August 16, 2006
Local Governments Wary of New Eminent Domain State Laws
By Joe White
Nashville Bureau for NCSL
NASHVILLE—State eminent domain laws passed in the wake of the controversial Kelo decision have made it harder for local governments to approach redevelopment—and the fallout isn’t over yet, legislators were told in a crowded session at the National Conference of State Legislatures' 2006 Annual Meeting.
Georgia’s House Speaker Glenn Richardson forecasted that “regulatory takings” will be the next focus of the debate about public use of private property. Regulatory takings are government actions such as zoning regulations that dictate what a parcel of land can and cannot be used for.
Richardson, who sponsored his state's new eminent domain law, was joined on the panel by Kansas Representative Janice Pauls, Pace Law School professor John Nolon., and NCSL policy expert Larry Morandi.
When the U.S. Supreme Court decided on June 23, 2005, that it would not over-rule the Connecticut Supreme Court in Kelo v. City of New London, it set off a firestorm of public criticism, Richardson noted. “It went from being a non-issue in Georgia to a snowball rolling down a hill,” the House speaker said.
The Supreme Court's decision essentially allowed private development to occur over the objections of local landowners if it was deemed to be for a "public purpose." Morandi said that caused “a huge legislative response." A full 46 states have had legislative sessions since Kelo and 31 of them—two-thirds—passed legislation to limit eminent domain powers, Morandi said. Six states proposed constitutional changes.
Laws passed fall into seven categories. They:
- Prohibit eminent domain use for economic development,
- Bar such use to increase tax revenues,
- Ban a transfer of private property to another private owner,
- Define the term “public use” more narrowly to reduce such takings,
- Restrict the use of eminent domain to blighted property and redefine what constitutes blight,
- Change the process to require public hearings, more open transactions and more public input, or
- Require compensation at greater than market value.
The change to super-compensation bothers some legislators, Morandi said. “They tell me, ‘That gets us into negotiating a payoff instead of considering a principle,’” he said.
Richardson said his state faced a storm of criticism. “All over Georgia people who couldn’t spell eminent domain were afraid that government would come in and take their single-wide, or their mansion, and put up a big-box store,” he said.
As each legislator in Georgia contributed his or her own idea for the state's bill, “we wound up with an extremely large bill,” he said.
“We went about this bill simply trying to prevent economic development,” Richardson said, even though “it had happened only rarely. That’s how the seed got planted. A kudzu field grew up,” he grimaced.
The outcome is that even redevelopment for blight has been so tightened up that “it will be a long time before it is used. … The property is going to have to be dilapidated,” Richardson said.
Property seized in Georgia will not be able to be re-sold to another private owner for 20 years, and if the property sits idle for five years the original owner will be able to buy it back for the compensation sum plus interest.
“I told the governor when we passed the bill that we would never be able to authorize the taking of land for industrial development, or for an airport,” Richardson said.
Professor Nolon said he originally thought the Kelo decision was not important, merely reaffirming previous decisions. But “in the press this has been the land use issue of the last year,” Nolon said. He views the new laws as trouble for cities. State legislators have so tightened the rules that “cities that have no other opportunity … except for redevelopment” have lost the ability to pursue a viable future, Nolon said.
“My concern is the same as the concern of mayors and of urban advocates,” he said. “Legislatures’ practice for decades has been to make tools available to cities. Now tools have been taken away,” Nolon said.
Not only have the chances of urban redevelopment been reduced, Nolon said, but “it has become very difficult to define economic development in the urban context.” Many new restrictions bar the use of eminent domain to improve the tax base, he noted. “But the tax base is what you have to give services to the community,” he said. Cities challenged by under-employment, population loss and “lulus,” or “locally unwanted land uses” like hospitals and nonprofit landowners may so bog down some cities that the only possible development is redevelopment, he said.
In New Orleans, Nolan said, landowners in the Lower Ninth Ward are selling out for 30 percent of market value because the new Louisiana laws bar the use of a redevelopment plan that would allow the condemning authority to pay market value, he said.
In response to questions about seven states facing referenda dealing with the loss of land value due to regulatory restrictions (as opposed to condemnation), Richardson said the question of whether such “loss” is compensable was raised in Georgia but sidestepped. “I predict within the next three to four years, legislators will have to take up that issue,” he said.
The question will revolve around “buffer zones, setbacks … where do you draw that line on what you compensate for?” Richardson asked.
Morandi said such “takings” are different from eminent domain because regulatory “takings” typically restrict development, while eminent domain often promotes development. The public outcry is different, he suggested.
###
This summary is provided for information purposes only. NCSL does not endorse any views it contains. |
