Impact of eminent domain ruling tempered in Arkansas: Hope (AR) Star, 7/11/05

By Ken Mclemore

Following is the first of two parts regarding the impact in Arkansas of the U.S. Supreme Court decision in Kelso v. City of New London.

The old saying that, "A man's home is his castle," has never been entirely true in the absolute sense; but, the recent decision by the U. S. Supreme Court in a Connecticut case appears to have done little to settle that proposition.

U.S. Supreme Court Justice John Paul Stevens, writing for a 5-4 majority of the court, said the application of Connecticut law regarding the public taking of private property (eminent domain) does not conflict with the "Takings Clause" of the Fifth Amendment to the U. S. Constitution where a private, non-profit economic development entity benefits from a city's exercise of eminent domain to the benefit of a third party private developer.

The Court's opinion turned upon a distinction regarding the application of the phrase "public use" in the Constitution, which Justice Stevens interpreted to encompass a "public purpose" which went beyond a necessity for the public to obtain the property involved.

Relying upon a 1954 Washington, D.C., case (Berman v. Parker) and a 1984 Hawaii case (Hawaii Housing Authority v. Midkiff) as they applied a 1798 federal case (Calder v. Bull), Steven's wrote that federal courts should defer to the judgment of legislative bodies in their deliberations as to the need for such plans since "economic development" is indistinguisable from other "public purposes" where the application of eminent domain on the state level is concerned.

"Accordingly, when this Court began applying the Fifth Amendment to the States at the close of the 19th Century, it embraced the broader and more natural interpretation of public use as 'public purpose,'" Stevens wrote.

Hope City Attorney Joe Short said the ruling stems from a basic principle.

"What we're dealing with is the Fifth Amendment to the U. S. Constitution, which says, beyond all the other stuff, is that you can't take somebody's property without just compensation," Short said. "That stems from the law in England, where if the Crown needed a particular piece of property, they just took it and didn't compensate anybody for it; and, so, the theory was that, if the government needed a piece of land or property, they could take it, but they had to pay just compensation to the owner for it; and, that language has carried over to the Arkansas Constitution."

But, Short does not think it will change the manner in which public entities in Arkansas exercise eminent domain.

"How the Supreme Court opinion will affect Arkansas is that the states can generally make it, not necessarily more restrictive, but it has got to be in line with what the U. S. Constitution says," he said. "That case dealt with whether that was a violation of the U. S. Constitution; it might be okay under state law, or can we do it based on the federal law?

"And, the Supreme Court said, 'Sure, as long as it's a betterment for the community as a whole to do that,'" Short said. "As far as changing Arkansas law, it's not going to change it very much because Arkansas has in place statutory language for the state, and municipal corporations more than anything, to take property for public purposes."

Under state statute and case law, those "public purposes" have limited definitions, Short said.

"Generally, they have always been defined as water improvements, sewer improvements, electrical or roads, that kind of thing," he said. "I don't know of a case where there has ever been a condemnation in turn for sale to a private corporation to develop in Arkansas."

Short admits that application of the language has held true in Arkansas to this point.

"Historically, that has been true up to this point," he said. "When they mapped out the route for I-30, there may have been landowners who didn't want to sell, for whatever reason; and, the greater good of the people as a whole would have been served by being able to take that.

"But, from what I understand they were going to do in Connecticut was just to condemn these houses that had been there and people had been there for years, so they could turn it into a convention-type center," Short said.

He said some cases typically occur where property is condemned for public use but not completely developed for that use.

"Let's say they condemn 600 acres for a public park, but only use 200 of it; so, what do you do with the other 400 acres?," he posed. "I guess at that point they would be free to sell it to whoever; but, it seems to me the public park in the Connecticut case was simply, 'Oh, yeah, by the way, we really want this other development, but these folks don't want to sell; so, we're going to make it a public park, and then we're going to do something.'"

Justice Sandra Day O'Connor's dissent to the opinion raises an question to the kind of broad scope for eminent domain which is justified by simple public revenue generation.

"The spectre of condemnation hangs over all property," Justice O'Connor wrote. "Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

Short said such a scenario is unlikely in Arkansas.

"I don't know that any local governmental entity would be big enough to condemn a Motel 6 for the Ritz-Carlton," Short said. "What is the public purpose? Now, if they are going to tack on a public park, that's something different.

"But, let's also talk about what just compensation is," he said. "Just compensation is to compensate you for the highest and best use of that property; and, generally, that is to be set by a 12-person jury."

Short said the "highest and best use" of a property is generally determined by any number of factors, including comparable uses in the area.

"The highest and best use of a property depends upon the characteristics of a property as it lays right now," he said. "If you've got an old piece of property out at the proving grounds not being used for anything, it's highest and best use may be as farm land.

"But, if you've got land in a commercial corridor such as North Hervey Street, then commercial property may have a higher value than farm land," Short said.

He said the economic development concept as a factor is already permissible under Arkansas law.

"It's never been used in Arkansas, to my knowledge, to benefit a private corporation; unless, and I really haven't looked, but, I would think that the governmental entity might well have the power to condemn private property for the construction of an industrial park," Short said. "If you had city-owned land, and the city wanted to develop an industrial park; and, you had one land owner who held title to property that was either surrounded or was contiguous to it, I think the city would have the power to condemn that to make it part of an industrial park; and, as they go along, they could sell that to private individuals for the construction of their plants. I think that could be another public purpose."

Should Arkansas property owners be concerned?

"I'd be hard-pressed to see a city government that would want to take that fight on," Short said.

Hope Star: www.hopestar.com