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A short-term solution to the Kelo mess

Now that the heat has faded from my outrage over the Supreme Court's decision about eminent domain in the Kelo case, I've taken a little time to read and think about it. And the analysis by a certain person I've learned I can trust, I"m not quite as panic-stricken as I was a couple days ago. In food terms (can you tell I'm just finishing dinner?), it's now at mustard and pickles level, from my prior Fear Factor Entree' response.

The decision is done, and the moving hand has writ. Screaming and wailing and gnashing of teeth might make you feel better briefly, but in the end all you end up doing is looking silly. The time has come to recognize the reality of the situation and deal with it.

Several people are calling for a Constitutional amendment to overturn the ruling. Frequent Wizbang guest McGehee has put forth over on his own blog his version of such a measure, and I think it would garner quite a bit of support. But, ultimately, I think any final version would be a bit less pointed than his.

But amendments take years to pass, and what do we do in the meantime? One school of thought is to let seizures go unchallenged, to keep up the public outrage and enthusiasm for the amenment.

But while I see the appeal and the possibilities behind such a measure, I have my own idea I'd like to put forth. And again, I need to thank Jeff for his digesting the actual Court decision.

The ruling in the Kelo case does very little. It simply says that state and local governments may seize private property for non-public uses, as long as there is a significant benefit to the community as a whole. It is recognizing the right of those bodies to do it, not encouraging it.

So, by extension, the states themselves can impose their own restrictions on when they exercise this power. And since state legislatures have been more responsive to the concerns of voters, I think this is where we should focus our attention.

The first restriction should be, I think, on the "just compensation" requirement. Corporations that want to use this ruling are going to perform simple cost-benefit analyses, and in many cases will probably decide that it will simply be cheaper to go through a government than to come to terms one-on-one with private landowners. So the first step should be to cut into the profit margins of takings.

One of the ways this has been abused has been to lowball "fair value" for the seized property. Often, towns will outright condemn a desired property, shredding its paper value and therefore cutting down on compensation.

My idea would be to set the value of the property in question to the value assessment done for property taxes. But it should not necessarily be the current value. It should be at the highest rate in the last five years. This will circumvent the "condemned" tactic, the long-term scheming, and other shenanigans.

Secondly, the owner should not simply be handed the same amount they could expect if they were selling willingly. There should be compensation above and beyond the value of the property, to cover the inconvenience and outright rudeness of taking someone's home from them without their consent. Once the property's value has been determined as according to above, there should be a 20% "bonus" tacked on as an apology.

Finally, the private entity receiving the seized property must pay the city or town doing the actual taking the above-mentioned price for the land, within a 5% margin. That will give the towns some leeway to either pass along their expenses in getting the land, or offer some incentives to the incoming owners -- whichever they should wish.

With these restrictions in place, we should be able to put some curbs on the possibility of wholesale takings for private gain. And putting serious pressure on your state lawmakers might not have quite the satisfaction of "salting" your property with radioactive material, as I've seen mentioned in one or two places, but it sure as hell is a bit more civilized.

UPDATE: My formula for calculating the costs of the seizure to the recipient has confused at least one person, so here's an example: Suppose the town of Bugtussle, West Virginia takes David Anderson's luxurious manse for a new Yoyodyne manufacturing plant. David's manse was last revaluated for $250,000, so the town pays that to him and a 20% "nuisance fee" of $50,000 for his land. David, fed up with Bugtussle politics, goes back to Costa Rica. (David doesn't mind that too much, if you've seen the pictures of Costa Rican women he posts on a regular basis.) Therefore, they have paid a total of $300,000 for David's land.

Now comes the time to transfer the land to Yoyodyne. Under the law, they must sell it to Yoyodyne for what they paid David for it, give or take five percent. One selectman wants to reward Yoyodyne for promising his worthless nephew a job, so he pushes for a 5% cut, or $285,000. Another used to go fishing with David, and will miss him, so he's steamed at Yoyodyne. He wants to tack on that 5%, and charge them $315,000. The entire board fights for a while, and settles on charging Yoyodyne exactly what the town paid -- $300,000 -- no more and no less, and the town eats the costs it incurred in taking David's land (lawyers, transfer fees, surveyors, and the like).


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Comments (25)

Good post.I've been ... (Below threshold)
Les Nessman:

Good post.
I've been saying the same things, especially regarding the 'pay 20% extra' for the rudeness of forcibly taking someones home.

