Monday, October 31, 2005

Just Compensation: Jurors v. Judges?

Todd Zywicki:
"A reader sends along this article reporting on a $7.7 million judgment awarded to a small business owner in San Diego whose property was condemned in order to make way for a new luxury hotel. The article implies that this was an unexpectedly high award. His lawyer 'called the verdict a 'home run' ... and important for other property owners.' The city had offered $3 million before trial. The city has not announced whether it will appeal.

Given the public choice and other political failures that are endemic to use of the eminent domain power for the benefit of private interests, and the unwillingness of the Supreme Court to do anything about it, it will be interesting to see if verdicts like this signify a beginning for jurors to step up and become more vigilant in ensuring that private property owners are being fully compensated for Kelo-style takings. If so, that would be an interesting and heartening development."
This seems an important area for discussion and analysis. As I've noted in other posts, it seems government not only uses its power of eminent domain to take property, but it also threatens the use of its eminent domain power, perhaps in an effort to get owners to sell out. I suspect owners often see the compensation awarded as "just" by the courts as significantly less than just.

Tuesday, October 25, 2005

New London & Pfizer

Todd Zywicki has some interesting info on New London, the Kelo opinion, and Pfizer:
"The records — obtained by The Day through the state Freedom of Information Act — show that, at least as early as the fall of 1997, Pfizer executives and state economic development officials were discussing the company's plans, not just for a new research facility but for the surrounding neighborhood as well.

And, after several requests, the state Department of Economic and Community Development produced a document that both the state and Pfizer had at first said did not exist: A 1997 sketch, prepared by CUH2A, Pfizer's design firm for its new facility. Labeled as a “vision statement,” it suggested various ways the existing neighborhood and nearby vacant Navy facility could be replaced with a “high end residential district,” offices and retail businesses, expanded parking and a marina.

Those interactions took place months before Pfizer announced that it would build in the city, on the site of the former New London Mills linoleum factory, and months before the New London Development Corp. announced its redevelopment plans for the neighborhood and the former Naval Undersea Warfare Center next door.

As I have noted, a particular understanding of the facts in the case and the governmental processes behind it seems to underpin Justice Stevens's opinion in the case. His belief that judicial enforcement of the 'public use' clause is unnecessary seems to be rooted in the notion that local democratic processes will be transparent and participatory in discerning the 'public good' in these matters. In fact, it seems clear that Pfizer had the taking of individual's house 'wired' from the outset and that there was little that could be done to change this.
The local democratic process may not be well understood by Justice Stevens.

On the other hand Pfizer claims Zywicki's assertions are incorrect:
""Letters To The Editor: Your story 'Pfizer's fingerprints on Fort Trumbull plan,' published Oct. 16, simply recycles a well-worn, untrue myth - that our company's decision to invest here was conditional on the replacement of the surrounding neighborhood.

That charge is unjustified and plain wrong. The documents and conversations you report show that, in 1997, the state and city asked Pfizer executives for ideas on how our arrival might impact Fort Trumbull.

At that time, we believed our $300-million investment and 1,500 new employees would act as magnets - drawing many others to this area.

Our architects shared our optimism and their diagram includes ideas about how our new neighborhood might evolve if we built here. We had optimism and ideas, but we had only two demands. First, we wanted the next-door sewage plant capped to reduce odor. Second, we wanted the restoration of the long-abandoned and derelict Revolutionary war fort. Both conditions were met and brought considerable benefit to the city."

Friday, October 21, 2005

Monterey Park Eminent Domain

The city of Monterey Park is considering using the power of eminent domain for a redevelopment project.
"Eng and other council members cited financial figures to make their case for the public benefits of the project:

- The development would create $26 million in taxes for the city over 33 years.

- More than 400 jobs would be created.

- More than $200,000 in annual property taxes would be created by the project.

- Kam Sang would have to pay $200,000 into a fund for city parks.

While discussion on the matter went late into the night, at least one council member expressed doubt that the property at 608 N. Atlantic is truly blighted.

Councilwoman Betty Tom Chu said that when she inspected the property it did not appear visibly blighted to her.

City Manager Chris Jeffers said blight could also be defined by the low economic performance of the property.

