Archive | Eminent Domain

More on Eminent Domain, Crony Capitalism, and the Decline of Detroit

Building on my post discussing the role of eminent domain abuse and the destruction of property rights in helping to cause the decline of Detroit, economist David Henderson has an interesting discussion of how “urban renewal” condemnations in the 1960s helped cause the massive 1967 race riot that most believe was a major milestone in the city’s deterioration. The use of eminent domain to forcibly uproot poor African-Americans had destroyed previously cohesive communities where social ties could forestall civil disorder or at least limit its scale. Henderson notes that one of the few poor black neighborhoods in Detroit to avoid large-scale rioting was also one that had managed to avoid urban renewal takings in earlier years. Residents of that area had previously banded together to form a a neighborhood block club, which in 1967 played a key role in preventing violence from spreading to the area. Urban renewal takings had undermined such civic society organizations in other parts of Detroit’s inner city.

Meanwhile, Shikha Dalmia discusses the role of Detroit’s deleterious policy of favoring big business interests, while at the same time harrassing and driving away smaller businesses with burdensome regulations:

Every mayor for the last two decades has tried to jump-start Detroit by reviving its crumbling downtown. In the 1990s, Dennis Archer erected stadiums and casinos. His successor, Kwame Kilpatrick (who was convicted on federal extortion and racketeering charges) hosted mega events.

The current mayor, Dave Bing, has been too bogged down in Detroit’s fiscal quagmire to propose anything grand. But a group of rich investors led by Dan Gilbert, owner of Quicken Loans, is spearheading a massive effort to bring businesses, hotels and residents into the city.

Gilbert has pumped close to $1 billion to relocate his headquarters in Detroit and scoop up real estate for stores, hotels

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Eminent Domain and the Decline of Detroit

Detroit’s sixty year decline, culminating in its recent bankruptcy, has many causes. But one that should not be ignored is the city’s extensive use of eminent domain to transfer property to politically influential private interests. For many years, Detroit aggressively used eminent domain to promote “economic development” and “urban renewal.” The most notorious example was the 1981 Poletown case, in which some 4000 people lost their homes, and numerous businesses were forced to move in order to make way for a General Motors factory. As I explained in this article, the Poletown takings – like many other similar condemnations – ended up destroying far more development than they ever created. In his prescient dissent in Poletown, Michigan Supreme Court Justice James Ryan warned that there was no real reason to expect that the project would produce the growth promised by GM and noted that Detroit and the court had “subordinated a constitutional right to private corporate interests.”

Eminent domain abuse certainly wasn’t the only cause of Detroit’s troubles. But the city’s record is a strong argument against oft-heard claims that the use of eminent domain to transfer property to private economic interests is the key to revitalizing economically troubled cities. In addition to the immediate destruction and dislocation caused by such takings, they also tend to deter investment by undermining confidence in the security of property rights. One of the main findings of recent scholarship in development economics is that secure property rights are an important factor in promoting long-term economic growth. As economists Daron Acemoglu and James Robinson put it in their much-praised recent book Why Nations Fail, “secure private property rights are central [to development], since only those with such rights will be willing to invest and increase productivity” (pg. 75). Detroit is [...]

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Our Amicus Brief on the Property Rights of Private Planned Communities

The Cato Institute recently filed an amicus brief urging the Supreme Court to hear Mariner’s Cove Townhomes Association v. United States , a case addressing an important issue involving the property rights of private planned communities. The brief was filed on behalf of Cato and several property scholars, including Richard Epstein (Chicago and NYU), James W. Ely (Vanderbilt), Donald Kochan (Chapman), my George Mason colleagues Adam Mossoff, and Alex Tabarrok, and myself. Here is the petition for certiorari written by University of Virginia law professor Daniel Ortiz and the UVA Supreme Court Lititgation Clinic.

Ilya Shapiro of Cato summarizes the important issue at stake in the case:

The U.S. housing market has seen a major shift in the past 30 years: the rise of the community association. In 1970, only 1 percent of U.S. homes were community association members; today, more than half of new housing is subject to association membership, including condominium buildings. These organizations provide substantial benefits, including community facilities, maintenance, and rules designed to preserve property values, in exchange for assessment fees….

Mariner’s Cove Townhomes Association v. United States affects the rights of the more than 60 million Americans currently living in these associations. This case arises from the federal government’s taking 14 of 58 townhouses from one development in the wake of Hurricane Katrina. Mariner’s Cove owned a right to collect dues that was appended to those 14… homes, and sued the government for extinguishing that valuable right without just compensation under the Fifth Amendment’s Takings Clause.

