Eminent Domain and Minority Rights:

The Orlando Sentinel, Kansas City Star and Birmingham News have just published my op ed on the impact of eminent domain on ethnic minorities (coauthored with historian David Beito, Chairman of the Alabama State Advisory Committee of the U.S. Commission on Civil Rights). Here's an excerpt:

Few policies have done more to destroy community and opportunity for minorities than eminent domain. Some 3 to 4 million Americans, most of them ethnic minorities, have been forcibly displaced from their homes as a result of urban renewal takings since World War II....

On Tuesday, the Alabama Advisory Committee of the U.S. Commission on Civil Rights will hold a public forum at Birmingham’s historic Sixteenth Street Baptist church to address ongoing property seizures in the state....

Current eminent domain horror stories in the South and elsewhere are not hard to find....

Eminent domain has always had an outsized impact on the constitutional rights of minorities, but most of the public didn’t notice until the U.S. Supreme Court’s 2005 ruling in Kelo v. City of New London. In Kelo, the Court endorsed the power of a local government to forcibly transfer private property to commercial interests for the purpose of “economic development....”

Few protested the Kelo ruling more ardently than the National Association for the Advancement of Colored People. In an amicus brief filed in the case, it argued that “[t]he burden of eminent domain has and will continue to fall disproportionately upon racial and ethnic minorities, the elderly, and economically disadvantaged....”

Some earlier civil rights champions, by contrast, often ignored, or worse helped to undermine, the rights of property owners. Ironically, the same U.S. Supreme Court which handed down Brown v. Board in 1954 also issued Berman v. Parker, in which the Court allowed the District of Columbia to forcibly expel some 5,000 low-income African-Americans from their homes in order to facilitate “urban renewal.” It was Berman that enabled the massive urban renewal condemnations of later decades, which many critics dubbed “Negro removal” because they too tended to target African-Americans....

If takings end up becoming a key constitutional rights issue for minorities in the 21st century, it will be fitting that the crusade against them begins in Alabama.

Unlike in the 1950s and 60s, today the minority poor are targeted for condemnation less because of intentional racism than because of their political weakness. That, however, is little consolation to the victims.

The massive legislative response to Kelo has made important progress. But, as we note in the article, and I discuss in much greater detail in this paper, many of the new laws are likely to be ineffective. A great deal of work remains to be done before property rights - particularly those of the minority poor - get anything approaching adequate protection.

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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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Tim Sandefur on California Proposition 99 - the Deceptive Eminent Domain "Reform" Initiative:

Tim Sandefur of the Pacific Legal Foundation has an excellent post detailing some of the dangers of Proposition 99 - the deceptive California eminent domain "reform" initiative that purports to protect property rights against takings but actually undermines them. Prop 99 is sponsored by the California League of Cities and other government organizations that seek to retain the broadest possible condemnation authority for themselves.

I wrote about some of Proposition 99's other flaws here. The great danger posed by Proposition 99 is that nonexpert voters will understandably assume that it really does protect property owners, without realizing that it will actually undermine their rights by 1) offering no real protection and 2) blocking implementation of Proposition 98, a ballot proposal that really would give property owners protection against the kinds of takings authorized by the Supreme Court Kelo v. City of New London. Even if Prop 98 and Prop 99 both pass, Section 9 of Prop 99 would negate Prop 98 so long as Prop 99 gets more votes than 98 does. Understandably, even relatively well-informed voters could easily be fooled by Prop 99.

I have written an entire article on the ways in which state governments have used political ignorance to block meaningful eminent domain reform, as well as many other works on ignorance more generally. And I have to give credit to the sponsors of Prop 99 where credit is due: This is the most skillfull attempt to manipulate voter ignorance on the eminent domain issue that I have ever seen. In most cases, efforts to exploit political ignorance in this field simply take the form of passing off cosmetic measures that don't really constrain takings as effective ones that do. They portray efforts to do nothing as efforts to do something. Prop 99 goes one step further. It actually dresses up a proposal that would undermine property rights as an effort to protect them.

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My Los Angeles Times Op ed on California Proposition 99 and Eminent Domain "Reform":

In today's LA Times, I have an op ed criticizing California Proposition 99, the eminent domain "reform" initiative sponsored by pro-condemnation interest groups that pretends to protect property rights, but would actually do far more to undermine them. Here's an excerpt:

The U.S. Supreme Court created a huge political backlash when it ruled that local governments could use eminent domain to seize private property and transfer it to other private owners for "economic development." Since the Kelo ruling in 2005, 42 states have enacted limitations on eminent domain — not always effective ones. But like lawmakers in many other states, some California officials are trying to block real eminent domain reform.

On June 3, Californians will vote on Proposition 99, a ballot initiative sponsored by groups representing cities, counties, redevelopment agencies and other pro-condemnation interests. It purports to protect property rights against eminent domain, but it actually provides almost no protection....

