FRONTLINES: Eminent domain
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BY ROBERT FREEDMAN
Preserving owners’ rights
U.S. Supreme Court decision sparks states to limit condemnations.
REALTORS® around the country are moving to shore up their states’ property rights protections after a U.S. Supreme Court decision that gives a Connecticut city the green light to condemn properties for private development.
Governments have historically taken property for projects with a clear public use, such as roads and schools. But in recent years, there’s been a trend toward the use of takings for redevelopment projects that promise to remediate blight and increase tax revenues. The June 23 ruling in Kelo v. City of New London was a first for the Supreme Court on whether government has a right to take non-blighted land solely for the purpose of economic development. At issue was New London, Conn., officials’ plan to replace 15 homes with a waterfront office, condo, and retail complex adjacent to a new clinical research lab.
“The ruling flies in the face of reason,” says Ed Tugaw, CRB, CRS, chair of the National Association of REALTORS®’ Land Use, Property Rights, and Environmental Committee and head of Coldwell Banker Tugaw, REALTORS®, in Brigham City, Utah. ”It gives cities a sharper sword for taking people’s homes.”
REALTORS® are far from united in their view on the limits of eminent domain. However, the inviolability of property rights remains a core value of NAR; REALTORS® differ mainly on the conditions that make a condemnation appropriate. “If you ask eight different people, you’ll get eight different opinions,” says Tugaw.
Swift response to Kelo decision
The New London case touched a nerve with many in the real estate community because it opened the door for governments to choose economic winners and losers by handing property over to private interests that promise a higher and better use for it. “If they take land once, what’s to stop them from reclaiming the land if the economic development doesn’t meet their expectations?” says Mary Beth Coya, vice president for public and government affairs for the Northern Virginia Association of REALTORS®. “Where does this chain of events stop?”
REALTORS® in Illinois have petitioned state lawmakers to make it illegal for local governments to turn over condemned property for private development without first getting an OK by a three-fifths vote of the state legislature, among other things. "Eminent domain authority should be exercised only in special circumstances," Julie Sullivan, assistant director of governmental affairs for the Illinois Association of REALTORS®, testified before the Illinois Senate State Government Committee in July.
The Northern Virginia association has called on lawmakers to impose a narrow definition of “public use” in eminent domain actions to stop condemnations justified purely on economic grounds. “We have some local governments champing at the bit to take advantage of eminent domain,” says NVAR’s Coya. REALTOR® groups aren’t the only ones who’ve leapt into action since Kelo. By early August, lawmakers in about half the states had moved to toughen eminent domain restrictions. Actions in many other states are expected to follow, according to data from the Castle Coalition, an eminent domain clearinghouse.
"The Supreme Court decision elevated this issue to a new level,” says Dana Berliner, a senior attorney with the Institute for Justice, a private nonprofit group that represents the New London homeowners. The Institute describes itself as a public interest law firm representing people in civil rights cases.
In Connecticut, lawmakers are expected to move quickly once the next legislative session starts, in early 2006. In the meantime, some leaders in the legislature, backed by Gov. M. Jodi Rell, have called for a moratorium on eminent domain actions and want to hold hearings during that period to air issues. “We should not let the matter drag on for months,” Gov. Rell said in a statement. REALTORS® in the state are taking a wait-and-see approach. “We’ll try to push things in a positive direction once we see what lawmakers come up with,” says Gene Marconi, general counsel for the Connecticut Association of REALTORS®.
Varied constitutional protections
Restrictions on the use of eminent domain are already in place in the constitutions of the 50 states, in many cases based on the language of the Fifth Amendment to the U.S. Constitution. That language allows the taking of private property for public use as long as property owners are justly compensated. Roughly half the states go beyond that language in their constitutions to talk about permissible uses of eminent domain.
State statutes and legal precedents arising from court cases further refine the restrictions under which state and local governments exercise their condemnation authority.
Those multiple layers of law — constitutional, statutory, and case — complicate the task of tracking the states in which eminent domain restrictions are tight and the ones in which they are loose, say NAR analysts. But some states stand out.
New Hampshire, which prohibits takings without the consent of the owner, is considered one of the toughest states on eminent domain. Connecticut is considered one of the weaker states. That has made the state vulnerable to controversial takings. “There was a taking similar to New London in Bridgeport. Waterfront property was taken for the Steel Point Redevelopment Initiative,” says Mark Foreman, president-elect of the Connecticut Association of REALTORS® and a sales associate with Cornerstone Capital Mortgage & Real Estate Services Inc. in Fairfield. “The locality took the property, then went through several developers before finally finding one that might be able to get the financing to do it. But it’s been about 10 years.” The project would replace existing businesses and homes with a mixed-use facility.
Controversy over use of eminent domain for private development has been heating up for years, so even before Kelo, some states had beefed up their condemnation protections.
In Utah, for example, REALTORS® last year successfully backed passage of a law that restricts the use of eminent domain by redevelopment agencies, government organizations set up to revitalize economically depressed areas. Redevelopment agencies are one of the biggest drivers of condemnation for economic development. The law stalled a large retailer that was working to assemble dozens of lots in Ogden for a superstore. “It’s not going to happen now,” says Tugaw, the NAR Land Use Committee chair.
Likewise, despite the recent Supreme Court ruling, homeowners in the New London case are unlikely to lose their property soon, if at all, says Berliner, who has petitioned the Supreme Court for a rehearing. Even assuming the court affirms its green light for the project, the city is unlikely to evict the homeowners because of the public scrutiny it would generate, Berliner thinks. “One way or another, they’ll likely stay in their homes,” she says.
Takings in the national spotlight
Eminent domain questions are largely state and local matters. But federal lawmakers have been quick to jump into the fray, starting with a nonbinding resolution, H. Res. 340, introduced by Rep. Phil Gingrey, R-Ga., expressing Congress’ concern over the Kelo vs. City of New London ruling. State and local governments, the resolution says, “should never use eminent domain to advantage one private property over another.”
In addition, Sen. John Cornyn, R-Texas, has introduced The Protection of Homes, Small Businesses, and Private Property Act of 2005, S. 1313, to prohibit the federal government — and state and local governments using federal funds in a project — from taking land for economic development. Rep. Denny Rehberg, R-Mont., has introduced the same restrictions in the House.
NAR analysts are reviewing these and the other bills. At the same time, the association is developing a set of core principles (the definition of blight, for example) and rolling out a radio and print ad campaign in states considering association-backed legislation.
Also available from NAR:
- Customized state legislation. State associations can tap assistance from a nationally regarded land-use law firm at a reduced rate.
- Land use initiative. NAR makes available expert analyses of the legal, planning, economic, and environmental issues in land-use proposals.
- Issues mobilization. Associations can tap educational, technical, and financial support for organizing and managing issue campaigns.
- Legal action. NAR helps cover litigation costs in select cases.
Read more on NAR’s eminent domain resources:
Supreme Court Rules for Property Seizure
