Detroit’s request to build on wetlands. So Made in Detroit went back to the drawing board, significantly changing its development plans to please the Environmental Quality Department.

After Made in Detroit jumped through several regulatory hoops, the Environmental Quality Department approved its plans. Then, the federal government stepped in.

The U.S. Army Corps of Engineers controls our country’s navigable waterways. This week, the corps denied Made in Detroit’s building permit, allegedly because of environmental concerns. The corps, however, took almost 20 months to make this decision and technically does not have authority to regulate the marshlands it claims it is trying to protect.

William Merriweather, chairman and CEO of Made in Detroit, points out that 100 percent of permits approved by the Department of Environmental Quality last year also were approved by the Corps.

“This decision is further evidence of extortion by the U.S. Army Corps of Engineers to obtain a piece of property it does not own at the sole costs of the land owner,” Merriweather said. “It is a clear violation of the Fifth Amendment of the U.S. Constitution. It proposes an illegal taking of private property without due process or compensation to the owners. It sets a dangerous precedent for all developers and property owners throughout the nation.

“It is incredulous that the U.S. Army Corps of Engineers would deny us our permit after the State of Michigan, which has even stricter wetland requirements, granted us a permit,” he added. “We are responsible developers. We created and designed Gibraltar Bay with respect for the environment and surrounding area. We are committed to protecting and preserving the integrity of our entire site including the conservation easement. "

Merriweather, who until now has refused to comment on the race issue, this week stated that racism was a factor in denial of the permit. The five principals of Made in Detroit are black.

Regardless if that contention, the denial of this permit and irresponsible treatment of landowners by a government agency is appalling.

According to financial studies by Made in Detroit, the total project could be worth $950 million in spinoff economic benefits for the area.

During public hearing on the issues, however, nearby homeowners made it clear they did not care about increased tax revenue nearly as much as they cared about “preserving” the “feeling of community.” In other words, they would rather keep outsiders outsiders, rather than allow development to improve their schools and roads.

It is precisely this attitude that allows the government to continue its reckless disregard for private property rights. All developers should back Made in Detroit as it faces the Corps in court – any private property owner could be the next target.

And in other news … Simon Property Group (NYSE: SPG) is acquiring a regional mall portfolio from New England Development Company. A joint venture led by Simon acquired 10 malls … EquityCity.com claims it already has developed an investment base of $2 billion. The Internet investment company started operations just weeks ago and matches investors with real estate developers seeking equity capital partners.

Published: September 2, 1999

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Lesley Hensell covers commercial real estate and financial issues for Realty Times. Based outside of Dallas, Lesley works with high-tech and real estate clients as an independent marketing and public relations consultant. She also writes for several publications, including the Dallas Morning News. E-mail Lesley at: lhensell@earthlink.net