Archive | Property Rights

Using Eminent Domain to Take Wind Rights

The city of New Ulm, Minnesota may try to use eminent domain to promote wind power [HT: VC reader Paul Milligan]:

Does the government’s power of eminent domain include seizing the rights to the wind that wafts over your property? That’s the controversial question swirling around an 8 megawatt wind farm proposed by the southern Minnesota city of New Ulm and opposed by several farmers in rural Lafayette Township who refuse to grant their “wind rights” to the city utility.

“This is merely an evolution of principles that have been evolving since the sovereign rights of eminent domain were determined to exist,” according to Hugh Nierengarten, New Ulm City Attorney.

“Eminent domain is basically like a nuclear bomb,” said Clete Goblirsch, a farmer who refuses to sign an easement. “The repercussions would be long lasting and widespread, not just for us, but for the wind industry.”

While public utilities have fairly broad powers to use government authority to force property owners to sell to meet their needs, the New Ulm plan involves an unprecedented move to expand eminent domain authority to include the seizure of air space on private property for power generation.

“This is a first time this question has come up and the first time any entity has indicated they might use condemnation for wind development,” said Bob Cupit, an expert with the Minnesota Public Utilities Commission (PUC).

The opponents’ objections to the proposed five wind turbines include noise concerns, lower property values, and adverse impact on the landscape and rural atmosphere. “Nobody’s against wind energy,” said Jeff Franta, a farmer who’s helped organize the opposition. “We’re just against a project being forced on an area that doesn’t want it.”

This proposed use of eminent domain is unusual in two ways. First, it will be utilized to promote […]

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New York Intermediate Appellate Court Invalidates Taking of “Blighted” Property for Transfer to Columbia University, but Contradicts Recent State Supreme Court Decision in the Process

In Kaur v. New York Urban Development Corporation,a close 3-2 decision [HT: Neighborhood Retail Alliance], a New York intermediate appellate court has invalidated the taking of property in the Manhattanville neighborhood of New York City for transfer to Columbia University. Columbia and the government claimed that the land in question was blighted. However, the court ruled that there was no evidence of any real blight (especially before Columbia acquired much of the surrounding area after 2002), other than claims of “underutilization” of property. And mere “underutilization,” the majority concludes, is not enough to justify the condemnation of property as “blighted.” As the court puts it, “[t]he time has come to categorically reject eminent domain takings solely based on underutilization.” I wholeheartedly agree with this general sentiment. Indeed, I have often argued against broad definitions of blight that allow virtually any property to be condemned on the grounds that some other use might lead to increased development (see, e.g., here). Overbroad definitions of blight undercut many of the eminent domain “reform” laws enacted in response to the US Supreme Court’s decision upholding “economic development” takings in Kelo v. City of New London. I also think the majority makes a strong case that the blight determination in this case severely flawed, and in large part the product of the government’s desire to transfer property to a politically influential university. Indeed, I have often criticized Columbia’s plans to use eminent domain in Manhattanville, in a series of posts going back to 2006 (see here for the most recent post, and links to earlier ones).

There is, however, one major problem with the Kaur decision: it seems to contradict the New York Court of Appeals’ (the state supreme court) recent decision in the Atlantic Yards case, Goldstein v. New […]

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Preview of the Stop the Beach Renourishment Case

I recently completed a preview of Stop the Beach Renourishment v. Walton County, an important property rights case which was argued today, for the ABA Supreme Court Preview. It doesn’t seem to be up on their website yet, but I have posted it here. Below is a brief excerpt:

Under Florida’s Beach and Shore Preservation Act…, the state government establish “renourishment” projects to restore waterfront land that has become “critically eroded.” Once the projects are complete, the Act gives the state title to any newly dry land that has been cleared as a result of the project’s pushing back the waterline. This deprives waterfront property owners of their previously existing right to ownership of land up to the “mean high waterline” (MHWL). This is exactly what happened to the six waterfront property owners in Florida’s Walton County, whose holdings abutted a renourishment project established in the area. The property owners formed a group called Stop the Beach Renourishment, which is the petitioner in this case….

