California lawmakers have introduced a proposed ballot initiative that would limit the impact of a U.S. Supreme Court decision, which allowed a Connecticut town to condemn a number of homes to make way for commercial development. With the decision in Kelo v. City of New London at the federal level, states now need to protect homeowners from this type of egregious land grab for commercial purposes. California lawmakers are right to lead the way.
Government must have the power to acquire property that is needed for roads, schools, utilities and other public works, which benefit the community; however, that power shouldn’t be absolute. It should be used sparingly and only to advance legitimate public goals, a criterion that shouldn’t encompass private developers’ construction of new shopping malls, office buildings and other commercial projects. What’s more, special care should be taken when eminent domain targets houses and small businesses.
The Supreme Court’s decision in Kelo doesn’t stipulate that commercial redevelopment is an appropriate use of government’s power to take property. Rather, the decision allows localities to decide what uses of land best suit the public good.
Local control is appropriate in land-use decisions because faraway politicians aren’t in a good position to know the situation on the ground. What’s troublesome about Kelo is that officials in New London valued commercial redevelopment more highly as a public need than individual private homes. It’s a sad instance of excessive consumerism when retail shops–and the tax revenues they generate – are so important that a locality will take private homes for commercial redevelopment and call it a benefit to the community.
A U.S. District Court in California came to a different conclusion about commercial property two years ago in .99 Cents Only Stores Inc. v. Lancaster Redevelopment Agency. In that case, a discount store sued a local redevelopment agency to block the agency’s plan to take the store’s property so that an adjacent store could expand its square footage. The district court issued an injunction against that plan because the targeted stores weren’t that old and thus couldn’t be considered “blighted.”
The difficulty with the “blighted” criterion is that one person’s blight could be another’s person’s luxury, and property owners, commercial developers and government officials are unlikely to agree on how much blight would warrant a government takeover of a specific property. Such laws thus leave homeowners vulnerable to the view that their supposedly “blighted” little houses might be more attractive and beneficial to the city’s coffers if they were turned into luxury hotels, office buildings, boutique shops and the like.
Critics of the Supreme Court’s decision in Kelo have taken revenge on Justice David Souter, who voted with the majority in the court’s 5-4 decision. They’ve asked the local zoning board in Souter’s hometown to turn his 200-year-old farmhouse into a luxury hotel to bring “economic development and higher tax revenue” to the town, according to news reports.
That’s a creative way to call attention to the problem, yet state legislation to protect homeowners from Kelo would be a more effective response.
At least one state Realtor association has responded. The Illinois Association of Realtors outlined a proposal that would clarify the definition of “public use,” prohibit takings in which the property would be owned, leased or sold to a private developer without certain state-level checks and balances, and require government compensation to include the property owner’s costs as well as the value of the property, among other elements.
Realtor groups have a long and not always laudable history of strong support for private property rights. In this case, the Illinois association is on the right track. The National Association of Realtors has also prepared an interesting analysis on Kelo.
State laws that would limit local eminent domain powers wouldn’t hinder commercial redevelopment because private developers can – and should – acquire property for their projects on the open market. They shouldn’t need to strong-arm homeowners with the power of government on their side of the negotiations. Limits on such power would force commercial developers to deal fairly with private property owners without having the deck stacked in the developers’ favor.
Marcie Geffner is a real estate reporter in Los Angeles.
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