Of the eight businesses housed in the three commercial buildings, four have already reached a settlement with Kam Sang and the city. Happy Family Restaurant II at 608 N. Atlantic is close to reaching a deal, according to the restaurant owner's attorney." [Jason Kosareff, "Eminent Domain Vote Stalled: Monterey Park Considers Condemning Buildings," San Gabriel Valley Tribune, Oct 21, 2005]
The project in question would appear to have to use eminent domain to take 3 commercial properties. It appears the project would be the work of one corporation, and the plan is to "redevelop" by replacing the current property owners with the corporation's 200,000 square feet of retail, 200 condos, and a 14-screen theater.

The benefits that would be enjoyed by the use of government's eminent domain power seem of questionable value from an economic point of view. Note that two of the items on the list are tax revenues. I suppose local politicians and local government bureaucrats may well see more taxes as a benefit. After all, more taxes means more money to spend. Of course, the source of the tax revenues will be the community's taxpayers. From the perspective of the taxpayers, tax payments are always a cost.

The fact that politicians and bureacrats spend the taxes paid does not create a benefit. Economic analysis is that taxes are always a transfer from one person, through the "middle-man" which is government, to be spent on another person. So, the power of eminent domain would be used in this case to take private property from one person, only to then be transferred to another person, and this for the asserted "benefit" of taking tax money from some in the community to transfer it to others in the community. No economic benefits here.

Another one of the benefits is said to be that "more than 400 jobs will be created." First, note that it is not said that this is the number of net "new" jobs. The property which is taken is devoted to commercial activity by those who own the property. There are probably jobs associated with the commercial activity. But, there is a more significant point suggested by economic analysis. In general, "job" describes a situation where an employee is hired by an employer to engage in some productive activity. The means that the employee cannot be used in other potential productive activities in the community. The employee is a productive resource that could have been used in other productive activities, and this suggests the economic concept of "opportunity cost" is relevant. The point is that a job, from an economic point of view, represents a cost, which is the value of other goods and services forgone. If the 'job" involves the employment of a worker that would otherwise be unemployed in any productive economic activity, then, and only then, would the job be an economic benefit from the perspective of the community. It is quite unlikely that the 400 jobs listed here as a benefit would actually employer workers who woulde otherwise not be employed. This looks like another cost.

Often those in local government who promote economic development policies offer justifications that sound like the economic concept of positive externality. Specifically, there is a loosely argued suggestion, in general, that jobs benefit the community in general. But, this does not represent a positive externality, and these jobs do not benefit people in the community in general. Most people have jobs in the community. The 400 people who take the "new" jobs, will undoubtedly be better off, but they will be the only people in the community to enjoy a benefit for the jobs. The proponents of such city government economic development activities try to make it seem that everyone in the community benefits, but this simply is incorrect.

In summary, city government in Monterey Park appears to be considering using the power of eminent domain to take property from the lawful owners to turn it over to other private property owners. This taking is justified by incorrect assertions of community benefits in the form of greater taxes and greater "jobs." The economic truth is this taking is being justified by its proponents by calling true economic costs benefits.

It is bad enough to note this for one town, but the reality seems to be, that the same sorts of reasons are typically given when local government uses eminent domain for "redevelopment."

Wednesday, October 19, 2005

Eminent Domain Coercion?

Samuel Gregg:
"By expanding the concept of eminent domain to embrace the notion of “economic development,” Kelo overrides all these limitations. First, the public use requirement is rendered meaningless. In the name of what it decides constitutes “economic development,” local government can transfer one piece of property from one private person or business to another private person or business.

Second, it suggests that the basic justification of ownership is no longer found in the fact of legitimate possession, but rather in which private individual or business is deemed more likely by local government to use the property in economically productive ways.

And here we find potential for very disturbing developments. St. Thomas Aquinas once wrote that private property was a great bulwark against undue expansion of state authority, precisely because my ownership of a property means that I, rather than government officials, make most of the decisions about how to use it. Kelo’s expansion of eminent domain undermines this very basic protection against excessive government power.

