As a land use planner, how do you feel about the Kelo case, and in particular about the possibility that whatever government you work for might have greatly expanded condemnation powers in the future?
Actually, it tends to be governments who use that trick – minimize housing in order to make extra room for more lucrative business development. If that means most of the regular working stiffs in Arlington and Fairfax Counties have to live out in Prince William – hey, that’s their* problem. This is likely to get much worse if the Supremes drop the ball on protecting property rights; cities and counties will then be able to outright expel the less lucrative.
*This could refer to either the working stiffs themselves or the people trying to balance Prince William County’s budget. The politicians in Arlington and Fairfax couldn’t care less about either.
Condemnation is a rarely used tool here in Virginia. There are just way too many potential ramifications for it to be used too often - no politician worth his seat is going to go to that well any more than is absolutely needed. I’ve been a practicing land use planner for nearly 20 years and I’ve personally been involved in only 1 case (I had to deliver the check to the property owner and had to have an armed escort with me - it was that contentious an issue). My point is that even if the SC rules in the City’s favor, I wouldn’t expect to see a sudden rash of condemnation suits all over the country and I’m uncomfortable with the 10,000 cases in 5 years that is cited in the CNN Money article. That number just sounds way, way too high from my practical experience. It may be that condemnation is more widely used in other locales.
In order to stand up under scrutiny, an eminent domain case has to meet a three-pronged test (if my memory serves me right - like I said, this isn’t something that you come up against very frequently):
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The property must be taken for a “public use.” The definition of “public use” has been an evolving one - there are quite a few cases where other municipal governments attempted just what New Haven is attempting and have been slapped down. New Haven must have a pretty good feel that they have a sufficiently well thought out case to keep at it all the way to the SC. Generally, the trend has been to judge such cases against the purported “public purpose,” rather than the actual “use.” That lets the municipalities off the hook somewhat - industrial parks may be built on land acquired through eminent domain even though the government is going to turn around and sell the land to a private individual, for instance. The “public purpose” of providing for a sound economic base of the community at large is served, even though the municipality is not making actual use of the property. A subtle difference, but an important one.
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The property must be taken as a matter of necissity. The legislative body usually has to make a public finding that it has to have that particular piece of property and that no other property will serve its purpose. Generally, decisions by legislative body’s are given great weight provided that it can’t be proved that they acted arbitrarily or capriciously. As a judge told me one time in making a ruling upholding a Board of Supervisor’s action, “The Board is assumed to know all things.” This is a pretty high bar for someone suing under a takings action to cross.
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The local government has to provide just compensation. “Just compensation” is the price that would be paid by a willing buyer to a willing seller under ordinary circumstances. The compensation generally has to be based on the highest and best use of the property, and such things as value after condemnation have to be taken into account (someone asked if I have to be compensated as the present fair market value, or the potential fair market value after the condemnation). The government can’t offer you a $1 for your house and then proceed with a condemnation suit.
Long story short, I don’t see the case as being any sort of expansion of the powers already given to local governments by whatever State enabling legislation they’re acting under. Governments have been doing this exact same thing for a long time - economic development, urban revitalization, and public facility projects are done this way all the time and I’m a little surprised that people see this as something new. I suppose there’s enough difference of opinion in the various circuits to warrant a definitive opinion from the SC.
This is the heart of the problem, as I see it.
If the SC approves this use of eminent domain, there’s no reason for Wal-Mart to try to buy up properties (and drive up the market values). They can skip that step. Instead, they decide where they want to build, and then they go to the city council. They convince the city council to condemn the desired property. Maybe they grease a few palms in the process. The city condemns and “buys” the property at the depressed prices. (Remember, Wal-Mart hasn’t driven prices up by buying anything in this scenario.) Then the city sells the property to Wal-Mart. Maybe the city even makes a little profit on the sale. Or maybe just a few city council members make some off-the-books profit for themselves.
This is a sweet deal for Wal-Mart. They get the property much cheaper than if they’d been forced to assemble it in a free market.
This system invites graft.
plnnr, I’m going to try to poke a few holes in your post. Nothing personal.
This strikes me as a vanishingly small distinction. Really only a question of semantics. I see nothing to prevent CompanyCorp from discretely approaching a few city council members and saying, “We’d like to build a factory/store/warehouse/marina where Neighborhood A sits.” A few palms get greased. The city council condemns the neighborhood, and establishes an “industrial park,” or “development zone” or some such. Now they publicly “recruit” CompanyCorp to build there, and sell CompanyCorp the land. Much cheaper for CompanyCorp than trying to assemble the land on their own.
Again, it sounds like semantics. “Necessity” can be defined very broadly if you put your mind to it: “Neighborhood A is a burden and a drain on our community. Look at the ramshackle homes. Look at these crime statistics. Why, if we don’t do something, no respectable company will ever set up shop in our town. It is an absolute necessity that Neighborhood A be re-developed, if our town is ever to achieve economic success.”
