Eminent Domain Without Limits? IJ Asks U.S. Supreme Court to Decide

[Muzzle Tough]

I'm rooting for the little guy.

http://www.ij.org/publications/liberty/2004/13_4_04_d.asp

August 2004

Eminent Domain Without Limits? IJ Asks U.S. Supreme Court to Decide

By Dana Berliner

On July 19, 2004, the Institute for Justice petitioned the U.S. Supreme Court to hear one of the most important property rights cases in the past 50 years.

Kelo v. New London puts the issue to the U.S. Supreme Court in the clearest possible terms: Does the U.S. Constitution allow the government to take property from one private party in order to give it to another private party because the new owner might produce more profit and more taxes for the City from the land?

The rights of all home and business owners hang in the balance.

For the past three and a half years, the Institute for Justice has represented seven property owners in the Fort Trumbull neighborhood of New London, Conn. The City of New London and the New London Development Corporation (NLDC)—a private corporation—have been trying to take the Fort Trumbull homes and businesses for an office building and something else (they don’t know what) to complement a nearby Pfizer facility.

We mostly succeeded in the trial court. Judge Thomas Corradino of the Connecticut Superior Court held (in a 200+ page opinion) that 11 out of 15 properties could not be condemned, because the City and NLDC didn’t know what they were going to do with the land. The judge couldn’t say the condemnations were necessary for the project, as no one knew what the project would be. However, he allowed the condemnation of four homes for the office building. Both sides appealed to the Connecticut Supreme Court.

IJ and the homeowners’ argument was simple—the Constitution forbids condemnations for the purpose of private development. The constitutions of both the United States and Connecticut state that the government may use eminent domain only for “public use.” While the U.S. Supreme Court has held that cities may take land in order to remove “slums” or “blight,” and then transfer the property to private parties to develop it in a non-blighted way, it has never held that property can be condemned for the sole purpose of private development. That’s the difference between removing a health hazard or public nuisance, on the one hand, and taking property from one person to give it to somebody else, on the other. We argued that the condemnations were unconstitutional.

New London’s argument was also a simple one—the city needs more tax revenue. The people who are living there now aren’t wealthy. If the city gets rid of them and replaces them with an expensive hotel, richer residents and an office building, the city will have more tax dollars. Because the Fort Trumbull neighborhood has a prime location on the waterfront, a developer can make a good profit off it, and that profit will bring more money to the city.

According to the Connecticut Supreme Court, which issued its sharply divided 4-3 opinion in March of this year, the single fact that your City is strapped for cash justifies condemning your home. As long as the city has an idea of a project that promises to produce more taxes and employ more people than your home, it satisfies the Constitution. Taking your home is for the good of the city.

The Connecticut Supreme Court’s reasoning effectively reads the Constitution’s protections out of existence. Whose land wouldn’t produce more taxes if it were an office building instead of a home? Allowing condemnation for “economic development” just allows cities and developers to pick whatever land they want, without regard to the people who live or work there.

<snip>

[Liberty Belle]

1. Oh, this is vile! Kick.

[Occulus]

2. Kicking again.

Exceptionally vile. Vile, and morally repugnant. I imagine the Freepers won't much like this, either. They're all in favor of property rights- and this directly affected at least one small business.

Can we bridge this over to them? I don't have an account there, but... this kind of issue is something both we and they can agree on.

Let's play nice for once.

[The Backlash Cometh]

3. I agree with E.D. when there is an urgent need, but economic development

doesn't qualify. That's just allowing the chamber of commerce cronies to force sales from people that wouldn't have sold them land under normal circumstances

[mcscajun]

4. This story doesn't get nearly enough press

I recall reading about it earlier this year and being shocked, then indignant. I'd like to say 'yeah, what do you expect from Connecticut?" but I don't think this is something other places haven't thought of, and I'm sure this case is being very carefully watched by the commercial real estate industry.

[happyslug]

5. Georgian economic System

Henry George was an economist who pointed out the main problem with the economy was the concentration of ownership of LAND, and how that concentration prevented full economic development. Furthermore he pointed out most of the value of land had NOTHING to do with what a person did to the land,but the value of the land was the product of Society. The best example of this is why Gasoline Stations tend to e at traffic intersections. Why, so that people will see them and drive in to fill up. Gasoline stations are willing to pay top dollar for that location, but the value is NOT the building of the Station but the actual location.

This was the favorite saying of successful business, the three rules of a successful business is LOCATION, LOCATION, LOCATION.

George reasoned that given that location is the main factor in the value of a piece of land, why should the owner of the property get a return for that value. The owner did NOT create the value, Society did, so why should society NOT receive the value?

Before someone complains about "Property Rights" Henry George did not advocate community ownership of property, he liked private property. What Henry George advocated was that mere owner something should NOT give you the right to receive "rent" for the property. In George's view All Rental value for merely owning property should go to the community, but any value you received for the improvements should go to the person doing the improvements.