Worse, it creates tremendous incentives for businesses seeking to expand their holdings to disdain the normal methods of acquiring another’s property, such as offering to buy it from the owner. Instead they can aggressively lobby local government officials to invoke eminent domain and use the state to take another’s property for their own use. Such behavior is as much an instance of corporate welfare as tariffs and subsidies. Moreover, like all forms of corporate welfare, it is a recipe for corruption."
This last paragraph seems to be supported by the practice of local governments to THREATEN the use of eminent domain before much of an effort has ever been made to acquire property through the normal process of market exchange.

Misguided Government in Boynton Beach

Boynton Beach City commissioners approved an agreement Tuesday with the Community Redevelopment Agency to take more than a dozen properties in the Heart of Boynton neighborhood through eminent domain. . . .

Rev. Eddie Evans, of the Jesus House of Worship church on Seacrest Boulevard, offered an emotional plea for his property. "My concern is, if you demand that I go from there, where am I going to go?" Evans said. . . .


City officials have been working to revitalize the Heart of Boynton neighborhood for years. The properties along Martin Luther King Jr. and Seacrest boulevards are the first phase of their plan.After the CRA gathers all the properties, it will offer them to developers to build new homes and businesses.

Many of the buildings and empty lots that make up the area serve as gathering places for drug dealers and other criminals, city officials and residents say. "If we do not go forward with this plan, the situation that this community has been living with will continue," said Quintus Greene, the city's director of development.


It’s curious that the justification for taking the properties is that doing so will rid the neighborhood of drug and criminal activity resulting from the availability of abandoned buildings. Yet it is not only the abandoned buildings being taken, it is also the Jesus House of Worship church. I’m pretty confident the church doesn’t serve as stomping ground for drug and criminal activity.

I think the Boynton Beach government has confused its role here. Their role is not to centrally plan the economy. If the neighborhood is plagued with criminal activity, it is the role of government to catch those criminals and hold them accountable for their crimes. Simply taking over the neighborhood and redeveloping it to cater to a more affluent group only serves to displace those individuals engaged in criminal activity. Redeveloping the neighborhood does not kill the criminals or turn them into law abiding citizens; it merely provides incentive for the criminals to move the location of their activities elsewhere.

Then what? Invoke the power of eminent domain again?

Tuesday, October 18, 2005

New London v. New London Development Corp.

"The city council has voted to sever ties with the quasi-public development authority at the center of a national debate over eminent domain powers.

The council voted 6-0 Monday night to revoke the designation of the New London Development Corp. as the city's 'implementing agency' for its Fort Trumbull development. The agency has guided the $73 million state-funded project since its inception in 1998."

This is very interesting. I wonder if this ends the threat of eminent domain for now? Can a "development corporation" have the power of eminent domain when the local government withdraws its endorsement?

But the development corporation angered state and local officials by sending orders to vacate to five Fort Trumbull residents living on the property that the developer wants for a hotel and office space.

State officials had asked municipalities to hold off on property seizures until the legislature considers changing the state's eminent domain laws.

City officials asked the development authorities' two leaders to resign, but they declined. They did rescind the orders to vacate under pressure from Gov. M. Jodi Rell.
It seems many people may not like the way government has come to use its power of eminent domain. Perhaps there is something good to come from political pressure.

The council also voted Monday to demand the agency transfer title to all its real estate in the project area to the city of New London. That includes the former Naval Undersea Warfare Center at Fort Trumbull, which was transferred by the U.S. government to the development authority, not the city.
I wonder if this demand will be met? I wonder if the development corporation was created by local government?

Saturday, October 15, 2005

Oregon Limits Overturned

"A judge on Friday overturned a voter-passed property compensation law as unconstitutional.

[ . . . .]

The law, passed as Measure 37 on the November 2004 ballot, requires that state and local governments either compensate land owners when regulations lower property values or waive the rules.

James said the statute violates equal protection provisions of the Oregon Constitution and a state constitutional ban on suspending laws.

She also ruled it breaches the separation of powers between government branches, 'intrudes on' legislative authority and violates due process protections under the U.S. Constitution.

Foes of the law argued that it violates the 'equal privileges and immunities' provisions of the state constitution because it gives benefits to people who buy their land before regulations were applied but not to those who purchase property later." [Charles E. Beggs, "Voter-Passed Measure 37 Law is Overturned," KATU News, October 14, 2005]

This is interesting. It seems to me, in general, that it should be possible to constrain government from making regulations that diminish property values, and that telling government it can only make such regulations if it compensates for the harm it causes is a pretty nice way of constraining government. On the other hand, there are cases, in theory, when regulations regarding the use of property might honestly be aimed at preventing harm to the person or property of others. In these cases, even if property value is decreased, government should not be required to compensate the property owner.

