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Proposition 99 - California's Trojan Horse Eminent Domain "Reform" Referendum Initiative:

The Institute for Justice has a good analysis criticizing Proposition 99 the eminent domain "reform" initiative that will be on the ballot in California this November [correction: June 3](hat tip: Tim Sandefur). Sponsored by the California League of Cities and other pro-condemnation interests, Proposition 99 purports to protect property rights against takings but actually provides almost no real protection. I discussed an earlier version of Proposition 99 in this 2007 post, where I explained in some detail why it doesn't actually provide meaningful protection to property owners. The current proposal is substantially identical to the earlier one. It is a clever effort to prevent the backlash against Kelo v. City of New London from forcing the enactment of reforms that will genuinely restrict eminent domain in California.

As I show in my article on post-Kelo reform, new laws enacted by referendum have generally given property owners far more protection than those enacted through the ordinary legislative process. In this case, however, pro-condemnation interests are trying to use the referendum system to their advantage.

Indeed, Proposition 99 is likely to actually reduce protection for property rights; that is most likely its main purpose. How? by forestalling Proposition 98, an initiative placed on the ballot by property rights activists that really would forbid Kelo-style "economic development" condemnations and other eminent domain abuses. Absent Proposition 99, Prop 98 is almost certain to pass and enter into law - as have anti-Kelo referendum initiatives in ten other states. Section 9 of Proposition 99 would invalidate any other referendum amendment on eminent domain passed on the same day so long as Proposition 99 receives a greater number of votes than the other initiative does. As I discussed in my earlier post, the interest groups behind Proposition 99 are banking on voter ignorance. Legally unsophisticated voters are unlikely to either notice Section 9 or understand its import if they do. Most will vote for Prop 99 simply because it seems to protect property owners against Kelo-like "economic development" takings - a hugely popular cause supported by some 80% of the public. They may well not understand that a vote for Prop 99 actually prevents property owners from getting any real protection.

As I explain in my comprehensive paper on post-Kelo reform, widespread political ignorance has led to the enactment of numerous eminent domain reform laws that pretend to protect property rights but actually allow takings to continue as before. The California League of Cities' Proposition 99 is a particularly skillfull attempt to use political ignorance to stave off effective eminent domain reform. I hope that it fails, but I'm not optimistic.

CONFLICT OF INTEREST WATCH: I have in the past done pro bono work and written amicus briefs in property rights cses for the Institute for Justice.

UPDATE: I have corrected the link to the IJ analysis of Proposition 99. Thanks to commenters for pointing out the previously flawed link.

UPDATE #2. In response to several commenters who raised the issue, it's worth pointing out that Proposition 98, unlike Proposition 90 (narrowly defeated in 2006), does not have any provisions requiring compensation for regulatory takings. It bans condemnations for "economic development" and other similar transfers to private parties, and therefore will have little or no effect on environmental regulation, rent control or other issues. As co-blogger Jonathan Adler argues in this excellent article, compensating property owners for environmental regulations that restrict their ability to use their land is actually good policy and likely to improve the quality of environmental protection. Be that as it may, Proposition 98 doesn't require any such compensation. In this 2006 article, Adler and I explained why a ban on "economic development" takings of the sort Prop 98 seeks to impose would have beneficial environmental consequences.

UPDATE #3: I had not read Section 6 of Prop 98 as carefully as I should have when I wrote the last update. Section 6 of Proposition 98 specifically exempts preexisting rent control laws from coverage and ensures that tenants who currently reside in rent controlled housing units continue to receive the benefit of those laws. However, Prop 98 would forbid new rent control laws, or the limitation of rent for new tenants under the old ones. That said, the California Constitution makes it easy to enact new amendments, so the voters could still enact new rent control laws if they want to - they would just have to take the form of a referendum initiative or other constitutional amendment.

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