How Henry George proposed doing this was to tax land for its value without any improvements (For example high tax rate at an intersection of two highways do to the fact Gasoline Stations put a high value on such locations even without building a Gas Station). George than would NOT tax the improvements. Remember the power to tax is the power to destroy. Thus if you tax something to much people will avoid whatever is being taxed (or evade the tax but that is another issue) and slowly (or quickly depending on the tax) destroy what is being taxed.

George says there was one exception to this rule, Land. Land is hard to destroy and create. Given that fact a tax on land rarely if ever destroys what is being tax (i.e. rarely does the land get destroyed).

Thus under George's tax system, you tax the land based on its value, even if it is not being used in its most valuable way. You also do NOT tax improvements for improvements should be encouraged and the best way to DISCOURAGE improvements is to tax the improvement.

Various Municipals taxed using the Georgian Tax System, with the biggest being the City of Pittsburgh (Which ended it in 2001 for reason explained below). The reason it was adopted and used for almost 100 years was to force people to use their land for its greatest economic gain. In this it worked for many years (The City of Pittsburgh did not adopt a complete Georgian system for it had two tax rates, one on land and one on improvements. This dual system was created to keep up Tax Revenues. Under a 100% Georgian system you could have whole neighborhoods paying almost nothing in taxes (do to low valuation of the housing location) while other areas would have high tax payments (Do to very high value put on the property location).

As I said this system worked for over 100 years until the County GOP decided to "do "Property tax reform" in the late 1990s. By the time the "reform" movement had run its course, the county had been re-assessed by a new assessor who did not understand the Georgian tax system. He put a higher value on land that had buildings on the land than on vacant fields (Which undermines the whole concept of Georgian system of taxing the value of land only). This was used by local businessmen to have City Council drop the Georgian system. Many of these business men benefited from this change for the drop in the tax on land was compensated by the increase in the tax on buildings. The effect of this change was a shift of the tax burden from Business to Owner/occupiers (And all of this was done under the headlines of helping grandma keep her home, in the end she ended up paying more for her land was not worth much but her house was).

I went into the background of the Georgian tax System for it is very compatible to the concept of using eminent domain to take private property for "greater good". The Courts UPHELD the Georgian system even as it put a greater burden on Businesses than owner/occupiers. The same will occur here, all the Constitution guarantee is your land will NOT be taken WITHOUT COMPENSATION. The Constitution does not says your land will not be taken. You must be compensated based on the value of the land, but the state can take the land. This reflects the concept of Tax being the power to destroy. In the Georgian tax system the tax on land was design to raise revenue while doing minimal economic damage to the economy. The same with this use of eminent domain, it is the giving of property to greater economic gain and the Courts upheld that concept BEFORE Henry George, and followed it After George's concepts where made into law.

For More on Henry George and his tax system:
http://www.henrygeorge.org/denigris.htm

[hansberrym]

6. you are glossing over some key words.

you said:
all the Constitution guarantee is your land will NOT be taken WITHOUT COMPENSATION. The Constitution does not says your land will not be taken. You must be compensated based on the value of the land, but the state can take the land.


the fifth amendment:
"nor shall private property be taken for public use, without just compensation.


If "public use" means whatever the big money corporations want, then we are another step down the road to fascism.


On the other hand I did like many of Henry George's ideas, thanks for the link.

[happyslug]

7. "What Public Use"????

That is up to the Government to decide. This has been the rule in the United States since the Great Depression. The Courts since the Great Depression have deferred to the Government WHAT IS THE PUBLIC GOOD. Thus the Government wants to take your land and than sell it to someone else based on the grounds the new owners will do More economic good with it THAT IS FOR PUBLIC USE.

Furthermore you are quoting the Bill of Rights, unless the right comes under the concept of being a denial of Due Process (the 15th Amendment) the Bill of Rights only apply to the Federal Government NOT the States. For example denial of Free Speech by your local Government or your state Government was ruled to be a violation of your Right to Substantial Due Process under the 15th Amendment. The federal Courts have adopted the MOST of the Bill of Rights as part of the Due Process clause of the 15th, but NOT ALL OF THE BILL OF RIGHTS (The Second Amendment has NOT be "incorporated" for example). Thus the issue is NOT the exact wording of the Fifth Amendment but how is the Fifth incorporated under the concept of Substantial Due Process?

Thus the Courts have NOT always followed the exact wording of the Bill of Rights when Incorporating the Right via the 15th Amendment Due Process clause. The Courts in dealing with the Fifthteen Amendment have often deferred to the state and local government decision as to what was Due Process instead of the exact language of the Bill of Rights.

My point here the Court can IGNORE the term "For the Public Good" on the grounds that the phase only applies to the FEDERAL GOVERNMENT (For the Bill of Rights do apply as written to the Federal Government) and as long as the STATE or Local Government follows the rest of the Fifth (i.e. pays full value for the Property) all the requirements of the Fifteenths Due Process clause are meet.

Thus it is more likely than not the Court will uphold this taking. Either ruling that the determination of what is "for the Public Good" is a decision left up to the local Government OR that the Fifth Amendment only applies to the States and Local Government as to the price the State and Local Government has to pay (The Phase "For the Public Good" not being incorporated with the rest of the fifth into the 15th Amendment).