But consider the idea that the law which was overturned "gives benefits to people who buy their land before regulations were applied but not to those who purchase property later." Doesn't this make you think of Alice in Wonderland?

When regulations lead to decreased property values, those who buy post-regulation are buying at the lower prices. There surely is no need to compensate buyers post-regulation. Buyers post-regulation know that the range of uses for the property they purchase has been specifically limited or constrained by the government's regulations.

But this is not at all the situation faced by the property owner who has new land use regulations imposed. Under the new regulations, if property value is diminished, then the property owner at the time the regulations are imposed is clearly a loser. It simply is not fair to expect the owner at the time the regulation is imposed to bear the cost of actions taken in the name of the entire community. The proposed compensation requirement would remedy this unfairness or injustice. By requiring government to compensate you will be requiring people in community in general to pay for the actions government takes in the name of the entire community.

Baseball stadium pushes landowners out

In December 2004 MLB teamed up with DC to finance a $535 million publicly financed 41,000 seat baseball stadium to allow the former Expos, now the Nationals, to move to DC. The team currently plays at RFK stadium. To move into their new stadium by opening day 2008, eminent domain will take property from 23 landowners.

The city made offers to all 23 landowners on the site last month but received no response from 10.

"We think there are some that we'll have good-faith negotiations with," said Steve Green, director of development in the office of the Deputy Mayor for Planning and Economic Development. "There are some we haven't heard from at all."

Many property owners on the site said the city's offers are inadequate. Others are suing the city on the grounds that it has no right to use eminent domain to acquire land at the site, despite a Supreme Court ruling affirming the right of municipal governments to take private property for the purpose of economic development.


I just can't imagine the Founding Fathers standing here today saying, Yes, of course, to use the power of eminent domain to construct a baseball stadiumm is perfectly acceptable because it will encourage economic development. I think they would be appalled at the behavior of government. A baseball stadium is not for public use. It's for private use.

Futhermorere, if the best use of that land was to turn it into a baseball stadium, then is there some reason to suspect that private industry would not do it on its own? If moving the stadiumim to DC is such a great economic move, why would we not expect someone to realize the profits that could be made and build it themselves? Because real business people know that purchasing the land necessary to build the stadium would be outrageously expensive, like the building of the stadium itself. Government doesn't have to worry about those trivialities though.

Stockbridge, GA Urban Redevelopment

"The state Senate's Eminent Domain Study Committee headed by Sen. Jeff Chapman (R-Brunswick) got a tough welcome Friday from Stockbridge City Manager Ted Strickland.

Chapman brought the committee to town for its latest public hearing because Stockbridge has become the epicenter of the fight over using eminent domain — condemning property — in Georgia.

The city, like many around metro Atlanta, is hoping to create a new, vibrant downtown that will attract a second wave of development. City leaders envision new shops, offices and residents in houses and townhomes on 22 acres that the city and the city Urban Redevelopment Agency are purchasing or condemning.

That is what attracted the ire of residents and state politicians —condemning the property of others to sell to private developers.

Strickland told committee members that several of them who visited a City Council meeting in September made 'disparaging remarks' and used 'outrageous rhetoric' when they commented publicly about Stockbridge's plans.

'It is wrong for outside interests to tell the City Council what they should do to help our community thrive and prosper,' Strickland said."
What does Strickland mean by "outside interests?" Isn't it the case that local governments get their governmental power through the state government? If so, then it would seem that members of the state legislature are not really outside interests.

"He said the city had worked hard for more than five years to bring new prosperity, which many residents support, and asked the committee members, 'Should one property owner prevent the redevelopment of downtown, which would benefit thousands?'

Shannon Goessling, a lawyer for the Southeastern Legal Foundation who is representing one of the Stockbridge condemnees, answered the question when she addressed the committee.

'Yes,' she said. If her clients Mark and Regina Meeks don't want to sell their flower shop, they shouldn't have to, she said. 'We don't need our government to be entrepreneurs and interested in financial gain,' she said.

