More on Kelo and the Abuse of Eminent Domain

I think that liberals had hoped that the outrage over the Kelo decision would fade away, but it hasn't. One of the concepts that has always defined America has been the protection of private property rights, a tradition that the Kelo decision washed away. Typically, the property stolen by the City of New London today stands empty and barren, almost a testimonial to the abuse that took place there. The developer walked away, as another attempt by a government agency to make business decisions came a cropper, but this doesn't help Susette Kelo or the others who were forced out of their homes and businesses.

Helping to End Eminent Domain Abuse

By Daren Bakst May 15, 2011 American Thinker

Six years ago, the United States Supreme Court effectively gutted property rights protections in the Fifth Amendment. A pending bill in the United States House could help to address some of the damage caused by the Court.

In Kelo v. City of New London , the Court held that the government can seize private property from one private citizen and transfer the property to another private citizen for economic development. If a home would generate more tax revenue as a mall, then the government can seize the home.

The Fifth Amendment of the United States Constitution states "nor shall private property be taken for public use, without just compensation." This language is supposed to limit the government's power to take private property except for a "public use."

However, for decades, the term "public use" has been effectively deleted from the United States Constitution, and instead replaced by "public purpose" or "public benefit." These terms are judicial creations that drastically broaden when the government can seize private property.

Yet, even with these terms, it was not a given that the Court would allow these economic development takings that were at issue in Kelo . By allowing these takings, the Court has rendered the "public use" limitation virtually meaningless and gutted the Fifth Amendment.

As would be expected, some states took action to provide stronger property rights protections for their citizens. The federal Constitution acts as a floor on rights that a state may not go below, but states can exceed the floor by providing greater rights.

Eight states have passed constitutional amendments since Kelo and many other states have passed statutory changes, all with varying levels of protection. Regardless, the federal government must play a role in protecting property rights.

If freedom of speech were gutted as severely as the Fifth Amendment has been, Congress would not hesitate to take immediate action. They would even consider passing a constitutional amendment.

The idea that Congress should defer to each state in order to protect the federal constitutional right of freedom of speech would be laughable. The same arguments apply when it comes to protection from eminent domain abuse.

Further, the federal government helps to make these economic development takings a reality by providing economic development funds to state and local governments. Without those funds, many of these takings wouldn't occur.

The United States House is currently considering the "Private Property Rights Protection Act." This bill would be an important step in ensuring that all Americans, not just those in some states, have protection from eminent domain abuse.

First, the bill would prohibit the federal government from engaging in economic development takings. Second, it would deny federal economic development funds for two years to any state or local government that engages in economic development takings.

There are significant challenges in properly crafting a prohibition on economic development takings that doesn't permit the government to engage in end-runs. For example, the bill doesn't allow the taking of property for economic development. This type of language forces a court to examine the intent behind the taking. Is the taking for economic development or is it for another reason, such as a legitimate public use?

Courts generally provide significant deference to the government when it seizes property and the real reason for a taking can be difficult to ascertain. As a result, so long as any legitimate reason for seizing property is identified, the taking will be allowed regardless of whether it appears to be motivated in large part by economic development reasons.

This is why the bill wisely puts the burden of proof on the government to show that a taking is not for economic development. By doing so, it makes it far more difficult for the government to seize property using a legitimate public use as a pretext for taking the property for economic development.

The bill also doesn't solely rely on the government to enforce the law, as often is the case with laws that withhold federal funds. There is a private right of action allowing property owners to challenge the takings and possibly triggering the denial of federal funds to states and local governments.

In 2005, the House overwhelmingly passed this legislation in a bipartisan manner 376-38. Unfortunately, it died in the Senate. Congress once again has a chance to make it clear that no matter what state you live in or how much money your property generates, you will be protected from eminent domain abuse.

Kelo Still Here; Still a Disaster

Now that we are in the midst of a massive housing correction that is threatening banks and promises to bring our economy down – a bursting of the bubble that has also focused attention on stupid and destructive lending practices, perhaps this is also time to push harder to overturn or counter the horrendous Supreme Court decision on Kelo – a decision that stripped Americans of their private property rights.

As a Floridian, I keep harking back to a development here called Murdock Village, which illustrates perfectly what can happen when government blunderers substitute their wishes for the wisdom of the marketplace – and ends up displacing people from perfectly good homes while imposing a massive and never-ending tax burden on local tax-payers. Envisioned as a new community of mixed commercial and residential uses, Murdock had become a white elephant even before the housing market collapsed. No-one wants to develop it, and tax-payers in one small county are out $14,000 per day just on interest on the bonds that were floated.

