June 30, 2015

June 30, 2015 | Commentary on Legal Issues, Economy

Your Home Is Your Castle—If You Can Keep It

Take a look around your living room. There’s a risk that it could become part of a food court in a mall or an assembly line in a factory.

This is possible because of a decision handed down 10 years ago this month by the U.S. Supreme Court. In Kelo v. City of New London, the court ruled that private property can be seized and transferred to another private party for economic development. In the case, the City of New London, Conn., seized the homes of Susette Kelo and other property owners in order to revitalize the city.

A decade later, Congress still has not taken meaningful action to address this attack on property rights — despite overwhelming bipartisan support to do so. This failure by Congress needs to end this year.

Under the Fifth Amendment, private property may be seized only for a public use. Kelo effectively deleted “public use” from the Fifth Amendment. As Justice Sandra Day O’Connor famously said in her dissent, “The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

While the threat of economic development takings can impact everyone, lower-income individuals are the most at risk, victims of a “reverse Robin Hood effect” — taking from the poor and giving to the rich. After all, cities typically seek out inexpensive properties that are not generating the desired economic benefits and transfer those properties to private parties that government officials think will help with economic development.

Even if the takings are foolish, a court is unlikely to step in. In New London today, empty fields sit where the seized homes used to stand.

These economic development takings are also a prime example of cronyism. A developer can use the government as its middleman to seize properties and avoid paying what likely would be their true costs. Kelo has made it easy for government officials to benefit their friends and politically-connected businesses using the awesome power of eminent domain.

While many states have tried to address Kelo, with varying levels of success, these attempts don’t excuse Congress from taking action. If the Supreme Court gutted First Amendment protections, there would be widespread outrage. Policymakers wouldn’t believe it was adequate to protect federal First Amendment rights through a state law. The same holds true for private property rights.

Congress needs to prohibit the federal government from engaging in such takings. Congress should also clarify that states and local governments are ineligible for certain funds, such as Community Development Block Grants, if they engage in prohibited takings.

Certainly, takings for economic development should be prohibited, but any prohibition must be carefully crafted because the government can find ways around many prohibitions. The government often identifies some non-economic development reason for a taking and courts aren’t going to bother figuring out whether that reason is just a convenient cover for taking property for economic development. This is why it’s critical that the government have the burden of proving that a taking isn’t for economic development and it would have occurred even if there was no economic development benefit.

The blight excuse is a major way government seizes private property for economic development. State blight laws don’t usually define blight in any commonly understood way, such as properties that are unsafe. Instead, these laws often have vague and easy-to-meet definitions of blight that would cover properties in good condition. Even pristine properties can sometimes be seized if they are in blighted areas.

Blight abuse is alive and well. For example, after Kelo, an overbroad definition of blight was used to seize private property in Brooklyn for apartment and office towers, as well as private property in Harlem for Columbia University, a private institution. Congress should prohibit these blight takings, unless a property poses a concrete and imminent risk to public health and safety.

Congress should mark the 10th anniversary of Kelo by adopting reforms that properly address economic development and related takings. The American dream of owning a home should no longer be threatened by the nightmare of eminent domain abuse.

 - Daren Bakst is a research fellow in The Heritage Foundation’s Roe Institute for Economic Policy Studies and the author of the just-released legal backgrounder A Decade After Kelo: Time for Congress to Protect American Property Owners.

About the Author

Daren Bakst Research Fellow in Agricultural Policy
Thomas A. Roe Institute for Economic Policy Studies

Related Issues: Legal Issues, Economy

Originally appeared in Inside Sources