Tuesday, February 22, 2005

Eminent Domain

There is a case before the Supreme Court that will have an effect on homeowner's rights from now on. In 1954 the Supreme Court ruled that property in blighted neighborhoods could be seized. Since then, lower courts have held that if the property can be redeveloped to produce more jobs or generate tax revenue, eminent domain could be applied.

The Fifth Amendment of the Constitution of the United States says:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Public use is generally defined as being property taken for firehouses, schools, roadways, and the like. Recently though, public use has been expanded to include any use that will increase the tax base, such as shopping centers and housing developments.

Okay, so you say, I don't want to sell or I'll sell, but this is my price. The local government can say, too bad, so sad, this is what we will pay. Take it and like it. We're gonna take your property anyway.

If you have property that has been in your family for generations, or if you just bought it last week, the local government can take the property from you, at a price they determine to be "just" and turn it over to a developer. Why? Well, the developer will build a shopping center or housing development that will pay thousands and maybe millions more in tax revenue than you would. The developer gets the land dirt cheap (forgive the pun), builds whatever, sells it off for a profit (why build if you're not going to make a profit?) and the local government begins collecting a whole bunch more taxes than you ever paid. It's a win-win situation for everybody.

Except for the person who has lost his house. Do you really think the local government is going to pay what the property is really worth? Fair market value doesn't really mean anything. Fair market value is what the government is willing to pay. That's it.

Okay, so the developer comes knocking on your door and says, I want to buy your property and I'll pay this much." Let's say you want more. After some dickering back and forth, the developer decides you want more than he's willing to pay. That's when he goes to local government and tells them that he wants your property to build on. Doesn't matter what he wants to build. He tells local government that his development of the property will bring in this much more tax revenue. Dollar signs light up in the eyes of the local government officials. They need more revenue, what municipality or large city doesn't? So they apply eminent domain, you are forced out of your home for less than you wanted. The developer gets the property, the city gets more tax revenue, and you get the shaft.

It doesn't just happen to blighted neighborhoods. In the case before the Supreme Court, Kelo v. The City of New London, the Connecticut Supreme Court agreed with New London, ruling that promoting economic development outweighed private property rights. However, the property owners argued that their neighborhood is not a slum nor is it crime ridden, so it does not meet the legal standards to appy eminent domain. It's taking private property from one private owner to give to another private property owner who will then make money on your property.

I can understand applying eminent domain to build a school or firehouse or improve roads. But I had a thought about appying eminent domain to build a shopping center or housing development. Sure, tax revenue will be increased, but won't the government expenses also increase? Think about it. More housing means more firefighters, EMT's, police, schools, hospitals, roads, and so on. I suppose local government officials figure out whether the additional revenue will offset the additional expense. Don't they?

I can understand razing a slum and building a housing development but, there are better ways of doing it. If the area is blighted, tell the property owners to clean it up. If they don't assess fines against the property. Then, when the fines aren't paid, local government comes in a cleans it up, removes the residents, and sells the property to another private party to develop the property as he sees fit. This way, the original property owners have a chance to keep their property. It's a fairly simple matter of cleaning up the property. If the owner isn't able to, they can get help from friends and relatives to do the clean up or even pay someone to do so.

We have got to think about private property rights now, otherwise we might not have private property tomorrow.

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