The Florida Supreme Court ruled against the property owners, holding that state law did not give them the right to
own all property up to the new MHWL created by the project.

The property owners now argue, in the U.S. Supreme Court, that the Florida court decision amounts to a “judicial taking” that deprived them of property rights through a sudden and unexpected revision of state law by the state judiciary.
Previous precedents hold that even a small “physical invasion” or occupation of a landowner’s property by legislation or executive action is a taking that requires compensation under the Fifth Amendment, which mandates that “just compensation” be paid whenever property is taken for “public use” …. However, the Supreme Court has never ruled on the issue of whether a deprivation of property that

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How Private Property Saved the Pilgrims

Today is Thanksgiving. And there is no better time to remember an underappreciated lesson of the original Thanksgiving: that the Pilgrims nearly starved to death because of collectivism and eventually saved themselves by adopting a system of private property. Economist Benjamin Powell tells the story here:

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on equality and need as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. Governor William Bradford, in his 1647 history, Of Plymouth Plantation, wrote that this system was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort. The problem was that young men, that were most able and fit for labour, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense. Because of the poor incentives, little food was produced.

Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private

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New York Court of Appeals Upholds Atlantic Yards Condemnations

The New York Court of Appeals has issued its opinion in Goldstein v. New York State Urban Development Corporation, an important property rights case. The 6-1 decision upholds the condemnation of numerous properties in Atlantic Yards project area in Brooklyn for the purpose of transferring them to powerful developer Bruce Ratner, who plans to use most of the land to build a new stadium for the New Jersey Nets and to construct “luxury” housing. This outcome is not surprising. As I explained in this post, where I predicted the result, New York courts are among the most hostile to property rights of any in the country. New York is also one of only seven states that hasn’t enacted eminent domain reform of any kind since the federal Supreme Court’s controversial 2005 decision upholding “economic development” condemnations in Kelo v. City of New London.

Significantly the Court concluded that the property in question could be condemned because it is “blighted” and blight alleviation is a “public use” recognized by the New York Constitution, thanks to a constitutional amendment allowing the condemnation of slum areas. This despite the fact that it is very far from being a slum of any kind, and much of it is actually middle or lower middle class housing. Indeed, the opinion itself notes (pg. 14) that the Atlantic Yards area “do[e]s not begin to approach in severity the dire circumstances of urban slum dwelling” that led to the enactment of the blight amendment. To get around this problem, the Court held that “blight” alleviation is not limited to “’slums’ as that term was formerly applied, and that, among other things, economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose” (pp. 15-16, […]

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Predicting McDonald

Below, my colleague Orin offers his predictions as to whether the Supreme Court will restore the “lost” Privileges or Immunities Clause to constitutional law. He may well be correct in predicting but a single vote for that proposition, but I remember when many predicted Angel Raich would get 0-1 votes for her Commerce Clause challenge to the Controlled Substances Act. Instead, in addition to Justice Thomas’s vote, she also received the support of Chief Justice Rehnquist and Justice O’Connor–in a “marijuana case” no less. True, her challenge did fail, as widely predicted, but she definitely beat the spread.

But note that, by Orin’s count, only one Justice is willing to follow the text of the Constitution. According to him, the others will decide the case based on stare decisis–i.e. their own ancient decisions (Scalia), the potentially revolutionary implications of reviving the actual text of the Constitution (Roberts & Alito, the latter of whom gave a speech just last week on the importance of Justices following the actual text as it appears to the naked eye), his personal “style” (Kennedy), and undesirable results (Breyer, Ginsburg, Stevens & Sotomayor). How sad it is that one can implicitly criticize a brief to the Supreme Court of the United States for relying on the text of the Constitution. Although Alan Gura’s brief does stress both original public meaning and original intent, under the relevant precedent Orin thinks the Court will or should (?) follow, the alternative is not that the Privileges or Immunities has a modern meaning but has no meaning whatsoever!

