An apartment developer paid millions for prime real estate in Edgewater, New Jersey, with a beautiful view of Manhattan. Nearly 2,000 apartments would be built. The developer also offered to build public parks, parking, a ferry terminal, and a pier, all at no cost to taxpayers.

But Edgewater's mayor, Michael McPartland, and city council said: No, you may not build!

That's not that unusual. Local officials often keep new developments out.

But in this case, they also voted to seize the developer's land using eminent domain. John Stossel asks: Why would they do that?

The developer says he knows. He filed a lawsuit alleging a "corrupt relationship" between politicians in Edgewater and an established developer, Fred Daibes. The lawsuit claims Daibes was upset because he wanted the property himself. "Daibes even directly threatened Plaintiff's representatives that they 'should have come to me in the beginning,'" the lawsuit states. "'I own and built this town. Now it will be condemned; I am your neighbor on all sides.'"

The lawsuit then lays out alleged corruption: The mayor lives in a Fred Daibes' apartment building, where he gets a subsidized rent (an accustation the mayor denies).

Four city council members also received loans from a Daibes-controlled bank. The lawyer for the plaintiff tells John Stossel that many have "ongoing relationships with [Daibes]. Jobs…undervalued rentals…loans for their business purposes through a bank that Mr. Daibes started and has the controlling interest in."

But the mayor and city council say they have a legitimate reason for blocking the development. It "would kill the infrastructure. It's just too much," McPartland told The New York Times.

But then why did they approve an even bigger development for Fred Daibes? It's twice as tall as the project the city council blocked.

That sounds like possible corruption to Stossel.

Neither Daibes, the mayor, nor anyone on the city council agreed to be interviewed for this story. So Stossel went to a town council meeting to see if the politicians would answer questions.

"Are you on the take?" Stossel asks. He then lays out some of the allegations. But the council members and mayor don't respond to the issues. Their lawyer criticized Stossel's "objectionable tone" and advised the mayor not to comment.

"You've had your time. You may sit down," the mayor eventually tells Stossel.

That was that.

Developers can't tell other developers "you can't build here" unless they have cronies in government, Stossel points out. That's not capitalism, that's crony capitalism. Or corruption.

That harms people who now won't be able to live in apartments near Manhattan. It harms the developer who loses a multi-million dollar investment. It harms citizens of Edgewater who lose out on free parks and other amenities.

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The views expressed in this video are solely those of John Stossel, his independent production company, Stossel Productions, and the people he interviews. The claims and opinions set forth in the video and accompanying text are not necessarily those of Reason.