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Why California's Proposition 99 is a Lot Worse than Nothing:

Yesterday's California returns show that Proposition 98 - the referendum initiative that would have imposed real restrictions on eminent domain and also phased out rent control - has been overwhelmingly defeated by a 61% to 39% margin. The rival Proposition 99 - an initiative sponsored by local governments and other pro-condemnation interests that only pretends to protect property rights - passed easily by 62 to 38. I will have more to say about the failure of Prop 98 in a later post. Here, I focus on Prop 99. Unfortunately, it not only fails to protect property rights against takings, but is likely to make things worse than they were before.

For reasons I outlined in my LA Times op ed, Prop 99 won't actually give property owners any real protection. In brief, the protections of Prop 99 only apply to "owner-occupied homes" where the owners have resided for at least 1 year, thereby categorically excluding the 42 percent of California households that are renters. And even owner-occupied homes remain vulnerable to condemnation because of Prop 99's many loopholes. California is one of the nation's worst abusers of eminent domain, and Prop 99 will do nothing to change that. Instead, it has made things worse in four ways.

I. Blocking Effective Eminent Domain Reform by Fooling Voters into Believing that the Problem has been "Solved."

The passage of Proposition 99 might persuade at least some California voters that the eminent domain problem has been "solved" and that no further action is necessary. As I document in Part III of my forthcoming Minnesota Law Review article on post-Kelo eminent domain reform, the enactment of fake reform laws in other states has fooled many voters (about one third of all those who express any opinion at all about the effectiveness of eminent domain reform in their states) into believing that effective reforms have been enacted. When such deception succeeds, it can greatly reduce public demand for effective reform and make its enactment difficult or even impossible.

II. Contributing to the Defeat of Proposition 98.

Proposition 99 probably contributed to the defeat of Prop 98, an initiative that really would have protected property rights. Given the large margin of Prop 98's defeat, it is by no means certain that it would have passed had there not been also been a bogus anti-Kelo proposition on the ballot. But it is a possibility.

III. Forestalling Potential Judicial Protection for Property Rights.

Third, as Tim Sandefur astutely pointed out, Prop 99 will "make things far worse . . . because the courts would interpret it as meaning that Californians did not want more serious protections for property rights." This is a subtle point that I myself didn't understand the first time Tim made it. Proposition 99 is an amendment to the California Constitution, and as such has to be taken into account by state courts in interpreting the protection that Constitution gives property owners against eminent domain. Before the passage of Prop 99, the California Constitution - like most state constitutions - merely had a general requirement that takings must be for a "public use." California courts had usually interpreted this language broadly to allow the government to condemn property for almost any reason. However, the possibility still existed that they would revert to a narrower and more natural interpretation - that the term "public use" excludes many takings that transfer property from one private owner to another. Many other state supreme courts - including those in liberal states such as Illinois, Michigan, and Washington - have done precisely that. Over the last 15 years, state supreme courts have generally been moving in this direction, with half a dozen new states banning Kelo-style takings under their state constitutions, and only one new case (the Connecticut Supreme Court's ruling in Kelo itself) going the other way.

By defining the scope of protection for property owners as precisely as it does, Proposition 99 forecloses the possibility of such a judicial development in California. The state Supreme Court is unlikely to apply the generic term "public use" in a way that bans takings that would be permissible under the much more specific and detailed language of Proposition 99. In effect, Prop 99 incorporates into the California Constitution an extremely broad definition of "public use" that allows state and local officials to condemn almost any property they want.

IV. A Blueprint for the Defeat of Future Property Rights Initiatives.

Perhaps worst of all, Prop 99 is an extremely clever blueprint for the defeat of property rights referendum initiatives in other states. Recall that it was initially put on the ballot primarily - if not exclusively - for the purpose of defeating Proposition 98. In the end, Prop 98 was defeated at least in part because of its sponsors'own mistakes, such as the decision to package eminent domain restrictions with a phaseout of rent control.