Proposition 99 . . . protects only owner-occupied residences against condemnations with the purpose of transferring property to "private persons." That leaves renters — 42% of Californian households — unprotected. If the buildings they live in are condemned, renters can be forced out even if their leases haven't expired. Owners of farms, small businesses and homeowners who have lived in their residences for less than one year also would remain vulnerable.

Even the protection for homeowners covered under Proposition 99 is likely to be ineffective...

Also on California's June ballot is Proposition 98, which really would forbid "economic development" condemnations and other abuses. Absent Proposition 99, Proposition 98 would likely become law — as have anti-Kelo initiatives in 10 other states. Proposition 99 would invalidate any other eminent domain referendum passed on the same day so long as 99 receives a greater number of votes than Proposition 98. Many voters are unlikely to realize this.

Due to tight space constraints, I didn't have room to say much about Proposition 98, the far more effective eminent domain reform initiative that Prop 99 was put on the ballot to block. Fortunately, Tim Sandefur of the Pacific Legal Foundation has recently published an excellent op ed addressing most of the standard objections to Prop 98. The use of Prop 99 to block effective eminent domain reform by exploiting political ignorance is part of a broader pattern common to many states, one that I have discussed in much greaterdetail in this academic article on post-Kelo eminent domain reform.

If time permits, I will have more to say about Propositions 98 and 99 over the next few days. It's hard to fully consider these complex initiatives in a 600 word op ed.

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Deception in the Political Struggle over California Propositions 98 and 99:

Some commenters on my previous posts on this subject claim that Proposition 98 (the California eminent domain referendum proposal that I support), is as much or more deceptive than Prop 99, the one that I criticized in my LA Times op ed and elsewhere for undermining property rights under the guise of protecting them.

Deception is a common political tactic, especially in a world of largely ignorant voters. I don't claim that the pro-98 campaign is squeaky clean on this score. But it is far less dishonest than the Pro-99 effort.

The crucial distinction between the two is that Prop 98 really would achieve the objective which is the main stated goal of its supporters: banning Kelo-style "economic development" takings and other similar abuses. To my knowledge, no expert commentator on either side of the issue denies this. By contrast, for the reasons stated in my op ed, Prop 99 will not provide any real protection for property owners against takings, despite the sponsors' disingenuous claims to the contrary. Moreover, it would actually undermine protection for property rights by blocking implementation of Prop 98 even if the latter passes. A proposed law that does what sponsors say it will do is surely less deceptive than one that not only won't achieve its supposed objectives but will actually undermine them.

Critics of Prop 98 claim that it is deceptive because, in addition to limiting takings, it also forbids the enactment of new rent control laws and phases out old ones as current tenants of rent-controlled apartments die or move out. In an upcoming post (if time permits), I will explain why this aspect of Prop 98 is likely to have only a limited impact if enacted - and a beneficial one at that. I will also argue that the inclusion of rent control in the proposal was probably a tactical error by the sponsors. Here, I focus solely on the issue of possible deception.

The sponsors of Prop 98 are indeed guilty of packaging a relatively unpopular proposal (phasing out rent control) with a far more popular one (protecting people against takings), and then emphasizing the latter far more than the former in their public statements. This standard political ploy is routinely used by both liberal and conservative groups. Even so, it may be objectionable, and it may be an effort to exploit political ignorance (because many voters might not know about the rent control provision in Prop 98). However, to my knowledge, the sponsors of 98 have never denied that their initiative would phase out rent control. Unlike the Prop 99 sponsors, they aren't lying about the effects of their proposal, but merely emphasizing the more popular ones and downplaying those that are less so.

Ultimately, I think that Propositions 98 and 99, like other proposed laws, should be assessed based on their likely effects, not on the ethics of their supporters. If I thought that Prop 99 was an improvement over the status quo, I would support it despite the deceptive tactics of its sponsors. The main point of my op ed was to outline Prop 99's substantive flaws, and (more briefly) to explain how they came about (because of widespread political ignorance, which the Prop 99 sponsors have effectively exploited). In real-world politics, there are few if any proposals promoted only by completely honest tactics. Prop 99 is unusual only in so far as it is a particularly brazen effort to use deception to promote a law that is intended to achieve the exact opposite of its stated objectives.

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Proposition 98 and Rent Control - the Policy Issues:

Much of the opposition to Proposition 98 - the only one of the two California initiatives taht will be voted on June 3 that will actually protect property rights against eminent domain - has nothing to do with takings. Instead, it is focused on the provision of Prop 98 that would phase out rent control. In this post, I argue that this opposition is misguided. If enacted, Prop 98 will actually have only a modest effect on rent control in California. Even if you think that rent control is a boon to poor tenants, it is important to recognize that this group has far more to gain from Prop 98's protection against eminent domain than it stands to lose from its rent control provision. Moreover, if Prop 98 does succeed in abolishing rent

If time permits, I will do a follow-up post on the political aspects of the rent control provision, where I will argue that including it in Prop 98 was a tactical mistake by the initiative's sponsors. Here, I focus on the policy merits.