Pols Remain Masters of Domain
By Steven Malanga June 25, 2008 RealClearPolitics

In her two great works--The Death and Life of Great American Cities and The Economy of Cities��"Jane Jacobs explained that effective economic development and urban renewal arise from the bottom up as the product of thousands of enterprises and people working on their own without a master plan, rather than from the top down, as planned by politicians or bureaucrats. The vibrancy and diversity of city markets and neighborhoods lie in “the creation of incredible numbers of different people and different private organizations, with vastly differing ideas and purposes, planning and contriving outside the formal framework of public action,” she observed.

This week, it is exactly three years since the U.S. Supreme Court’s Kelo decision, which endorsed a very different view of how local economic progress occurs. In that decision, the court said that it was okay for government to condemn and take private property and use it for new economic development if officials believed that the seizures would "provide appreciable benefits to the community, including…new jobs and increased tax revenue." The court’s decision expanded the so-called “takings” clause of the Constitution’s Fifth Amendment, which previously had been interpreted to mean that government could only take private property to create a public “good,” such as construction of a needed new highway or water pipeline.

The Kelo decision was enormously unpopular, with polls showing that between 80 percent and 90 percent of Americans disagree with the idea, even when property owners received market value for their land. Still, that hasn’t stopped the politicians and urban planners, who moved in quickly. In the first year after Kelo, according to a study by the Castle Coalition, which tracks eminent domain seizures, state and local governments condemned or threatened to condemn more than 5,400 properties, compared to slightly more than 10,000 such actions in the previous five years. In the eminent domain business, a threat to condemn is usually just as good as an actual taking, since a homeowner can’t sell a house under those conditions and a business would find it difficult to do things like get credit.

The homes and businesses targeted in the wake of Kelo ranged from a seafood restaurant in Freeport, Tx., whose property officials wanted so that they could expand a local marina, to a parking lot in Oakland, Ca., which the city wanted to take from a private owner and hand to an auto parts store, to single family waterfront homes in Long Branch, N.J., that the city wanted to see redeveloped into luxury condominiums.

Most Americans object to such takings because the intended uses of the land don’t justify violating property rights when the owner is unwilling to sell to government.

ut as Jacobs observed, another important objection is that government planners often do a lousy job of anticipating the marketplace when they take property to be developed into something new. What I call mega-project ‘state capitalism,’ the grandiose schemes of politicians and their planners to invest public money in big projects like stadiums, downtown super-malls, and subsidized entertainment districts, has been on the rise for years, often with disastrous results which should have given the Supreme Court justices pause before they gave their blessings to seizures that "provide appreciable benefits to the community."

Indeed, the very redevelopment project that sparked the Kelo lawsuit, an effort by the town of New London, Ct., to turn its Fort Trumbull waterfront into a haven for high-priced homes and 21st century jobs, has sputtered. The ground where Susette Kelo’s home stood is now barren, because the townhouses that the city-sponsored developer was supposed to build there have never gone up. Interest in the area isn’t very great and the developer hasn’t been able to get financing. In fact, what began more than a decade ago as an extravagant ‘public-private’ scheme to redevelop this whole area around tourism, research and development and luxury residential uses has produced little except ongoing construction on a $17 million Coast Guard station.

State capitalism provides more examples of losers than winners. Consider the convention center business. About 25 years ago urban politicians noticed that a few cities, notably Chicago, Las Vegas and Orlando, were cashing in on a booming convention and business meetings marketplace. Almost in tandem around the country, cities rushed to build convention centers or expand their current ones, investing billions in tax subsidized dollars. In some cases, such as facilities in Boston and San Francisco, officials also used eminent domain to take control of private property that stood in the way of the building of their new centers.

The result has been a disaster for the taxpayer. Dozens of new convention properties have opened around the country, creating a glut of convention space, and most centers are underperforming. In 1986 the country boasted 194 centers sporting about 32 million square feet of space, while today there are 322 featuring 66.8 million square feet, with about 40 million more square feet under construction, according to congressional testimony by Professor Heywood Sanders of the University of Texas. The building boom, coming at a time when the convention business has been flat, has turned many of these projects into money-losers. Projections that the new centers would create thousands of jobs to boost the local economy have rarely materialized, leaving taxpayers in Boston, Baltimore, St. Louis and Washington, D.C., among other places, on the hook for additional subsidies.

