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The Church of Tax Revenues:

As I observed a few months ago, one predictable loser in the post-Kelo aftermath would be tax-exempt organizations such as churches. Tom Blumer reports on the case of the Centennial Baptist Church which stands in the path of a new Home Depot in Sand Springs, Oklahoma.

By pure coincidence, the new strip mall just has to go exactly where the church is located, rather than, say, on the site a nearby McDonald's and muffler shop. Tom has the maps--it looks like the church is right in between the McDonald's and the muffler shop.

I suspect this won't be the last we hear of churches in the crosshairs of governments taking land and giving it to commercial developers. Small, minority, poor, and unpopular religions and charities would seem to be especially vulnerable to the wrecking ball.

Update:

More from Professor Bainbridge (who previously described a similar situation in LA involving a nonprofit animal shelter), Christine Hurt, who asks, "What's Liberal About Eminent Domain?" and Peter Lattman at the WSJ Law Blog, who describes Eminent Domain as "Business Law's Angelina Jolie" (taking off on this article in today's NY Times).

Al Maviva (mail):
If a church is targeted for re-zoning, it should look into filing an RLUPA claim.
1.18.2006 10:26am
Mr. Java (mail):
The church will receive fair compensation and can use that fair compensation to buy or build a church in a different location. Economic development is good for the whole community; sometimes minority interests need to compromise a little for the greater good. Sure, it is inconvenient to relocate, but then it is even more inconvenient for people to be unemployed.

People have been called to make much bigger sacrifices for their community. For example, sacrificing their lives in the war in Iraq that, realistically, primarily benefits the people of Iraq. (I am not denying that their may be some collateral benefits to the United States.) All due to the political process and the decision-making tendencies of the current President. A church having to relocate after being fairly compensated is NOTHING compared to that sacrifice. I should point out that when a soldier dies, their family is NOT fairly compensated. When eminent domain is used, you are fairly compensated.

This is about progress. If you don't think it is progress and you live in a community where something like this is happening, why don't you go convince your neighbors to vote for people who support your point of view?

I am not sympathetic to your anti-democratic argument that democratic processes should not be used to allow a community to grow in the manner that is most economically favorable. You often gleefully post about a Kelo-backlash. Great. That means democracy is working for you. Sometimes you win, sometimes you lose. Your problem is you think your view on this issue should always win, democratic majorities or not. One should accept democratic victories without tasteless gloating and democratic losses without excessive whining.
1.18.2006 10:40am
Marcus1 (mail) (www):
>By pure coincidence, the new strip mall just has to go exactly where the church is located, rather than, say, on the site a nearby McDonald's and muffler shop.<

The article stated that they plan to take "two other churches, several businesses, dozens of small homes, and a school."

>Small, minority, poor, and unpopular religions and charities would seem to be especially vulnerable to the wrecking ball.<

They might seem that way if we lived in China. In America, I kind of doubt it. Even if such a move were attempted, anybody targeted in such a way would have a very strong First Amendment freedom of exercise claim.

But then, isn't this something the political process should decide? I hope conservatives aren't running to court to short circuit political decisions about what is a public use and what is the best way to revitalize a city. Just saying...
1.18.2006 10:48am
Freder Frederson (mail):
When eminent domain is used, you are fairly compensated.

Why on earth should the government act as the agent of private industry? If private industry wants to build in a particular location, then the marketplace should decide the value of that land. The government has no business creating an artificially low price for the property through eminent domain and then reselling it to the developer. If eminent domain produced fair compensation (which should be the fair market price) for the property then, by definition, it would not be necessary, as a rational person would always sell his property for fair compensation. That's how the market works. If the price is too high for the buyer, he will simply have to build somewhere else. Eminent domain is meant to be used for truly public purposes--not to interfere with negotiations between private parties.
1.18.2006 10:51am
byomtov (mail):
While I understand the dislike for Kelo, I think it is unfair to blame the decision totally for this sort of thing. After all, Kelo did not force state and local governments to condemn property for strip malls.

Shouldn't the local officials be the ones attacked here? That's who is actually taking the church, after all. They are the ones who should bear the vast bulk of the criticism.

This strikes me as a case of "small-government" types being absolutely unwilling to criticize local government, and looking for any excuse to blame evrything they don't like on the Federal government and the big bad Supreme Court.
1.18.2006 10:53am
KevinM:
What's interesting about this is that it tends to undermine the fair-compensation argument (even assuming the mythological premise that compensation will be fair). The taxable/nontaxable distinction introduces a distortion, rendering profitable a transaction that wouldn't make sense in purely real-estate-market terms.
1.18.2006 10:56am
Freder Frederson (mail):
I hope conservatives aren't running to court to short circuit political decisions about what is a public use and what is the best way to revitalize a city.

Of course they are. Do you think that most large developers are run by Democrats? In the long run, as much as Kelo is derided as the product of a "liberal activist court", who do you think will benefit the most from it? It sure ain't gonna be the Friends of the Earth and the Sierra Club. It's going to be Rouse and WalMart.
1.18.2006 10:57am
billb:
Mr. Java: How is building a Home Depot on the site of a religious institution in any way serving the public good much less a "public use?"

