Thursday, August 04, 2005

Eminent Domain Has Become a Way to Give More to the Rich

For years. Long Branch, New Jersey was an economically depressed seaside town. The main pier had burned, vacant lots and boarded-up buildings filled the shore area and not even liquor stores could find enough business to stay open in the most distressed parts of town. The solution? An eminent domain filled revitalization.

For many years, the city of Long Branch has been involved in a massive revitalization project, seizing entire neighborhoods along the shore and giving them to private developers who have built high-end condominiums, apartments and shopping/dining destinations. For the most part, everyone was happy. Until recently.

The city is now planning to seize 36 beachfront homes and turn the neighborhood into another set of luxury condominiums. But the residents are refusing to sell and have started a community organization focused on stopping the city’s efforts. Unfortunately, after the Supreme Court’s recent Kelo v New London decision, the homeowners’ chance of success doesn’t look good.

First let me say that redevelopment of blighted areas can be a very positive local government action. In the four years I’ve lived in Washington, DC, I’ve seen neighborhoods I wouldn’t walk through become neighborhoods I’d take my son to—all because of massive redevelopment projects that used eminent domain to transfer blighted property to private developers.

But the Long Branch, New Jersey neighborhood is not blighted. It’s nothing fancy but the 36 homes involved are well-maintained and the community is strong—as witnessed by their solidarity and activism in the face of losing their homes. Exactly why are these people worth less than the New Yorkers who will come to live in the million dollar condos?

Sure, rich people with their expensive homes and robust spending habits would bring the city more in taxes. But surely the worth of a man or woman is not measured solely in what he or she pays in taxes. Surely a city does not measure its success solely on how many rich people it can attract.

And this is what disturbs me so greatly. Regardless of the constitutionality of these acts, cities are using eminent domain to build housing for the rich. Long Branch isn’t just trying to increase its tax base, its trying to turn its oceanfront into an enclave for the wealthy. They are forcefully taking away the desirable beachfront property of middle-class citizens and handing it over to the rich.

Others will disagree and say the tax revenue generated from these million dollar condos will help the city improve services across the board—that all residents will benefit. Maybe. But I just can’t help but wonder if all these eminent domain redevelopments aren’t just primarily improving the lives of the rich.

Even here in DC where the redevelopment has been beneficial, the new residences going in to these redeveloped areas are designed exclusively for the wealthy. Sure, the neighborhoods are improved with restaurants and stores and clean streets, but only the very rich can live there—the rest just get to visit.

If this were only the free market at work, I’d have no complaint at all—there’s nothing wrong with being wealthy and nothing wrong with using that wealth to live where you want and how you want. But, in these redevelopment cases, government is giving the interests of the rich a big push. Would the free market really leave no housing for the middle class? I don’t think government should actively oppress the rich, but I sure as heck don’t think the rich need any extra governmental help in fulfilling their desires.

There must be a better method of redevelopment that 1) doesn’t abuse eminent domain as is happening in Long Branch and 2) doesn’t focus so exclusively on amenities for the rich. It’s something cities need to be thinking about.

6 Comments:

At 7:02 PM, Anonymous Anonymous said...

Writing your own eminent domain revision? Here’s an analysis of some typical proposals:

CALIFORNIA

This state’s proposed Constitutional amendment contains two key provisions:

“Private property may be taken or damaged for a stated public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner. Private property may not be taken or damaged for private use.”

It appears the authors meant to tighten up “public use” by mandating that it be “stated.” However, any formulation can be developed to satisfy this requirement, without changing the outcome in any eminent domain action. The problem is that no definition of “private use” is provided. In default of that, the courts would be likely to apply the traditional idea: “private”—forbidden—use is eminent domain used in violation of another law or as a result of some criminal violation.

“Private property may be taken by eminent domain only for a stated public use and only upon an independent judicial determination on the evidence that the condemnor has proven that no reasonable alternative exists. Property taken by eminent domain shall be owned and occupied by the condemnor or may be leased only to entities that are regulated by the Public Utilities Commission. All property that is taken by eminent domain shall be used only for the stated public use.”

The eye-opener here is “no reasonable alternative.” Strict scrutiny says that the government action must be narrowly tailored to achieve a compelling government interest. “Narrowly tailored” is usually taken to mean that there is no reasonable alternative. Under this provision, therefore, it would appear that all eminent domain is subject to strict scrutiny. One wonders if the authors realize this, and if so, if they realize the level of opposition likely to develop by governments and private interests which have always used eminent domain under minimal scrutiny. Note that this provision provides strict scrutiny for housing with respect to eminent domain, and so immediately raises the question with respect to housing and other facts, in what other contexts they receive strict scrutiny? In the alternative, what is the likelihood that a pressured court would reconcile “no reasonable alternative” with “public use” to find that “no reasonable alternative” in this proposal, means “rationally related to a legitimate government purpose”—effectively gutting the proposal? Or does this language change the role of the State in the Federal system, making it impossible for the state to legislate for the general welfare? The owner, occupation and leasing provisions seem to be merely more invitations to creative evasion, and not likely to change the outcome of any eminent domain action.