Public officials and planners continue to pursue such projects in the face of repeated failures in part because redevelopment schemes and ‘public-private partnerships’ help put enormous additional power in the hands of politicians and the private entrepreneurs who partner with them.. In California, for instance, 390 redevelopment agencies operate with the power to condemn property, tax and float debt. Collectively these redevelopment agencies, many run by municipalities and controlled by local politicians, own some $13 billion in property, generate nearly $9billion a year in revenues (mostly from dedicated taxes) and have racked up some $81 billion in debt "most of it paying tax-free interest thanks to the federal tax code.

Redevelopment authorities and public-private partnerships are especially common in places like California where government has created such a hostile environment for business that officials justify their work as necessary to jumpstart a sluggish economy. But as Doug Kaplan, a California developer, has observed in a piece he wrote for the Castle Coalition, local government would serve their communities better by simply cutting red tape for new development, reducing fees, and focusing on basic government services like public safety, while leaving the rest to the market. Asked by a local redevelopment officer to join a ‘public-private partnership” to open a restaurant in a depressed downtown, Kaplan told him,” If you really want to revitalize downtown, then light the sidewalks, fix the roads, take care of the police, support the schools.” That’s not a message most redevelopment types, or politicians, want to hear, however.

In the wake of public reaction against Kelo, officials in many states promised they would seek laws limiting local use of eminent domain, but although a few states have put in tougher restrictions, in many places there has been little reform because regardless of public sentiment, officials like the power of takings that the Supreme Court gave them. The League of California Cities and the California Redevelopment Association, for instance, undermined efforts by taxpayer groups to pass a referendum restricting eminent domain by putting their own competing, but much weaker referendum on the ballot, one which doesn’t prohibit condemnations against businesses, who are the most common target of seizures.

Today, three years after Kelo, the game of public sponsored economic development subsidized by taxes, tax-free bonds, tax-breaks for favored businesses, and the threat of eminent domain, is alive and well, supporting everything from mega-projects like the massive 22-acre Atlantic Yards in Brooklyn, N.Y., to the efforts by the tiny California town of Hercules to take land away from Wal-Mart because the town fathers objected to the big box retailer invading their domain. Kelo has allowed local officials throughout the country to remain masters of eminent domain, and private markets continue to suffer as a result.

The Continuing Stupidity of Kelo v. New London

Last year I wrote the following column:

“One of the areas where the country may have lost ground in the last election is in the area of eminent domain. There seems to be wide agreement across political lines that the Kelo vs. New London decision, which gave local governments virtually unlimited power to usurp private property and turn it over to other, favored, private interests, was unwise and unjust. Only the far left, unfortunately represented by Supreme Court Justices Stevens, Breyer, Ginsburg, and Souter (and in this case, Kennedy) are in favor of granting this power to government. With a Democrat majority in the Senate now, all prospects for another conservative justice to overturn this decision appear to have gone up in smoke.

Many states, and even the federal government, have taken steps to place limits on this expansion of power, and many citizens in affected areas are engaged in effective protests that have slowed down or even stopped several projects. Up until now, most arguments against this expansion of government power have centered on its unfairness to those whose property has been taken – and on the un-American character of this disregard for the property rights of average citizens.

What I have not seen much of, however, is the point that government bureaucrats are among the worst groups to be making decisions about the best uses for parcels of real estate. When a government entity decides to take an area of land and develop it commercially, some of the worst decisions imaginable can be made.

Nowhere is this more evident than in south Florida where Charlotte County decided it didn’t like the way a particular area was developing and took it all by eminent domain for the creation by a private developer of so-called, Murdock Village. So far, they are several years into the taking, whereby hundreds of home owners and businesses were kicked out, and $93.3 million dollars in bonds was raised to fund the endeavor. The citizens of Charlotte County are now paying $5.3 million dollars a year in interest on these bonds ($14,300.00 per day), and the first developer chosen was found not to have the expertise or the resources to do the job.

A second developer has just been selected, but will end up paying only about 80% of the county’s cost to purchase the land. As of today it does not appear that a single shovel of dirt has been turned, and it may be that it never happens.

So add stupidity to the more common reasons for opposing this expansion of eminent domain we call Kelo vs. New London."

My prediction has come true, and the citizens of Charlotte county are in for a further shellacking. Government agencies should stay out of the real estate business:

Murdock Village numbers sobering and shifting
By ZAC ANDERSON, Herald-Tribune

MURDOCK -- The true cost of the Murdock Village redevelopment project is coming into clearer focus, and the numbers are sobering for Charlotte County officials.

Based on developer Syd Kitson's current offer to the county, it could take three decades and upward of $160 million to pay off the county's loan for the project.

