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The Nation's Housing

Homeowners Challenge Government Seizures of Property to Generate Higher Tax Revenue

By Kenneth R. Harney
Saturday, March 5, 2005; Page F10

Could your local government seize the home you own just to transfer it to somebody who promises to pay higher taxes?

That may strike you as bizarre, improbable and illegal. After all, the Fifth Amendment to the U.S. Constitution prohibits takings of private property for public use without just compensation, right?

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Correct. But what is a "public" use, and who gets to define it? Could it involve, as the Supreme Court heard Feb. 22, a municipal government hypothetically seizing a privately owned Motel 6 and transferring the property to a privately owned Ritz-Carlton hotel development group, simply because the latter would generate higher tax revenue?

Wesley W. Horton, a lawyer for the city of New London, Conn., told the Supreme Court that such a taking of private property would fulfill the test for public use "if [the taxes] are significantly more."

Horton is representing New London against the owners of 15 private homes in the city's Fort Trumbull neighborhood along the Thames River near Long Island Sound. The property owners -- holdouts who refuse to sell at any price -- don't want their houses to be bulldozed by private developers of condominiums, office buildings, a hotel and conference center. The city favors the redevelopment project, and argues that the tax revenue and jobs produced by the new construction will benefit the entire city -- thereby meeting the constitutional standard of public use.

But Susette Kelo, a registered nurse who bought and restored her water-view Victorian house in 1997, says the city's condemnation of her property -- solely for the purpose of handing the land over to private developers who'll pump up the tax base -- is unconstitutional. Her lawyer, Scott G. Bullock of the Washington-based nonprofit Institute for Justice, told the court: "Every home, church or corner store would produce more jobs and tax revenue if it were a Costco or a shopping mall."

In other words, if the promise of higher municipal tax revenue is the only justification needed to seize a private citizen's home, whose house is safe? Shouldn't there be a higher test when you are forcing people out against their will? One of the families facing displacement in Fort Trumbull, the Derys, has lived in the neighborhood since 1895. Wilhelmina Dery, 87, was born in the well-maintained house the city now wants to seize and bulldoze. The roots of these people go deep in the community; can a municipal government simply rip them out for "economic development" reasons?

At one level, the case of Kelo v. City of New London is as simple as that: How can anyone fail to sympathize with the embattled homeowners fighting Goliath down at City Hall? But at another level, the issue is considerably more complex. For one thing, local governments routinely exercise their powers of eminent domain to acquire private property for roadways, railways and other public uses.

And the definition of "public" can be trickier and more elusive than you might assume. For example, 51 years ago, in a landmark decision involving an economically depressed and crime-ridden section of Washington, the Supreme Court itself agreed that "public use" can be served by redeveloping blighted neighborhoods with the help of private developers of housing and commercial buildings.

That case, Berman v. Parker, helped open the door to ever broader interpretations of public use to justify eminent-domain seizures of private property. The court ruled that "public ownership is [not] the sole method of promoting the public purposes of community redevelopment projects." A public purpose, in short, can also include a more generalized public benefit that allows private development and private profit and ownership in addition to jobs and public revenue.

Since the Berman decision five decades ago, local governments across the country have used that rationale to renew downtowns, waterfronts and declining commercial districts, projects that often have produced vast and unquestionable economic improvements.

But even granting that, is there a dividing line that distinguishes legitimate public purposes from naked tax-revenue grabs of private properties by politically powerful interests to reward their corporate friends and allies?

If there is no limit to local governments' condemnation powers when they cloak their seizures with the public-purpose label, who protects individual property owners in this federal system?

Several justices seemed skeptical during oral arguments that the judicial branch is equipped to wade into the muddy trenches of real estate projects and second-guess local elected bodies' decisions.

"Do you really want the courts in the business of weighing evidence to see if a hospital . . . or a road will be successful?" Justice Sandra Day O'Connor asked Bullock.

But homeowners such as Kelo and Dery might ask in response: If the courts can't come up with standards to protect us, where else do we go?

The Supreme Court's decision is expected by late June.

Kenneth R. Harney's e-mail address is kenharney@earthlink.net. © 2005, Washington Post Writers Group


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