I'm not sure I understand this last part:
"Finally, the private entity receiving the seized property must pay the city or town doing the actual taking the above-mentioned price for the land, within a 5% margin. That will give the towns some leeway to either pass along their expenses in getting the land, or offer some incentives to the incoming owners -- whichever they should wish."

What exactly does that mean?

The one question I have is ... (Below threshold)
Darby:

The one question I have is this:
Is the reimbursement of the property value taxed?

There are a few more things... (Below threshold)
E.M.:

There are a few more things that state legislatures can do, but you are right about "just compensation." Its likely that the court battles that ensue from the Kelo decision will involve just compensation. Because the governments are receiving a benefit from the ED, that benefit should get passed on to the person whos land is being seized. Its only fair.

States can put other restrictions on this, too. They can limit what is a legitimate public benefit, they can limit how much land can be taken, and they can require that the taking be done in proportion to the stated purpose. The states can really run with this.

But, this is asking a state to curb their own power to increase tax revenue, so it may not be as easy as it looks.

1) Get 50 (angry, well off)... (Below threshold)
Al:

1) Get 50 (angry, well off) people to buy property near Ruth Bader-Ginsberg's ranch.

2) Incorporate.

3) Vote yourselves into office.

4) Propose a public good. The choice of precisely what type of public good dramatically affects things.

5) Lawsuits.

6) (eventually) Supreme Court. With one member recused.

Georgia already has a prohi... (Below threshold)

Georgia already has a prohibition on using eminent domain to take from one private owner and give to another, but I believe the "just compensation" issue is still open for improvement.

I would modify your proposa... (Below threshold)
BC Monkey:

I would modify your proposal as follows: the local gov't has to pay the value, plus 100%, not 20%, and the corporation which will build upon the land is required to pay 60% of the total, with the local gov't having to absorb the other 40% of the total.

I make this suggestion because it makes the expropriation process painful for the government in one of the ways that truly matter to it- money. It foces the gov't to weigh the additional tax revenue they will gain by giving the land to others versus how much they themselves will have to pay for the future revenue.

If gov't views expropriation as a virtually cost free action, they will be much likelier to use it than if they must pay substantial amounts of their own money. My proposal turns the issue from something they automatically make money on to something they can lose money on.

If and when these "new owne... (Below threshold)
-S-:

If and when these "new owners" assume someone else's property, they need to be required to post and host and maintain a very, very large sign at the most prominent point on the property that reads, "WE TOOK THIS PROPERTY BY EMINENT DOMAIN"....

and then anyone/everyone who visits or uses whatever they build there has to be informed about that, like some sort of usage stamp, receipt, access pass, whatever.

The point is, there should be some sort of requirement for to make their acquisition actions publicized to anyone/everyone who comes into contact with the newer ownership events afterward. However that's possible, depending upon who/what assumes the property.

And that the signage/announcement has to remain in effect throughout the lifetime of the "new" property "owners."

If it's a WalMart, for instance, before anyone driving by sees the "WalMart" sign, they'd see the history of the property.

If condos, homes, then there's a sign at the entrance of the property announcing the history, if a development, same thing.

An elderly widow, who has l... (Below threshold)
Calif Democrat:

An elderly widow, who has lived in her home for 40 years, raised her family there. What is just compensation in that case? It's painful enough when eminent domain is done for a true public purpose, such as flood control, transportation, or a school. When eminent domain is done so that a new WalMart can be built under the guise of economic improvement, well, that's just unacceptable and immoral.

I like the idea of an economic poison pill so that companies will think twice before using the eminent domain axe. If a private owner benefits from eminent domain, then pass federal law to require that the displaced owners receive fair market value ^plus^ royalties from the new owner's income stream.

I predict that what we will... (Below threshold)

I predict that what we will see, in the next few years, is a string of cases whittling away at the ruling, explaining why this or that redevelopment plan is not as compellingly in the public interest as the Kelo plan had been.

So, instead of a simple overturning of the decision, it will die the death of 1,000 cuts.

Sorry, 20% ain't enough, du... (Below threshold)
j.pickens:

Sorry, 20% ain't enough, dude.
Many areas of this country have soaring property values, and local governments are often lax at revaluation for tax purposes.

What's wrong is wrong. State governments can pass laws like Georgia's.
I have no problem with eminent domain for building highways, pipelines, power lines, sewerage treatment facilities, even public grade schools and high schools.
Now, it may be that some of these facilities are privately owned, but there is a definite public purpose in their construction. Not so with a waterfront office park for Pfizer.