In contrast to most lower courts, however, the U.S. Court of Appeals for the Fifth Circuit held that “the right to collect assessments, or real covenants generally” are not subject to Takings Clause analysis. In other words, the government can take those rights without paying anything to the

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The Case for Federal Eminent Domain Reform

Nick Sibilla of the Institute for Justice, the libertarian public interest firm that litigated Kelo v. City of New London and many other property rights cases, has a good op ed in Forbes on the need for reform measures to curb federal funding of abusive condemnations by state and local governments:

Eight years ago, the U.S. Supreme Court ruled the city of New London, Conn., could use the power of eminent domain to seize an entire neighborhood…. The city justified this as a “public use” by claiming the development might increase tax revenue and jobs.

Americans were—and still are—outraged by this decision. Since Kelo v. New London, 44 states have passed some type of eminent domain reform…..

Despite this well-deserved backlash to the Supreme Court, eminent domain abuse still festers. Six states have failed to pass any type of reform….

Meanwhile, in states that have reformed eminent domain laws, municipal governments and developers have exploited loopholes. For example, some of these reforms still allow seizing property that has been declared “blighted.” Unsurprisingly, blight can be very broadly defined….

While many redevelopment projects are funded through state and local measures, federal grants are still being used to fund eminent domain abuse. Cedar Rapids, Iowa, received a $35 million grant from the Department of Commerce’s Economic Development Administration (EDA) to seize a hotel for a new convention center. At the time, it was the “largest discretionary grant” ever doled out by the EDA. In fact, that same bureaucracy was also responsible for granting $2 million to the redevelopment project that threatened Susette Kelo’s little pink house….

To that end, Congressman Jim Sensenbrenner (R-WI) has reintroduced the Private Property Rights Protection Act, which was recently passed by the House Judiciary Committee. If the act passes, a state or political subdivision that exercises

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The Kelo Condemnation Site Still Lies Empty Eight Years after the Supreme Court Ruled it Could be Taken for “Economic Development”

In its controversial 2005 decision in Kelo v. City of New London, the Supreme Court ruled that private property can be taken and transferred to other private owners in order to promote “economic development.” Eight years have passed since that decision. But, as the New London Day reports, there is still no development going on. The site continues to lie empty:

In the late 1990s, with around $80 million from the state, the city began a redevelopment project that included razing the worn-down neighborhood of single- and multi-family homes along with the bones of an abandoned federal research center at Fort Trumbull. Many home owners sold their land and moved on. Some properties were taken by eminent domain.

A hotel, restaurant, conference center, athletic center, bioscience office park and new housing were supposed to be built next to a new $300 million Pfizer Inc. office building. But eight years after the landmark Supreme Court decision, which expanded the parameters of eminent domain to include the taking of private property for future economic development, there is still no new construction in Fort Trumbull….

Last year, Mayor Daryl Justin Finizio issued an apology to former Fort Trumbull property owners [whose land was taken] and announced a restructuring of the New London Development Corp….

The mayor wants the land that was taken by eminent domain to be set aside and used only for public projects. Possibilities include a desalinization plant, a wind farm and a solar field. A municipal parking garage with ground-floor retail is also a possibility, he said….

But as of now, nothing is happening at the site.

A groundbreaking for the first phase of the 103-unit, $24 million condominium project was postponed last month after a dispute over financing of $8 million for the first phase of the

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New Jersey Legislature Passes Ineffective Eminent Domain “Reform” Law

New Jersey is one of only six states that have not enacted an eminent domain reform law since the the Supreme Court’s controversial 2005 decision in Kelo v. City of New London, which ruled that state and local governments have the power to condemn private property and transfer it to other private interests in order to promote “economic development.” Last week, the state legislature finally did pass a reform law. Unfortunately, as John Ross explains, that law won’t actually do much to prevent eminent domain abuse:

This week, New Jersey lawmakers sent legislation to Governor Chris Christie that would reform the state’s eminent domain laws. If Christie signs, New Jersey would become the 45th state to pass reforms since the U.S. Supreme Court ruled against homeowners in Kelo v. New London in 2005.

Unfortunately, the legislation provides scant protections for property owners. The companion bills (S-2447 and A-3615) each allow local officials wide latitude to declare property blighted, which authorizes the use of eminent domain for private redevelopment projects….

