Commentary - August 2005

Eminent Domain

Is Anyone’s Property Safe?

by Lyle Brennan

Fifth Amendment to the U.S. Constitution

Attorney Kermitt L. Waters

The city government of New London, Conn. faced a problem shared by many cities: residents and businesses were fleeing to the suburbs, a nearby government installation had closed and the city’s tax base was eroding. The city’s solution was to create a master plan for urban renewal that included converting a neighborhood community into an office complex, retail shops and a waterfront park. So far, so good. However, several property owners in the neighborhood, including the Kelo family, didn’t want to sell, so the city used a state law entitling it to claim "eminent domain" and take over their homes anyway. The residents being displaced argued that the city didn’t have the right to take their land except for projects with a clear public use, such as roads or schools, or to revitalize blighted areas, and their neighborhood could in no way be called blighted.

The case eventually made its way to the U.S. Supreme Court, which decided in favor of the city. Its controversial, 5-to-4 ruling in Kelo v. New London caused an outcry all across the country – and justifiably so. A complete transcript of the decision, including dissenting arguments, can be found on supremecourtus.gov/opinions/opinions.html. It makes for very interesting reading, especially as it reviews the history of the court’s decisions in eminent domain cases. The Kelo case is only the latest in a series of decisions that have gradually chipped away at our Fifth Amendment protections without most of us realizing what was happening.

Dissenting Opinions

Timothy Sandefur, an attorney with the Pacific Legal Foundation, recapped it this way: "In a series of decisions in the 1930s, the Supreme Court relegated economic freedom and property rights to second-class status, giving its blessing to laws that took property from hardworking Americans to run constantly expanding welfare programs.

Not long after that, it decided in the infamous case of Berman v. Parker that government could clear slum areas by condemning property and reselling it to private developers. The Court’s rationale was that anything that benefits the public in any way qualifies as a ‘public use.’ In the years that followed Berman, poor inner city neighborhoods were demolished under the euphemism of ‘urban renewal.’ In 1981, Detroit, Mich. seized an entire working-class neighborhood and gave it to General Motors to build an auto factory.

Between 1998 and 2003, there were 10,000 reported cases nationwide of eminent domain being used, or threatened, for the benefit of private developers. All in the name of ‘public use.’"

The court’s version of this follows: "The disposition of this case therefore turns on the question whether the City’s development plan serves a ‘public purpose.’ Without exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field." It proceeds to give details of the Berman case, which was filed by a department store owner whose property was not blighted, but was taken away because it fell within the boundaries of an area slated for urban renewal. The court continues, "In Hawaii Housing Authority v. Midkiff (1984), the Court considered a Hawaii statute whereby fee title was taken from lessors and transferred to lessees (for just compensation) in order to reduce the concentration of land ownership. We concluded that the State’s purpose of eliminating the ‘social and economic evils of a land oligopoly’ qualified as a valid public use."

In the Kelo case, the opinion continues, "The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including – but by no means limited to – new jobs and increased tax revenue. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment."

In the dissenting opinion, written by Sandra Day O’Connor, the four justices who disagreed with the ruling warned, "Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded – i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public – in the process. The Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public – such as increased tax revenue, more jobs, maybe even aesthetic pleasure.

"For who among us can say she already makes the most productive or attractive possible use of her property? The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

Nevada Congressman Jim Gibbons issued the following statement: "This is one of the most egregious rulings in the history of the U.S. Supreme Court. This country was founded on the rights of individuals, and this ruling replaces individual rights with more government power. Public use has never before been defined to include private resorts or office complexes. Because of this ruling, every homeowner in every neighborhood could be uprooted simply because a developer offers local officials a ‘better deal.’"

"This is a clear blow to private property rights," said Congressman Chris Cannon of Utah, chairman of the Congressional Western Caucus. "The Supreme Court has shown, once again, that it has lost its moorings to the Constitution. …If commercial development now meets the definition of ‘public use,’ no private property is safe from government hands."

Congressman Richard Pombo of California, chair of the House Resources Committee, agreed, stating, "Today’s decision is reflective of the unlimited appetite of government and yet another notice that we must always be on guard against it."

What’s Ahead for Nevada?

The Supreme Court’s decision will have far-reaching impact on Nevada. First of all, it should make us re-examine our state laws concerning eminent domain. The 2005 Legislature passed two bills restricting use of eminent domain. Assembly Bill 143 added new requirements that local governments must satisfy before condemning private property for redevelopment: two-thirds of a redevelopment area slated for seizure must be declared "blighted" and the government must also show that four out of 15 possible factors exist to prove the area is blighted. However, more could be done to shore up our rights.

The issue may actually come up before the 2007 legislative session, if Kermitt Waters has his way. Southern Nevadans may remember the long court battle that took place between the Pappas family and the Fremont Street Experience, which condemned the family’s downtown property in order to build a parking garage for the redevelopment project. Waters, an attorney whose firm defended the Pappas family, is leading a movement to put a "property owners bill of rights" on the ballot for the general election in 2006, declaring, "We have to put this monster back in its cage."

Another thing to consider is the importance of supporting judicial nominees who will uphold property rights. As changes take place on the Supreme Court, other factors should be considered besides a candidate’s position on Roe v. Wade or other political litmus tests. This case should underline the importance of appointing judges who will support property rights.

This is only the latest decision in a consistent trend by activist judges to erode the rights of U.S. citizens established by the Constitution. Make no mistake – even if you don’t own property, the ramifications of this decision will resonate throughout our society and strip yet another layer of the freedom guaranteed by our forefathers.

And Justice for All

Freestar Media Group, a limited liability corporation, notified the City of Weare, New Hampshire that it intends to build a hotel on land currently owned by Supreme Court Justice David H. Souter. "A recent Supreme Court decision, Kelo vs. New London, clears the way for this land to be taken by the Government of Weare through eminent domain and given to my LLC for the purposes of building a hotel," declared a tongue-in-cheek letter sent to the city’s code enforcement officer. The letter explained, "The justification for such an eminent domain action is that our hotel will better serve the public interest, as it will bring in economic development and higher tax revenue to Weare."

According to a press release sent out by Freestar, "The proposed development, called ‘The Lost Liberty Hotel,’ will feature the ‘Just Desserts Café’ and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon’s Bible, each guest will receive a free copy of Ayn Rand’s novel, Atlas Shrugged." Clements explained the hotel must be built on this particular piece of land because it is a unique site – the home of someone largely responsible for destroying property rights for all Americans.

Lyle Brennan Publisher
COMMENTS? email: lyle@nbj.com