05
Jul
2005
Two weeks ago, the U.S. Supreme Court ruled in a 5-4 decision that local governments may seize people's homes and businesses against their will for private economic development.
The court's ruling in the case, Kelo v. City of New London, Connecticut, has provided wider powers for local governments to transfer private property from one owner to another through its powers of eminent domain based on a greater perceived public benefit between land uses. In other words, cities can give residential properties to developers of hotels or shopping malls based on higher tax revenues generated from these commercial uses versus the tax base generated from residential use.
Justices Stevens, Kennedy, Souter, Ginsburg, and Breyer voted to allow properties to be taken under eminent domain from one private owner (Kelo) and given to another (unnamed future developer[s]) for economic development and a greater "pubic benefit."
This definition of "public benefit" replaces the constitutional "public use" that forces the more contextual use of eminent domain, which requires that the taking of property must be strictly for a clear public use, such as a road, school, or hospital, etc. In addition, any private property taken for economic development has always had a current use that was detrimental in some way to the public (e.g., blight).
Locally elected public officials have always had the power to exercise eminent domain, but not on behalf of private development for private development's sake. Now, the Kelo ruling broadens this scope considerably, allowing a city council to effectively become the arbiter of which private enterprise or residence has a greater value over another private enterprise or residence. Add this to the arsenal of tax abatements, TIFs, and other lucrative incentives large-scale developers gain from municipalities hungry for revenue, and the potential for abuse becomes very real. Independent property owners and home owners will not have the advantage of paid lobbyists and economic-development agencies that will be using their access to influence city officials. Planning to invest $200,000 into your commercial property? Too bad; the local chamber of commerce has a developer in the wings that says it will invest $1 million, so you must sell your property to the bigger fish. Never mind that you've been paying taxes in the community for decades.
A greater public benefit is one thing to a city government, such as increased tax revenues, but can be a very different thing to a neighborhood, individual business, or homeowners. Increased tax revenue should not be sufficient by itself to justify eminent domain. As Justice O'Connor astutely pointed out, property rights are now more vulnerable to the political process because the beneficiaries of the court's decision will be those with disproportionate influence and power. The government now has the license to transfer property from the "have not enoughs" to the "promise to have more in the futures."
For instance, a city may have incremental development occurring in its urban areas through private investment in rehabbing old buildings, converting warehouses into residential and commercial spaces, etc. But a developer comes along with promises of a large-scale development for mixed-use living and commercial spaces that trump the independent property owners whose efforts are smaller than the promises of the larger project. The city, being the new arbiter of value, determines that the tax base will increase at a faster pace with the larger developer than with the smaller independent investors, so eminent domain is invoked to transfer the necessary properties to the larger of the two, even though uses are similar.
This is but one of a thousand examples that can potentially undermine the rights of property owners over time. It is unnerving to think that our homes and businesses are now exposed to this unprecedented risk. The Fifth Amendment holds property rights as among the most important in a free society, so the Supreme Court's ruling is distressing to say the least.
The ruling, while setting a precedent for broader powers for transferring property under eminent domain, refused to impose even the basic standard of accountability on local governments to ensure that should eminent domain be invoked, the stated benefit justifying such a severe act will actually accrue to the public.
Make no mistake: This new modus operandi is no small matter. It is but another recent example of government being given more power to infringe on personal rights and liberties with less accountability. Davenport has already demonstrated its willingness to trample the rights of private property owners as evidenced by the council's vote to grant an easement for a sewer via eminent domain to developer Niky Bowles for a condominium project because she and her neighbor could not agree on a price for the land needed to run the sewer. The alternative would be for Bowles to run a more expensive line through her own property.
Mayor Brooke vetoed the council's vote, claiming it was unconstitutional to take private property for private gain that serves no public purpose. More importantly, it would seem to be unconstitutional to take private property and give it to another based on the economic benefit of one property owner over the other.
Property owners would do themselves a service by demanding an eminent domain litmus test from their would-be elected local officials, holding them accountable at the voting booth should they stray.
Justices Stevens, Kennedy, Souter, Ginsburg, and Breyer voted to allow properties to be taken under eminent domain from one private owner (Kelo) and given to another (unnamed future developer[s]) for economic development and a greater "pubic benefit."
This definition of "public benefit" replaces the constitutional "public use" that forces the more contextual use of eminent domain, which requires that the taking of property must be strictly for a clear public use, such as a road, school, or hospital, etc. In addition, any private property taken for economic development has always had a current use that was detrimental in some way to the public (e.g., blight).
Locally elected public officials have always had the power to exercise eminent domain, but not on behalf of private development for private development's sake. Now, the Kelo ruling broadens this scope considerably, allowing a city council to effectively become the arbiter of which private enterprise or residence has a greater value over another private enterprise or residence. Add this to the arsenal of tax abatements, TIFs, and other lucrative incentives large-scale developers gain from municipalities hungry for revenue, and the potential for abuse becomes very real. Independent property owners and home owners will not have the advantage of paid lobbyists and economic-development agencies that will be using their access to influence city officials. Planning to invest $200,000 into your commercial property? Too bad; the local chamber of commerce has a developer in the wings that says it will invest $1 million, so you must sell your property to the bigger fish. Never mind that you've been paying taxes in the community for decades.
A greater public benefit is one thing to a city government, such as increased tax revenues, but can be a very different thing to a neighborhood, individual business, or homeowners. Increased tax revenue should not be sufficient by itself to justify eminent domain. As Justice O'Connor astutely pointed out, property rights are now more vulnerable to the political process because the beneficiaries of the court's decision will be those with disproportionate influence and power. The government now has the license to transfer property from the "have not enoughs" to the "promise to have more in the futures."
For instance, a city may have incremental development occurring in its urban areas through private investment in rehabbing old buildings, converting warehouses into residential and commercial spaces, etc. But a developer comes along with promises of a large-scale development for mixed-use living and commercial spaces that trump the independent property owners whose efforts are smaller than the promises of the larger project. The city, being the new arbiter of value, determines that the tax base will increase at a faster pace with the larger developer than with the smaller independent investors, so eminent domain is invoked to transfer the necessary properties to the larger of the two, even though uses are similar.
This is but one of a thousand examples that can potentially undermine the rights of property owners over time. It is unnerving to think that our homes and businesses are now exposed to this unprecedented risk. The Fifth Amendment holds property rights as among the most important in a free society, so the Supreme Court's ruling is distressing to say the least.
The ruling, while setting a precedent for broader powers for transferring property under eminent domain, refused to impose even the basic standard of accountability on local governments to ensure that should eminent domain be invoked, the stated benefit justifying such a severe act will actually accrue to the public.
Make no mistake: This new modus operandi is no small matter. It is but another recent example of government being given more power to infringe on personal rights and liberties with less accountability. Davenport has already demonstrated its willingness to trample the rights of private property owners as evidenced by the council's vote to grant an easement for a sewer via eminent domain to developer Niky Bowles for a condominium project because she and her neighbor could not agree on a price for the land needed to run the sewer. The alternative would be for Bowles to run a more expensive line through her own property.
Mayor Brooke vetoed the council's vote, claiming it was unconstitutional to take private property for private gain that serves no public purpose. More importantly, it would seem to be unconstitutional to take private property and give it to another based on the economic benefit of one property owner over the other.
Property owners would do themselves a service by demanding an eminent domain litmus test from their would-be elected local officials, holding them accountable at the voting booth should they stray.
