Public Power, Private Gain: The Abuse of Eminent Domain

by | Feb 14, 2005

the public – things like roads, water systems and public buildings. Times have changed.

Most people have never heard of “eminent domain,” but they know the government sometimes takes private land for projects the public will own and use, such as a highway or post office. Few people realize, however, that state and local governments routinely take individual homes and businesses to transfer the land to private businesses for private profit. Later this month, the U.S. Supreme Court will hear a case that seeks to set the outer limits of this government power.

Eminent domain is the power to force four elderly siblings out of their home of the last 60 years, as recently occurred in Bristol, Conn. Eminent domain is the power to evict a small family-owned woodworking shop to make way for Home Depot, even if that means the small business will never reopen, as took place in East Harlem, N.Y. It is, as a Supreme Court Justice called it in the 1700s, a “despotic power.”

The Framers of the U.S. Constitution were keenly aware of this potential for despotism, and that’s why they placed two vital constitutional limits on eminent domain power. First, government cannot take land without paying for it; “just compensation” must be paid. Second, government may take property only for “public use.”

Originally, “public use” was understood by everyone – courts, local governments and the general citizenry – to have its ordinary meaning, and eminent domain was used only for projects that would be owned by and open to the public – things like roads, water systems and public buildings. Times have changed. Now state and local governments think they can condemn anything for any reason. They freely use eminent domain to benefit all kinds of private parties – casinos, Costco, upscale condos and office buildings, to name a few.

Government has either taken or threatened to take more than 10,000 homes, businesses, churches and land for private benefit. And that is during just a five-year period.

Eminent domain for private use happens all over the country, from a small urban church in North Hempstead, N.Y., condemned for private retail, to the removal of a woman in her 80s from her home of 55 years in Bremerton, Wash. The claimed purpose was expanding a sewer plant, but the City actually gave her former home to an auto dealership. The beneficiaries are often powerful private business interests, like The New York Times and Bank of America. Sometimes they are national chain stores; St. Paul took a local car dealership for a Best Buy. And sometimes the businesses are just local favorites, as in Mesa, Ariz., where the City unsuccessfully tried to condemn a family owned brake shop for the more politically connected Ace Hardware Store.

The stated goal of these development projects is to increase jobs and tax revenues. There’s nothing wrong with increased business development, but the means used by government in these cases isn’t lifting regulations and encouraging entrepreneurship. Instead, government is using force to replace middle-income citizens with richer ones and small businesses with larger ones. Both Merriam, Kan., and San Leandro, Calif., removed used car dealerships for new car dealerships.

The jobs and taxes justification gives an unlimited field for exercise of government power. Few homes in the nation wouldn’t generate more jobs and tax dollars as a private business venture. That’s what Kansas said when it condemned 150 homes for a racetrack. Ditto for small businesses. Bill Brody’s commercial building in Port Chester housed 11 small businesses, but it still wasn’t as desirable to the Village as a Stop & Shop. And of course, absolutely any private use will pay more taxes than a tax-free church. That was the explanation of Cypress, Calif., when it filed a condemnation against church property to replace it with a Costco.

If these are such blatant constitutional violations, then shouldn’t the courts be saying so?

Of course they should, but for years courts have abdicated their responsibility to protect individuals from overreaching government power. It started with a U.S. Supreme Court decision that didn’t sound so objectionable at the time.

In 1954, the District of Columbia wanted to condemn an area that was in truly bad shape – high infant mortality, overcrowding, no plumbing. In those days, it was called “slum clearance,” and city planners believed that the key to solving our urban problems was moving people into clean, orderly housing projects, which would be both beautiful and safe.

D.C. argued that even though it planned to transfer the property to a private developer, just ridding the city of a public nuisance accomplished an important public purpose. The U.S. Supreme Court agreed, switching the constitutional public use requirement to the much vaguer standard of public purpose or benefit.

