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WebMemo #927 on Smart Growth

December 1, 2005

Property Rights Protection Get Bogged Down

By

On June 23rd, the U.S. Supreme Court sent shock waves through the ranks of the nation's homeowners and small businesses when it ruled 5 to 4 that government could seize property and transfer it to another private owner if the change in ownership might enhance the community through "economic development." The case pitted the City of New London, Connecticut, against Susette Kelo, who fought the city for seven years to keep her home from being seized to make room for a major commercial development.

 

Because the decision alerted families across the nation that their homes are threatened, widespread alarm and opposition quickly spread.[1] Dissenting Justice Sandra Day O'Connor wrote that "the specter of condemnation hangs over all property," and I observed at the time that "Perhaps not since Dred Scott have the weak been so abused by the nation's highest court." Congress, too, reacted with disbelief, and in just days lawmakers introduced several legislative proposals to limit the ability of government to seize private property for economic development. With only a few notable exceptions, however, elected officials' responses have been more talk than action.

 

House Judiciary Committee Chairman James Sensenbrenner spoke for many of his colleagues when he said, "This decision assaults the Constitutional rights of all Americans and unsettles decades of judicial precedent," and he promised that his committee would soon produce legislation to better secure property rights. He honored that promise in early November when a bipartisan majority of the committee reported out the Private Property Protection Act of 2005 (H.R. 4128). A day later, the House passed the bill by an overwhelming margin, 376 to 38.

 

The bill would prevent any government entity receiving federal funds from taking property through eminent domain for the purpose of economic development. Any violation would disqualify that government entity from receiving federal funds for two years. The House bill has since been sent to the Senate, where it still has not been considered, and a less ambitious bill (S. 1313) has languished in the Senate Judiciary Committee since last June.

 

Because the House bill would leave state and local government entities that do not receive federal funds free to seize private property for economic development, citizens in many states have urged their state lawmakers to pass legislation to prohibit such takings. Several states already have this protection in their law or constitutions, and bills to limit eminent domain abuses have been introduced in virtually every state in the union. But in the five months since Kelo was handed down, only Alabama and Texas have enacted laws to strengthen property rights against eminent domain abuse. The Institute for Justice, a public-interest law firm in Washington, D.C., maintains a comprehensive and up-to-date listing of all of these proposals, including their legislative status, on its web site.

 

While much of the focus has been on the issues associated with Kelo-that is, taking property from one private owner and selling it to another for purposes of economic development and increasing tax revenues-a more common type of private property abuse occurs when communities impose restrictive zoning regulations on residential development-a growing trend. For the most part, these new zoning laws are designed to limit construction to single-family detached homes on large lots. In this way, communities effectively exclude moderate-income households by prohibiting the construction of affordable apartments and townhouses.[2]

 

By controlling the number and type of homes that a property owner can construct, communities can control the demographic profile of new residents. In most cases, the aim of such exclusion is to limit the number of moderate-income households living in a community because the cost of the public services they use, such as roads, schools, and police protection, often exceeds the tax revenues that they generate. And as with Kelo, it is low- and middle-income households that suffer as affordable housing is zoned out of existence. Perhaps as a consequence of these restrictive zoning ordinances, the construction of single-family detached houses in 2005 comprised the largest proportion of new residential construction in 6 years, according to the Census Bureau.

 

Despite the widespread concern that swept the country following the Kelo decision, state and federal elected officials have done little to strengthen the protection of property rights. With the exceptions of the House bill and new laws in Alabama and Texas, property rights initiatives in other states and in the U.S. Senate have been bogged down in legislative committees, in large part due to opposition from mayors, developers, and economic development officials who stand to see their power diminished. To date, President Bush has been silent on the issue, despite its popular appeal and property rights' status as a basic principle of individual freedom. With efforts to strengthen the protection of property faltering, now is the time for President Bush to take a strong stand and encourage the Senate and the states to enact laws that better protect an individual's property.

 

Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.



[1] See Ronald D. Utt, Ph.D., "Kelo Backlash Could Lead to Restoration of Property Rights Lost to Smart Growth and Eminent Domain Abuses," Heritage Foundation WebMemo No. 781, June 29, 2005, at http://www.heritage.org/Research/SmartGrowth/wm781.cfm.

[2] Ronald D. Utt, Ph.D., "Can Both Sides of the Sprawl Debate Find Common Ground on Property Rights?," Heritage Foundation WebMemo No. 730, April 25, 2005, at http://www.heritage.org/Research/SmartGrowth/wm730.cfm.

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