I. The Modest Impact of Prop 98 on Rent Control.

One of the key reasons why Prop 98 is likely to have only a minor impact on rent control is that most California cities are already forbidden to enact rent control ordinances under Sections 1954.50 and 1954.53 of the 1995 Costa-Hawkins Rental Housing Act. However, the Costa-Hawkins Act does exempt those California cities that already had rent control laws in 1995, which include major metro areas such as LA and San Francisco. Even in these areas, the impact of Prop 98 will be less significant than some opponents claim because Prop 98 exempts current tenants of rent-controlled housing units. Thus, it is not true that anyone will be "thrown out on the street" as a result of Prop 98's anti-rent control provisions.

Even more important, the rent control aspect of Prop 98 will be easy to reverse if California voters want to do so. The California constitution is easy to amend by referendum initiative, as numerous past examples show. Given the popularity of rent control, a pro-rent control initiative could likely be passed on during the next election cycle in 2010. In the meantime, very few tenants will actually be affected by Prop 98's rent control provisions because current tenants are grandfathered in. Local government and urban planning groups strongly support rent control, and they would have both the money and the incentive to put a pro-rent control initiative on the ballot if Prop 98 passes. These groups, of course, were easily able to find the money to sponsor Proposition 99, the anti-property rights initiative they put together to counter Prop 98.

This point is crucially important. If you oppose Prop 98's rent control provision because you believe that rent control is an important protection for poor tenants, you have to weigh the anti-rent control aspects of Prop 98 against the important protections it offers to poor tenants against eminent domain. As I explain in my recent LA Times op ed, the use of eminent domain routinely expels numerous people - most of them poor - from their homes, and the rival Proposition 99 will do nothing to protect them. Indeed, Proposition 99 specifically excludes tenants from even the very minor protections it would provide for homeowners. Because of their political weakness, the poor are routinely targeted for condemnation. Since World War II, some 3 to 4 million people (most of them poor minorities) have been expelled from their homes as a result of "urban renewal" and "econoimc development takings" (see pg. 269 of this article for the data). As an Institute for Justice study points out, California is no exception to this pattern and is in fact "one of the most active states in condemning properties for the benefit of other private parties." Overall, poor tenants have far more to gain from Prop 98's protections against eminent domain then they might lose from its rent control provision. And this is true even if you believe that rent control is good for tenants on balance.

II. Why Rent Control is Poor Policy.

To the extent that Prop 98 might succeed in undermining rent control, this is actually a good result. Like other price controls, rent control reduces the quantity and quality of the good in question. If apartment owners can't charge market prices for their units, they are likely to put fewer apartments on the market and take worse care of the ones they do offer for rent. That is why jurisdictions with rent control - including in California - often suffer serious housing shortages. All of this is basic economics, and is broadly accepted by most economists from across the political spectrum. If you want a more detailed statement, see this essay on rent control by economist Walter Block, in the recently published Concise Encyclopedia of Economics. As Block points out, rent control is opposed by the overwhelming majority of American and Canadian economists (over 90 percent), including liberal ones.

There are many far better ways to help low-income tenants. For example, as I explain in this post, zoning regulations artificially increase the costs of housing in many urban areas. California cities have some of the harshest zoning laws in the country. Cutting back on restrictive zoning laws would help poor tenants far more effectively than rent control.

If you prefer a more active government role in helping the poor, rent control is still the wrong choice. The government could instead subsidize rental payments for the poor (as some states already do), or give them tax breaks on rent (as many states do, though I don't know if California is one of them). The government could also subsidize the construction of low income housing. All of these alternatives are superior to rent control because they don't have the negative side effect of reducing the quantity and quality of available housing. In addition, unlike rent control - which is often exploited by tenants who are far from poor - the benefits of these alternative policies can be targeted to the poor tenants who actually need them.

The alternatives are also far more just than rent control. If society has an obligation to subsidize housing for the poor, there is no reason to arbitrarily impose this burden solely on apartment owners who rent to poor tenants. The costs should instead be shared by all taxpayers or at least by all of the relatively affluent. To the extent that rent control does succeed in helping poor tenants, it does so only by arbitrarily singling out a single social group to bear the cost. Most landlords who rent to the poor are not particularly wealthy themselves, and there is no reason to force them to bear the full cost of a societal obligation that should be shared by all of us.