The time has come to rec... (Below threshold)
John:

The time has come to recognize the reality of the situation and deal with it.

The reality of the situation is that the Supreme Court can do what it wants and no one is challenging them. Congress that has abdicated its roll to make the laws in this country and the Supreme Court (and other judges) have moved to fill the void. Congress should have the authority in this situation. But between dodging having to take action which will upset potential voters and contributers, Congress is tied up with conflict and bickering.

Jay, I agree. I'm a full-o... (Below threshold)

Jay, I agree. I'm a full-on supporter of property rights. But I think Kelo properly decided--and indistinguishable from Midkiff.

Unrestricted eminent domain would be unconstitutional. But Kelo demands no such thing. The Constitution doesn't compel Federal Courts to substitute their judgment for elected municipal officials.

Kelo is a pro-conservative, pro-Federalism decision that bolsters a bit of judicial deference commonly confined to the legal endangered species list. Not all developers are scum; not every Mayor's on the take--if the are, call the cops and vote against crooked councilmen next November. Isn't that what conservatives tell liberals?:

"[T]he fact remains that state and local governments have a fair amount of power under our constitution to enact either. We often tell folks on the left that not every social ill should be cured by the courts, and that should apply no less when "conservative" interests are at stake."

Connecticut has the right to be socialist--and I have the right not to live in Connecticut.

I'm quite conservative--which is why I'm puzzled that Kelo critics on the Right sound like anti-Wal-Mart kooks. Look to state and municipal government, not federal courts, for redress. And don't assume the sky is falling.

Jay, I agree. I'm a full-o... (Below threshold)

Jay, I agree. I'm a full-on supporter of property rights. But I think Kelo properly decided--and indistinguishable from Midkiff.

Unrestricted eminent domain would be unconstitutional. But Kelo demands no such thing. The Constitution doesn't compel Federal Courts to substitute their judgment for elected municipal officials.

Kelo is a pro-conservative, pro-Federalism decision that bolsters a bit of judicial deference commonly confined to the legal endangered species list. Not all developers are scum; not every Mayor's on the take--if the are, call the cops and vote against crooked councilmen next November. Isn't that what conservatives tell liberals?:

"[T]he fact remains that state and local governments have a fair amount of power under our constitution to enact either. We often tell folks on the left that not every social ill should be cured by the courts, and that should apply no less when "conservative" interests are at stake."

Connecticut has the right to be socialist--and I have the right not to live in Connecticut.

I'm quite conservative--which is why I'm puzzled that Kelo critics on the Right sound like anti-Wal-Mart kooks. Look to state and municipal government, not federal courts, for redress. And don't assume the sky is falling.

The supporters of this deci... (Below threshold)
YoPopa:

The supporters of this decision seem to be saying that it's OK because New London really needs the money. HUH???

Did you ever hear a judge say that a robbery was OK because the thief really needed the money as opposed to just wanted it for beer money? A principle of right and wrong cannot be so lightly bent to fit the situation.

Just compensation in ALL cases of eminent domain should include allowance for the mental anguish of loosing one's home and a publicly paid defender to protect your rights. Why should a common thief get lawyered up for free and the innocent home owner go broke defending their property from injustice?

This land was your land, but now it's my land
I bought the rights from, your town selectman
From your front porch rocker, to your bed room window
This land was stole from you for me.

Trackback's giving me crap,... (Below threshold)
Tom:

Trackback's giving me crap, so here's my response.

http://mudandphud.blogspot.com/2005/06/idea-from-wizbang.html

No Oil for Pacifists,... (Below threshold)
Tom:

No Oil for Pacifists,

You said:

I'm quite conservative--which is why I'm puzzled that Kelo critics on the Right sound like anti-Wal-Mart kooks. Look to state and municipal government, not federal courts, for redress. And don't assume the sky is falling.

I have to disagree. Conservatives (or at least this one) believe very much that we should be able to look to local government for redress. However, that does not mean that we should overlook any action of the federal government that smacks of unconstitutionality. What the Court ruled was simply wrong. The short-term answer certainly lies in finding legislative protections from local and state governments...but that's a tactical answer.

The strategic answer is to force the federal government to rule and enact laws that are not at odds with our God-given Rights as specifically protected by the Constitution.