The bills do provide for “non-condemnation redevelopment areas,” which allow developers to access the subsidies that come with a redevelopment designation—without granting eminent domain….

But, weirdly, the bills allow for turning a non-condemnation area into a condemnation area when a property owner is unwilling to sell to officials’ preferred developer. Sort of negates the whole point.

The legislation purports to codify a 2007 state Supreme Court ruling that made it more difficult to declare property blighted. Paulsboro officials had argued that their belief that a piece of land was not being put to the best and highest use was enough to warrant a blight designation. The judges disagreed.

But it will remain very easy for officials to label an area blighted. If an unstated number of properties in a neighborhood

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Yun-chien Chang on Takings Compensation

How much should the government pay to compensate property owners whose land it has condemned? Legal scholars, jurists, and economists have been debating this issue for centuries. The Supreme Court has interpreted the Fifth Amendment’s value requirement of “just compensation” as requiring “fair market value” compensation – roughly the amount of money that the property could be sold for on the open market. Some critics argue that this standard leads to undercompensation, because many people value their property at higher than the market rate; if you valued your house at the market rate or less, you would probably have sold it already. On the other hand, some economists have argued that even fair market value compensation is too high, because it incentivizes property owners to overinvest in land that is likely to be condemned.

Taiwanese legal scholar Yun-Chien Chang’s new book Private Property and Takings Compensation is an excellent analysis of this longstanding debate. Chang does a first-rate job of assessing a wide range of compensation frameworks put forward by both economists and legal academics. Ultimately, he concludes that fair market value compensation is the least bad available approach, but argues that it should be supplemented with additional “bonus” payments, especially in the case of properties with high “subjective value,” such as homes where the residents have lived for a long time. He also brings to bear a wide range of empirical evidence from US and Taiwanese takings, showing that authorities in both countries tend to undercompensate property owners even relative to the fair market value standard, and that compensation policy is likely influenced by interest group lobbing.

I do have a few reservations about Chang’s analysis. For example, I think he should have included a more extensive discussion of what kinds of characteristics of a property should result in [...]

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Interesting Missouri Supreme Court Decision Interpreting the State’s Post-Kelo Eminent Domain Reform Law

The Supreme Court of Missouri recently issued Missouri Ex. Rel. Jackson v. Dolan, an important decision interpreting the state’s post-Kelo eminent domain reform law, which bans the use of eminent domain to condemn property for “solely economic development purposes.” As Robert Thomas points out at the Inverse Condemnation Blog, the ruling gives the statute more bite in constraining eminent domain than most experts (myself included) expected it to have.

In the aftermath of the federal Supreme Court’s unpopular decision in Kelo v. City of New London, which ruled that the federal constitution permits economic development takings, 44 states adopted eminent domain reform laws that supposedly restricted such condemnations. Unfortunately, many of the new laws do little to actually constrain the use of eminent domain authority, often allowing the same old takings to continue under other names. Most commentators believed that the Missouri law was one such ineffectual reform, because, as Thomas explains, “it would seem that all a condemnor need do is throw in another reason — in addition to economic development — and it would be off the hook.” As he points out, courts in other states that ban takings “solely” or “primarily” for economic development have accepted such circumvention. In Jackson, however, the Missouri Supreme Court struck down a condemnation that, in addition to promoting economic development, would also supposedly enhance port facilities and “improve” river commerce. The Court ruled that these alternative rationales were not genuinely different from economic development because “”[t]he record demonstrates that the only manner in which the taking will ‘improve river commerce’ is by drawing more economic development into the area” and that any enhancement of port facilities would be of value only because it too promotes development.

Thomas is right that this ruling could potentially constrain economic development [...]

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Illinois Senate Passes Bill Authorizing the Use of Eminent Domain to Take Property for Casinos

The Institute for Justice, a leading libertarian public interest law firm that has litigated numerous property rights cases, reports that the Illinois state senate has passed a bill authorizing the use of eminent domain for the benefit of casinos:

The bill passed 32-20 in the state Senate on May 1 and is now being considered by the House Executive Committee. Gov. Pat Quinn has previously vetoed two Chicago casino bills in the past. However, while the governor still has concerns about this new casino bill, he has indicated he could sign, so long as gambling revenue funds education and ethics standards are tightened. (After all, four of Illinois’ last seven governors have gone to prison.) Yet casinos abusing eminent domain apparently hasn’t crossed Quinn’s mind.