Your scenario assumes good legal representation for the homeowners. In point of fact, a city could offer $1 for a house and get away with it if the owner never retains an attorney to fight that valuation. Of course, no local government is so crass as to offer only $1, but governments do make lowball offers on a regular basis. In fact, I’ve never seen a condemnation proposal that didn’t involve a lowball valuation of the property being condemned. Now if the homeowner is sophisticated enough, they will hire an attorney and fight the valuation in court. Of course, that may result in a jury trial. And an attorney must be paid. Doesn’t take much legal battle before the attorney’s fees outrun the potential gain of fighting the lowball appraisal. So sometimes even sophisticated homeowners make a cost-benefit analysis and accept the lowball number. Moreover, even if you go to trial, property valuation is going to be based on comparable sales, and would not take into account the potential increase in value that would be the result of CompanyCorp trying to assemble the property through private sales.
For all of these reasons, it is a fallacy to assume that local governments pay “fair market value” for condemned property.
You’re right. It has been going on for some time. But that does not preclude debate on whether it should be going on, or at least whether the practice should be curtailed.
Do you disagree that there is a potential for graft when you are effectively condemning property to sell to developers? Doesn’t this give a developer incentive to bribe local politicians?
Either the lawyer for the homeowners isn’t doing a good job or he doesn’t have much of a legal case. He seemed to be all over the board in trying to make a case against the city.
Mr. Moto
But it they’re willing to put up with the problems of the inner city, then what makes them “elite”?
You implied that you shouldn’t have to worry about urban sprawl because, unlike other people, you’re entitled to live in a nice, sparsely populated suburb with a lot of open space.
Naturally I was being waggish. It’s just that, during the election, the definition of “elitist” was thrown wide open to include anyone who values education over the “salt of the Earth”. So I turned it back around to apply to someone who takes pride in ignoring an important problem in the name of getting away from other people so he can live better than them.
I’m not quite convinced the so-called “Big Business” factions in the Republican party (so-called because it’s a lot more complex than that) woud be in favor of New London. That would eviscerate their property rights, too.
Even most big corporations would have the think twice about it, because it would mean that any site of theirs could be gutted and sold in a heartbeat to a competitor who offered a better tax deal. This is a bad idea all around.No, it wouldn’t. Breaking down legal restraints so that each case boils down to the question “How much justice can you afford?” tips the playing field in favor of Big Business, for obvious reasons. (And, no, they wouldn’t have to worry about Bigger Business screwing them over – like the old joke about two people running from a wolf, Big Business just has to be bigger than the ordinary property “owner”.)
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plnnr, I’m going to try to poke a few holes in your post. Nothing personal.
Nothing personal taken. I hope you’ll take my comments in the same vein.
All of the situations you’re presenting could certainly take place. The opportunity for graft is certainly present in nearly any government transaction; however, I’ve seen even less of that than I have condemnation cases (and I worked for the City of Richmond, which has taken some hits recently for government corruption). It simply isn’t that big an issue.
Condemnation cases are BIG news when they happen. They get covered in the media, they get big play, they involve numerous public hearings and public findings, they’re documented out the whazoo. If I was going to bribe a public official, it certianly would NOT be in the context of a case involving condemnation - that’s just setting yourself up to be discovered. Far better to do it on a straight rezoning case where there isn’t the same level of public scrutiny.
You also seem to be assuming that these events are taking place in some sort of political vacuum, which I can assure you is not the case. Politicians and legislators are in the business of getting re-elected. ComanyCorp can’t vote - it can’t go into a ballot booth and turn a lever or punch a voting card. Old Ms. Jones, who has lived in her house for 50 years, who babysat Legislator X when he was in kneepants, and who’s a member of the Greater New Life Abyssinian AME and Reformed Southern Baptist Evangelical Church of What’s Happening Now (and who has lots of contact with the other members) DOES go into the voting booth and does write letters to the editor and does have the abilty to make your local legislator’s life uncomfortable. The spectre of BIG BUSINESS,while playing a role, doesn’t play anywhere near the role that many people give them credit for (at least not at the local level). Size and money get you access, but access can only carry you so far. I’ve seen an energized citizenry, well-informed, and well-organized, carry the day on more than one occassion when pitted against business interests. Believe me - legislators (at the local level) know who put their asses in the fancy seats and who can kick them to the curb.
The test that I set forth aren’t merely guidelines - they’re tests that are applied based on court cases and precedent. Additionallly, the ability to acquire land by eminent domain isn’t inherent in government - it has to be granted specifically by state legislation (enabling legislation contained in State code or within a municipal charter). The decision to grant such authority to local governments has been reached through the democratic process, just as has the ability to zone land, levy taxes, or do any of the other things that municipal governments are called on to do. Again, there’sa political reality associated with the process that precludes it from just happening on whim.
