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Eminent Domain One Year After Kelo

Private property rights activists were horrified nearly a year ago when the U.S. Supreme Court ruled that federal law doesn’t prohibit local governments’ use of their eminent domain power to seize individual homes and businesses for commercial redevelopment projects. The high court’s decision in Kelo v. City of New London ignited a firestorm of debate and protest, but many homeowners, including those in two of the nation’s most populous states, still don’t have adequate protection from government takings of their homes for private commercial purposes.

In California, a Democrat-backed proposal is pending in the legislature while a Republican-supported initiative that would amend the state constitution appears to be headed toward a popular vote on the November ballot. This unfortunate cross-purposes situation isn’t surprising in a state that’s known for its bizarre politics and where the ballot initiative was invented nearly a century ago. Yet all the same, it’s unfortunate that no concrete action has been taken by the legislature to counter Kelo and protect the state’s homeowners.

In New York, the state bar association has called for a commission to study proposed changes to the state’s eminent domain laws. The primary beneficiaries of a study would appear to be the attorneys themselves, who should be familiar enough with the state’s laws to explain what would be needed to protect homeowners from Kelo-like situations without the distraction of a government-funded study. Indeed, the state bar already has convened its own task force on the subject of eminent domain. What’s needed is not another study, but action.

Granted, California and New York are the most populous states in the country and they contain some of the nation’s most densely packed urban areas, characteristics that make property rights and appropriate redevelopment particularly complex.

There is a risk that new laws could make eminent domain cases even more complicated and onerous for homeowners, who rarely have the financial resources and access to the legal system that’s necessary to challenge such government powers.

There is also a risk that responses to Kelo could err in the opposite direction and make it impossible for government authorities to condemn property that would meet almost anyone’s definition of blight and that was needed for redevelopment projects that clearly would serve the public interest, regardless of whether private companies also might be involved. Yet the risk of excessive constraints against government takings seems small compared with the harm homeowners could suffer in states where the wild permissiveness of Kelo hasn’t been curtailed.

Elsewhere, progress has been made. Hundreds of legislative proposals to counter Kelo have been introduced in more than 40 states, and some dozen states have enacted new limitations on government powers, according to a recent newspaper report. That outcome is exactly what the Supreme Court decision in Kelo envisioned. Most of these new state laws prohibit the use of eminent domain powers to further economic development or increase the tax base while others prohibit condemnation of property that isn’t deemed to be “blighted.”

Legislation that’s pending in Illinois and has the support of the state Realtors association attempts to strike a balance. Municipalities would be forced to prove an area was blighted before they could compel owners to sell their property for private development projects. Government seizures of property for private development would require a written agreement with a developer or an established plan to eliminate blight and a written agreement or deed restriction that would ensure the property was used for the stated purpose. Government entities would be required to pay relocation costs for displaced residents consistent with federal law in all eminent domain actions. And attorney’s fees would be awarded on the basis of the net benefit gained by property owners who made a good faith settlement offer and successfully challenged the government’s last and best offer for their property.

The bottom line is that state laws need to balance communities’ needs for development and homeowners’ property rights in ways that don’t result in greater confusion and endless legal wrangling between the two sides. On the margin, laws should err in favor of private homeowners, not commercial development or the interests of eminent domain attorneys.

While California debates and New York studies, local developers and their government cronies surely have their eyes on both campaign coffers and private residences that occupy prime real estate. Homeowners deserve better protection from the type of indefensible government takeover that Kelo seemingly condoned.