Hijacking Eminent Domain: Bait and switch with regulatory takings: new Jersey Eminent Domain Blog, 9/27/06

By Bill Ward

“They’re baiting you with eminent domain, telling you that this is going to fix eminent domain, and then they’re switching in regulatory takings, and actually getting you to vote for that, when you might not if you really knew what it was about.
Councilwoman Elaine Clegg, Boise, Idaho

Ever since the June 2005 Supreme Court Ruling in the Kelo case, eminent domain, its abuse, and related property rights issues have generated stories; and in turn, those stories have grown legs, appearing daily in all forms of local and national media – radio, television, print, and the internet. A disturbing trend has developed around eminent domain abuse issues, post-Kelo: Charlatans and opportunists are showing up in droves, and their tactics and misuse of the eminent domain abuse issue is hurting the movement.

The latest example is Howie Rich and his efforts to pass so-called “eminent domain propositions” and other measures in California and 12 other states. These stealth propositions are like wolves in sheep’s clothing. Using an emotional call to action (eminent domain abuse), these ballot initiatives really mean to prevent communities from passing zoning laws and prevent government from adopting zoning regulations because those laws will ultimately be considered “takings:”
In fact these provisions are not “takings” at all, but more like “givings.” They give special rights to big landowners and developers, whose demands for compensation cannot be met by local governments, and who will use the new law to remove all barriers to runaway sprawl.

So, who is Howie Rich? He is a New York real estate developer who has, over the years, donated millions of dollars to libertarian causes such as Americans for Limited Government, filtering his money through a maze of organizations. Despite his activities, Mr. Rich is not widely known. He is a 66-year old nominal Republican. He sits on the board of the Cato Institute of Washington, D.C., a libertarian think tank, founded by billionaire Charles Koch. Rich has also been active in the Libertarian Party. See last week's PBS special, Taking the Initiative.

Mr. Rich uses eminent domain abuse as the lead card in his hand, but the deck is stacked with other more controversial issues. His real focus is on so called “regulatory takings.” He equates the genuine outrage that many feel about eminent domain abuse to government zoning regulation or DEP regulation which restricts use. Government regulation, is in most instances, a legitimate exercise of the police power to regulate what can and cannot be done on a particular piece of property. Generally, regulation takes the overview and seeks to protect the greater community and the environment. In order to be a considered a “taking”, the courts have said that regulation must deny the property owner ALL beneficial use and enjoyment of the property.

What Rich is attempting to achieve, through public referenda in those states that permit such initiatives on their ballots, is a mandate that government must compensate property owners for diminution in value resulting from regulations which restrict use. Rich puts forth this proposal by equating takings for redevelopment, which are overwhelmingly despised, to legitimate regulations which are needed to control use. Let’s look at some of the practical effects in states where Rich’s proposals have either passed or are pending this November as reported in The Left Coaster:
In California, Howie Rich's baby is Proposition 90. The fine print in this proposition is that Californians are being asked to prevent government from using regulations except where there are health or safety issues without paying the property owner because regulations "take away" his property value. This proposition seeks to do what Measure 37 did in Oregon. As one of the first "takings" amendments that won passage in the United States, it is a sobering look at what Rich wants to achieve. Oregonians, even many who voted for the Measure, are distressed at what it means for their future.

"The way Measure 37 was presented to the public, prior to the election, they paraded the little old lady who had 20 acres in the ads, they had (her) saying, 'Well, my retirement was going to (rely on the) 20 acres, and I was going to sell 5 acres, and the land-use laws won't let me,' " says Ted Schroeder, a doctor in the rural Grande Ronde Valley in northeast Oregon. "In my naiveté, I thought I was voting to help relieve those sorts of situations." Now, a neighboring family, operating as Terra- Magic Inc., has filed a Measure 37 claim seeking to brush aside agricultural zoning and subdivide 1,400 acres of prime farmland into 335 home sites.

Bill Rose, who breeds specialty grasses on 2,100 acres in the Willamette Valley, about 20 miles south of Portland, says he voted for Measure 37 because he wanted to relax regulations enough to allow modest subdivisions on hilly, unfarmable rural land. Then one of his neighbors filed a Measure 37 claim to convert a 40-acre berry farm into lots one-seventh of an acre for a total of 280 houses. The developer wanted Clackamas County to waive the agricultural zoning or pay him at least $3.6 million. The county had no choice but to approve the claim. Now Rose is making a last-ditch attempt to persuade the county to limit the number of new septic tanks. He says Measure 37 claims "will destroy this valley -- the best place to live and farm that I know of."

"It's happening all over Oregon," says Renee Ross, who lives on 32 wooded and pastured acres near Molalla, southeast of Portland. Two of her neighbors have filed Measure 37 claims: One wants to build nine houses on 60 acres, and the other wants to dig a gravel mine on 80 acres. Handcuffed by Measure 37, the Clackamas County government approved both claims. "We went from having a very strict landuse policy to having no policy," Ross says. "We don't have any rights at all. It leaves us no say in the types of surroundings we live in, the undesirable businesses that can be put in right next to our property."

The western states targeted by Rich have provisions in their state constitutions or statutory law that allow the passage of new laws by ballot initiative. New Jersey does not permit this. Whenever I see the New Jersey Legislature working its magic, I’m tempted to urge this system for our state. A good example where public referendum might be useful is A-3257, the Burzichelli Bill, which seeks reform of the Local Redevelopment Housing Law, N.J.S.A. 40A:12A-1, et seq. This bill overwhelmingly passed the Assembly and has languished in Senator Ronald Rice’s Committee of Community and Urban Affairs for the past six months. So, effectively, the bill is “dead.” Neither Governor Corzine or Senate President Codey have expressed a real interest in passing eminent domain reforms.

But imagine if we had the ballot initiative in New Jersey! It would then be possible for the people to regain the power that has been effectively seized and thwarted by their elected representatives. A ballot initiative would allow Burzichelli’s Bill, or a revised version more acceptable to property owners, to appear on the ballot and be voted into law directly by the people, and not held hostage by elected officials who refuse to act.

But, be careful of what you wish for. Ballot initiatives are susceptible of being co-opted by wealthy proponents of particular issues, like Howard Rich. Imagine what could happen to the Pinelands, the Highlands, and the Hackensack Meadowlands, which are governed by commissions and governmental regulations that limit growth in sensitive areas. This type of regulation would become too expensive for government to implement because government would be obligated to pay for the restriction of use. A regulatory restriction would then be deemed a compensable taking which must be compensated for by the government.

But the ultimate price the citizens will pay in deregulation is the loss of large swaths of precious land and resources to overdevelopment and sprawl.

New Jersey Eminent Domain Blog: http://www.njeminentdomain.com