Charlotte and other North Carolina municipalities with grand economic redevelopment plans need to pay close attention to an important case the U.S. Supreme Court has just agreed to hear. The decision will likely define the limits of government action is this sphere for years to come.
The question before the court is simple but fundamental:
What protection does the Fifth Amendment’s public use requirement provide for individuals whose property is being condemned, not to eliminate slums or blight, but for the sole purpose of “economic development” that will perhaps increase tax revenues and improve the local economy?
The case of Kelo v. City of New London will hopefully decide this question in a way that protects property rights. The Washington-based Institute for Justice has brought Kelo before the Court, part of IJ’s tireless defense of property rights in courtrooms across the country in recent years. Eminent domain cases can be complicated, but for IJ’s attorneys Kelo presents a stark choice.
“If jobs and taxes can be a justification for taking someone’s home or business, then no property in America is safe because anyone’s home can create more jobs if it is replaced by a business and any small business can generate greater taxes if replaced by a bigger one,” Dana Berliner, an IJ senior attorney, explains.
“We have to restore the meaning of public use to what everyone once understood the term to mean — something the public would own and use, such as a road. Economic development is not a public use,” he adds.
But a Connecticut court found just the opposite in deciding that the City of New London and the New London Development Corporation need only assert that it could make more money from taking land from one set of property owners and leasing it to another set to meet the “public interest” test for eminent domain.
In a report Berliner compiled last year, and which IJ relies on in making its case to the Court, he found that between 1998 and 2002 alone, there were over 10,000 filed or threatened condemnations with Kelo-like private-to-private transfers of property in 41 states. Moreover, the report found that the way states treat eminent domain varies greatly state-to-state. Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina, and Washington all make clear the condemnation cannot just be used to increase tax revenue or on the basis of vague economic benefits. But Connecticut is joined by Kansas, Maryland, Michigan, Minnesota, New York, and North Dakota in permitting the very thing the other states prohibit.
Indeed, this variance is an important part of calling on the Supreme Court to settle the matter as a fundamental Constitutional right, the ability to own and dispose of private property, can mean wildly different things depending on the jurisdiction.
Happily, Berliner found that North Carolina has been reluctant to permit government power to trump property rights. Berliner’s analysis of recent court cases in the state only found one in which eminent domain was used to further a government redevelopment plan by taking property from one owner and essentially delivering it to another owner for another use. In that case, the Piedmont Triad Airport was expanded over the objections of a property owner who said his property was being condemned just to benefit FedEx.
But because this was a relatively specialized case of an airport expansion — which involves questions of safety and does not happen very often — the decision might not signal a change in how North Carolina courts treat property rights. Or, as Berliner notes, it could signal a jumping-off point for local governments and development commissions upon which to base new arguments for broader eminent domain powers. We just do not know.
We can, however, spin out a perfectly reasonable hypothetical case in which the Connecticut-style interpretation of eminent domain might unfold in the Charlotte area in the near future:
Local government, acting in service a Charlotte Area Transit Service plan, moves to use eminent domain to claim several residential parcels or small businesses. The goal is to place higher density “transit oriented development” on the site, increase tax revenue, and stimulate the economy. Further, supposing Amendment One passes in November, the locality can very easily show that it can afford to underwrite the development using tax increment financing to pay for the project. As the new project would both generate more tax revenue and jobs than the old uses of the site and further the supposed public interest in greater use of light rail mass transit, the old property owners could be swept away at a modest cost.
The Supreme Court needs to make clear that eminent domain is not a green light for local government planners to indulge in their dreams to remake the world. Property uses other than that which central planners desire is not the same thing as blight, and should not be treated as such.