I wonder how Orin would have predicted the grant of cert, which stated the question presented as follows:

Whether the Second Amendment right to keep and bear arms is incorporated as against the States by the Fourteenth Amendment’s Privileges or Immunities

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Jeff Benedict on Pfizer’s Withdrawal from New London, and the Kelo Takings

Journalist Jeff Benedict is the author of an excellent book on the Kelo condemnations, that I reviewed here. In this Hartford Courant op ed, he discusses the Pfizer Corporation’s recent decision to close down its headquarters in the New London, Connecticut neighborhood where it had previously played a key role in instigating the notorious condemnations that led to the Kelo litigation:

I’m often asked if I’d consider writing a novel. My answer is always no, truth is better than fiction … and often harder to swallow.

Consider the bitter pill that Pfizer Inc. slipped New London this week. Barely a decade after constructing a $300 million research and development headquarters in the city, the pharmaceutical giant announced it was shutting down the facility. Just like that, New London will lose 1,400 jobs and become home to a gigantic, vacant office park that sprawls over a 24-acre campus.

Never mind that an entire residential neighborhood was bulldozed by New London to change the look of a 90-acre landscape around the Pfizer campus. And never mind that along the way the city used eminent domain to drive out homeowners and then fought a costly eight-year legal battle against holdouts Susette Kelo and her neighbors that went all the way to the U.S. Supreme Court….

After all the shouting, the developer ran out of money and the city has zero prospective replacements. Barren weed fields are all that exist where homes once stood.

Now that all of New London’s best-laid plans have been laid to rest, Pfizer is leaving, too. It’s tempting to suspect a connection. After all, let’s not forget that Pfizer never wanted to make its corporate home on the edge of New London’s urban Fort Trumbull neighborhood. “Pfizer wants a nice place to operate,” one well-connected Pfizer employee

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New York: Where “Underutilization” Equals “Blight”

Jay-Z and Alicia Keys sing “there’s nothing you can’t do” in New York.  That may be true for Hova, but it’s not supposed to be true when it comes to eminent domain under New York law.  A purported “public purpose” is insufficient to seize private property for economic development.  So government authorities resort to “blight” designations to condemn private property they would like to redevelop.  This is the strategy being used for the Atlantic Yards Arena and Redevelopment Project in Brooklyn.  Yet as Nicole Gelinas reports, the blight designation here is a bit of a stretch, as it relies upon the condition of the Metropolitan Transit Authority’s railyards, occasional weeds and grafitti, and the alleged “underutilization” of local properties.  As Gelinas notes, if “underutilization” is sufficient to constitute blight, then nearly any proposed economic redevelopment project could utilize eminent domain under New York law. […]

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NY Times Blog Discussion on the Implications of Pfizer’s Decision to Abandon its New London Facility Near the Site of the Kelo Takings

The New York Times Room for Debate blog has a forum on the implications of Pfizer’s decision to abandon its New London headquarters. Pfizer and its New London facility had previously played a key role in instigating the condemnations that led to the Supreme Court’s decision to uphold the use of eminent domain for “economic development” in Kelo v. City of New London. My contribution argues that Pfizer’s role in the Kelo takings and their failure to produce any actual development bolsters the case for strengthening protection for property rights. Here’s an excerpt:

Far from producing the promised “development,” the condemnation of private property in New London under Kelo damaged the local economy by destroying homes and businesses and wasting taxpayer money.

This result should not have been surprising. Government planners who undertake “economic development” condemnations have strong incentives to approve takings that benefit well-connected interest groups, even if they end up destroying more development than they create. Usually, as in Kelo, those targeted for condemnation are poor or politically weak.

I previously wrote about Pfizer’s role in the Kelo case and its recent withdrawal from New London here, here and here. […]

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More on the Implications of Pfizer’s Decision to Close Down its New London Headquarters

Over at the Land Use Prof Blog, property scholar Matt Festa has a good discussion of the implications of Pfizer’s decision to close down its New London headquarters for the ongoing debate over the use of eminent domain to promote economic development. As I explained in this post, the construction of this Pfizer facility was at the center of the firm’s successful efforts to lobby for the condemnations that eventually resulted in the Supreme Court’s controversial decision upholding “economic development” takings in Kelo v. City of New London.