But it is important to recognize that Proposition 99 would likely have nullified 98 even if the latter had been perfectly drafted and had passed with a strong majority. Section 9 of Prop 99 would have overridden 98 so long as Proposition 99 had passed with the larger majority of the two. As a practical matter, even the best possible eminent domain reform initiative in California would have found it difficult to beat the 62% of the vote that Proposition 99 received. Rationally ignorant voters would be unlikely to figure out the interconnection between the two initiatives, and the more effective of the two would have been the subjected to a well-funded "no" campaign backed by local governments and other interest groups. A well-drafted property rights initiative could still pass in the face of such opposition (as happened in ten other states). But it probably could not pass by as large a margin as a rival initiative that doesn't face such strong opposition.

Up until now, eminent domain reform laws passed by referendum have generally been far stronger than the often ineffective ones enacted by state legislatures. If the Proposition 99 model is copied by pro-condemnation interests in other states, that might well change.

Justin Levine:
<blockquote>
But it is important to recognize that Proposition 99 would likely have nullified 98 <i>even if the latter had been perfectly drafted and had passed with a strong majority</i>. Section 9 of Prop 99 would have overridden 98 so long as Proposition 99 had passed with the larger majority of the two. As a practical matter, even the best possible eminent domain reform initiative in California would have found it difficult to beat the 62% of the vote that Proposition 99 received. Rationally ignorant voters would be unlikely to figure out the interconnection between the two initiatives, and the more effective of the two would have been the subjected to a well-funded "no" campaign backed by local governments and other interest groups.
</blockquote>

You seem to be missing the point. Prop. 99 never would have gotten 62% if it wasn't for the anti-rent control provisions of Prop. 98. People voted for 99 not because they were 'rationally ignorant' as you suggest, they voted for it because they were very well aware of the issues and wanted to make absolutely sure that 98 went down to defeat. They didn't trust a Prop. 98 defeat simply by voting 'no' on it, so they voted 'yes' on 99 as back-up insurance.

In the end, a hell of a lot more people cared about the rent control issue than they cared about the takings issue. Once rent control was attached, Kelo become a completely secondary concern. If 98 was 'perfectly drafted' (i.e., without rent control or other extraneous issues), there is no way 99 would have gotten as high as 62% and likely would have lost out to 98.
6.4.2008 6:38am
Ilya Somin:
You seem to be missing the point. Prop. 99 never would have gotten 62% if it wasn't for the anti-rent control provisions of Prop. 98. People voted for 99 not because they were 'rationally ignorant' as you suggest, they voted for it because they were very well aware of the issues and wanted to make absolutely sure that 98 went down to defeat. They didn't trust a Prop. 98 defeat simply by voting 'no' on it, so they voted 'yes' on 99 as back-up insurance.

This is unlikely. The 62% that Prop 99 got is pretty similar to that achieved by anti-Kelo initiatives in other states. And the Pro-99 forces didn't stress Section 9 in their ads as a reason to vote for 99. Anti-98 ads did stress rent control as a reason to vote AGAINST 98, but did not emphasize how 99 could be used to block it.

Moreover, those few voters knowledgeable enough to know about Section 9 and its effects were also probably knowledgeable enough to know that - by election day - Prop 98 had no real chance of winning.
6.4.2008 6:43am
Snarky:

The passage of Proposition 99 might persuade at least some California voters that the eminent domain problem has been "solved" and that no further action is necessary. As I document in Part III of my forthcoming Minnesota Law Review article on post-Kelo eminent domain reform, the enactment of fake reform laws in other states has fooled many voters (about one third of all those who express any opinion at all about the effectiveness of eminent domain reform in their states) into believing that effective reforms have been enacted. When such deception succeeds, it can greatly reduce public demand for effective reform and make its enactment difficult or even impossible.


Unfortunately, you can get pretty much any measure on the ballot if you have enough money to collect signatures.

I do not think we have seen the last of Proposition 98 type ballot propositions in California. However, I also expect that the sponsors of the next Proposition 98 type initiative will likewise try to take a bigger bite of the apple.
6.4.2008 6:43am
Snarky:

This is unlikely. The 62% that Prop 99 got is pretty similar to that achieved by anti-Kelo initiatives in other states. And the Pro-99 forces didn't stress Section 9 in their ads. Moreover, voters knowledgeable enough to know about Section 9 and its effects were also probably knowledgeable enough to know that - by election day - Prop 98 had no real chance of winning.


