Tuesday, March 6, 2012

Guidelines For Use of Eminent Domain

Below is an operational manual for the constitutional use of eminent domain by municipalities. I will post an abridged version later.

Guidelines for the Use of Eminent Domain
Eminent domain for private gain undermines capitalism and private property rights (Thomas). The economic freedom along with the right to own land is one of the cornerstone philosophies for which this country broke free of its oppressor nation(Jefferson). The right to own land gives a man power of his destiny. He can grow crops to feed himself or sell them to make money and buy goods, he can build a large home to live in and rent out part of it for income he can cut down trees for warmth or commerce. In other words land ownership helps us all break away from wage labor, or the king or monarch or government (Blackstone). What good is land ownership if your property can be taken away at the whim of your city or town? This issue of eminent domain abuse is an issue of critical importance, not only for landowners but also for government (Thomas). Government gains its legitimacy through popular sovereignty this sovereignty grants it certain powers such as eminent domain. If governments abuse this power they undermine their own legitimacy (Blackstone).

There is a solution to this problem. Government can respect its landowners right and at the same time use city planning to better its’ municipality. This will require a respect for the constitution, understanding of community needs and creativity.
It is the charge of governments to work around this inherit issue of eminent domain. It is very easy to simply seize land wherever one sees fit and build whatever one sees fit. However city officials are elected to provide growth and services in ways that don’t interfere with inherit rights. They must look to solve problems within their budget and within the constraints of their powers.

John Locke was an English philosopher who wrote about law and the role of government. Locke believed that the government must only use its taking power for the “common good” but their duty must be to protect everyone’s property. He understood that when we enter into a “contract” such as a government we give up certain liberties. These liberties are only given up however to achieve societal goals and even still protecting the individual must be the ultimate charge of government (Locke).

If it is to be decided that governments’ ability to produce tax revenue shall supersede private citizens property rights then we must ask why governments exist. Why would people give up some fringe rights and privileges for the protection of their most precious rights if those rights can be trumped by the transitory spending whims of their government? (Blackstone) If a government does not protect both bodily and intangible (i.e. freedoms and liberties) freedoms of its citizens; it has become obsolete and unnecessary (Jefferson). Government that would put production and tax revenue over the most basic rights of its citizens is nothing but a conduit for corruptive subversive and cheating neo-capitalism.

This is the philosophy that has stood the test of time. The laws of Western Civilization are based on the views by thinkers and politicians such as Locke. William Blackstone once wrote “the law of the land has postponed even public necessity to the sacred and inviolable right of private property” (Blackstone) The idea of property as a preeminent right is well documented.

Ownership is based on many things. There are many definitions of ownership but in general the owner must be able to: sell, trade or rent, have access to, exclusive control of and have use of his property in order to own it (Locke). Of course people who own property sovereigns in and of themselves. They must abide by certain rules. The intention of these rules is to promote the “public good” or “general welfare” (U.S. Constitution). It is a public good to prevent certain land usages because they may adversely affect others. You cannot burn tires in your front yard because there is a threat to the “public good” and the government has a right to intervene and protect the “public good” (Wright)

That is the view held under “common law” the constitution actually allows for more government intervention then would be allowed under the theory of “public good” (Midkiff). It allows for government to seize property for “public use”. The fact that government usurps more power in the Fifth Amendment means it is ready to draw a very finite line between acceptable takings and unacceptable takings (Thomas). In Wright v. United States the Supreme Court said “no word was unnecessarily used, or needlessly added” referring to the Constitution (Wright).

Kelo v. New London was the case of the Connecticut city of New London trying to seize 115 properties through the New London Development Corporation (group responsible for city economic development) the plan would incorporate a Pfizer research facility, a hotel, restaurants, shopping, marinas, new residences, a coast guard museum and two more parcels for miscellaneous and undisclosed uses. (Kelo v. New London) The NLDC plan was based around the arrival of pharmaceutical giant Pfizer and the expected job creation and tax revenue that would hopefully come with it. Suzette Kelo (petitioner) lived in the area for nearly twenty years. Respondent (New London) admits that Mrs. Kelo’s home nor that of any other of the respondent’s homes were blighted (Kelo). In fact Kelo had a waterfront view and had made many repairs to her home over the years. One of the respondents had lived in their home for 60 years. There was in fact no need for the city redevelopment project, just a desire to create more revenue (Castle) .