The power to condemn should be used only for public projects like roads and schools and only as a tool of last resort, she argued."
It seems to me that the number benefitted (thousands) is not quite the correct criterion. Thousands could benefit and benefit privately. The redevelopment discussed here seems to involve private businesses, etc. On the other hand, roads do seem to benefit many, perhaps even most, in a community. The criterion that should be used is one that means people in the community share in what city government provides after the use of the power of eminent domain. If the property that is taken turns out to be put to actual public use, e.g., city streets, then it seems to me the relevant criterion would be met.

Eminent domain fight in Bayonne?

"Bayonne may use its power of eminent domain to take title to a downtown parcel that has been approved for condo development and put a 'pee-wee' soccer field there." [Ronald Leir, "Eminent domain fight in Bayonne?" The Jersey Journal, October 15, 2005]
When many talk about the need for cities to have the power of eminent domain, the illustrations of the sorts of projects for which the power should be used typically mention roads and highways. I don't remember pee-wee soccer fields being suggested very often. I wonder which use is more highly valued, soccer field or condo development? Is there any reason to think that private decisions won't answer this question? Why not let the city bid against condo development to see if the city "thinks" the best economic use for the land is as soccer fields?

Friday, October 14, 2005

Bad Half - Good Half

Some Pennsylvania lawmakers say they want to limit the power of eminent domain.
"Ms. Kelo's pink cottage in New London was doomed after the U.S. Supreme Court ruled in June that government can force owners to sell their property to make way for private businesses that generate more taxes.

Lawmakers want to ensure Pennsylvanians' properties are protected from a similar fate.

'The idea that one taxpayer's property can be taken by government and turned over to another private person for non-governmental purposes is outrageous,' said state Sen. Jeffrey E. Piccola, R-Dauphin.

He is sponsoring legislation to restrict municipalities' rights to take property by eminent domain. Similar legislation by Rep. Thomas Yewcic, D-Cambria, is in committee.

At least 35 other states are considering similar bills.

Stumping for Mr. Piccola's bill yesterday were Sens. John C. Rafferty Jr., R-Montgomery, and Patricia H. Vance, R-Cumberland; and Rep. Glen R. Grell, R-Cumberland, who is introducing identical legislation in the House.

Under their plan, municipalities could seize property under certain circumstances -- for example, to remove blighted structures that are beyond repair and unfit for habitation or use. Municipalities also could take unoccupied properties that have been tax delinquent for more than two years, have been abandoned by their owners or have liens totaling more than 150 percent of fair market value. Municipalities could condemn an entire area if more than half of the properties within it are eligible for seizure." [Tracie Mauriello, "Legislators aim to put limits on uses of eminent domain, Pittsburgh Post-Gazette, October 14, 2005]
I don't understand the last part. Why should city government be able to condemn "an entire area" just because 1/2 the area is "eligible for seizure?" Perhaps, there is a good half and a bad half. Why should the government be able to take the good half simply because someone figured out a way to define an area so that more that 1/2 of it is eligible to be condemned?

Stratford Says Yes to Eminent Domain for Economic Development

The Town Council in Stratford (Conn.?) defeated : a proposed ordinance to ban the use of eminent domain for economic development.
"Fearing it might stop development in Stratford, the Town Council said no to the eminent domain ordinance Tuesday.
The ordinance, which would have banned the town from condemning private property by eminent domain for economic development purposes, died in a 5-4 vote. Although it received five votes, it needed six for approval.

[ . . . . ]

Town Council Chairman Joe Crudo, R-at-Large, who cast the last no vote to defeat it, called the ordinance shortsighted.

It doesnt allow development for the benefit of all citizens, said Crudo, whose final vote killed the ordinance." [Deanna Holgerson, "Eminent domain ordinance fails," Stratford Star, October 13, 2005]
I'm at a loss to understand Chairman Crudo's assertion regarding "for the benefit of all citizens." The policy controversy involves taking private property from one person just to have the property owned privately by another person. Since the original owner did not agree to terms for such a property exchange, the implication is that at least the original property owner is not enjoying a benefit. Clearly not ALL BENEFIT when the power of eminent domain is used in such cases.