I may not be representative, but I voted by absentee ballot for 99 and against 98 several weeks before the election.

I would not have voted for 99, except for my desire to ensure that 98 was defeated.
6.4.2008 6:46am
Ilya Somin:
I may not be representative, but I voted by absentee ballot for 99 and against 98 several weeks before the election.

I would not have voted for 99, except for my desire to ensure that 98 was defeated.


Since you have been regularly reading and commenting on my posts about 98 and 99 (and therefore did know about Section 9 and its import), you are indeed likely to be unrepresentative. As a general rule, people who regularly read and comment on political blogs probably follow politics more closely than at least 95% of the adult population.
6.4.2008 6:51am
Snarky:

you are indeed likely to be unrepresentative


You are probably right about that.

On the other hand, the fact that absentee ballots are often voted long before one can know for sure that a particular ballot measure will likely be defeated is something that needs to be taken into consideration to your point that informed voters would know that voting for 99 in order to defeat 98 was likely to be unnecessary.

It should be kept in mind that the turn out in this last election was low, so that those who actually bothered to vote were probably more informed than average.

I suppose that one could wait to vote until you have more information. However, in my case at least, I vote absentee ballots right away because if I don't take care of it right away, there is a good chance I won't end up voting at all.
6.4.2008 7:03am
pireader (mail):
Professor Somin -

Here's a different interpretation ...

The typical voter's sympathies and concerns are very different from yours. You object to Kelo because it undermines property rights. The voter objects because it threatens peoples' right to keep their homes. The voter doesn't much sympathize with a commercial property owner displaced by eminent domain, even when it's for "economic development". In fact, economic development projects are pretty popular in some quarters, which is probably why elected officials favor them.

So of course, Prop 99 gets support even though it only applies to owner-occupied houses. That's a feature, not a bug.
6.4.2008 9:15am
kanchou (www):
To back up Pireader's statement.

I had generally heard rants from home owners against absentee landlords, or use their terminology, slum lords. Home owners generally want to maximize their own property value. While rental property owners usually aim to maximize cash flow, sometime at expense of dragging down nearby property value. The natural result is that, quite often, it's the nearby home owners to push for redevelopment to remove "blights" in order to increase their own property values.

I know several people who vote against 98 and for 99 with those rational.
6.4.2008 10:35am
Elliot Reed (mail):
pireader—that sounds about right to me. My visceral sense of fairness doesn't rebel against taking commercial properties for private benefit in remotely the same way it rebels against taking people's houses for private benefit. Renters can lose their homes just by having the landlord decide not to renew their lease, so the additional chance of losing them to economic development takings doesn't seem all that problematic. If I think about it harder (and consider that the properties taken are still likely to be businesses in poor neighborhoods and the rental homes of poor people) it seems much more problematic but I doubt the average voter even thinks it about it that hard. And as a liberal, I'm sure I'm a lot more like the average California voter than Ilya is.

Of course, the thing that really killed Prop. 98 was the rent control provision. Property rights supporters have been losing because instead of limiting themselves to anti-Kelo amendments they're trying to tack on much less popular property rights protections. The last failed anti-Kelo proposition had the same problem—its supporters tried to restrict regulatory takings, which would have had much more of an impact than Kelo did
6.4.2008 10:44am
David M. Nieporent (www):
You seem to be missing the point. Prop. 99 never would have gotten 62% if it wasn't for the anti-rent control provisions of Prop. 98. People voted for 99 not because they were 'rationally ignorant' as you suggest, they voted for it because they were very well aware of the issues and wanted to make absolutely sure that 98 went down to defeat. They didn't trust a Prop. 98 defeat simply by voting 'no' on it, so they voted 'yes' on 99 as back-up insurance.
You seem to be missing anything resembling facts in your comment, substituting for actual evidence your personal outrage over the fact that some people think landlords are citizens too.
6.4.2008 11:09am
charlene (mail):
Let me provide another hypothesis for 99 passing. Both 98 and 99 were very difficult to parse for the average non-lawyer, especially if you did not read the entire text, which very few voters do. And I was overwhelmed by flyers and phone calls and you-name-it telling me to vote for 99; our household was told that both the Democratic party (probably true) and Republican party* (*: paid for by proponents of 99) were for it. Rent control was hardly mentioned at all; the tagline on all the flyers I saw seemed to be "Vote for 99 because it'll prevent that nasty deceptive 98 from passing!"
6.4.2008 11:14am
Fub:
Elliot Reed wrote at 6.4.2008 9:44am:
pireader—that sounds about right to me. My visceral sense of fairness doesn't rebel against taking commercial properties for private benefit in remotely the same way it rebels against taking people's houses for private benefit.
Maybe most peoples' "visceral sense of fairness" is limited to their own specific situation. The California voters' reaction to Kelo and reforms reminds me of the old joke about the organizer trying to persuade the peasant to join the communist revolution, but scaled up a bit.