Only about half of that money -- between $72 and $90 million -- will come from Kitson; the rest will be tax dollars captured from the Murdock Village property owners through a special redevelopment district.

Kitson and county officials have said from the beginning that tax money would be needed to complete the 1,200-acre project.

But because Kitson is only offering $15 million upfront, the county will have to finance the loan over a longer period than expected and spend more taxpayer money.

The complex financial scenario did not sit well with some county commissioners Thursday during a special meeting set up to explain the purchase agreement.

"These numbers right now are not my favorite," said Commissioner Tom D'Aprile

Kitson and the county's negotiators finished the deal on Wednesday, a major milestone for the Murdock Village project considering two other developers backed out during negotiations.

Commissioners have a month to look it over before a vote in early July.

A Florida County Shows the Stupidity of Kelo v. New London

One of the areas where the country may have lost ground in the last election is in the area of eminent domain. There seems to be wide agreement across political lines that the Kelo vs. New London decision, which gave local governments virtually unlimited power to usurp private property and turn it over to other, favored, private interests, was unwise and unjust. Only the far left, unfortunately represented by Supreme Court Justices Stevens, Breyer, Ginsburg, and Souter (and in this case, Kennedy) are in favor of granting this power to government. With a Democrat majority in the Senate now, all prospects for another conservative justice to overturn this decision appear to have gone up in smoke.

Many states, and even the federal government, have taken steps to place limits on this expansion of power, and many citizens in affected areas are engaged in effective protests that have slowed down or even stopped several projects. Up until now, most arguments against this expansion of government power have centered on its unfairness to those whose property has been taken – and on the un-American character of this disregard for the property rights of average citizens.

What I have not seen much of, however, is the point that government bureaucrats are among the worst groups to be making decisions about the best uses for parcels of real estate. When a government entity decides to take an area of land and develop it commercially, some of the worst decisions imaginable can be made.

Nowhere is this more evident than in south Florida where Charlotte County decided it didn’t like the way a particular area was developing and took it all by eminent domain for the creation by a private developer of so-called, Murdock Village. So far, they are several years into the taking, whereby hundreds of home owners and businesses were kicked out, and $93.3 million dollars in bonds was raised to fund the endeavor. The citizens of Charlotte County are now paying $5.3 million dollars a year in interest on these bonds ($14,300.00 per day), and the first developer chosen was found not to have the expertise or the resources to do the job.

A second developer has just been selected, but will end up paying only about 80% of the county’s cost to purchase the land. As of today it does not appear that a single shovel of dirt has been turned, and it may be that it never happens.

So add stupidity to the more common reasons for opposing this expansion of eminent domain we call Kelo vs. New London.

Theft Through Eminent Domain Takes a Big Hit

Among the debris of the election this month one good thing did happen – the Kelo decision by the Supreme Court was effectively nullified by many states. Kelo v. New London established the incredible concept that government bodies could take, by force, privately owned property and transfer that property to another private party. This fall, nine of twelve states passed constitutional amendments banning this practice. In addition, the federal government and many other states have passed restrictions on this anti-American practice which turns upside down our bedrock value of private property rights. Eminent domain should only be used to acquire for the public - property needed for a critical public purpose. This is developing into a major defeat for the left.

Accuracy In Media
“On September 30, 2006 the Louisiana electorate voted to amend its constitution. Yesterday twelve States had ballot propositions in varying degrees seeking to circumscribe the reasons why a governmental entity could take private property. Voters in Arizona, Florida, Georgia, Michigan, Nevada, North Dakota, Oregon and South Carolina approved these limitations. New Hampshire results are not yet available. California, Idaho and Washington voters rejected their propositions.”

USA Today
N.H. voters opt to curb eminent domain; smaller House districts also at stake
Updated 11/8/2006 3:13 AM ET

CANTERBURY, N.H. (AP) — Voters overwhelmingly decided Tuesday to amend the state constitution to bar government from taking private property from one landowner so another could develop it.

With 254 of the 301 precincts reporting, 86% voted to approve the change.

BALLOT MEASURES: Initiative results by state
Property rights advocates argued a 2005 U.S. Supreme Court decision gives government broad latitude in eminent domain cases if taking property provides a public benefit. The amendment, one of 11 on state ballots around the country, would limit takings to projects like schools and roads actually used by the public.

This spring, New Hampshire lawmakers rewrote state law to allow takings only for a public use. They also approved the proposed amendment on Tuesday's ballot.
It reads: "No part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property."