In Kelo v. New London however the court says that “public purpose” or “public benefit” was the measure for eminent domain usage. If that is the case then accordingly the constitution should have those words instead of “public use” (Kelo). The constitution also uses the term “General Welfare” a very broad term that has allowed legislatures to create all sorts of laws pertaining to all different functions of the country. Then why didn’t the writers of the Constitution say “nor shall private property be taken for “GENERAL WELFARE”, without just compensation?” Instead they use the much narrower term “public use” because they did not intend for eminent domain to be used for a wide range of city planning. Eminent domain is a tool of last resort not “Sim City 3000” (Thomas)

Today the debate rages. Despite an overwhelming percentage of the public against the use of eminent domain for private gain there are still those who support the concept of “public purpose” (Connecticut). I will not try and discern why these four powerful judges would support such a ridiculous notion instead I will show why they are wrong and how we can implement a system that will work for land owners and municipalities.

Research Methods
I will use mostly quantitive research methods to discern the meaning of the Constitution, to show the violations of the “equal protection clause” and to implement a strategy to help cities work around eminent domain restrictions. I will use some qualitive research to show the human toll of eminent domain as an ethical argument against the abuse of eminent domain by municipalities.

  1. This is not intended to be a complete legal argument for or against the use of eminent domain for private businesses. I will instead go over the basic case for a stricter constructionist interpretation of the takings clause and what that means legally for municipalities and city planners.
  2. I do not intend to discern the motives of municipalities who use eminent domain to transfer property from one private entity to another. I may present individual cases of abuse and malfeasance as further proof that guidelines are needed. I may also look at the disproportionate number of poor landowners who are affected by eminent domain being used to transfer private property from one private owner to another. This may however be because of their lack of political efficacy rather than an outright discrimination. I will leave that up to you to decide. I will assume that most municipalities want to work within the framework of the Constitution to make their communities better.
  3. This report is not intended to be a guideline for city planners. I will show the means by which municipalities can do city planning and still uphold Constitution in their takings.
Scope of Inquiry
  1. Eminent Domain
    1. History
  1. Common Law
  2. Federalist Papers
    1. Constitution
      1. Fifth Amendment
      2. Fourteenth Amendment
      3. Court Interpretation
    2. Current use of eminent domain
      1. Public takings
      2. Private takings
      3. Poor v. Rich
      4. City v. Rural
  1. Guidelines
    1. Constitutional
    2. Ethical
    3. Logistical
A plan needs to be developed to protect land owners, protect municipalities from lawsuits and allow for careful city planning based on fundamental respect for property rights.

Eminent Domain and the Constitution
The Fourteenth amendment to the Constitution was ratified in 1866 (ThomasLoc) in response the “black codes” in the Deep South which not surprisingly were very similar to the “slave codes” in place prior to the south rejoining the union. These codes created separate rules and regulations for black many of them in effect put blacks back into slavery through legal jargon and technicalities (Mitchell Civil War class). The Fifth Amendment provides that the federal government provide “equal protection” to citizens under the law. However the duties and regulation of the state government against violating basic freedoms laid out in the Bill of Rights do not necessarily exist unless specifically stated to apply to state government. The tenth amendment to the Constitution states “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”

We can now see the problem clearer as there is an ambiguity in the law. If the state government can violate my right to assemble and if I am in the United States I am always in a State unless in Washington D.C. then does the constitution actually protect any of my rights. This is where sensible interpretation and a sense of how federalism works in the relation between states and national government works could have come in handy. Further confusion comes when we read the ninth amendment which basically states that just because a right is not listed in the Bill of Rights doesn’t mean the people don’t have it. This would assume that in fact we have more rights and that these are the bare minimum of utmost importance that must be written down. There is also the concept under federalism that states can grant more rights to their citizens but they cannot deny rights(Wright, U.S. Constitution, Articles).

There is a reason why the Articles of Confederation didn’t work. They granted too much power to the states and neutered the power of the federal government leaving it unable to protect the basic security and freedom of US citizens. This may be hard to imagine in this day and age where the federal government has grown so huge and quickly usurping state power. There was at the 1860’s a real threat that the balance of power would shift to far to the states. As John Locke pointed out if it is necessary for men to give up some rights to form their government then these more minor rights may only be infringed in a manner that protects the public good and most importantly essential personal rights.
Racial and Age Discrimination
‘“Urban Renewal” was often referred to as “negro removal”’ (NAACP amicus brief in Kelo v. New London). Is it coincidence that the fourteenth amendment which was ratified in order to put an end to the “black codes” which sought to keep blacks enslaved is being violated by the blatant abuse of eminent domain? Justice Thomas dissenting in Kelo writes "Losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.” This creates a situation where lack of money and political efficacy could cause you to loose your rights. While this may happen in life in general, when the government in fact encourages it becomes tyranny.

