In recent years, city governments have increasingly turned to a process called amortization to allegedly stimulate development and economic growth. However, given the fact that amortization necessarily destroys existing businesses, that claim is a mere pretense. In truth, amortization is a declaration by city officials that they don’t like the business.
Amortization occurs when a zoning ordinance is changed and some parcels of land no longer conform to the new land-use regulations. The existing use is amortized—that use can continue for a specific period of time. After that time, the existing use is illegal.
Consider the case of Jeremy Sark and Marie Dougherty. Jeremy and Marie own and operate an auto repair shop and U-Haul rental business in Mauldin, South Carolina. Since opening in 2013, the business has grown to seventeen employees and serves more than 10,000 customers each year. They have created jobs and obviously provide a value that thousands appreciate.
City officials, however, aren’t so appreciative. In 2021, they modified the city’s zoning ordinance with the aim of modernizing the downtown. They grandfathered in every existing business, except U-Haul truck rentals. The ordinance gave Jeremy and Marie until the end of 2022 to either close their U-Haul rental business or relocate.
The U-Haul portion of their business is a large part of the business’ success. To close it would mean sacrificing a substantial amount of revenue over the coming years. The cost to relocate is simply unaffordable.
The business isn’t violating anyone’s rights. It isn’t a nuisance—other commercial establishments neighbor the repair shop and directly across the street is a mayonnaise manufacturing plant. Those businesses will be allowed to stay, but Jeremy and Marie’s business can’t. And the reason is that the developer that the city chose to redevelop the downtown expresses a dislike for U-Hauls. And so, city officials decided that they don’t like the business either.
Amortization essentially allows city officials to arbitrarily change land-use regulations with impunity. Because property owners are given warning that their property use will become non-conforming at some future time, defenders of amortization claim that no taking has occurred, and compensation isn’t due the property owner. In the name of economic development, they proceed to destroy businesses.
The Institute for Justice is now representing Jeremy and Marie.