I would like to point out that you also gloss over the issue of what constitutes "fair" compensation. Everybody has a price, and I'm sure that if Home Depot wanted this land bad enough, they could pay the church members' price to move. Instead HD seeks to have the city force the parishoners to move in exchange for what the city determines a fair value to be. For many years private businesses could not do this--the government could only do this for roads, dams, schools, and the like (i.e. public institutions). After Kelo, things are different. The right of alienation is basically gone now.
1.18.2006 10:58am
Mike BUSL07 (mail):
Well, to be fair, it cuts both ways. The locals wouldnt be able to do this if it werent for the Kelo.

And Mr. Java, Iraq is a long way from New London, and no one is forced to enlist in the army. People are on the other hand forced to give up their homes in eminent domain proceedings.
1.18.2006 10:59am
AF:
Churches may well have remedies under RLUIPA, the Free Exercise Clause, or state constitutions. As for other non-profits, I would support state and federal statutes preventing taking their property merely to increase tax revenue. If such statutes can't get passed, one wonders why federal judges should step in.
1.18.2006 11:10am
Huggy (mail):
Douglas Adams' Hitchhicker's Guide To The Galaxy gives a rebuttal to "byomtov" above. And for a true public use.

My belief is that fair laws would insure the 40%+ that don't vote are as protected as the 60%- that do. Ironically this is currently true in large parts of the country. That's why Kelo has created a stir.

The growing consensus is that SCOTUS is a problem and a solution. 50 years of social engineering will do that.
1.18.2006 11:12am
Anderson (mail) (www):
Riiiiiight ... they're out to get the Baptists ... in Sand Springs, Oklahoma?

This map shows Baptist population in the U.S. by county. Tulsa County is relatively low, but that's still 10-25% Baptist. I somehow suspect the Baptists are not an oppressed minority in Tulsa County.
1.18.2006 11:28am
Stephen C. Carlson (www):
Anderson: I somehow suspect the Baptists are not an oppressed minority in Tulsa County.

Well, there are different types of Baptists, and not all Baptists are Southern Baptist. According to the Tulsa Metropolitan Ministry directory, Centenniel Baptist Church is part the National Baptist Association, one of the oldest African-American organizations in the country.
1.18.2006 11:35am
Brutus:
Why on earth should the government act as the agent of private industry? If private industry wants to build in a particular location, then the marketplace should decide the value of that land. The government has no business creating an artificially low price for the property through eminent domain and then reselling it to the developer. If eminent domain produced fair compensation (which should be the fair market price) for the property then, by definition, it would not be necessary, as a rational person would always sell his property for fair compensation. That's how the market works. If the price is too high for the buyer, he will simply have to build somewhere else. Eminent domain is meant to be used for truly public purposes--not to interfere with negotiations between private parties.

Freder, I just wanted to say you're right on the money there! You and I agree completely about something, how about that? =D
1.18.2006 11:38am
Pro-Liberty & against Mob rule:
I'm against the Kelo disaster, which is a recipe for the politically powerful to loot; perhaps if people who are plundered are given TREBLE what the government says is "fair compensation" there'd be fewer eminent domain takings.
1.18.2006 11:55am
BizzyBlog (mail) (www):
Mr. Java:
The full National Review Article and my post has this quote from the Reverend:

"After I heard the news, we started looking to see if we could move," Gildon said. "I just don't think we can afford it. It's too expensive. And if we can't move, and they take our building, what happens to the church? If we leave, who is going to minister to the black community in Sand Springs?"

So your claim that he can just up and move is questionable, no different than many homeowners who may live in paid-off houses but can't afford to move anywhere else if everything available is much more valuable then their own places.
1.18.2006 11:59am
Not a lawyer but ...:
If eminent domain produced fair compensation (which should be the fair market price) for the property then, by definition, it would not be necessary, as a rational person would always sell his property for fair compensation.

Here's a thought experiment for Freder, who wrote the above: someone rings your doorbell at home, and offers 120 percent of the fair market value of your home, in cash. (Fair market value is based on what comparable properties sell for.) All you have to do sign, and move in three months. Sure, you've lived in the home for years, it's exactly what you want, all your friends are in the close neighborhood, the replacement house you'll buy probably will be at least a half mile away - but since you're a stictly rational person, and you make decisions based solely on fair market value (based on what comparable properties sell for, yes?), you'll sign as fast as you can. Right? Because subjective factors should play no part in economic decisions - that would be irrational.
1.18.2006 12:02pm
Cheburashka (mail):
Don't equal protection doctrines come into play if the government targets non-profits for eminent domain takings?
1.18.2006 12:04pm
dweeb:
Not a lawyer said "someone rings your doorbell at home, and offers 120 percent of the fair market value of your home, in cash. (Fair market value is based on what comparable properties sell for.)"

