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Sunday, July 31, 2005

Law - Ruling Sets Off Tug of War Over Private Property

Issues arising from the U.S. Supreme Court's ruling in Kelo v. City of New London (6/23/05) were discussed yesterday in this story in the NY Times. Some quotes from the lengthy piece:

SANTA CRUZ, Calif. - More than a month after the Supreme Court ruled that governments could take one person's property and give it to another in the name of public interest, the decision has set off a storm of legislative action and protest, as states have moved to protect homes and businesses from the expanded reach of eminent domain. * * *

Far from clarifying government's ability to take private property, the 5-to-4 Supreme Court decision has set up a summer of scrutiny over a power that has been regularly used but little-discussed for decades.

"The intense reaction - this backlash - has caught a lot of people off guard," said Larry Morandi, who tracks land use developments for the National Conference of State Legislatures. * * *

The Fifth Amendment allows the taking of land for "public use" with "just compensation," and governments have long used the practice to build roads and schools and to allow utilities to run service lines. In its June 23 ruling regarding efforts by the City of New London, Conn., to condemn homes in an old part of town to make way for a private development, the Supreme Court said public use could mean something that brings a public benefit - like jobs or increased tax revenue.

But at the same time, the court invited states to tailor their own laws. While only one state, Delaware, has changed its law, most states are likely to have a proposed change by next year, Mr. Morandi said.

"The initial outcry after the court case was: Nobody's house is safe, we've got to do something now," he said. "But as more states take a look at this they will respond in some form, but they won't want to take away a valuable tool."

In a story published 7/12/05, the New London Connecticut paper, The Day, published a story (no longer available online) that began:
Hartford — State legislators declared a moratorium Monday on the use of eminent domain in Connecticut, saying no municipality — including New London — should go forward with any plans until they have revised the law to protect the rights of private homeowners.

“The New London case has forced our hand,” House Speaker James A. Amman, D-Milford, said at a press conference at the Legislative Office Building. “What we need is a law that considers economic development and offers homeowners some peace of mind. This legislature will act on eminent domain,the towns heading down this path should take note, and they should hold off on any plans.”

And while stopping short of saying they would prevent the city of New London from taking the homes of those people still living in the Fort Trumbull neighborhood, they did suggest it was a possibility.

“The legal case is over,” said Rep. Michael P. Lawlor, D-East Haven, co-chairman of the legislature's Judiciary Committee, “but towns in our state exist by virtue of state law; they don't have any independent powers, so theoretically we could tell them to stop if that's what we wanted to do. And I think since they're spending state money to do it, theoretically that's possible.

“The existence of the city of New London itself is at sufferance of the state government under our constitution, so yeah, that's theoretically possible.”

Gov. M. Jodi Rell issued a statement saying she supported the moratorium and urging the legislature to act without delay.

“This issue is the 21st-century equivalent of the Boston Tea Party: the government taking away the rights and liberties of property owners without giving them a voice,” Rell said. “But this time it is not a monarch wearing robes in England we are fighting; it is five robed justices at the Supreme Court in Washington.

“Home ownership is often referred to as ‘the American Dream.' Our homes are the places where we raise our families and build our lives. When government intrudes on our homes, it must have a defensible reason. In the New London case, the reason was not defensible.”

Thomas Londregan, the attorney for New London, was baffled that the state would disavow the use of eminent domain after it took the lead role in planning and funding the redevelopment of the Fort Trumbull neighborhood.

Londregan said the city, in fact, wanted to declare the neighborhood blighted before condemning the houses there. Although courts have said for half a century that governments can use eminent domain to clear blight, Londregan said the state insisted that New London take the houses for economic development. The city's reliance on the economic development statute spawned the case, Kelo v. New London, that the U.S. Supreme Court decided last month.

“The executive branch told New London it would only give the money for the project under the economic development statute, not the blight statute. Had the executive branch and the legislature allowed the city to proceed under the blight statute, there would be no issue of eminent domain today,” Londregan said. “The actions of the governor are mystifying.”

Lawmakers cautioned Monday that it was too early to determine what action the General Assembly might take.

“What's clear is that we cannot undo the Supreme Court case. It's also clear that we can change eminent domain going forward. I guess there would be some question of can we go and undo eminent domain procedures and takings that have already occurred or that are under way at the present? That, I imagine, would require a little more research,” said Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn.

“We've got to figure that out,” Lawlor added. “We have to decide whether or not that's the right thing to do.”

The Fort Wayne News Sentinel ran an editorial 6/28/05 (no longer available online) including these quotes:
It’s not quite that bad in Indiana. Officials are reluctant to use eminent domain and have frequently gone out of their way to avoid it. As Rob Young, president of the Fort Wayne-Allen County Economic Development Alliance, puts it, “The use of eminent domain needs to be a last resort.” It’s something needed in the economic-development toolbox, but “it should be used with all due care and as infrequently as possible.” Other development officials echo those sentiments.

And Hoosier property owners do have one thing going for them that Connecticut residents do not – a state requirement that condemned property actually be blighted. That’s not a guarantee against government overreaching, though. It’s hard to argue, for example, that Southtown Mall wasn’t blighted when it came into the city’s eminent-domain sights. But what about Belmont Beverage downtown, taken for a Grand Wayne-affiliated hotel that now might not even be built there?

“Their criteria for blight and mine are different,” says owner Thomas F. Druley. He says there has been talk of guidelines so that government “can’t just take what they want willy-nilly. But I don’t see that happening.” Furthermore, the “fair value” that’s supposed to be given for taken property is determined by the very people who take the property. They choose an appraiser who will lowball the property’s value, “and who am I going to get to get a better appraisal? These people don’t want to risk offending the city and never getting work from them again.”

State Rep. Dave Wolkins, R-Winona Lake, shares both Druley’s outrage and assessment of the “blighted” requirement in Indiana. “The law is so broad,” he believes, “that blight is whatever anybody wants to say it is.” Wolkins, at least, is in a position to do something about his outrage. He will be on an interim study committee, established by his bill in the last session of the General Assembly, to look into all aspects of eminent domain. He first tried to get eminent domain prohibited for private development (which eight states now do – Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington). That failed, so he tried to at least make things better for those whose property is taken – giving them, for example, 150 percent of the property’s appraised value. That failed, too, so he settled for the study committee.

Wolkins says he’s changed his mind about banning all economic-development condemnations (“I can see some cases where it might be needed”), and that’s surely right. If used sparingly and judiciously, it is a valuable revitalization mechanism. But he will push for better compensation and thinks tightening up the definition of blight is a must.

Posted by Marcia Oddi on July 31, 2005 12:48 PM
Posted to General Law Related