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California Proposition 98 and Rent Control II - Why Bundling Rent Control and Eminent Domain Reform Was a Political Mistake:

In my last post on California Proposition 98, I explained why its phaseout of rent control would have only a modest impact - one that is likely to be positive. In this one, I will suggest that the inclusion of rent control in an initiative primarily focused on protecting property rights against eminent domain was nonetheless a serious tactical error. By greatly reducing the chance that Prop 98 will pass, making property rights advocates seem dishonest, and closing off possible alliances with groups on the left, the "bundling" of rent control and eminent domain issues has done more harm than good - even from the standpoint of those who favor the abolition of rent control (as I do).

I. Including Rent Control Reduces the Chance of Passage.

Proposition 98's sponsors were not totally wrong to hope that their initiative might pass even with the rent control provision included. Back in 1995, Massachusetts voters abolished rent control in a stand-alone referendum; as MIT economist Henry O. Pollakowski showed in this study, the Massachusetts referendum predictably led to an expansion in the quantity and quality of housing available in Massachusetts cities that had previously been subject to rent control. If that could happen in one of the country's most liberal states, the Prop 98 forces could reasonably hope that it could also happen in California as part of an initiative bundling rent control with the vastly more popular issue of restricting eminent domain authority.

Nonetheless, given the popularity of rent control, including it in the initiative at least significantly reduced the chances that Prop 98 would pass. Experience with eminent domain referenda in 2006 shows that they pass by overwhelming margins if limited to banning government efforts to condemn property for "economic development" and other similar purposes (as occurred in Kelo v. City of New London). All nine "clean" anti-Kelo referenda on the ballot in 2006 passed easily. By contrast, two of the three referenda that tried to bundle anti-Kelo laws with more controversial restrictions on "regulatory takings" were defeated. Significantly, one of thes failed initiatives was California's Proposition 90, which was defeated by a narrow 52-48 margin. I summarized this data in a November 2006 post, where I concluded that "[t]ying anti-Kelo referenda to the much less popular regulatory takings referenda has turned out to be a serious political mistake." Bundling the anti-Kelo cause with an anti-rent control initiative is risky for similar reasons.

II. The Disastrous Interaction with Proposition 99.

Even so, it is possible that Prop 98, as written, could have succeeded if it were the only eminent domain initiative on the ballot. Rent control has fewer avid supporters than the many different regulatory programs potentially affected by Proposition 90.

Be that as it may, the situation changed radically once Proposition 99 - the rival intiative sponsored by pro-condemnation forces - entered the picture. Prop 99 greatly increased the difficulty of passing Prop 98 in two ways. First, as I have documented in my LA Times op ed, it would invalidate Prop 98 even if the latter also passes - so long as 99 gets the greater number of votes of the two. This means that Prop 98 can't be enacted unless it not only gets a majority, but more votes than Prop 99. Most voters are unlikely to realize the technical legal connection between the two ballot measures and are likely to support Prop 99 simply because it seems like a measure that will genuinely protect property rights against takings (even, though, as I explained in the LA Times piece, it won't actually do so).

Second, Prop 99 gives voters an apparent way to protect property rights without also taking on the rent control issue. Nonexpert voters are unlikely to realize that Prop 99 is deliberately structured to avoid giving property rights any real protection. This too increases the odds against Prop 98, and may be enough to cause its outright defeat.

The Proposition 99 ploy is so cleverly designed that it might have doomed Proposition 98 even if the latter didn't include a phaseout of rent control. With rent control included, failure becomes almost certain. Proposition 99 has been in the works for a long time. I first blogged about it more than a year ago. It was a mistake for Prop 98 advocates not to take it more seriously from the start.

III. The Dangers of Appearing Deceptive and Undermining Potential Alliances with the Left.

The inclusion of rent control in Prop 98 is also politically damaging for two other reasons. First, it exposes property rights supporters to charges of lying and deception. And such charges have in fact been repeatedly made by opponents of Prop 98, who have focused their campaign almost entirely on the rent control issue. For reasons I outlined in this post, I think that the charge of deception is wrong or at least greatly overstated. The sponsors of Prop 98 don't deny that it will phase out rent control; the official Prop 98 website specifically notes that it will. They merely focus on other more popular aspects of the initiative in their public rhetoric. Certainly, any deception by the Pro-98 side pales in comparison to that practiced by the sponsors of Prop 99, who are promoting an initiative intended to achieve the exact opposite of its stated objectives.

Nonetheless, the charge of deception is easy to make and impossible to refute in a succint way that ordinary voters can quickly grasp. It effectively diverts public attention away from the issue of eminent domain, and from the far greater deception perpetrated by the sponsors of Proposition 99. Since the Pro-99/Anti-98 side includes most of California's political establishment and major media outlets, these were predictable results. Like Caesar's wife, the cause of property rights must not only be pure; it also has to be perceived as such. That imperative is particularly important when the other side has vastly greater resources and media support.