But, it is not even clear that most in the community will benefit. If economic development polices of local governments are to be expected to provide "benefits for all," or even benefits for most, then it should be the case that there is some source of market failure, or some economic reason to believe that market incentives do not adequately provide for private actions to voluntarily advance economic prosperity. The sorts of reasons typically given in support of local government policies in the name of economic development do frequently sound like the market failure of positive externality is present, but my conclusion has been that in general such assertions are incorrect.

Thursday, October 13, 2005

Age

"Anna DeFaria’s 21/2-year battle with the city of Long Branch came to a climax a week ago.

That was when she received a letter giving her two weeks to negotiate the sale of her longtime home or lose it through eminent domain proceedings.

“When I read the letter I was devastated,” said DeFaria, Marine Terrace.

“I am 80 years old and a widow. Where do you go if they take your home away?”

DeFaria has lived in her oceanfront home for 45 years and raised her four children in the house.

“It was my first home, and my family loved it here,” she said.

“I feel safe and secure here. I thought I would stay here until I died.”

Rose LaRosa, DeFaria’s neighbor in the three-street zone slated to be bulldozed and redeveloped as upscale housing, described the moment she received a similar “14-day letter” as “dreadful.”"
Is there an age factor in the use of eminent domain?

Wednesday, October 12, 2005

450 New Parking Spaces

"Greensburg Council authorized its solicitor Monday to use condemnation and eminent domain powers if necessary to acquire land for more downtown parking.

After last night's meeting, Solicitor Tim McCormick described property negotiations so far as cordial. But he said he wanted to have council's endorsement to use condemnation or eminent domain if needed.

In September, council approved spending up to $1.9 million to buy properties to create 450 new parking spaces.

Parking is a greater concern because of the anticipated opening next year of a new state office building on North Main Street, about a block from the Westmoreland County Courthouse. At times, especially when the courts are in session, finding parking can be difficult near the courthouse." [Bob Stiles, "Greensburg solicitor granted eminent domain power," Tribune-Review, October 11, 2005]
I'm not sure why we want government to have the power to take property for new downtown parking spaces. If parking really is scarce, why wouldn't we expect private property owners to see potential profit in parking spaces? I see no reason to expect any of the traditional market failures of economics to be relevant in this case. Government may be seeking greater revenue from renting parking spaces. But I wouldn't want to consider this to fall within the "public use" constraint to the eminent domain power. Each of the parking spaces is rented by an individual, and not one of the parking spaces can be shared by all the people who make up "the public."

We're Ready To Go Homepage

In one community under the eminent domain gun of a city government there is apparently a webpage maintained by a group of property owners supporting the project and buyout of their property. There is also an opposition group. At the webpage you can find:

During the past year and more, Westfield has funded a juggernaut of professional service firms whose mission is to stop the Main Street at Sunset development in Sunset Hills. Most of the families in Sunset Manor (229 of 254 families) support the Novus buy-out and are ready to go. Instead, we are held hostage by others … mostly outsiders, who are not from the neighborhood … who have formed the “Stop the Land Grab” opposition group. They are funded by Westfield.
I wonder what "held hostage" by outsiders means? Is this one of the dimensions of the "hold-out problem" justification for giving government the power of eminent domain?

Tuesday, October 11, 2005

St. Louis Shopping Center

From the Washington Times:
"Jim Seelbach, 83, lives in a suburb of St. Louis and he is about to lose his home of 20 years. The city wants it to make way for a shopping center.

Mr. Seelbach and several dozen neighbors in the city of Sunset Hills face an eminent-domain order that could seize their properties to develop the $160 million complex filled with stores and offices.

Even if he were amenable to moving, he says the money offered for his home would make it impossible to find similar housing.

Mr. Seelbach has refused to accept the $118,000 offered for his two-bedroom, one-bath frame dwelling in the Sunset Manor subdivision near St. Louis.

'I can't find another home for $118,000, and at 83, there's no way I can even obtain a mortgage,' he says.

Likewise, his neighbor, John N. Hogan, 79, a Korean War veteran who has lived in his house for nearly 50 years, doesn't want to move and doesn't think he has a fair offer for it.

