Eminent domain reform: spot the joker! Part 1
Even as New London’s story is ending in farce, proving that the post-Kelo backlash against local governments’ using eminent domain defies simplistic right-left labels, the campaign is gathering steam: the San Francisco Chronicle brings an update on a California initiative (with a grimacing joker in its language) that appears certain to make the ballot:
“Please allow me to introduce myself, I’m a man of wealth and taste.”
Legislatures in 25 states, as well as numerous local governments, including at least seven in California, have passed a variety of laws and ordinances to blunt the court’s June 2005 ruling that the City of New London, Conn., was justified in using the legal process known as eminent domain to seize private land for a different owner to develop a hotel, condominiums and commercial space.
(As usual, this unfairly oversimplifies what the City of New London sought to do, inverting the priority of uses — it was the new jobs that drove everything, and the condo’s and hotel are intended to create a vibrant diverse riverfront area. But back to our story.)
That’s what
“This is one of the most dynamic issues in urban policy in decades,” said Sam Staley, director of urban and land use policy for the Reason Foundation, a libertarian think tank in Los Angeles. “I would never have predicted before Kelo the kind of reaction we’ve seen in the state legislatures.”
The proposed ballot measure would:
1. Require governments that seize property either to occupy it themselves or rent it out for public use; they could not seize it for private development.
2. Increase how much governments must pay for seized property
3. Require governments to compensate landowners if regulations not directly related to public safety hurt their property’s value — unless the property is exempted from the new restrictions.
This initiative (full text here) has been crafted by people who know what they’re doing and are strongly committed to achieving it:
With nearly $2 million from a
Could the Chronicle find a phrase more ominous than ‘obscure
He believed in private property rights.
[Hey, I can play guilt-by-free-association too!]
Max Neiman, director of the government and public finance program at the Public Policy Institute of California in
“The Kelo decision basically triggered a kind of social movement across the
‘Glorious and baroque’?
Actually, this is gloriously baroque
Consider each of these changes one by one:
1. Public use only. The magic Fifth Amendment phrase (the Takings Clause) is:
Nor shall private property be taken for public use without just compensation.
Up through the late nineteenth century, ‘public use’ was interpreted to mean ‘freely accessible to the public,’ so it allowed parks, roads, airports, and so on; then when it became needful to take long slices of land for railroads, the court concluded that ‘public use’ could stretch to ‘public purpose’ (that is, a private party benefiting) if the private party were regulated, such as a public utility or a railroad.
A big benefit in being able to draw straight lines
These entities were considered ‘public use’ because, even though they were private companies, they delivered a benefit used by everybody, and subject to government profit-limiting oversight, so in effect the government had privatized delivery but not benefit.
Only after World War II, with the postwar boom and the rise of urban redevelopment, did ‘public use’ morph into ‘public benefit broadly.’
This principle was strongly affirmed in Berman and Midkiff, and reaffirmed (narrowly) in Kelo, so the petitioners here are seeking to restore a pre-twentieth-century interpretation.
My gosh, I forgot what century it is!
In general, I oppose such a rollback, because eminent domain for economic development is a critical tool in revitalizing cities, a twentieth-century problem the agrarian Framers never faced; but the ‘pure public use’ position is certainly defensible, and the proposition is one that California’s voters will be well equipped to evaluate when it comes to the ballot.
2. Just compensation. As I’ve previously blogged, an expanded approach to ‘just compensation’ seems to me entirely appropriate. Indeed, the
The measure would not restrict government’s ability to use eminent domain for public uses such as roads, schools and libraries. But the new valuation criteria would probably likely increase costs because governments would have to pay whichever is higher of:
· The land’s current market value or
· Its value with the new use officials envision.
The proponents’ actual language (see Sections 19(b)(5) and 19(b)(6)) is even more clear:
- If a public use is determined, the taken or damaged property shall be valued at its highest and best use without considering any future dedication requirements imposed by the government. If private property is taken for any proprietary governmental purpose, then the property shall be valued at the use to which the government intends to put the property, if such use results in a higher value for the land taken.
Value at the intended use is too much: improvement involves (a) new capital, and (b) substantial risk-taking, both of which diminish the as-is value even if anticipating a change in use. Even adopting this approach — which, as I’ve previously noted, has considerable merit — the appropriate measure of damages should be either the estimated as-is value assuming renovation, or a deferred payment based on a share of the actual economics.
Nevertheless, this has some promise.
3. Expanded range of compensable actions. The language sounds innocuous enough: “compensate landowners if regulations not directly related to public safety hurt their property’s value.”
This cleverly written clause is the joker in the pack.
You think I’m trying to baffle you with big words?
Here’s the language, in Section 19(b) of the proposed amendment::
8. Except when taken to protect public health and safety, “damage” to private property includes government actions that result in substantial economic loss to private property. Examples of substantial economic loss include, but are not limited to, the down zoning of private property, the elimination of any access to private property, and limitations on the use of private air space. “Government action” shall mean any statute, charter provision, ordinance, resolution, law, rule or regulation.
9. A property owner shall not be liable to the government for attorney fees or costs in any eminent domain action.
10. For all provisions contained in this section, government shall be defined as the State of
Can you spot the joker? Or jokers?
[To be concluded tomorrow in Part 2.]