Finally, the inclusion of rent control in Prop 98 closed off potentially promising alliances with forces on the political left. As documented in Part I of my academic article on post-Kelo reform, the Kelo decision and economic development takings are extremely unpopular among many liberals and leftists because they tend to victimize the poor and minorities. Ralph Nader, Bill Clinton, Howard Dean, Maxine Waters, and the NAACP (all cited in the paper) were among those who denounced Kelo in very strong terms. Surveys (also cited in the paper) show that 77 percent of self-described liberals oppose Kelo, and almost as many favor state laws banning economic development takings.

On the other hand, most liberals also strongly support rent control. An initiative that packages the anti-Kelo effort together with a rent control phaseout is likely to forfeit the support of many liberal voters who would be willing to support a pure anti-Kelo measure. In a generally liberal Democratic state like California, that is a major political drawback. It is particularly serious in a vote that takes place on June 3, where the absence of major statewide races leads to a low turnout - thereby ensuring that ideologically more extreme voters (who turn out at higher rates than moderates) will be a higher percentage of the total. Obviously, a liberal state like California has many more strongly ideological liberals than conservatives and libertarians.

Worse still, the bundling of rent control and eminent domain reform will lead many liberal activists to think that conservative and libertarian opposition to Kelo is just a cover for other causes that liberals oppose. That might reduce their willingness to ally with us on property rights issues in the future, not just in the case of Proposition 98. As a result, Proposition 98's bundling of rent control and eminent domain reform might have negative effects that go beyond Prop 98's own probable failure. I'm not sure how serious those effects are going to be. But I doubt they will be completely negligible.

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Polls on California Eminent Domain Ballot Initiatives Show Prop 98 Likely to Fail and Prop 99 Likely to Pass:

As this San Francisco Chronicle article indicates, recent polls show that California Proposition 98 (the ballot initiative that would meaningfully restrict eminent domain) is likely to be defeated in tommorrow's referendum. Proposition 99, the rival initiative sponsored by local governments and other pro-condemnation interest groups that only pretends to protect property rights against takings, is likely to pass. In a recent Field Poll cited in the article, Proposition 98 was losing by 43 to 33 percent among "likely voters," while Proposition 99 was ahead by 48 to 30 percent. A slightly earlier poll conducted by the Public Policy Institute of California has similar results.

If, as is likely, Proposition 98 is defeated, it will probably be a result of the combination of the sponsors' tactical error in combining the popular anti-eminent domain measure with a far less popular phaseout of rent control (a mistake I criticized in one of my earlier posts), combined with the presence of the deceptive Prop 99 on the ballot. The latter probably led voters to believe that they could protect property rights against takings without simultaneously attacking rent control.

I will post further on the lessons of this outcome (assuming that it actually happens) tommorrow or Wednesday. For now, however, the key lesson - one that should have been learned back in 2006 - is that anti-Kelo eminent domain measures can pass so long as they aren't combined with anything else that is significantly less popular. This is the second time that California property rights activists have had an opportunity to learn this particular lesson since Kelo. The first was Proposition 90 (briefly discussed in this post), which was narrowly defeated in 2006 because it combined restrictions on Kelo-style "economic development" takings with a far more controversial effort to restrict regulatory takings.

To make my position clear, I myself favor the abolition of rent control, and also think that there should be tighter restrictions on regulatory takings (though I haven't studied the regulatory takings provision of Prop 90 closely enough to tell whether I think it strikes the optimal balance on that score). However, the best should not be the enemy of the good. California is a major abuser of both "blight" and economic development takings. As the Institute for Justice, the libertarian public interest firm that litigated Kelo, concluded in a 2003 study, "California is one of the most active states in condemning properties for the benefit of other private parties." Passing a measure abolishing such takings in California would be an important victory in its own right.

REQUEST TO READERS: If you work for Field Poll or the Public Policy Institute or otherwise have access to the data from the two polls cited above, please contact me. I would like to discuss the possibility of using them in my research. I would, of course, use the data for research purposes only and would not resell it. If you can't release the individual-level data, but can only give me the complete aggregates, that would be useful too.

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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.

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Causes of the Defeat of Proposition 98:

In my last post, I considered the likely impact of the passage of California Proposition 99. In this one, I consider the causes of the crushing defeat of Proposition 98 - the initiative that, unlike 99, would have given property rights some real protection against takings.

There were two major causes of Prop 98's defeat. One was the sponsors' mistake in combining the popular cause of restricting eminent domain with a far less popular phaseout of rent control. I have already written on this one at length (see here and here), and don't have much to add. I would only emphasize the importance of not repeating this error in the future. As I noted in the two earlier posts cited above, California property rights advocates made a similar mistake with Proposition 90 back in 2006. Hopefully, they won't commit the same error a third time.

The second and more unusual cause of 98's defeat was the presence of Proposition 99 on the ballot. As I have documented at some length in earlier posts in this chain (e.g. - here), Prop 99 purports to protect property rights against takings, but actually doesn't. It passed easily, with 62% of the vote. Voters concerned about eminent domain could easily have been fooled into believing that Prop 99 would "solve" the problem without needing to vote for the more controversial Prop 98. This would be consistent with the pattern in many other states, where voters have been persuaded that Kelo-style takings have been banned by new laws that are actually ineffective (albeit usually legislatively enacted laws rather than referenda).