Comrade Organizer: Join our revolution and nobody will be poor. From those who have two houses, we will take one and give it to the poor so they will have a place to live!

Peasant: Hooray!

Comrade Organizer: From those who have two automobiles, we will take one and give it to the poor so they can travel!

Peasant: Hooray!

Comrade Organizer: From those who have two chickens, we will take one and give it to the poor so they will not be hungry!

Peasant: No!

Comrade Organizer: Do you want the poor to starve? What is wrong with feeding the poor with the chickens of the rich?

Peasant: Because I have two chickens!
6.4.2008 11:25am
Andrew J. Lazarus (mail):
I am not at all sure how I would have voted on 99 in the absence of 98. Add me to the list of backup-insurance 99 supporters.

Of course, Ilya admitted earlier that the anti-Kelo people behind 99 bastardized (my word, not his) their initiative so that they could get landlord anti-rent-control funding. As such, I can't tell which part of 98 was the tail and which was the dog.
6.4.2008 12:36pm
ray_g:
More data, perhaps it will be useful: As a CA voter, I screen my phone calls and don't take campaign calls, and I toss mailed flyers without reading. My exposure to propositions and initiatives are TV ads (which I try to ignore but can't completely), selected newspaper editorials and articles (often not that useful), and the state published voter's guide, which I believe is actually quite good. Most of the TV ads for 99/against 98 were of the "stop the deceptive 98" type ,usually without explaining just what was deceptive about it. The anti 98/pro 99 editorials and arguments in the voters guide mostly seemed to focus on the rent control aspect of 98.
6.4.2008 1:05pm
jim:
I think pireader is exactly right. Also, what does protecting renters have to do with property rights? The supporters of 98 would not support making it harder to evict tenants. They really only care about property owners. The public relied on cues from who was supporting each side. Would the public have voted the same way if they were fully informed? My guess is that they would have.
6.4.2008 1:08pm
Ohismith (mail):
I suppose majority rule in amending the Constitution to take away property rights is a bad thing, but amending the Constitution this November to take away marriage rights is OK? Maybe ballot box legislating is not such a good idea after all?
6.4.2008 1:23pm
ralphm1999:
To the people of Baldwin Park who will not get relief from eminent domain, be sure to thank the Howard Jarvis organization and their friends for doing them such a big favor by making rent control more urgent than protecting you.
6.4.2008 1:23pm
ralphm1999:
Of course I meant "rent control elimination" in my above post.
6.4.2008 1:26pm
tvk:
pireader: I think you have it generally right. The median voter wants to keep his home; and then allow developers to condemn the remaining 49% of properties so that he can reap the benefits of economic development. So categorically excluding 42% of properties from protection while protecting 58% is just about the right percentage. From a political science perspective, the perfect initiative is one that screws over 49% of people and gives it all to 51% of people (assuming that it doesn't decrease overall wealth).

But Prop. 99 also makes it extraordinarily easy to condemn even owner-occupied homes because of its loopholes. So while I agree many voter probably liked the limitation to owner-occupied homes (that is, they rationally preferred over an initiative not so limited); it is still the case that they probably didn't get what they bargained for.
6.4.2008 1:33pm
mojo (mail):
Don't look at me, man. I voted against both those dogs.
6.4.2008 1:41pm
Brett:
Since yesterday I've talked to a number of acquaintances and co-workers who voted against 98 and for 99. I can report no anecdotal support for the theory that they voted for 99 in order to be absolutely sure that 98 was defeated.

