Fracas over home seizures moves to states

When the US Supreme Court ruled in June that private homes may be seized to make room for commercial development projects, the decision ignited a firestorm of criticism.

Outraged property-rights activists said the 5-to-4 opinion in Kelo v. New London would render homes and businesses nationwide vulnerable to government land-grabs to foster economic revitalization. Some ranked it among the high court's worst decisions, calling it this generation's Dred Scott.

Now, six months later, the debate over property rights is still raging, but it is about to enter a new, more deliberative phase as state legislatures prepare to open for business next year.

"There will be 44 states in session, and I am sure you will see bills introduced in all those states," says Larry Morandi, who tracks reaction to the Kelo decision for the National Conference of State Legislatures.

In his majority opinion in the Kelo case, Justice John Paul Stevens wrote that even though the condemnation plan of New London, Conn., did not violate the Constitution, there was nothing to prevent state lawmakers from restricting their own state's eminent-domain power.

The coming year will show to what extent state lawmakers are prepared to exercise that authority. What's clear now is that, as the debate shifts to state capitols, a new set of battle lines are being drawn.

On one side are property rights advocates pushing for tough restrictions on the use of eminent domain against homeowners and small businesses. On the other side is the redevelopment industry - planners, urban renewal specialists, construction firms - and various federal, state, and local officials who stress the need for government flexibility in helping communities rebound from chronic economic hardship.

"The key will be striking the proper balance between use of eminent domain for job creation on one hand and proper respect for property rights on the other hand," says Timothy Dowling of the Washington-based Community Rights Counsel, a public-interest law firm that helps state and local officials litigate land-use issues.

So far, four states - Alabama, Texas, Delaware, and Ohio - have passed measures in response to the Kelo decision.

In addition, last month the House of Representatives voted 376 to 38 to pass the Private Property Protection Act, which threatens to cut off federal funding to states and communities that seize homes for private commercial projects as a form of economic development. The measure now moves to the Senate.

"There is going to be a mega-debate," says Dana Berliner of the Institute for Justice, a Virginia-based public-policy law firm that represents the homeowners in the Kelo case and property owners in other eminent-domain cases. "The momentum toward legislative reform is very strong," she says.

A broad national consensus has emerged across political lines in opposition to the use of eminent domain for economic development, Ms. Berliner says. Polls show public opposition has ranged from 70 percent to more than 90 percent of respondents, she says.

Some reform legislation will likely be "watered down" through statehouse compromises, Berliner says. But "given how strong the movement is to do something on this, it is going to be difficult for states to pass [merely] cosmetic legislation," she adds. "They really are going to have to do something."

Many on the redevelopment side of the debate say they are perplexed by the fact that they won their case at the Supreme Court but appear to have lost it in the court of public opinion. Some credit effective public-relations efforts by property rights groups, while others say members of the media have distorted the issue by favoring homeowners in their news coverage.

Proposals for eminent-domain reform range from an outright ban on property seizures for economic development to beefed-up regulatory processes requiring more community involvement earlier in the planning process. Some states have halted all seizures of homes, pending study by the legislature.

Timothy Sandefur, a lawyer with the Pacific Legal Foundation, favors limiting home seizures to projects involving actual government use of the property. But many states are likely to push for something less, he says. He is not impressed by the reforms adopted in the four states that have already taken action. Reform-minded lawmakers should use those states as models of what not to do, he says.

Alabama and Texas continue to allow public seizures when property is deemed "blighted." But Mr. Sandefur says vague definitions of what constitutes "blight" leave giant loopholes in those state laws.

A proposed law in Pennsylvania has a focused definition of blight and is thus a reform effort with real teeth, he says. "Blight is dangerous property," Sandefur says. "It is property that attracts rats. It is property that is going to fall down. It is property that is going to burn up."

In contrast, the definition of blight in some states is so all-encompassing that it embraces any property that is not producing enough sales-tax revenue for the government, Sandefur says.

Community Rights Counsel's Mr. Dowling favors a legislative approach under consideration in New York. "They are thinking of ways to enhance property rights without tying the hands of state and local governments where a job-creation project does require the use of eminent domain," he says.

Lawmakers there may offer homeowners an increased level of compensation above the required fair market value for their property, Dowling says, to help cover some of the noneconomic costs associated with eminent-domain efforts.

"I don't think it has to be an either/or situation between never using eminent domain and always using it," he says. In many cases, he says, eminent domain is an essential tool to counteract a property owner who is holding out to extort a lucrative deal from city or state officials whose only goal is to achieve a greater good for the community.