The interesting question is: What was the relative importance of the two factors? Perhaps the impact of Prop 99 was minor relative to that of the rent control issue, or vice versa.

Anything approaching a definitive answer would require detailed survey data. Nonetheless, the available evidence suggests that Prop 99 probably did make a major difference to the outcome. One way of measuring the difference it made is to compare Prop 98 (which got only 39% of the vote) with Proposition 90, the 2006 California property rights initiative that was defeated by a narrow 52-48 margin.

Like Proposition 98, Prop 90 combined restrictions on eminent domain with other measures that are anathema to many liberals. Its "regulatory takings" provision would have required the government to compensate property owners for any diminution in the value of their land resulting from the enactment of new regulations in a whole host of areas, including many environmental regulations. New rent control laws (including tightening of existing ones) would also have required compensation. In that respect, Proposition 90 limited rent control as well, though not as much Prop 98 would have done. Because of its broad sweep, Proposition 90 should have been much more offensive to liberal (and many moderate) voters than Proposition 98, which would only have affected rent control in addition to its primary purpose of banning Kelo-style takings. Yet Prop 98 was defeated overwhelmingly, while Prop 90 nearly prevailed.

It would probably be a mistake to assume that the presence of Prop 99 on the ballot accounts for all of the difference between the narrow defeat of Proposition 90 and the anti-98 landslide. But it may well account for the lion's share. Indeed, the nine point difference between the Pro-98 vote and the pro-90 vote may even understate the impact of 99. Because of its narrower scope, Proposition 98 was intrinsically offensive to fewer voters than Prop 90 was and its "natural" level of support might well have been higher than the 48% that Prop 90 got.

Finally, it's worth reemphasizing the point that Proposition 99 would likely have defeated Prop 98 even if the latter had gotten a majority; this would have occurred because Section 9 of Proposition 99 would have overrriden Prop 98 so long as the former got more votes. To outpoll Prop 99, 98 would have had to get more than 62% of the vote. As I explained in my last post, even a perfectly drafted Prop 98 would probably have been negated by 99. Some commenters on my previous post claim that many people might have voted for 99 solely to defeat 98's rent control provision, thereby implying that a better-drafted 98 would have outpolled 99. This is theoretically possible, but highly unlikely. First, the 62% that Prop 99 got is pretty similar to that achieved by anti-Kelo initiatives in other states, including liberal states politically similar to California. That suggests that there wasn't any large additional increment of voters who supported 99 solely to negate 98.

Moreover, the Pro-99 forces didn't stress Section 9 in their ads as a reason to vote for 99; they instead emphasized the (false) claim that 99 would protect homeowners. Anti-98 ads did stress rent control as a reason to vote against 98 itself, but did not emphasize how 99 could be used to block it.

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, according to polls. Such few voters as did support 99 solely because of its potential impact on 98 were likely offset by pro-98 voters who opposed 99 solely for the opposite reason. In a world where the vast majority of citizens are ignorant of very basic facts about politics and public policy, I find it highly unlikely that any significant number of voters read and understood the highly technical Section 9 and voted for or against 99 on that basis. If there is polling data indicating the contrary, I would be very interested to see it, however.

Ultimately, it's difficult to gauge the relative impact of Prop 99 and rent control on the defeat of 98 without good survey data. Quite likely, both were important. But the available evidence suggests that 99 made a real difference. At the very least, it probably turned what might have been a close defeat for 98 into a landslide. It's possible that the rent control issue would have defeated 98 even in the absence of 99. But the reverse is also likely: Prop 99 might have caused the outright defeat of 98 even in the absence of the rent control provision. And even if a rent control-free Prop 98 had gotten a majority, it would very likely have been negated by Section 9.

For now, this will be the last post on Propositions 98 and 99. However, I will try to get survey data on voter attitudes to the two propositions, and will return to the question if that data contains any interesting revelations.