Rich v. Poor
So what does this mean for eminent domain? Some lawyers and scholars would say not much. They argue that while eminent domain seizures taking private property away from one and giving it to another private person or business happen disproportionately to the poor in favor of big business, that they do not necessarily violate the “equal protection” clause. (Articles of Confederation) Just like the fact that while the majority of car thieves tend to have lower incomes this does not mean that the grand theft auto laws violate the equal protection laws. This is true however it ignores the fact government seizures of property from the poor to give to big business specifically discriminate based on how much tax revenue the citizen produces. Wealth or lack thereof is in fact a causation of eminent domain seizures not simply correlated like car theft (Kelo).

If we follow the line of logic that creating a greater tax revenue would necessarily create a “public good” and thus serves a “public purpose” which is apparently the new working definition of the court, then we could also say that seize the homes of the elderly in order to bring in a younger citizenry would be beneficial and constitutional. Even if they don’t provide more property tax revenue they would occupy more jobs, spend more money in town, tax the resources of the town less and likely stay longer than the former resident senior citizens. Is there any doubt that this would be a clear violation of the “equal protection” clause? As ludicrous as the previous example sounds it is not far removed from the actual scenario found in kelo and countless other cases throughout the country.
We must also address the issue of unfair compensation. We have seen that compensation in eminent domain seizures is often far below market value. In fact poor landowners receive less of a percentage of their land value in compensation in comparison to more wealthy land owners. This is caused by many factors most notably ability to withstand legal costs to fight compensation amounts and also a vast difference in political efficacy. (Patricia Munch “An Economic Analysis of Eminent Domain”)

Widespread Abuse
The Castle Coalition documented over ten thousand cases of land owners having their property taken or being threatened with having their property for benefit of another private owner, in just a four year span from 1998-2002. Here are just a few examples from an article taken fromWorld Net Dailyof the avalanche of property confiscations unleashed by last summer's 5-4 Supreme Court ruling in Kelo v. City of New London:
  • Oakland, Calif.: A week after the Kelo ruling, Oakland city officials used eminent domain to evict John Revelli from the downtown tire shop his family has owned since 1949. Revelli and a neighboring business owner had refused to sell their property to make way for a new housing development. Said Revelli of his fight with the City, "We thought we'd win, but the Supreme Court took away my last chance."
  • Boynton Beach, Fla.: Under the threat of eminent domain, the 50-year-old Alex Sims Barber Shop is selling to the City of Boynton Beach to make way for new residences and storefronts. Guarn Sims called the Kelo ruling "the nail in the coffin" that ended his hope of saving the business.
  • Baltimore, Md. Baltimores redevelopment agency, the Baltimore Development Corp., is exercising eminent domain to acquire more than 2,000 properties in East Baltimore for a biotech park and new residences. BDC Executive Vice President Andrew B. Frank told the Daily Record the Kelo decision "is very good news. It means many of the projects on which weve been working for the last several years can continue."
  • Boston, Mass.: Two days after the Kelo decision, Boston City Council President Michael Flaherty called on the mayor of Boston to seize South Boston waterfront property from unwilling sellers for a private development project.
  • Richmond Heights, Mo.: City officials are taking bids to demolish 200 homes in the Hadley Township Neighborhood, just to turn the land over to a private developer who will build more homes.
  • Spring Valley, N.Y.: Less than a week after the Kelo decision, Spring Valley officials asked the New York Supreme Court to authorize the condemnation of 15 downtown properties in an area where a private developer plans to construct residential and retail buildings.
  • Ventor City, N.J.: Mayor Tim Kreischer wants to demolish 126 buildingsmom-and-pop shops, $200,000 homes, and apartmentsto erect luxury condos, high-end specialty stores, and a parking garage.

Public Opinion
The public is nearly unanimously against this most statewide polls show 90 plus percent of respondents against eminent domain to convey private property to other private properties. Even more telling the unscientific CNN poll showed that 2/3 of people thought government should never be allowed to seize property through eminent domain; only one percent believed the government should be allowed to seize property to give to other private parties.
In the home state of “kelo” (Connecticut) 89% of voters believe the state should pass laws limiting eminent domain. More than 60% of Connecticut voters disagreed with government’s use of eminent domain even for “public use” (http://www.quinnipiac.edu/x11385.xml?ReleaseID=821). The Washington Times warns of a “swift and dramatic backlash” against the ruling in kelo as several state legislatures have already passed laws curtailing eminent domain and many more are pending. (http://www.washingtontimes.com/op-ed/20050828-100444-1733r.htm)
If you don’t practice restraint the legislature will seize your eminent domain powers. This would cause many problems and hardships, but it would be necessary and preferable over the reckless abuse of citizen’s rights in the face of kelo. Cities and towns must prepare now for possible congressional legislation overturning the decision in kelo. Failing to prepare for this very real possibility could cost cities and towns billions in wasted monies on planned projects that were stopped by congressional legislation.

