Wednesday, December 7, 2005

Sandefur on Post-Kelo Backlash

Timothy Sandefur (Pacific Legal Foundation) has posted The “Backlash” So Far: Will Citizens Get Meaningful Eminent Domain Reform? on SSRN.  Here's the abstract:

The Supreme Court’s decision in the eminent domain case of Kelo v. New London was greeted with anger and frustration. The public outcry reaction came to be called the “Kelo backlash,” and news reports and editorials declared throughout the fall of 2005 that this backlash was leading to statutory reforms in many state legislatures. Following Justice Stevens’ suggestion in the Kelo opinion that states could provide greater protection for property owners than the federal courts provided, and recognizing that some state courts had imposed stricter limits on eminent domain through the “public use” requirements in state constitutions, activists and legislators in 38 states began working on changing state laws regarding property seizure.

So far, the backlash has produced few results. Largely because most state legislatures have been in recess since shortly after the Kelo decision was announced, only four states have passed legislation regarding eminent domain. Unfortunately, those four provide little protection for property owners. Proposals in other states, including two brought forward in the California Legislature, even appear to have been consciously designed to effect no meaningful change. On the other hand, a bill recently passed by the Pennsylvania House of Representatives and now pending before the state Senate, as well as federal legislation which appears likely to be enacted into law, do include significant limits on eminent domain. These bills give reason to hope that meaningful reform is on the horizon once other state legislatures return from winter recess. But proponents of these measures must resist the pressure to include loopholes and exceptions that have so severely weakened the four new reform laws
In this article, I survey these four new laws, as well as three proposals that were shot down by the legislature of California, to see how they promise far more than they actually deliver. I will also examine bills recently passed by the Pennsylvania Legislature, and by the United States House of Representatives, which, if enacted, would provide genuine protection for property owners. After a brief background on the law of eminent domain after Kelo, and the public reactions to that decision, I explore each bill in sequence. I then conclude with some observations as to the two biggest obstacles faced by those hoping for serious eminent domain reform: the political influence of powerful redevelopment proponents, and the lack of serious philosophical support for opposition to the outcome of Kelo.

There is some discussion of Sandefur's argument at both the Volokh Conspiracy and BizzyBlog, though the comments at the VC suggest that there was some initial misunderstanding of Sandefur's key points, which were first made in a post on Positive Liberty.

Those interested in the subject might also be interested in these other posts:  Is Justice Stevens a Vulcan?; A Tale of Two Blight Statutes; Resources on the Legislative Response to Kelo; and my posts on the Berman v. Parker and Hawaii Housing Authority v. Midkiff conference notes.

UPDATE:  Todd Zywicki has more on related topics here and here.

Ben Barros

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I have a general question for the IJ/Pacific Legal folk: Those of us who are urban planners know that one of the great impediments to meaningful urban redevelopment is the collective action problem involved in site assembly. If these restrictions on municipal use of eminent domain you recommend pass, how do you propose to solve the "Holdout" problem in site assembly? Or, do you reject totally Kelo's holding that: "Promoting economic development is a traditional and long accepted function of government."?

Posted by: Kurt Paulsen | Dec 10, 2005 7:25:39 AM

My general comment on the so-called holdout problem is that there is not one single way that development will occur. It will take more individualized solutions that take into account local conditions and owners. John Norquist's amicus brief in Kelo goes through a whole bunch of different methods for property acquisition, including making existing owners partners, offering bonuses for communities who can create a package deal of all properties (voluntarily), and buying under the radar.

Often the sticking point is not money but some other factor, like finding a handicap accessible house or one on a bus route, etc. This will take more work on the part of the developer to actually do what it takes to make the seller happy, but it's not insurmountable. For businesses, one of the major problems that I have seen is cities' refusal to allow businesses to reopen with the same permits if they have grandfathered zoning. Many businesses have to refuse to move because they will never be able to reopen. Instead, cities will have to actually allow people to open their businesses again under the same conditions as their existing business. In general, permitting and various other bureaucratic processes can discourage development substantially. Streamlining these or making zoning and permitting more flexible can also help. In many of the communities that I have seen using eminent domain, the city also refused for years to allow even modest business expansion of local businesses.

Other methods include using infill development more, selling off city-owned land or using homesteading-type programs for empty or abandoned property. Of course, for properties that are dilapidated or tax delinquent, there are existing methods for addressing those issues. Building around properties that don't want to sell is often a very viable option. In many of the projects that I have seen, the person who did not want to move was not truly necessary for the project. In New London, for example, the plans do not call for anything being built on the site of those homes for the foreseeable future. In addition, the owners expressed interest early on in being moved, together, to the residential part of the project area. The city wasn't interested.

Having said all of that about different methods for development, I would add I very much believe that eminent domain should not be used for private development and rather obviously disagree with Justice Stevens on this point.

Posted by: Dana Berliner | Dec 12, 2005 6:08:53 PM

The holdout problem is only "so-called"?! I guess I expected libertarians to make such an argument. But, what is the purpose of using eminent domain for urban redevelopment if not to solve the holdout problem. I think the IJ position is extreme: it would give any one propoerty owner essentially veto power over economic development projects. How would one propose to do urban redevelopment without at least the possibility of eminent domain to solve the holdout problem in site assembly. Cities face increasing service needs and declining tax bases. Without real-estate based urban redevelopment (call it "economic development") I don't see how cities can thrive. Are the IJ folks willing to consider regional tax base sharing and an infusion revenues into cities if they would prohibit redevelopment? Surely there are abuses in eminent domain: this calls for better compensation and better procedures and making sure that redevelopment proceed according to a carefully formulated, public-planning redevelopment plan. But absent redevelopment, how can cities thrive? Does the ownership of property confer such absolute rights on owners that one homeowner can veto redevelopment which would benefit the public welfare?

Posted by: Kurt Paulsen | Dec 18, 2005 11:18:26 AM

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