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Penalver on Prop 98 & Prop 99: Over at Prawfs, Eduardo Penalver has an interesting post on California's recent Propositions 98 and 99. An excerpt:
  Insofar as the backlash against Kelo was rooted in the popular views about the special status of residential property, . . . it seemed strange to me that the proposed legislative responses have tended to sweep much more broadly, encompassing all privately owned land. It has always seemed to me that property rights groups were trading on the rhetorical and cultural power of homeownership in the service of a much more expansive agenda than the public reaction to Kelo merited on its own terms.
  You can see this manipulation of Kelo not only in the attempt to protect all private land from redevelopment takings, but also in the tendency of property-rights groups to bundle anti-Kelo initiatives with other elements of the property rights agenda, such as the anti-rent control provision of Prop. 98. Of course, to the property rights libertarian, all of these things (Kelo, rent control, regulatory takings, etc.) are related to broader principles about the nature and scope of private property rights, but most voters do not accept those underlying libertarian principles — their reaction to Kelo rested on grounds that were much narrower, grounds having to do with the special status of the home. I suppose in politics there's nothing wrong about running with a backlash for all it's worth, but it has always seemed to me that there was room for more targeted legislative responses to Kelo.
  I would have voted for Prop 98 myself, but I think Eduardo is probably right that the public opposition to Kelo is largely rooted in the importance of personal home ownership rather than on a broader view of property rights.
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Eduardo Penalver on California Proposition 99 and the Kelo Backlash:

In this interesting post on Prawfsblawg, prominent property scholar Eduardo Penalver argues that California Proposition 99 institutes a useful distinction between homes and other properties by protecting the former, and not the latter against takings:

Prop. 99 would bar governments from taking owner-occupied homes through eminent domain for redevelopment, but permit the taking of other sorts of property (or the taking of owner-occupied homes for other purposes). Prop. 99's focus on residential property makes it (to my knowledge) unique among anti-Kelo legislation and also dovetails with a suggestion I made in an essay I wrote on Kelo a few years ago. Insofar as the backlash against Kelo was rooted in the popular views about the special status of residential property, I argued, it seemed strange to me that the proposed legislative responses have tended to sweep much more broadly, encompassing all privately owned land. It has always seemed to me that property rights groups were trading on the rhetorical and cultural power of homeownerhip in the service of a much more expansive agenda than the public reaction to Kelo merited on its own terms.

One problem with Penalver's defense of Prop 99 is that it doesn't actually provide any real protection even for owner-occupied homes. I documented this point elsewhere (e.g. - here). Penalver himself notes that he would have preferred protection against eminent domain to be extended to "long-term renters as well, and even to certain categories of commercial property."

Penalver is perhaps correct to say that the general public cares much more about protecting homes against takings than about protecting other types of property. He is also right that some libertarians want to use the reaction against Kelo to provide protection for property rights that goes beyond protecting homes.However, both statements need to be qualified.

I. Is Public Opposition to Eminent Domain Limited to the Taking of Homes?

The fact that the public cares more about protecting homes against takings than protecting other property doesn't mean that it is indifferent to the latter. Other than homes, the most common type of property condemned for development purposes is small business property. I suspect that most of the public is only slightly less sympathetic to small businesspeople who lose their commercial property to eminent domain than it is to homeowners who lose their residences. Indeed, survey data compiled in recent articles by Janice Nadler and Shari Diamond (here) and yours truly (here) suggest that public opposition to Kelo is pretty stable in polls using different kinds of wording, regardless of whether the question refers to the taking of homes or not. Some of the surveys cited in Nadler and Diamond's piece show that anywhere from 39 to 53 percent of the public oppose the use of eminent domain against any property for any reason. As the authors caution, these results should not be taken literally. But they do suggest that public opposition to takings isn't narrowly confined to concerns about homes.

II. Have Libertarians Used Kelo to Establish Greater Protection for Property Rights than the Public Wants?

Penalver is right that libertarians would like to see broader protection for property rights than majority public opinion currently supports. However, he exaggerates somewhat when he states that "[y]ou can see this manipulation of Kelo not only in the attempt to protect all private land from redevelopment takings, but also in the tendency of property-rights groups to bundle anti-Kelo initiatives with other elements of the property rights agenda, such as the anti-rent control provision of Prop. 98." The comment about California's Proposition 98 is accurate, but Prop 98 is the exception not the rule. Of the thirteen anti-Kelo referendum initiatives placed on state ballots since 2005 (ten of which passed), only four included regulatory takings or rent control provisions that covered "other elements of the property rights agenda." And two of these, Proposition 98 and Proposition 90 (narrowly defeated in 2006), were sponsored by the same California group. The other nine ballot initiatives (all of which passed overwhelmingly) stuck narrowly to the Kelo issue of forbidding the condemnation of property for transfer to private properties. I discuss these initiatives in detail in my forthcoming article on post-Kelo reform (pp. 35-38).

Penalver is also wrong to assume that state "legislative responses to Kelo" usually protect "all privately owned land." In reality, as I document in detail in this article, the vast majority of the new laws exempt "blighted" land, often under a broad definition of blight that allows the condemnation of almost any property. Many also exclude vacant lots, property that poses a threat to public health, and other categories.

In sum, it is true that libertarians want more protection for property rights than does the majority of the public. We wouldn't be libertarians if we didn't! On the other hand, the public's concerns go beyond a narrow focus on homes. And in many respects, the libertarian view is closer to the general public's position than is the current law in most states, which continues to allow the condemnation of both residential and other property with few or no restrictions. As I document in detail in my paper on post-Kelo reform linked above, the majority of the 42 states that passed reform legislation in the wake of Kelo have enacted laws that pretend to protect property rights without actually doing so to any significant extent. In that respect, Proposition 99, with its fake "protections" for property rights, is far closer to the norm than Proposition 98.