For most of them, it's simply a matter of them wanting government to have a fairly free hand to seize private property. They've been led to believe that environmental laws and urban renewal are (a) public goods that (b) would be hindered by broad prohibitions on eminent domain, and since they like polar bears and gentrification in the abstract, they vote accordingly.

Most Californians will be completely hopeless on property rights issues until they discover a condemnation notice tacked on their front door.
6.4.2008 2:17pm
Specast:
"For most of them, it's simply a matter of them wanting government to have a fairly free hand to seize private property."

That sentence from Brett sums up a big part of the reason why I voted 99 up and 98 down. Like many other public policies, the "protection of property rights" has its limits and must defer to other public goals. I thought 98 -- aside from being deceptive in important respects -- went too far in limiting government's ability to exercise imminent domain, not to mention outlawing rent control. In my view, one of the biggest and least appreciated problems in California is the myriad straighjackets we impose on government. By law, a certain percentage of revenues must go to schools; property taxes may not be raised more than a certain percentage per year; some tax receipts must go to mental health services; and so forth. California goes into fits during every economic downturn in large part because the government doesn't have the flexibility to deal with declining revenues.

I think 98 would have unnecessarily added to these restrictions.
6.4.2008 3:01pm
Smokey:
Much of this discussion concerns rent control, but it never addresses why some people apparently believe that rent control is somehow a good thing?

It is an economic fact that rent control restricts the construction of living quarters, thereby causing rents to be artificially high rather than having a surplus of available homes and apartments, where competition would force rents lower.

One of the worst aspects of rent control is the undeniable fact that there are plenty of wealthy tenants, who prefer to rent rather than own. Would someone in favor of rent control please explain the fairness of forcing, for example, a relatively poorer property owner [who has, for instance, an 85% mortgage, and 15% equity, plus big payments] to subsidize a wealthy renter? Explain the "justice" there.

Ben Franklin was right, and the majority of tenants [versus the relatively small minority of rental property owners] now understand that they can vote to confiscate the property of the minority with impunity.
6.4.2008 3:10pm
ralphm1999:
Smokey, what a bunch of crap.

California does not have the normal dynamics that would create a fair market. In my area of LA I constantly see greedy landlords piling in mutliple families into one apartment because of the dire need for shelter for the incredibly voluminous Latino population. Without rent control, these shady landlords of which there are thousands would gleefully raise rents astronomically as they know they can continue brazenly to literally stuff these poor people into these havens by virtue of having multiple families paying their outrageous rentals. Next door to me in a one bedroom apartment live 10 people. In my building of 220 aparments it is like being in a small Latino town the building is so overcrowded. And please don't give me the crap about the law preventing this.... IT CAN'T. The number of wealthy renters living in rent control units are extremely low... why Smokey would they live in less than good areas when they can afford the safer neighborhoods? So stop with that nonsense also.
6.4.2008 3:30pm
Brett:
I think 98 would have unnecessarily added to these restrictions.


Obviously I disagree with Specast's take -- I think the restrictions on government that he notes are for the most part features and not bugs -- but the simple fact of the matter is that mine is a minority view. There is not a particularly big constituency for liberty in California, unless you restrict the meaning of "liberty" to parochial interests like gay marriage.
6.4.2008 5:09pm
Roger Schlafly (www):
Maybe the voters prefer single-issue propositions, as the California law is supposed tor require.
6.4.2008 5:58pm
Brett:
Without rent control, these shady landlords of which there are thousands would gleefully raise rents astronomically as they know they can continue brazenly to literally stuff these poor people into these havens by virtue of having multiple families paying their outrageous rentals.


Horrors! A property owner might actually enrich himself by raising the price of a highly-sought-after commodity! Ready the torches and pitchforks!
6.4.2008 6:36pm
Smokey:
Thank you, Brett, for pointing out ralphm1999's hypocrisy. I doubt that he would turn down added income; but it's just horrible when someone else does.

