The Supreme Court’s 2005 decision in Kelo v. City of New London, which allowed state and local governments to take private property and transfer it to other private owners to promote “economic development” generated a massive political backlash. Although many of the new laws were ineffective, the combination of strong reforms in some states and negative publicity in others did help reduce eminent domain abuse, even if it did not eliminate it. However, as Dana Berliner of the Institute for Justice shows in this recent Wall Street Journal op ed, abusive takings are now making a comeback, at least in many states. Berliner is one of the public interest attorneys who represented the property owners in Kelo, and is a leading expert on eminent domain. Here is an excerpt from the op ed:
In Atlantic City, a state agency recently decided to bulldoze the home that Charlie Birnbaum’s parents bought 45 years ago and that he now uses as a piano studio and a base for his piano-tuning business, as well as renting out two suites. New Jersey’s Casino Reinvestment Development Authority wants to replace it with an unspecified private development around the Revel casino, which emerged from bankruptcy a year ago.
Mr. Birnbaum is represented by my organization, the Institute for Justice, in trying to save his business and his parents’ former home. He was served with condemnation papers on March 14, and the first hearing will be on May 20. After a lull in cases of eminent-domain abuse over the past several years, we are increasingly hearing complaints from home and business owners about government attempts to take property for private development projects….
The [Kelo] decision shocked the nation. In the years that followed, 44 states changed their laws to make eminent domain for private development more difficult. State courts also stepped into the gap—nine high courts, including New Jersey’s, placed state constitutional limits on eminent domain. Chastened by this wave of opposition, most cities and agencies became much more careful in their use of eminent domain.
Unfortunately, this breathing spell seems to be ending. This latest condemnation by the Casino Reinvestment Development Authority is part of a new wave of eminent-domain abuse, as cities and redevelopment agencies try to regain some of the power they lost:
• California actually abolished its redevelopment agencies in 2011. Now cities and powerful development interests have launched a ballot initiative to restore the redevelopment agencies and greatly expand their power to seize properties for private projects.
• In Colorado, Denver suburbs and other cities have been on a spree of condemnations for shopping malls.
• Minnesota, Alabama and Illinois have added powers to state and municipal agencies to condemn for such projects as sports stadiums, industrial developments and business-district economic development.
Given widespread political ignorance and the unwillingness of most voters to pay more than very limited attention to political issues, it is not surprising that the public has shifted its limited attention to other issue. It is also unsurprising that politically connected casinos, developers, and other interest groups are taking advantage of the situation to lobby for takings that benefit themselves at the expense of the poor and politically weak, and to undermine post-Kelo reforms. Indeed, public ignorance helped ensure that many of the new laws enacted in the wake of Kelo were unlikely to ever be effective in the first place. Dubious takings that destroy more value than they create were common before Kelo, and never came close to completely disappearing. As the Kelo backlash recedes and the real estate market begins to recover from its recent plunge, they are likely to increase.
Property rights are still, on the whole, better protected against eminent domain in much of the country than was the case before Kelo. But much remains to be done to prevent backsliding and promote further progress.
CONFLICT OF INTEREST WATCH: I have done done pro bono work for the Institute for Justice on a number of property rights and eminent domain issues.