UPDATE: Eduardo Penalver clarifies his position somewhat in the comments here. I agree with much of what he says in his comment, but have two minor disagreements. First, I'm not convinced that a 25% rate of "bundled" post-Kelo referendum initiatives is unusually high - certainly not compared to the amount of bundling that occurs with initiatives on many other issues. Second, Eduardo is incorrect in claiming that Prop 99's focus on residential property is "a unique innovation in the anti-Kelo arena." Wisconsin's post-Kelo reform statute (discussed on pg. 24 of my article on post-Kelo reform) also provides greater protection for homes than it does for other land uses.

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Should Homes Get Stronger Protection Against Eminent Domain than Other Property?

Cornell lawprof Eduardo Penalver's praise of California Proposition 99 for claiming to protect homes, but not other property against development takings raises the more general question of whether homes should get more protection against eminent domain than other property. Penalver is perhaps the leading academic advocate of the view that they should (see this article for a statement of his views). I take the opposite position. As a general rule, all property should get the same level of protection against takings, regardless of function.

The standard "subjective value" argument for giving homes a special status in takings law is much less compelling than many believe. And even if homes do have higher subjective value than other property uses, the subjective value problem is only one of many good reasons for restricting takings. The others all apply with equal force to other property uses.

I. Homes and Subjective Value.

The main argument for giving homes special status in takings law is that they have unusually high "subjective value," the benefit that the owner derives from his property over and above its market price. As scholars have long recognized, the use of eminent often destroys subjective value because owners are only compensated for the "fair market value" of the property condemned by the government. Although it's possible to increase the level of compensation above the market price (as is done in Britain and Canada), it's hard to calculate subjective value with any precision. Thus, governments are highly likely to undercompensate the owners of condemned property in cases where the land in question has high subjective value. For this reason, many argue that the law should it make it more difficult to condemn high subject value property than property that has little value to the owners beyond its market price.

Homes, Penalver and others claim, tend to have higher subjective value than other properties. For example, many people have lived in the same house or apartment for years and have a strong emotional attachment to it. Others have strong attachments to their neighborhoods or to friends and relatives who live nearby. This valuable "social capital" might destroyed if they were forced to move.

It is indeed true that homes often have high subjective value. But at the same time, there are many homes that do not. On the other hand, there are many non-residential uses of property that have high subjective value of their own.

People like Susette Kelo and many of 4000 people expelled from their homes in the notorious 1981 Poletown case have lived in the same neighborhood for decades and have strong social ties there. But the Susette Kelos of the world are offset by the many homeowners who are more like me. I've only lived in my current apartment for a few years, don't know most of the neighbors, and attach relatively little subjective value to my condo. In a highly mobile society where many people move regularly, my case isn't that unusual.

By contrast, many non-residential property uses generate as much or more subjective value as most homes do. Perhaps the most common type of property condemned in "blight" or economic development takings is small business property. And many small businesspeople surely attach high subjective value to their businesses. Many would lose a large part of their customer base and community ties if forced to move by eminent domain, and these losses aren't included in the fair market value of the condemned land. Churches and private conservation areas are two other examples of non-residential property uses with high subjective value. Certainly, many churches have value to their clergy and worshippers that go far beyond the market price of their land and physical infrastructure. Both are often threatened by "economic development" condemnations, as Jonathan Adler and I discuss in this article (see also my discussion of the vulnerability of churches to takings in this 2006 post).

In sum, the distinction between homes and other property is a very poor proxy for subjective value. Many homes have little or no subjective value. And many of the most commonly condemned types of non-residential property tend to have high subjective value of their own.

II. Other Reasons for Restricting Takings.

Even if the subjective value rationale for limiting takings does apply more strongly to homes than other properties, there are a large number of other reasons for limiting condemnation that apply equally to all property. I can't possibly discuss all of them here. But my 2007 Supreme Court Economic Review article criticizing Kelo-style "economic development" takings considers several in detail. Among the most important are 1) the tendency of eminent domain to be "captured" by powerful interest groups who use it to victimize the politically weak for their own benefit, 2) the flaws in the political process that make it difficult or impossible for voters to monitor the quality of takings initiated by government, 3) the superior efficiency of the market in allocating land to its most highly valued uses, and 4) the tendency of development takings to cause net economic harm to the very communities they are supposed to benefit. All of these reasons for restricting takings - and a number of others raised in my article - apply just as much to commercial and nonprofit property uses as they do to homes.

Your home should indeed be protected against condemnation like a castle. But so should your business, your church, and any other legitimate uses that you might have for your land.

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