The concept of eminent domain has existed since the beginning of sovereignty. Much of what we hold true about eminent domain comes from the concept of common law.

Fla.: Riviera Beach Considers Eminent Domain Project

(April 28, 2006) --   Mayor Michael Brown hopes to send 6,000 of his city’s 31,000 residents packing in what would be the country largest eminent domain seizure.

The City of Riviera Beach, Fla., is at the center of the battle over whether government should be allowed to take property for private development. The $2.4 billion plan would buy up longtime resident’s homes and businesses near the town’s waterfront and sell them to private developers who would build pricey condominiums, houses, shops and yacht slips in their place.

Brown says it is necessary because Riviera Beach needs the money. The town is on the verge of bankruptcy and needs redevelopment if it is to thrive in wealthy Palm Beach County. Brown says the plan will bring prosperity to a city where a quarter of the residents live in poverty.

Viking Inlet Harbor Properties, a joint venture between Viking Yacht Co. and resort firm Portfolio Group, is developing the project. Viking CEO Robert Healy says it will bring in 1,500 higher paying jobs, up to 800 affordable homes and create a 400-student maritime vocational academy.

Some observers are appalled. "This land is very valuable and the attitude is, `Why should we waste this prime real estate on low-income people?"' says Dana Berliner, an attorney who represented Connecticut homeowners in the Supreme Court case last year that allowed such seizures. "It's a terrible thing."

Source: Dow Jones International News (04/28/06)

Companies that are able to compete in a fair and open market are more innovative and more economically viable then companies that chase after cheap government redevelopment programs.(Reason Foundation) As Daniel Kelly points out the “strategic holdout”(land owner intentionally not selling to stall plan or drive up price because he knows his property is the linchpin of a large new development) is actually a myth and that companies are actually much better served buying out large tracts of land using secret buying agents. Using municipalities to do the buyouts is much more risky because of the likelihood of a leak. Unless of course the municipalities use eminent domain to force seizures which is often the end result when companies go through cities and towns to buyout residents.

As use can see the question of how to use eminent domain fairly and effectively is the most pressing issue facing city planners and municipal employees today. To summarize the issues that can arise:
  1. Unjust compensation
  2. Support of Politically connected businesses over those with less efficacy.
  3. Discrimination
    1. Race
    2. Age
    3. Income