In addition, conflating the immigration issue with rent control is a non-starter. I'm in a generous mood, though, so I'll explain the obvious solution to ralphm1999: there are occupancy limits in every jurisdiction. Ten people in a 1-bedroom apartment greatly exceed any such limit. So, make a complaint to the local zoning authority. If that does not do the trick, note that this is a legal blog. Did you ever think of having an attorney write a letter to the property owner, explaining that he is breaking the law and causing you distress? Very likely, the issue will be resolved at that stage. If not, escalate.

Finally, the unfounded, and simply wrong statement that "The number of wealthy renters living in rent control units are extremely low" reinforces the point I made upthread. I live in Silicon Valley, an extremely wealthy area. We have rent control. Wealthy tenants take full advantage of that fact. The rent control law is not limited to poor tenants. See, that was my point that you tried to respond to: it is unjust to require that a middle-income property owner must financially subsidize a richer tenant, simply because the number of voting tenants greatly outnumber the voting rental property owners. Argue that point, if you can.
6.4.2008 7:53pm
Washingtonian:
I think ralphm1999 undermines his own argument. It's inaccurate to say that it's the "greedy landlords piling in multiple families into one apartment." Presumably the landlord would be just as happy to rent an apartment to one tenant as he would to multiple families. Happier, probably, as I imagine that his maintenance costs would be less.

Rather, it is the multiple families who choose to pile into one apartment. Why would they do this? Presumably because the housing is too expensive otherwise. So why aren't more landlords and buildings taking advantage of a market opportunity to build more housing units? If you said "rent control," you'd be right. Prospective builders can put their capital to different uses. Why build rent-controlled rental units that cap you're return when you can build commercial rental space, condominiums, shopping or theaters, etc. that doesn't.

It's basic supply and demand. Rent control artificially constrains the increases in demand by not letting the market respond to the imbalance by increasing supply. As a result, the supply goes out of whack, too. Hence, multiple families in apartments.
6.4.2008 8:12pm
Patrick C (mail):
While I voted for Prop 98 and against Prop 99 I don't necessarily agree with Ilya Somin that Prop 99 is worse than nothing. It could be seen as a foot in the door. Property rights advocates could co-opt Prop 99 by saying that the reason they opposed it was not because it was bad, but because it didn't go far enough. That could be the basis for a "Son of Prop 99" in some later election that would extend its protections to commercial property to protect small business. Just leave rent control out of it. Based on my observations, that more than anything galvanized people against Prop 98 by making it seem like the "unreasonable" property rights initiative compared to the "reasonable" Prop 98 in most people's eyes.

I think renters would vote for a Son of Prop 99 if they felt that it was protecting the local hardware store or cafe.
6.4.2008 9:42pm
Patrick C (mail):
Correction:

Just leave rent control out of it. Based on my observations, that more than anything galvanized people against Prop 98 by making it seem like the "unreasonable" property rights initiative compared to the "reasonable" Prop 99 in most people's eyes.
6.4.2008 9:43pm
bbeeman (mail):

Let me provide another hypothesis for 99 passing. Both 98 and 99 were very difficult to parse for the average non-lawyer, especially if you did not read the entire text, which very few voters do. And I was overwhelmed by flyers and phone calls and you-name-it telling me to vote for 99; our household was told that both the Democratic party (probably true) and Republican party* (*: paid for by proponents of 99) were for it. Rent control was hardly mentioned at all; the tagline on all the flyers I saw seemed to be "Vote for 99 because it'll prevent that nasty deceptive 98 from passing!"


I worked a polling place yesterday in a part of the state where rent control was not a huge issue. Listening to voters talk, there was very little understanding of the differences between 98 and 99. I heard more than a few comments that "they do the same thing."

So, clearly, in my area confusion factor outweighed the rent control issue. Even so, it's a shame that rent control is portrayed in the media as a "poor tenant v. evil landlord" issue. The only rent control in this area is in some mobile home parks. There is a huge shortage of mobile home park space, with several sub-standard parks closing. I just wish that folks would make the cause and effect connection.
6.4.2008 10:31pm