'They want to take my three-bedroom, two-bath redwood home for $147,000. But I can't buy anything in this area for $147,000,' he says.
"
Doesn't this set of circumstances suggest that the "just compensation" required by the 5th Amendment may turn out, once in the hands of government and the courts, to be something less than just? These 2 gentlemen seems to believe they are living well, at least compared to their alternatives, and the city wants to take the property with "just compensation" and leave them in diminished economic circumstances. Why not simply require the city to increase their offer, like any of us would have to do to obtain the property, until the gentlemen agree to sell and move?

Now consider:

"Don Borut, executive director of the National League of Cities, says there is some uncertainty about how often the taking of private land for private use occurs.

"We don't know how often this happens. We want to see how this is being used and how often. ... Where there have been abuses, they need to be addressed," says Mr. Borut, whose organization says the practice can be beneficial.

A report by the Institute for Justice, however, suggests it is more common than most people think. The institute found that from 1998 to 2003, there were 10,000 cases of eminent domain nationwide."
I don't know how often eminent domain is actually used to take private land for private use either. If it has been used in 10,000 cases nationwide over 5 years, then I suggest if has been used quite often. But, how often it is actually used to take property is probably not the relevant bit of information. It appears that cities use the THREAT of eminent domain much more frequently than the power to take itself. Of course the THREAT operates to reduce the value property owners decide to accept, rather than spend the additional time and money to fight the taking.

[Joyce Howard Price, "Drawing the line on eminent domain," The Washington Times (October 9, 2005]

Monday, October 10, 2005

East St. Louis

There is an interesting article on the use of eminent domain in east St. Louis in a recent Wall Street Journal:
"But to build in an urban area like East St. Louis, Mr. Koman must rely on eminent domain -- the government's power to force a landowner to sell property at what is considered a fair price. The State Street project wouldn't have happened if the city hadn't used the threat of eminent domain to clear about 40 houses and a gas station, Mr. Koman says. Of those properties, only two owners held out for long periods, and one of those buildings was condemned and appropriated through eminent domain after the owner refused to settle." [by Ryan Chittum, Oct 5, 2005, page B1, subscription required]
First, notice that the eminent domain power is described here as the "power to force a landowner to sell property at what is considered a fair price." In contrast, the statement of the power of eminent domain found in the 5th Amendment paints a different picture:
". . . nor shall private property be taken for public use, without just compensation."
Specifically, it is the power to take property. Eminent domain does not involve forcing a property owner to SELL. Plain and simple, eminent domain is the power of government to take private property from the owner of the property.

Second, notice the suggestion that the State Street project would not have been possible without the city's use of the THREAT. This may be a common practice of city government. Instead of deciding on a project, then going out and buying property at prices agreed to voluntarily by the owners of the property, the idea seems to be that city government announces it will use eminent domain. Isn't the implication clear? If you don't like the price your are offered for YOUR property, too bad, we will take if from you anyway because we've got the power to do so.

Now consider how Barbara Geisman, the mayor's executive director for development, sees things
"'. . . . We can't let one person hold up something that the entire city wants and needs.' It wouldn't be possible to do widespread redevelopment in an old, historic city like St. Louis if the Supreme Court hadn't upheld eminent-domain rules in its Kelo v. New London decision, Ms. Geisman adds."
I suppose this is the basic justification for giving government the power of eminent domain, i.e., because of the "hold-out problem." On the other hand, as the mayor's executive director for development describes things, I detect what may be a serious lack of respect for the individual, and in this case, the individual who ACTUALLY OWNS THE PROPERTY. I am also not so sure the potential hold-out problem is sufficient to justify the eminent domain power. Consider one more quote from the news article.

"Eminent-domain opponents, such as the Institute for Justice, the Washington nonprofit law firm that represented the homeowner in the Kelo case, beg to differ. 'The idea that private development in cities can't happen without eminent domain is crazy,' says Dana Berliner, senior attorney at the institute. 'Private development happens all the time without eminent domain. People buy the property: If it's difficult to buy the property, they work around that person or they buy another property.'"
It seems likely that much of the property acquisition can be accomplished by the city purchasing the land just as any one else would be required to do. If at the end of the process of land purchase there are one or two hold-outs then maybe it is justified for the government to have the power of eminent domain. But, of course, as we read elsewhere in the article, city government may choose to start the entire process of acquisition with the public THREAT.