Should a local government be able to condemn land, acquire it at fair market value for a legitimate public purpose? I happen to think so. I’ll give you the example I’m most familiar with: A rural locality that I worked was faced with a problem - trash service was not available in the county. Instead, refuse collection centers were scattered around the County. They were dirty, dangerous, and bad for the environment. They were also the source of many complaints from citizens. It was decided that the County would centralize the sites. The new site would be more central to the most citizens, could be easily serviced by utilities, could be more easily policed, and, in general, was needed by the citizens (they had specifically said so). The problem? There wasn’t any land available for sale at the location. The solution - go through an eminent domain process and obtain the needed land to meet the public need. All of the property owners in the County had the opportunity to participate in the process. All had the opportunity to express their views. All of their votes have equal weight. The issue was resolved and I have no heartburn about the process at all.
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Moreover, even if you go to trial, property valuation is going to be based on comparable sales, and would not take into account the potential increase in value that would be the result of CompanyCorp trying to assemble the property through private sales.
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No, that’s wrong. The value is not simply based on the use of the property at the time of condemnation - it is also based on the potential use of the property. The “highest and best” use of the property is not simply based on what the use or surrounding uses are at the time, but rather what the Comprehensive Land Use plan calls for viz future land uses and similarly situated parcels in the locality.
So do I. But what is up for debate is what constitutes a legitimate public purpose.
The dump you described certainly fits the bill. It gets a little dicier, in my opinion, when the government condemns land, sells it to a developer, and the developer turns it over for a huge profit. (I gather you haven’t encountered that scenario, which is great, but that scenario is what seems to be happening in the case before the Supreme Court.) That situation screams “Graft!” to me.
Can the local politicians be voted out of office if they make a shady deal? Sure they can. But by then the deal is done. And the ousted politician can take a nice cushy consulting job with CompanyCorp.
Maybe it’s simply a question of defining more rigorously (and more narrowly) what constitutes a “public purpose.”
I would also take issue with giving land to private groups being called a ‘public’ purpose.
I agree that this use of the powers of domain is rediculous, and I would like to point out that the title of the thread is a bit misleading as it isnt capitalism vs personal protection but mercantilism vs capitalism.
The land owners who are in danger of having their property siezed are the capitalists here; their land is part of their capital and its theirs to sell or not as they wish. The practice of govt handing out trade rights to certain parties while denying them to others is the old practice of mercantilism. The East India Company, two of the original three american transcontinental railroads, Amtrak, PG&E; the list goes on and they are all examples of mercantilism (a more descriptive term is economic fuedalism) , not capitalism.
Hard to tell, from this description, whether you’re favoring one or the other. A lot of important things (e.g., America’s 19th-Century railroad construction) have been accomplished by mercantilist policies that might have been impossible to achieve via pure free-market capitalism.
It’s reasonably sure the homeowners are going to lose, it sounds. However, what I’m also hearing is that it’s likely we’ll get new limits on eminent domain. That whole ‘Motel 6 for Ritz-Carlton’ comment really implies the Court doesn’t like the open-ended nature here.
Anyone got any ideas on where it’ll land?
You and I can agree on that point. That, I believe, is the crux of the case before the Court.
As I pointed out, there isn’t anything new in the case before the Court. Localities have been doing this exact same thing for years and years. The issue seems to be getting a better definition of “public purpose.”
My bet is on the City prevailing.
I’ll take that bet, simply because this has become a really hot issue in recent years, and the Supreme Court does follow public opinion from time to time.
I believe they will limit the scope of eminent domain considerably.
The sort of Republican you note here (and their big-gov Democrat counterparts) don’t have a direct interest here, and moreover, they don’t have a big say. They’re most active on the national and, to a lesser degree, state level. the Feds and states do sometimes use eminent domain, but less often and less keenly. They don’t generally care to use to give SuperGiantMegaCorp a new parking lot. They don’t think on that scale.
The people who really benefit from eminent domain are the local political power groups, who stand to gain considerably from the new tax revenues. Note who the government agency is here: it ain’t big government faction, but the local councilmen who want more tax dollars. Moreover, it’s often even more difficult to get attention on the local level than it is for a national cause.
And why do they want that additional tax revenue? Because schools, trash pickup, police, roads (in localities that build their own), and municipal services cost money. You can either get the revenue from real estate taxes on residential uses or real estate taxes on commercial/industrial. It never ceases to amaze me that people want to have a high quality of life, with all the perks, but wail and gnash their teeth when you give them the price tag.
So it’s everybody’s fault. Possibly true, but it doesn’t have any useful insight her.