Economic Windfall or Downfall?
In Kelo v. New London the main argument by respondents is that the arrival of Pfizer into the city, bringing about higher tax revenue and more supposedly more jobs(most of these types of high tech workers live not and pay taxes not in New London but in the suburbs). Respondent assumes that this will automatically support the “public good” and thus fits what is currently Supreme Court precedent for eminent domain takings “public benefit”. They fail to recognize the problems the problems a new development may bring into their town. Higher tax revenues brought about by mega city planning projects are self perpetuating.
Huge developments=Higher expenses for infrastructure
Higher expenses=Need for higher revenue
New Infrastructure creates the need for more tax revenue which causes more city projects to be planned which necessitates more infrastructures to be built requiring more tax revenue. It seems that all urban renewal or city development projects do is keep city planners on salary.
This assumes that greater tax revenue necessarily provides for a net “public good”. By itself this is true. We know however that tax revenue is not the only variable in providing for the “public good” and that there are many other factors. We need to look at the stress in public resources that large companies bring proportional to the revenue they generate, the distrust in government and the breakdown of communities caused by private eminent domain seizures. Many properties seized through eminent domain for private developers do not provide enough revenue to compensate the investment the municipality makes in improving its infrastructure.
Also after cities have spent millions in infrastructure many businesses leave only years later when another city gives them a better deal. General Motors did just such a thing in Flint Michigan. After seizing hundreds of homes to build a car factory in Flint, GM left shortly after leaving 30,000 people out of work. This leaves the city still paying off the bonds for the construction of the infrastructure without the extra revenue. These new developments also put strain on already existing city services such as police, fire, water and connecting roads.
It is common for private developers to acquire land at well below market value (Kelly). Often times these developers rather than try to negotiate a fair price with landowners go directly to the municipality in order to have the land seized by eminent domain. In Mesa Arizona private developers had the city of Mesa seize the land and profitable business of Randall Bailey for a third of the actual value of the property. The difference in property value and “effective subsidy” to the developer would likely offset most of the tax revenue gain. The city was eventually rebuked by an Arizona court. (Reason Foundation)
Mayor Michael Brown proposed seizing the homes of nearly 20% of his city’s residents in Riveria Beach Florida (pop. 31,000) to build high priced condos. He says that the city his poor and needs money and this project will bring prosperity to the city. I suppose that is correct if you move out all the poor people your city won’t be poor anymore. This doesn’t actually solve the problem of poverty for his citizens it simply shifts the problem over to another municipality while filling the coffers of his cities treasury.
The goals of my recommendations are to end the abuse of eminent domain and to provide municipalities with useful ideas for implementing eminent domain in the case of a reversal of kelo. I will also provide some examples of how to properly word any new by-laws that may be required in order to implement my recommendations.
  1. End all eminent domain seizures transferring property from one private party to another immediately. Exceptions will be made for groups that have prior to Kelo and Midkiff v. Hawaii been determined to be acceptable to the “public use” clause. Examples of exempted businesses include, “common carriers”, hospitals, airports or natural monopolies (utilities). No takings of private property shall be for dwellings or the development of dwellings nor any building or business that is by statue closed to a majority of the public (except natural monopolies)
  2. The municipality shall regulate any private party that gains private land through eminent domain seizure, in such a manner including but not limited to user fees, accessibility see 1. regulate the future sale of the property. These regulations are intended to be above and beyond any normal regulatory power that the municipality has over similar businesses not acquired through the above means.
    1. Regarding regulation of future property sale: Municipality shall require reimbursement for any infrastructure costs incurred by the town above and beyond what would have been necessary under the property’s previous use, if the occupant relocates from location in less than 5 years (although longer time may be negotiated).
  3. In order for a seizure for a private entity to be lawful it must meet the requirements of sections 1 and 2 and also the taking must be necessitated by an urgent logistical need not in major part related to cost effectiveness and no other reasonable alternative must exist within such a proximity such as would provide similar utility as the aforementioned property.
  4. When the property in question to be seized is not being used for either business or residential purposes there are a number of alternatives to eminent domain seizure.
a. Developer may negotiate a price for the property with landowner.
This is preferable to the government negotiating with the land owner because it lessens the possibility that the land owner will find out about a big development project and become a “strategic holdout” in order raise the sell price well above market value.
b. The landowner can agree with the developer to rent or lease the property
for a period of time that they negotiate.
    1. The developer may offer the landowner a cut of the development deal in lieu of payment for the property.
    2. The landowner can have the developer purchase another plot of land to exchange for his plot of land.
5. If the property is being used either as a residence or place of business, it is still preferable that the developer attempt to negotiate a deal with the landowner first. If this fails the municipality should offer the landowner 120% of the value of their property as assessed by an independent group.

What is it about blighted a neighborhood that makes governments want to build high priced condos?
  • Negotiated PurchasesThe private parties may meet and contract a sale of the property in question without the intervention of any government agencies. 
  • LeasesThe private parties may meet and agree to a lease where the existing landowner rents the property to the other party without the intervention of any government agencies. 
  • Joint VenturesA joint venture provides the landowner the opportunity to make a greater profit by participating as a co-developer.  This can be completed without the intervention of any government agencies.
  • Land SwapsThe developer can purchase another property which the landowner expresses interest in and then swap the properties.  This can be completed without the intervention of any government agencies. 
The bill of rights grants protections of more freedoms for citizens then are actually written down. Therefore if there is doubt in the law whether or not the government is overstepping its bound and infringing on personal freedom the courts must always defer to personal freedom.

Glossary of Terms
Blighted: A Blighted area is legally defined as an area with numerous inadequacies in infrastructure or dangers such as fire hazards and lack of sanitation. An area can also be blighted if it the titles of a proportion of the properties have certain legal issues. The full legal definition is below.
"Blighted area" means an area within a municipal corporation, which area by reason of the presence of a substantial number of slums, deteriorated or deteriorating structures, predominance of defective or inadequate street layout, faulty lot layout in relation to size, adequacy, accessibility, or usefulness, unsanitary or unsafe conditions, deterioration of site or other improvements, diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land, defective or unusual conditions to title, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, substantially impairs or arrests the sound growth of a municipal corporation, retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use.” (Ohio Revised Code, per Title 7, General Assembly: 120, Bill Number: Amended Sub. S.B. 19, Effective Date: 7-22-94)

Municipality: “A city town or village.”(www.answers .com)

Public Use: Utilized for the good of the general public and or owned by the public. (Thomas)

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