This is a rush transcript from "Hannity," May 30, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: More and more we are hearing stories about local government using the threat of eminent domain to push people out all in the name of higher taxes.

Now Ainsley Earhardt headed out to New Jersey where she found a bunch of hardworking homeowners living a nightmare.


AINSLEY EARHARDT, FOX NEWS CORRESPONDENT (voice-over): The area known as the Gardens in Mount Holly, New Jersey, sometimes looks more like a demolition zone or an abandoned lot than a neighborhood. But Santoz Cruz lives right in the middle of it.

(on camera): This is your house?

SANTOZ CRUZ, MOUNT HOLLY, NJ RESIDENT: Yes, this is my home right here.

EARHARDT: And how long have you lived here?

CRUZ: I've lived here 19 years. I rented for one and then I bought it.

EARHARDT: The American dream.

CRUZ: Or so I was told.

EARHARDT (voice-over): More than 1,000 people lived in the Gardens, which for years was a large cluster of 300 row homes in the southern New Jersey Township.

NANCY LOPEZ, MOUNT HOLLY, N.J. RESIDENT: I've lived here since 1987, so that's going on 25 years. I was a single mom. I raised five children here.

EARHARDT: But more than 10 years ago, town officials decided to bring in a private developer to revitalize the area.

CRUZ: The Township decided that they were going to give my property to a rich developer so he could develop it and make more money.

LOPEZ: Two days before Christmas they sent me a letter, stating that this is the offer they are giving me and I have to take it or else they are going to proceed with eminent domain.

W. JAMES HALEY JR., MOUNT HOLLY TOWNSHIP: This neighborhood was in very bad shape and the township has been working over these years to try to come up a number of different plans to rehabilitate it. Finally, it was determined that there was going to have to be a new neighborhood created.

CHRISTINA WALSH, INSTITUTE FOR JUSTICE: Using the threat of eminent domain, Mount Holly officials are buying up for low ball offers and tearing down these row homes one by one. Often times while they're still attached to occupied homes causing a irreparable damage.

EARHARDT (on camera): So this was part of the house that was next door.

CRUZ: They just left that open. They left the back open and look, there are no sidewalks either. They took out the sidewalks.

EARHARDT: If I walk down the streets in this New Jersey neighborhood several years ago, you would have seen children out here playing. You would have seen families still living in these row houses.

But now you see vacant lots like this one, after the township came in with bulldozers, but you still have a few residents here that refuse to leave.

LOPEZ: I work hard all my life for what I do have. I worked hard for it. Now they are going to come and tell me I have to go?

CRUZ: We picked this area. We did our research. Saw the schools were good. The stores were close and we picked living here. Why should we be ousted because somebody else with more money wants our property?

WALSH: Eminent domain is the power of the government to seize private property for things like roads and schools, traditional public uses.

But the U.S. Supreme Court has stripped the meaning of public use from the constitution to basically mean anything that might potentially benefit the public.

CRUZ: Is it fair to buy something and have it taken from you? They are not building a road here. They're not building a school. If they were building a road and a school, we with would understand.

EARHARDT: In this case it is going to be to build a better neighborhood for a wealthier clientele. That's the neighbors' complaint.

HALEY: Well, we have purchased 230 homes over the last 10 years. We have yet to use eminent domain once.

WALSH: Township officials are offering the remaining residents half of how much it would cost to buy a comparable home, just three blocks away. And the developer refuses to offer these homeowners replacement housing in his new development.

CRUZ: If you have seen the prices of homes nowadays, they are giving you a bag of peanuts and telling you to go buy a house. The only one that I know could do that is Jack from "Jack in the Bean Stalk." All we are getting is a bag of beans and a dream. Go move somewhere else.

EARHARDT (voice-over): The town argues they are offering more than is required by law to those who choose to relocate.

HALEY: The township is providing them with $35,000 over the value of their home.

EARHARDT: But the problem is at this point the value of these half demolished homes is close to zero.

LOPEZ: I understand that the way this neighborhood has become, we're not going to be able to stay the way it is. I mean, my house is literally glued together, but, I'm fighting this for like the principle of the thing.

EARHARDT: With the help of the Institute for Justice the remaining residents have gotten a court injunction to prevent the town from moving forward with eminent domain.

(on camera): Now the case sits in the U.S. 3rd Circuit Court of Appeals in the hands of a judge. The residents who are left can only wait and try to go about their normal lives as the community disappears around them.

This used to be a sidewalk?

LOPEZ: This used to be a whole sidewalk all the way around.

EARHARDT: But yet, they kept the sidewalk in front of your house. No curbs. No sidewalks. Why?

LOPEZ: If it snows they come make sure that I take the snow off of this piece of sidewalk.

HALEY: Like I've said over and over all these years that it's not a reflection of the people that are there.

EARHARDT: What is your message to them? Because they all feel like you are the bad guy and they wonder how you sleep at night and that kind of thing.

HALEY: I know. Listen, this has been going on for 10 years. A lot of elected officials have worked on this. They would not be doing this, if they do not believe it was in the best interest of the community of Mount Holly.

EARHARDT (voice-over): So the case winds through the courts. Amazingly, the homeowners still find a way to stay positive.

LOPEZ: Something good has to come out of this that we are doing maybe not for me to save my home or maybe for somebody else in the future. You know, I believe something good is going to come out of this.


HANNITY: And our own Ainsley Earhardt joins us right now. Ainsley, good to see you again.

EARHARDT: Sean, good to see you.

HANNITY: This drives me insane.


HANNITY: People in this story, 25 years, 19 years, people that have lived in this neighborhood. The government thinks they can take it because they want more taxes and they want to build a big development?

EARHARDT: That's exactly right. The houses that they want to build in that neighborhood are going to be upwards of $200,000, if not more. The people who live there, their houses really are not worth that much.

They're worth probably, I would say $30,000, $40,000 and so the township wants to give them money to move out. You and I both know in the state of New Jersey many people watching who live in the Midwest and the South. You can't buy much in the northeast with that amount of money.

HANNITY: Basically, they will get less than $100,000. I doubt they're going to be able to get any home anywhere. You pointed out in the piece, some of these people are elderly and sick. How does the government justify this?

EARHARDT: Well, the government is saying you are not bringing in the tax base for our community so --

HANNITY: Too bad.

EARHARDT: Exactly.

HANNITY: It's my property. I invest and I pay the taxes, leave me alone.

EARHARDT: And a lot of these people have become American citizens. They've gone about it the right way. They moved here, one lady single mother with five kids. You saw her in the piece. They are saying you have to move out and she is saying where do you want me to go?

HANNITY: All right, great piece. Thanks.

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