"People come from all over to shop in Holladay. Would you take an existing business that's generating tax dollars and get rid of it" to make way for different businesses? Amanda Lufkin asked three City Council members last week during a meeting organized by the Holladay Chamber of Commerce.

Lufkin works with her father, Gordon Hanks, who owns and operates Holladay Pharmacy, a decades-old business that could be affected by redevelopment plans.

"We've worked so hard for so many years, and for them to not respect it, to have someone out of your control determine the future of your property, is upsetting," said Hanks who pointed out that he put $1.3 million in improvements into his business four years ago.

But one council member, Steve Peterson, was quick to point out that no plan to dramatically redevelop the area has been accepted - he said, however, that he has seen one such proposal - and he emphasized that the city no longer has the power to condemn private property for private development. Lawmakers changed state statutes this year to exclude that controversial practice.

Meanwhile, Hanks said he supports the city's plans to reconfigure an intersection at the center of town and create a walkable village center. However, if those already-announced plans balloon into a much-bigger project, he and others do not want to be caught by surprise.

Sharron Horsey, who chairs Holladay's Chamber of Commerce, said the merchants would like assurances that if state law changes, condemnation, also known as "eminent domain," will not be used to take their properties.

"People were happy with creating a vibrant area, but now this seems to be going in a new direction," she said.

Such fears are driven by rumors that an unidentified developer has designs on a large chunk of Holladay. This is fueling a growing sense of mistrust between city officials and the people they represent.

Merchants at the meeting pressed Peterson, who chairs the city's Redevelopment Agency board, to reveal what he knows. He acknowledged that "a real estate developer has come in and has grandiose plans for the whole area." But he declined to disclose details.

Residents and business owners can attend a public hearing on Wednesday with the RDA board, which is made up of City Council members. They can discuss - and the board can possibly adopt - findings of a "blight" study that determined that 96 percent of the private parcels in the 58-acre village-center area exhibited three or more factors of blight.

A blight designation allows a city to offer various incentives to a developer and provide tax dollars to make improvements to streets, sidewalks and other services.

While condemnation is currently off the table, the merchants live with the nagging thought that it could be someday reinstated by state lawmakers.

This week's United States Supreme Court ruling in the Kelo vs. New London (Conn.) case added to that concern.

The high court, in a 5-4 ruling, said local governments can take private property through eminent domain for "public use."

Councilwoman Sandy Thackeray sides with the merchants.

"Right now it sounds like 'us against them' and it's not supposed to be that way. I understand their concerns and wouldn't want eminent domain hanging over my head," she said.

Peterson said he supports cities having the power of eminent domain but would not actively "pursue" its reinstatement.

"The most telling way to see how the city relates to all this was our purchase of Video Vern's" - a now-closed landmark in Holladay's business district. "At that time we had the right [to condemn it], but we bought it on the open market and paid probably more than it's worth," Peterson said.

cmckitrick@sltrib.com