As the IJ post notes, takings for the benefit of casino interests have occurred in other states, and often lead to the same sorts of abuses as other “economic development” condemnations of the type upheld by the federal Supreme Court in Kelo v. City of New London. Such takings are routinely used by politically powerful firms to acquire property from the politically weak. They also often destroy more economic value than they create. I discuss these problems in much more detail in this article.

In the aftermath of Kelo, some 44 states passed eminent domain reform laws intended to curb such abuses. But Illinois’ law is one of many that contain major loopholes that prevent them from providing much in the way of meaningful protection for property owners. The IJ post notes that Illinois’ 2006 law rates only a D+ under their grading scale.

Hopefully, the Illinois House of Representatives will reject the Senate bill. The legislation is currently before the House Executive Committee. If the House does not reject [...]

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Supreme Court Refuses to Hear Important Property Rights Case

As Damon Root notes, The Supreme Court recently refused to consider Ilagan v. Ungacta, an important Public Use Clause property rights case. I wrote an amicus brief on behalf of numerous public interest organizations and law professors urging the Court to take Ilagan and use it as an opportunity to clear up major ambiguities left over after Kelo v. New London, and also as a vehicle for reversing Kelo itself. I discussed the significance of the case in this post:

Ilagan v. Ungacta is a fairly egregious case where land was condemned for the purpose of benefiting a powerful private party, in this case the then-mayor of Agana, Guam, and his family (the new owners of the condemned property). In Kelo v. City of New London, one of the most widely opposed decisions in Supreme Court history, the Court ruled that the Public Use Clause of the Fifth Amendment allows condemnations for virtually any “public purpose,” including transferring property from one private owner to another in hopes of stimulating greater “economic development.” But the Court also noted that government may not “take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.” Unfortunately, neither Kelo nor other Supreme Court decisions have made clear what it means for a taking to be “pretextual.”

[L]ower federal courts and state supreme courts have come up with at least five different approaches to deciding what counts as a pretextual taking….

Ilagan is a great case for the Court to clarify the meaning of pretext because it includes all four possible indicators of pretext identified by various lower court decisions: dubious motives, a highly skewed distribution of benefits, lack of careful planning, and a major private beneficiary whose identity was obvious

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Interesting New Takings Clause Case

From Hillcrest Property, LLP v. Pasco County (M.D. Fla. Apr. 12, 2013):

Before 2025 Pasco County must build more and larger roads to accommodate the inevitable increase in automobile traffic. Preferring to avoid the payment of “just compensation” after acquiring the necessary land by eminent domain, Pasco County has hatched a novel and effective but constitutionally problematic idea, a most uncommon regulatory regime that is crowned by Pasco County’s “Right of Way Preservation Ordinance.”

The unremarkable part of the regime designates new “transportation corridors,” which expand certain Pasco County highways. The specific instance contested in this action designates a new transportation corridor that widens State Road 52, an arterial east-west highway in Pasco County, and identifies the boundaries of State Road 52’s future right-of-way. For most landowners, whose land is encroached by the transportation corridor but who have no plans to develop the land adjacent to the encroached land, no immediate consequence (and no constitutional jeopardy) occurs; Pasco County will take the expanded right-of-way—when needed—by eminent domain and will pay “just compensation” as determined by a jury in a Pasco County circuit court.

The remarkable part of the regime and the constitutional mischief appear in the instance of a landowner whose land is encroached by the new transportation corridor but who plans to develop the remaining land, which adjoins the encroachment. The Ordinance requires Pasco County to deny the landowner’s development permit and to forbid development of the land adjoining the new transportation corridor unless the landowner “dedicates” (conveys in fee simple) to Pasco County — for free — the land within the new transportation corridor. In other words, to avoid the nettlesome payment of “just compensation,” the Ordinance empowers Pasco County to purposefully leverage the permitting power to compel a landowner to dedicate land encroached by a transportation

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Don’t Believe the Denials – Alabama Really Did Undermine its Post-Kelo Eminent Domain Reform Law

Last week, I blogged about how the Alabama state legislature recently adopted a bill that undermines its post-Kelo eminent domain reform law and opens the door to the taking of private property for transfer to a wide range of politically connected private interests. Two state senators who sponsored the law have claimed that their bill doesn’t really expand eminent domain authority [HT: John Ross, who is similarly skeptical about the sponsors' denials]:

A new law designed to help lure high-tech manufacturing jobs to Alabama does not give cities greater eminent domain powers, several people involved in the legislation said Monday….

state Sen. Arthur Orr, R-Decatur, said that’s simply not the case. Orr said the “Major 21st Century Manufacturing Zone Act” does nothing to change or broaden eminent domain laws….