Some here feel comfortable ... (Below threshold)
DaveD:

Some here feel comfortable with the Supreme Court ruling because the Federal Courts will not substitute their judgement for that of the locally elected government. I hope the is what No Oil for Pacificists has said above. But shouldn't the rights of US citizens as outlined in the Constitution be protected from ALL levels of government whether local, state or national. Certainly local jurisdictions as defined by land area have been in flux since the time the Constitution was ratified. I think this is where my hangup lies. Another example: if the Constitution states that you have the right to bear arms, I assume a local jurisdiction cannot deny that right but they can discourage the possession of firearms by creating local registries, restricting permits for being able to carry a firearm, create laws to prevent gun shops within a jurisdiction, etc. But they cannot seize them. I just see the Kelo opinion as a bad precedent that allows the local government to act as an agent for local developers to strongarm folks into giving up a specific and potentially cherished possession for a very weak excuse for "the greater good". The government's fee for acting as the middle man? A larger source of tax revenue.

First, robbery is robbery, ... (Below threshold)
BP:

First, robbery is robbery, no matter who is holding the gun. If you must take land for private purposes, then you should have to share that public use/tax revenue with the displaced people.

What about the following for the New London situation and all "revenue-based" uses of eminent domain:

1) Market value (non-condemned) + 100% "nuisance fee" for each homeowner, tax free

and the real kicker,

2) The government and the private interest must pay a percentage of that tax revenue to each displaced homeowner for life.

I like the idea of having a big sign proclaiming how the land was acquired, too.


Here's an idea about "just ... (Below threshold)

Here's an idea about "just compensation" for land seized through eminent domain for commercial purposes:

Make sure that the original owner of the land--the one about to be disposessed--in addition to "fair market value" (which captures today's value) also gets a piece of the future value, say a percentage of the annual profits (pre-tax, please) that the property produces under the new owners.

This would actually provide some long-term justice for current owners and make strong-arm deals less attractive--because they'd be less profitable--to the would-be owners.

What needs to be done in ev... (Below threshold)
rudizink:

What needs to be done in every state is what we did in Utah. We organized ordinary citizens across the state, lobbied our state legislators mercilessly, and wound up with signed bill banning the use of the power of eminent domain by local redevelopment agencies within eight months' time.

The federal courts can no longer be trusted to enforce the right to property, as set forth in the United States Constitution by the Framers, and the federal constitutional amendment process takes too long, as you pointed out. It's also hopelessly complicated.

We did it; you can do it too. The time to move on it in your home state is now!

The real losers in this rul... (Below threshold)
SteveB:

The real losers in this ruling are farmland owners. Here in Illinois, farmland's property value for tax purposes is based on it's productivity, hence my 100 acres is valued for tax porposes at $20K where in reality it is worth $450K with very little development potential. Farmland with development potential will sell for over $20K per acre. My farmland value is driven largely by 1031 exchanges from other farmers that are getting that $20k per acre. Now that developers have another means to aquire farmland they can use E.D. and get it for a greatly reduced price.

I don't think you will see the Kelo ruling excersized to often to take residental property but farmland will be quietly taken with very little notice.

I have a better idea. Why ... (Below threshold)
kbiel:

I have a better idea. Why not just pass a law in your state that defines public use? This will work for most situations, if you use a real dictionary to produce the definition and not the double speak version currently in use at the SCOTUS.

The real "rub" here is that... (Below threshold)
Hepzi:

The real "rub" here is that each state gets to define eminent domain proceedings--and therefore the means by which "just compensation" is determined. In some states it's fair, in others overly generous, and in others out-an-out rape of the innocent.

So this federal law interpretation is small comfort to property owners in the "rape" states, where abuses will of course occur.

In the first 2 types of states, developers will tend to negotiate private market deals because the eminent domain process is usually not cost effective.

In the "rape" states? You guessed it--the developers will quickly line up the votes and proceed directly to condemnation.... Its hard to negotiate price with a gun to your head.

I am underwhelmed by the be... (Below threshold)
jeh:

I am underwhelmed by the benefits of an "independent judiciary". Lack of oversight never made anybody perform better and this court is proving that in spades.

Constitutional Amendment:
"Decisions by the Supreme Court can be vetoed by two-thirds of both houses of Congress and the President."

The president can be stopped by Congress and the courts. Congress can be stopped by the courts and with some restrictions by the president. In order to complete the system of Checks and Balances, there needs to be some way to make the courts accountable to someone else. Some of the authors of the Constitution recognized this oversight as early as 1830. It's about time we fixed it.

Bug Tussle is in Texas, not... (Below threshold)
ech:

Bug Tussle is in Texas, not West Virginia.




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