posted with permission by
Property Rights Foundation of America®
Founded 1994

COMMENTARY

ETHAN ALLEN INSTITUTE

"Ideas for Vermont's Future"
Independent - Nonprofit - Nonpartisan

4836 Kirby Mountain Road Concord, VT 05824 802 695 1448

For release Tuesday, June 28, 2005

Private Property At The Mercy of Government

John McClaughry

When, if ever, does government have the power to take the property of A and turn it over to B? According to a June 23 ruling by the U.S. Supreme Court (Kelo vs City of New London), government can do that whenever it thinks that B will pay more in taxes.

Six years ago the New London CT city council conceived a plan for urban revitalization and tax base enhancement. Through its nonprofit development agency, it would buy or if necessary condemn 90 acres called Fort Trumbull, adjacent to the Pfizer pharmaceutical complex. After setting aside 18 acres for parkland, it would sell off the remainder to a private developer. The developer would develop the remaining acreage according to a city-approved master plan including a hotel, a conference center, restaurants, and upscale retailing. The city would benefit from the jobs created and also rake in a ton of property tax dollars.

Fifty-eight of those acres are owned by 115 small landowners. Some of them have lived there all their lives, in modest and well-maintained homes. They went to court to defend their homes and neighborhood against the grand schemes of the city government and its developer friends.

The Fifth Amendment of the U.S. Constitution says "nor shall private property be taken for public use, without just compensation." To the framers of the Bill of Rights, "public use" meant highways, lighthouses, navy yards, arsenals, and customs houses owned by the public, or canals, ferries, and railroads serving as common carriers for the public. But private property may not be taken by eminent domain - regardless of just compensation - if the government simply turns it over to the private use of a different owner.

The Supreme Court began to chip away at this protection in 1954. It upheld a District of Columbia slum clearance and redevelopment program on the grounds that the area was unquestionably "blighted" and harmful to public health and safety. (Such programs were denounced by civil rights groups of the day as "Negro removal".)

In the Kelo case, the Court, on a 5-4 vote, ruled against Susette Kelo and the other homeowners. The Court replaced the constitutional requirement of "public use" with "public purpose." As Justice O'Connor observed, dissenting, "Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded - i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public…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."
The Kelo holding is a victory for tax-hungry governments, planning departments, and ambitious developers. It is a defeat for ordinary citizens who, until now, believed that the Bill of Rights protected their right to property ownership again governments eager to dispossess them in favor of other private citizens.

As Justice Thomas pungently observed in his dissent, "Extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best use, but are also the least politically powerful."

The Kelo case thus poses a dilemma for liberals. Liberals love government action to make sure that all development is done according to The Great Plan. On the other hand, liberals see themselves as principled advocates for justice for the poor, the little guy, disadvantaged minorities, Joe Sixpack - precisely the people who will be forced out of their property as governments, hand in hand with "the rich and the big corporations", take advantage of the green light newly given them by the Supreme Court.

Eight states expressly prohibit the use of eminent domain for economic development unless the area is clearly blighted. Vermont is not one of them. Vermont's constitution makes private property "subservient to public uses, when necessity requires it." To date, Vermont cities have rarely if ever sought to use eminent domain to confiscate property from A and turn it over to B, as in the New London case.

Now a U.S. Supreme Court majority has defined away the prohibition against takings for revenue enhancing purposes. The Vermont Supreme Court has shown itself willing to uphold almost any regulatory taking of land values. Given these unpleasant facts, property owning Vermonters should start thinking about adopting a constitutional amendment to protect their rights. Their 18th century constitutions are on their side, but their supreme courts, in thrall to the "diverse and always evolving needs of society", are clearly not.

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John McClaughry is President of the Ethan Allen Institute (www.ethanallen.org).

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