Eminent domain revisited

August 11, 2010

The dust kicked up by the Supreme Court’s decision in Kelo vs. New London is spreading all around the country.

In its 5-4 ruling last June, the Court found that New London, Conn., was within its rights under the Fifth Amendment to condemn well-maintained middle-class homes in order to turn the land over to private developers for economic development purposes Since then, Riviera Beach, Fla., has attracted national attention. This seaside town of 32,500 wants to condemn homes occupied by 6,000 of its own residents to build a waterfront yachting and luxury-home complex for … well, for rich people, who else? In the aftermath of Kelo, it has come to light that six states (Connecticut, Kansas, Maryland, Minnesota, New York, and North Dakota) already allow governments to take private property for economic development purposes. Last July in these pages, we suggested that states take a hard look at their eminent domain laws and consider the example of Washington, whose constitution states that, with a few minor exceptions, “Private property shall not be taken for private use.” It turns out that, in addition to Washington, eight other states (Arkansas, California, Florida, Illinois, Kentucky, Maine, Montana, and South Carolina) already restrict redevelopment authorities from condemning private property except in “blighted areas.” In anticipation of the Kelo decision, Nevada passed a law toughening its standards for determining blight in eminent domain cases. Similarly, Utah hardened its restrictions on using eminent domain by economic development agencies. Shortly after the Kelo decision, Alabama approved legislation forbidding the taking of private property for “nongovernmental retail, office, commercial, residential, or industrial development or use.” The governor noted that the state had been able to acquire the land for three automakers to build plants in Alabama without using eminent domain. In California, a state senator has proposed amending the state constitution to limit condemnation to “specifically prohibit the seizure of one person’s property for the private gain of another” by the state and its jurisdictions. More than 20 states are considering remedies to Kelo, none more innovative than one from Tennessee, where a state representative has proposed requiring the state and local governments to pay triple the “just compensation”—that is, the assessed value—for any property condemned for economic development.
I’d like to suggest another remedy. States could allow property to be taken for private projects for “just compensation,” but with a catch: The new landowner or developer would be required to grant shares or a stake in the project to those property owners whose homes or businesses were taken to create the new development. Sure, it sounds complicated, but that’s why we have 950,000 lawyers in this country. After all, if a Kelo-type project pays off, why shouldn’t those who helped make it possible share in the largesse?

         
 

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