Festa suggests that this experience, as well as other cases such as the notorious 1981 Poletown condemnations where some 4000 Detroit residents were forced out of their homes so that General Motors could build a new factory, may lead local governments to be more skeptical of economic development condemnations that depend on a single big firm for their viability:

Politicians and planners might be more cautious about hitching their redevelopment wagons to one big private entity. I’m as enticed as anyone by the idea of revitalizing a downtown/waterfront/etc. with a grand scheme that involves jobs, tax revenues, public-private partnerships, mixed-use development, walkable urbanism, transit, and the creation or enhancement of public space. But if the plan is based around promises from Pfizer, or GM, the incoming sports team, or any other single private entity or group, then the whole plan risks failure if the private actors decide to go elsewhere . . . When these plans fail to deliver, both the eminent domain power and the public fiscal resources are wasted.

I hope he is right. But I fear that this analysis may be too optimistic. The Kelo and Poletown takings occurred in large part because politically influential corporations (GM and Pfizer) lobbied for them in the first place. One […]

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Texas’ Amendment 11: Another Post-Kelo Eminent Domain Reform that Falls Short

It hasn’t gotten much media attention, but last week, Texas voters overwhelmingly approved Amendment 11, an eminent domain reform measure that purports to ban “economic development” takings of the kind the Supreme Court upheld in Kelo v. City of New London. Texas badly needs stronger protection for property rights, since it has a long history of eminent domain abuse, including recent examples documented by the Institute for Justice (the libertarian public interest firm that represented the property owners in Kelo) in this report.

Unfortunately, the new Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target. The amendment does forbid the taking of property for “the primary purpose of economic development or enhancement of tax revenues.” , But it continues to permit condemnations in areas with “urban blight.” And, as I document in this article (pg. 2124), Texas is one of many states where the definition of “blight” is so broad as to include virtually any property that the government might want to condemn. Indeed, Texas’ definition counts as “blighted” any area that, due to a wide range of possible causes, creates an “economic or social liability to the municipality” where it is located. This includes any area that creates an “economic . . . liability” because of insufficient development. Furthermore, the new Amendment still allows the power of eminent domain to be wielded by private organizations if they are “granted the power of eminent domain under [state] law.”

Amendment 11 is a small improvement over Texas’ previous almost completely toothless post-Kelo reform law (which I discussed in this article, pp. 2124, 2135-37). The main positive change is that “blight” now has to be shown on a property by property […]

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Pfizer Corporation Plans to Abandon New London Headquarters that Led to the Kelo Takings

The Pfizer Corporation has announced that it will close down its headquarters in New London, Connecticut. [HT: my former student Josh Blackman, and other VC readers]. As our regular readers may recall, Pfizer played a key role in instigating the notorious condemnations that led to the Supreme Court’s decision upholding the taking of private property for “economic development” in Kelo v. City of New London. Pfizer lobbied state and local governments to undertake the condemnation so that the land could be transferred to developers who would build facilities that were expected be useful to the firm and its employees. The head of the New London Development Corporation – the quasi-governmental agency that ordered the takings – had close ties to Pfizer and was married to a Pfizer executive.

The Kelo condemnations inflicted great harm on the people who lost their homes and businesses and led to the expenditure of some $80 million in public funds. To date, however, nothing has been built on the site, and there is no prospect that anything will be in the foreseeable future. Pfizer’s decision to leave New London makes it even less likely that anything productive will be done with the condemned land anytime soon. So far, the main beneficiaries of the Kelo takings seem to be the feral cats who have settled in the area. Far from producing the “economic development,” the Kelo condemnations have actually damaged the local economy by destroying taxpaying homes and businesses and expending large amounts of public money for no return.

For reasons I discuss in much greater detail in this article, this outcome should not be surprising. State and local governments that undertake “economic development” condemnations have strong incentives to approve takings that are expected to benefit well-connected interest groups even […]

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More on California Tax-Services Model – William Voegeli Responds to Comments

Last week I blogged about a very interesting article in the Manhattan Institute’s City Journal by Claremont Review of Books contributing editor William Voegeli titled “The Big-Spending, High-Taxing, Lousy Services Paradigm” (Autumn 2009).  It compared the tax-services models of California and Texas.  VC commenters were spirited as ever and raised a number of important questions.

