In other words, don’t get too comfortable in that recliner in front of the big screen TV while the kids whoop it up on the swing set in the back yard.
Why? The right of the government – federal, state, and local (even the school board) to evoke a right called Eminent Domain.
Eminent domain (it would be nice to abbreviate this as ED, but, gosh, Bob Dole has made that almost impossible) is nothing new. It is guaranteed by Article [sic — it's Amendment, not Article Five of the United States Constitution and has made possible the building of highways, dams, schools, and other crucial public works projects across the country for over two hundred years. Basically, eminent domain is the right of the government to take private property (after providing fair and equitable compensation) for the public good [sic — its public use, not public good].
Imagine if you will, the Interstate Highway System looking like a slalom course as it crosses the country, weaving in and between the homes and farms belonging to people who refused to sell their property to make way for the bulldozers. Countless farmers, businesspersons, homeowners, sometimes entire towns, have been forced to leave property behind so that massive projects such as the Quabin Reservoir in Massachusetts or the Glen Canyon Dam in Utah/Arizona could be constructed.
Some of these projects are easier to justify than others, and there will always be critics who say that the off ramp or the elementary school should have been put in a different location – perhaps where public lands already existed or landowners were willing to sell. Still, for over a hundred years, these takings by Eminent Domain were for public works projects and could at least stake a claim to serving the common good.
Then, in 1954, in Berman v. Parker, the Supreme Court ruled that cities can apply eminent domain to raze crime-ridden or decrepit areas for private purposes, making way for what became known as urban renewal.
Apparently, well under the radar, or at least unnoticed by the mainstream media, this ruling has slowly morphed into what local municipalities now consider a right to condemn private property in order to turn it over to other private ownership for development.
In Ogden, Utah the City Council wants to replace an older “blighted” neighborhood containing 34 homes and eight businesses with a Wal-Mart.
San Bernardino, California successfully evicted homeowners and a motel to build a new shopping center.
Riviera Beach, Florida has developed a plan to condemn 1,700 homes and apartments. While the city is probably years away from acting, these plans have substantial impact on homeowners’ ability to sell or desire to improve their properties.
According to The Institute for Justice as quoted by the Associated Press, there have been over 10,000 cases where private property was either threatened by condemnation or actually condemned by government for private use. (A second source quotes this figure for the time period 1998 to 2001.)
This all came into the spotlight earlier this week when the Supreme Court heard the case of Susette Kelo v. City of New London and New London Development Corporation. In this case, the City of New London, Connecticut, has condemned a stable, working class neighborhood near the Thames River to allow a private developer to build a glossy new office and residential complex. The development is intended primarily for use by Pfizer, the pharmaceutical mega-company, but will also house a hotel, river walk and a marina. By all accounts, the existing neighborhood was not blighted (much of it has already been leveled); it is occupied by middle-class homeowners who love their homes and maintain them. New London has justified the taking because the new project would, conceivably, provide more taxes and more jobs which it views as critical to the economy and future of a depressed New England town. The city plans to give the developers a 99 year lease on the property for one dollar a year.
Under eminent domain, the government generally notifies owners that a property is being considered for a public use and, after surveys and appraisals, makes an offer for that property. If the owner does not consider the price to be fair, or if he simply does not wish to give up his home or business at that, or maybe any, price, the government can then take the land. The owner is usually free to negotiate for a higher price for the property prior to the actual taking. But, under most rules, only after actual condemnation can the owner contest the price in court. Such court challenges are often well beyond the financial and emotional capabilities of those being displaced. Homeowners in New London freely admit that they would have been unable to fight eviction had it not been for the support of The Institute for Justice which has headed the Supreme Court challenge.
In the New London case specifically, but in many of the takings currently being protested throughout the country, the courts must feel like King Solomon trying to decide custody of the baby. Should the property rights of a few homeowners (seven in New London) outweigh the economic benefits that might accrue to an entire community? Should the economic interests (and profits) of Wal-Mart or a commercial developer be traded for the often more emotional interests of less affluent land owners who were, after all, there first?
In oral arguments before the Supreme Court on Monday, both attorneys and Justices showed the ambiguities that must be addressed by any decision. Even Scott Bullock, a senior lawyer with the Institute of Justice conceded, under questioning from Justice David Souter, that it could be a legitimate public purpose for a city to use tax money to buy up property for economic growth, but, in his view, only when people want to sell. Justice Souter than asked if there could not be a similarly legitimate public purpose in requiring people to sell. Bullock then retreated to a position that, perhaps government could force a sale for such purposes in certain cases, but only where the taking is certain to generate precise benefits.
Justice Sandra Day O’Connor asked New London representatives whether there should be any limits on government power in eminent domain proceedings. An attorney for the City said that the power of the people to vote representatives out of office constituted such a limit.
Aside from the issues raised in the New London case, there are others that may not be quite so obvious.
Should government be allowed to designate entire neighborhoods for “renewal” years ahead of any intention of acting? Property owners within such areas are placed in limbo for years, often unable to sell property, possibly even refinance it, because of a looming threat of condemnation
Does the earlier Supreme Court ruling that “blighted” neighborhoods are fair game discriminate against the elderly and the poor, those most likely to live in such areas?
Should property owners be able to avail themselves of court protection at an earlier time than after condemnation has actually occurred? Might there be a mediation process established above the level of the government agency doing the taking that can level the playing field for property owners?
The New London case has stirred the pot. There have dozens of public protests this week in areas with ongoing eminent domain controversies, so perhaps this issue will, at long last, get the public airing it deserves.
Meanwhile, don’t get too comfortable in that recliner.
Mortgage News Daily: www.mortgagenewsdaily.com
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