CONNECTICUT


The Connecticut General Assembly decided to conduct its review of eminent domain law through a specially convened Joint Judiciary and Planning and Development Committee, which began hearings on July 28, 2005. There seems to be a split between two provisions:

“Eminent domain shall not be exercised with respect to housing unless it is substantially related to an important government interest”

or

“Eminent domain shall not be exercised with respect to housing unless it is narrowly tailored to achieve a compelling government interest.”

These provisions immediately raised the question, what about eminent domain over a business which provides the income—that is, the maintenance—for its owner? Then is this an appropriate addition:

“Eminent domain shall not be exercised with respect to maintenance unless it is narrowly tailored to achieve a compelling government interest.”


ALABAMA


Signing Alabama’s revision to eminent domain on August 3, 2005, Governor Robert Riley said: “What our new law does is restore the level of protection that existed prior to the Supreme Court's ruling in June,” even though the decision merely ratified previous rulings on eminent domain. The Alabama law purportedly eliminated eminent domain for industrial, commercial, office, retail or residential development, but could be used to construct roads, public buildings and to remove blight; blight included areas which are obsolete, faulty in arrangement or design, or in danger of becoming blighted. As Dana Berliner, an IJ attorney, said of the blight provision: “All of these are ways of saying we'd like to construct something else here that has a different layout.” (The governor replied that he was willing to consider changes.) The apparent exceptions to “economic development” are more problematic than the language about blight. In the case of a concept such as “economic development” which, as Justice Stevens pointed out, does not, in the first place, distinguish a different kind of eminent domain, making “exceptions” to “economic development” merely puts the question, what is the Constitution? We are back to square one; the concept of “exceptions” retards, rather than advances, the inquiry into eminent domain.

For a discussion of the historical background of the Constitution, see this article, which will appear in the November 2006, issue of the Stetson Law Review: Ryskamp, John Henry, “Kelo v. New London: Deciding the First Case Under the New Bill of Rights.” http://ssrn.com/abstract=562521.

 
At 7:09 PM, Blogger Peter said...

I beleive that Michigan and New York are both also putting forth good proposals to stop this bad trend and a poor precedent set by the Supreme Court. I hope that if/when John Roberts gets on the Supreme Court that this is one topic that is reexamined that the stare decisis does not remain intact.

 
At 7:33 PM, Blogger Blair Hawkins said...

"cities are using eminent domain to build housing for the rich."

Would it be okay if they were building houses for the poor? Is public housing a public use?

Public housing is private residences for private citizens who must be and remain poor to live there. Welfare moms rent from the government in apartments that replaced through eminent domain the homes where the poor lived indepently before the seizure.

If eminent domain for the poor is okay, why isn't it okay for the rich as well?

In both cases, the land is seized from the poor.

In the case of public housing, low-income homeowners are converted to renters who require perpetual subsidies. Public housing is owned by government and pays no taxes. Public housing is never constructed on open or vacant land. The lower tax base must be removed as if it were a blight.

In the case of economic development, the government sells the seized property to developers who have the means to make the land more valuable, and therefore pay more taxes. The new houses and condos have a higher price which only the more wealthy can afford.

Public housing has no ownership component, other someone else used to own the property.

If we can get a handle on eminent domain abuse, our real estate taxes could go down, reducing further the need to seize.

Here's how it works:
(1) tax base shrinks when private property becomes publicly owned or is designated nonprofit tax-exempt.
(2) in a free economy, some properties go up in value while others go down.
(3) if value decreases, you have blight and grounds to transfer the property to someone who will keep assessments rising.
(4) city/county assessor wants to avoid another round of urban renewal, so no property is allowed to decline in value.
(5) resulting in skyrocketing assessments and a state-controlled real estate market.

I love your blog. Thanks.
Blair Hawkins

http://landfree.blogspot.com/

Stories from Charlottesville, Virginia
http://landfree.blogspot.com/

Time Machine to Heal the Wounds of Urban Renewal
http://geocities.com/healingcharlottesville/

 
At 7:59 PM, Blogger Alan Stewart Carl said...

Blair,

Outside the argument at hand, I am much more comfortable with government giving advantages to the poor rather than the rich. How that's done, of course, makes all the difference.

In the case of public housing, it's hard to claim that it's been anything but a faliure in most instances. The amount of crime, drugs and desperation that festers in many of the projects is clearly not serving the public.

I don't claim to have a housing solution for the poor--but I think public housing is, in its current and most obvious form, another example of how eminent domain is improperly used.

 
At 4:51 AM, Anonymous homerenter said...

why cant there be a homestead if there can be eminent domain?

 
At 4:54 AM, Anonymous homerenter said...

because if you feed a man he will eat for a day teach him to feed himself he will eat for life or die trying

 

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