Although I haven’t had the pleasure of meeting William Voegeli, I took the liberty of contacting him through the Claremont Institute and asked if he might have any additional thoughts for us, particularly responding to VC commenters.  Mr. Voegeli was kind enough to say yes, and has sent along the following response, below.  Let me add, on behalf of the VC community, myself as well as readers and commenters, our great thanks for engaging with us.  And let me add to the VC commenting community, that in the spirit of the original article, you might call Volokh Conspiracy a … Low-Taxing, High-Services blog!  Mr. Voegeli:

Dear Prof. Anderson:

Thank you for bringing my City Journal article (http://www.city-journal.org/2009/19_4_california.html) on California and Texas to the attention of the Volokh conspirators, and for your generous and thoughtful analysis (http://volokh.com/2009/11/02/the-california-versus-texas-model-and-public-choice/) of the piece.  Your post elicited many . . . spirited comments.  It would be cumbersome to address them individually, but I can offer a few points that speak to some of the general questions your readers brought up.

My essay argues that it’s not enough to look at how much states and localities spend because how well they spend is very important.  I understand several people in the comments section to be saying that this principle applies to the tax side of the equation, too.  Thus, California’s problem is not so much that it is a high-tax state but, as one commenter says, that

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California Withholding Tax Hike – Can Someone Explain the Legal Basis to Me?

I started out legal life in California, clerking for the California Supreme Court and, already being a tax geek, was handed many of the state tax issues.  So I have some familiarity with California’s tax law.  It is complicated and in many policy aspects problematic, but also, to be clear as a lawyer, it is also highly sophisticated as a body of regulatory law.  I have not had time to look back to California law and regulations on withholding, and haven’t updated my knowledge of the topic since I clerked there a long time ago and dealt with a couple of minor issues.

However, my understanding then was that withholding law was premised on it being an enforcement mechanism to ensure that the proper tax would be withheld on an expeditious basis and taking account of difficulties in collecting the tax due after the fact.  I did not think that it had a basis in law as a revenue raising device in its own right – it was legally an administrative provision for the correct, fair, and efficient collection of tax due, where the actual tax due was figured on the basis of separate statutes.

So I am confused as to the legal authority of the state of California apparently to impose an increase in the withholding rate, not for reasons having to do with the fair and efficient collection of tax finally to be due, but instead to raise revenues or time revenues for reasons not deriving from the administrative necessities of actually collecting a tax, the amount of which is determined by separate tax statutes and regulations.  Or have I not understood correctly, from news articles, what has taken place in a legal, tax-lawyer sense?

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage

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The Wall Street Journal on Alvarez v. Smith

The Wall Street Journal has an editorial urging the Supreme Court to rule in favor of the property owners in Alvarez v. Smith, an important property rights case that I have been trying to draw attention to for a long time (see my recent Findlaw column on it and previous posts on the subject here and here):

With states and cities struggling with deficits, one fertile source of revenue has been money or property seized by police in possible connection with crimes. Not to be left behind, Illinois has pursued this tactic aggressively, using a law which encourages both police departments and prosecutors to take property for forfeiture, long before the accused ever get their day in court.

This practice was challenged at the Supreme Court recently in Alvarez v. Smith, where six people allege that police use of the Illinois Drug Asset Forfeiture Procedure Act violated their right to due process under the Fourteenth Amendment. Though forfeiture laws are designed to strip criminals of ill-gotten gains, three of the six were never charged with a crime. All six had their property or money taken without a warrant and had to wait for months or years without a hearing on the legitimacy of the forfeiture…

Under Illinois law, the state has 187 days after property is seized to file forfeiture proceedings. Meanwhile, of forfeited funds seized, 25% lands in the lap of the prosecutor’s office. Another 65% goes to the department that seized the property, giving police added incentive to take the property to pad their budgets. Justice Sonia Sotomayor noted this police incentive with concern….

We’re all for relieving criminals of illegal profits, but civil forfeiture laws must be used with caution and oversight lest they infringe on fundamental rights. Alvarez v. Smith provides an opportunity to

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