Eminent domain in the U.S. & housing prices

[Gfactor]

Ummmm . . .

The proposed development, called “The Lost Liberty Hotel” will feature the “Just Desserts Café” and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon’s Bible each guest will receive a free copy of Ayn Rand’s novel “Atlas Shrugged.”

Maybe joke isn’t the right word . . . better is crackpot scheme:

“This is not a prank” said Clements, “The Towne of Weare has five people on the Board of Selectmen. If three of them vote to use the power of eminent domain to take this land from Mr. Souter we can begin our hotel development.”

http://www.freestarmedia.com/hotellostliberty2.html

Anytime you need to answer critics with “this is not a prank,” you probably need to reexamine your business plan. And notice he hasn’t indicated that even one of the Selectmen has indicated agreement with the plan.

[Balthisar]

@Gfactor

I don’t mean to browbeat ya, but . . .

Not at all. That’s what I’m here for.

[Gfactor]

@Balthisar

Not at all. That’s what I’m here for.

I realized after I wrote that that we had some people here who might not be familiar the basics of US eminent domain law. I will now attempt to quickly summarize.

1. The Fifth Amendment to the US Constitution says:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

(Emphasis added).

2. This last clause is called the takings clause. The Supreme Court has held that this clause contains two requirements:

   a. Private property can only be taken for a public purpose;
   b. If private property is taken for a public purpose, the government must pay just compensation for it.

3. I have argued elsewhere that this is not the only possible reading of the clause.

4. The Bill of Rights (first 10 amendments) did not originally apply to the states–it was interpreted to only restrain the federal government.

5. Later, the Court began to apply the Bill of Rights to the States through the 14th amendment. This is called incorporation

6. So, when the 5th Amendment was ratified, there were no Constitutional restraints on state or local condemnation–it was up to the states and local goverments to determine what limits to impose. As far as the US Constitution was concerned, the states could take property without paying for it, and give it to whomever they chose to.

7. That said, the Supreme Court evenetually decided that the Takings Clause applied to the states through the 14th amendment, and the states were subject to the two requirements outlined above.

8. The Court has struggled with both required elements of Takings Clause jurisprudence.

9. As I and others have discussed elsewhere, it has been a long time since public use has meant “used by the public.” For at least twenty years, the Court has approved the use of eminent domain where public use has been nothing more than a general benefit to the public. For instance, in Midkiff, the Court approved a Hawaii state statute that created a mechanism by which the state would condemn leased property and sell it to the tenants.
   http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=467&page=229
   In another case, Berman, the Court approved the District of Columbia’s plan to redevelop slum areas by condemning properties and conveying them to developers.http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?navby=case&court=us&vol=348&invol=26

10. So, even if we read *Berman *and Midkiff restrictively, *Kelo * is not a huge shift in legal doctrine.

11. With respect to the just compensation part, the Court has refused to come up with a simple standard, but basically the idea is to replace the value of the property as it was before the condemnation proceedings began.

12. A much more complicated, and interesting area of takings law involves government regulation that reduces the value or use of land, even though the government has not confiscated title to the land itself. This area of law is called Inverse Condemnation or Regulatory Taking.

Does this help?

[Exapno_Mapcase]

@Exapno Mapcase

And the publicity given to this decision makes it more likely rather than less that future uses of eminent domain to benefit private interests in the name of overall city prosperity will be closely scrutinized by everyone.

Today’s Wall Street Journal has an article on the aftermath of the Kelo decision. As I suggested, a huge backlash has manifested that threatens to derail even the fairly limited use of eminent domain for private economic development. Just a few quotes:

In the St. Louis suburb of Florissant…developer MLP Investments pulled out of a planned $30 million project to build condos, lofts and retail space when the owner of a piece of vacant land refused to sell…

City officials, however, say that the real reason was eminent domain. “The company did not want the adverse publicity,” says the mayor. “People don’t understand what eminent domain is. They think it’s always taking grandma out of her house, and that’s not true.”

In the six weeks since the Supreme Court’s ruling in the Kelo v. New London case, bills have been introduced in Congress and in more than half the state legislatures that would restrict, in varying degrees, the use of eminent domain for private development. Delaware has gone the furthest, passing a law restricting the use of eminent domain. In Alabama, legislation curbing eminent domain for economic purposes has passed both houses and awaits the governor’s signature.

I wouldn’t count on many more states passing laws, especially not once the real-estate lobbyists step in, but the public attention to the practice has made it many times harder for any projects to go through, and the ones that do will probably have massive public support.