State and local governments took the decision as a green light. First they condemned slums, then blighted areas, then not very blighted areas, and now, affirmatively nice areas. Their initial purposes were quasi-public, like public housing, but have now expanded to include any residential or business development that happens to appeal to local bureaucrats who are hungry for tax dollars.

For decades courts simply rubber-stamped all condemnations, ignoring even obviously private takings. The U.S. Supreme Court hasn’t reviewed a private development case since 1954, and its last major public use case was in 1984, in a case involving the reformation of the feudal Hawaiian land ownership system from before the state entered the union. In that case, too, the Court approved the condemnations, although the peculiar factual circumstances make it hard to generalize.

Since then, the Court has denied review in every public-use economic development case that has come along; there have been at least five in the past four years. That is, until now.

In a case arising out of New London, Conn., where a private development agency is seeking to take 15 non-blighted homes for private development, the Institute for Justice will urge the High Court to finally set some outer limit on this much-abused government power.

The result of the utter lack of judicial supervision has been a feeding frenzy. Power without any checks inevitably leads to abuse, and eminent domain is certainly no exception.

All the incentives point in the wrong direction. Cities can offer other people’s property to lure or reward favored developers. Developers love eminent domain because they don’t have to bother with negotiating for property; they can pick anywhere they want, rather than anywhere they can buy. It’s just easier to take property by force or threat. And the compensation they have to pay is usually less than if they bought the property on the open market. Private companies now routinely demand incentive packages that include promises of large areas of land – land that must be cleared of any homes and businesses that happen to be in the way.

Even now, governments will often claim that the area is “blighted” as a justification for using eminent domain. That sounds like it would make sense – after all, who could blame the city for removing an abandoned building and shepherding it into productive use?

But blight is in the eye of the bureaucrat. Just like public use, city officials’ use of blight bears no resemblance to what an ordinary person would call blight. Blight can mean that the property is not being used to its full potential–in other words, someone else wants to build something more profitable there.

Areas are sometimes declared blighted that have no blight but might become blighted in the future, as is the case in Norwood, Ohio, where senior citizens Joy and Carl Gamble were forced from their home of 35 years to make way for a half-billion-dollar developer’s mall expansion. The developer not only paid for the blight study, but is also paying the City’s expenses in securing the land.

Some people question why anyone should complain about getting condemned when they are being compensated. Yet as we all know, there are some things that money can’t buy. No money in the world could compensate the homeowners in Hurst, Texas, whose homes were condemned for a new shopping mall and who were forced to move while their spouses were in the hospital dying of cancer. No money in the world will compensate Wilhelmina Dery if she is evicted from her home of the last 87 years for an economic development project in New London.

We hope that the acceptance of Mrs. Dery’s case by the U.S. Supreme Court signals a shift in the judicial tide towards greater protection of property rights. After years of automatic approval of eminent domain, lower courts have been scrutinizing government’s behavior with a more skeptical eye. In the past seven years, courts invalidated condemnations or blight determinations in private projects about 40 percent of the time. That’s a vast improvement, but it doesn’t come close to restoring true constitutional protections. Courts throughout the country need to reread the state and federal constitutions and begin enforcing the public use requirement, instead of ignoring it.

Aggressive eminent domain tactics also have led to grassroots rebellions. Local community groups opposed to eminent domain have sprung up all over the country and they have been surprisingly successful.

One community in Baltimore County, Md., organized a successful referendum that defeated a plan to take 310 homes and businesses for a private development project. Citizens in New Rochelle, N.Y., fended off a plan to take their homes and businesses and replace them with an IKEA. Voters in Lakewood, Ohio, not only rejected a development that would have replaced a neighborhood of single-family homes with high-end condos and upscale retail stores, they also threw out the mayor who had championed the project, then rescinded the sham blight designation on the neighborhood which prompted the use of eminent domain in the first place.

Eminent domain abuse won’t stop by itself. It will take community activism and a constitutional commitment by politicians and judges. But at least the army of bulldozers has begun to hit some bumps in the road.

Dana Berliner is a senior attorney at the Washington, D.C.-based Institute for Justice. For more information, visit www.ij.org.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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