State Sen. Bill Holtzclaw, R-Madison, said he is “very big on personal property owner rights” and would not have co-sponsored the legislation if he thought it might be used to expand the use of eminent domain.

“I’ve been adamantly opposed to that,” Holtzclaw said Monday. “If there’s something there that was unintentional, we’ll close the loop on it.”

These denials are dubious, at best. The relevant legislation, Senate Bill 96 contains the following language:

It is further found and declared that the powers conferred by this chapter are for public and, in the case of automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities, private uses and purposes imbued with a public interest and for which public money may be expended, either directly or indirectly, in the case of automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities, and the power of eminent domain and police

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Alabama Undermines its Post-Kelo Eminent Domain Reform Law

In the aftermath of the Supreme Court’s controversial 2005 decision in Kelo v. City of New London, which ruled that state and local governments could condemn property for transfer to private parties for “economic development,” 44 states passed eminent domain reform laws intended to curtail abusive condemnations. Many of the new laws only pretended to curb the use of eminent domain without actually doing so. But Alabama was one of the exceptions, passing one of the nation’s better post-Kelo reforms. Unfortunately, as John Ross of Reason explains, the Alabama state legislature has now largely reversed its post-Kelo reform law, opening the door for condemnations that benefit powerful private interests at the expense of the poor and politically weak:

This month, Alabama Governor Robert Bentley signed into law a bill that allows local officials to condemn private property and turn it over to private developers.

Alabama’s statutes had contained some of the best protections in the nation for property owners; officials couldn’t seize property for private development unless it was a true threat to human health and safety.

Welcome back to the bad old days.

Advertised as a tool to attract industry to Alabama, the new law (the Major 21st Century Manufacturing Zone Act) expands tax subsidies for companies that open a manufacturing facility of at least 250 acres. It also allows municipal officials to seize property for “private uses and purposes imbued with a public interest” like auto factories, biomedical facilities, and pharmaceutical plants.

Officials can now condemn property they deem “blighted,” which, since the statutory definition of the term is so subjective, could be nearly any property.

As I discuss in this article, such “economic development” takings not only often victimize the politically weak for the benefit of powerful private interests, but also [...]

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How I Became a (Minor) Victim of Academic Plagiarism

Today, the Baltimore Sun published a detailed story about Towson University Professor Benjamin Neil, who has been accused of numerous instances of plagiarism, especially in a 2012 article on Kelo v. City of New London and post-Kelo eminent domain reform which has since been withdrawn by the Journal of Academic and Business Ethics:

A longtime Towson University professor has resigned his post as the head of the city school system’s ethics panel amid allegations that his published academic articles contain content from dozens of sources without proper — or in some cases any — attribution.

University officials and journal publishers say they are reviewing several articles submitted by Benjamin A. Neil, a legal affairs professor, after a librarian at another university alerted them to the issue.

A Baltimore Sun review of five papers published by Neil shows passages with identical language and others with close similarities to scholarly journals, news publications, congressional testimony, blogs and websites. In many cases, there was no attribution.

Neil, who has taught at Towson for more than 20 years, says he properly attributed work from other authors.

“I don’t think I’ve done anything wrong,” said Neil, 62. “The issue seems to be that I didn’t put things in quotes. But I’ve given attribution to people….”

Meanwhile, some of his colleagues across the country and authors of the original material who were contacted by The Sun criticized what they called “lazy plagiarism” and a breach of academic integrity. Experts say the incident highlights the pressures that professors feel to publish.

“It’s completely unacceptable conduct, particularly for a professor,” said Jeffrey Beall, a scholarly initiatives librarian at the University of Colorado, Denver who contacted Towson officials and journals about the alleged plagiarism.

It so happens that I was one of the scholars whom Neil plagiarized [...]

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Talk on Kelo and Post-Kelo Eminent Domain Reform at South Texas College of Law

This Thursday at 5 PM, I will be speaking on Kelo v. City of New London and post-Kelo eminent domain reform at South Texas College of Law in Houston. The talk will be held in the Emile Slohm conference roomon the 6th Floor, and is sponsored by the South Texas Federalist Society.

I will will cover both Kelo itself, and the massive political and judicial reaction it has generated. South Texas property professor Josh Blackman, who is also a prominent legal blogger, will provide commentary. [...]

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