After the 2005 U.S. Supreme Court decision in Kelo v. New London, it’s constitutional for the government to seize private property for economic development reasons. For example, your house or church could be seized so that a wealthy developer could build a shopping mall on your property.
Since 2006, eight states have passed constitutional amendments to protect against what are referred to as “economic development takings.” There has been bipartisan support for a constitutional amendment in North Carolina. In 2007, the House passed an amendment by an overwhelming 104-15 vote. The state Senate, notorious for its opposition to property rights, let the amendment die.
Recently, some House members have introduced a new eminent domain amendment: House Bill 1268. The amendment would prohibit takings for economic development. It appears as if the amendment may be on the fast track. This may sound good on its face, but when it comes to this amendment, the cure is worse than the disease. The amendment would actually weaken, not strengthen, property rights.
It is extremely rare for the government to admit that it is taking property for an economic development reason. Instead, the government uses alternative arguments to take property for economic development.
The biggest source of economic development takings and eminent domain abuse is through urban renewal or blight laws. Legislatures define “blight” to mean almost anything, from properties that are old to properties that hurt economic growth. “Blight” gives government a built-in excuse to seize property for economic development.
The history and abuse of blight laws is chilling. In 2005, the NAACP’s Hilary O. Shelton testified to Congress: “Indeed, the displacement of African-Americans and urban renewal projects are so intertwined that ‘urban renewal’ was often referred to as ‘Black Removal.'”
A recent Institute for Justice study states: “Under that act [Federal Housing Act of 1949], which was in force between 1949 and 1973, cities were authorized to use the power of eminent domain to clear ‘blighted neighborhoods’ for ‘higher uses.’ In 24 years, 2,532 projects were carried out in 992 cities that displaced 1 million people, two-thirds of them African American.”
The proposed amendment would specifically authorize this type of eminent domain abuse. A few years ago, the legislature strengthened the state’s blight law to protect against abuse. This amendment, for all practical purposes, would lead to the elimination of those protections.
Any amendment needs to define blight properly. This should mean that property is “blighted” if the property itself is either abandoned or a clear danger to public health and safety.
The proposed amendment would make it possible for government to do end runs around any prohibition on economic development takings. As long as any alternative reason is identified for a taking, courts defer to the government and allow the taking.
There’s a simple solution to this problem. The government should be required to have the burden of proof to demonstrate that a taking isn’t for economic development. Two states that have passed new constitutional amendments have language that addresses the burden-of-proof issue.
If a citizen wanted to sue another citizen for $50, the burden of proof would be on the plaintiff. Yet when the government wants to seize someone’s home, it doesn’t have to meet a burden-of-proof requirement.
The proposed amendment doesn’t ensure that eminent domain victims are compensated properly. If you have property seized by the government and have the resources to challenge its offer of compensation, you almost certainly will lose money in the long run. Even if fair market value were provided, the attorney’s fees you would owe would take a significant chunk of your money.
This doesn’t even include the relocation costs, loss of business goodwill, and other related costs. The amendment should require that compensation be truly just. This would mean requiring the government to pay whatever it takes to put property owners in the same financial position they would’ve been in had their property not been seized.
Both political parties will want to make it appear that they addressed eminent domain abuse. It is extremely easy for them to give the appearance that they are doing something meaningful, simply by passing an amendment. It’s critical for those concerned with property rights to understand the major flaws with this amendment.
The legislators who seek eminent domain reform should be commended. However, before any amendment passes the House, they need to make simple but significant changes to the proposed amendment.
Daren Bakst is legal and regulatory policy analyst for the John Locke Foundation.