Not really. Under free market capitalism, fair market value is what the owner of a particular asset is willing to sell it for. We don't average the price of all paintings of similar size to put a value on the Mona Lisa.
When a professional sports team wants to sign a star athlete, we don't expect him to sign for your definition of "fair market value" Fair markets involve at will transactions, where both parties can walk away from the deal if they don't see it increasing their marginal utility. Your evaluation of what constitutes a "rational" home sale decision overlooks a number of other purely economic factors. If I'm a consultant with the oportunity to bill out as many hours as I work, there's the cost of my time involved in finding a new home and moving, for instance. You overlook that a home is not like a share of stock, which can be liquidated with a few mouse clicks, with no further burden on the seller.

What's most troubling about Kelo is the model of the relationship between govt. and citizens/subjects it implies. It models government like agriculture, say, a dairy farmer, and the citizenry as cows - assets which the government manages like livestock to maximize revenue yield. Yes, I want government run like a business, but a business where citizens are customers, not capital equipment.
1.18.2006 12:48pm
Brutus:
Here's a thought experiment for Freder, who wrote the above: someone rings your doorbell at home, and offers 120 percent of the fair market value of your home, in cash. (Fair market value is based on what comparable properties sell for.) All you have to do sign, and move in three months. Sure, you've lived in the home for years, it's exactly what you want, all your friends are in the close neighborhood, the replacement house you'll buy probably will be at least a half mile away - but since you're a stictly rational person, and you make decisions based solely on fair market value (based on what comparable properties sell for, yes?), you'll sign as fast as you can. Right? Because subjective factors should play no part in economic decisions - that would be irrational.

Subjective factors can and do play parts in real estate decisions all the time! The top-floor condo with the better view will sell for more than an otherwise identical condo on the ground floor with a lousy view.

In this example, if my price is 25% or 50% above "fair market value" - or even if there is NO price at which I will sell, for whatever subjective reason - the government should not force me to sell if I don't want to.
1.18.2006 12:56pm
FlavaFlay:
Not a lawyer but ...: I may be wrong, but I think Freder would agree with the goal of your thought experiment.

It is my understanding that Freder is arguing that in a situation in which the government is acting as an agent of private industry, the use of eminent domain should be theoretically unnecessary. It is unnecessary because two private parties should be able to agree on an equitable solution. A church should be able to figure out what price is acceptable in order for them to continue to carry out their mission and goals and wants just as a person should be able to figure out what price for a home is acceptable to continue to meet his/her wants and needs.

For the government to exercise it's eminent domain power in such a situation belies the claim that fair compensation was issued.

But of course, there are obvious exceptions (BOCTAOE).
1.18.2006 12:58pm
David M. Nieporent (www):
The church will receive fair compensation and can use that fair compensation to buy or build a church in a different location. Economic development is good for the whole community; sometimes minority interests need to compromise a little for the greater good.
The silliest part of this argument is its foundation in the weird idea that the city council of Sand Springs, Oklahoma is somehow competent to manage "economic development." I mean, I understand that the folks in Havana and Pyongyang still think that way. But you'd think that idea would be dead in the rest of the world. But elect someone to a rinkydink job with a city council somewhere, and suddenly liberals think he can successfully centrally plan the economy of his town.

People have been called to make much bigger sacrifices for their community. For example, sacrificing their lives in the war in Iraq that, realistically, primarily benefits the people of Iraq.
Every single American in Iraq is a volunteer. Doesn't sound like the Centennial Baptist Church is.
1.18.2006 1:01pm
byomtov (mail):
Douglas Adams' Hitchhicker's Guide To The Galaxy gives a rebuttal to "byomtov" above. And for a true public use.

Maybe you would care to explain the rebuttal rather than just claiming there is one. My point was that those who are unhappy about this should be criticizing the local officials who are doing it, not just the Supreme Court decision that permits,but does not require this action.

When I see such obviously selective outrage I get suspicious as to whether the critics really care at all about the church, or any other specific case, or just see it as a a way to bash some justices they don't like.
1.18.2006 1:41pm
Cheburashka (mail):
Not really. Under free market capitalism, fair market value is what the owner of a particular asset is willing to sell it for. We don't average the price of all paintings of similar size to put a value on the Mona Lisa.

Courts calculate fair market value all the time. What's the big deal?

Your statement misses the economic reality of many large developments: Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay.

I don't have a problem with eminent domain being used so that a landowner gets fair value calculated at what they'd be willing to accept in the absence of the development.
1.18.2006 1:56pm
Curmudgeon:

For many years private businesses could not do this--the government could only do this for roads, dams, schools, and the like (i.e. public institutions). After Kelo, things are different. The right of alienation is basically gone now.

There may be a backlash, but the Kelo decision really didn't change anything. In Kelo, SCOTUS merely declined to change the existing rule, rather than make a new rule.
1.18.2006 2:00pm
eddie (mail):
Face it, the effect of Kelo means that the government is the owner of all property and deeds are to be considered only fancy leases. A person has to be living in a dream world to believe that elected local and city officials are more (or for that matter lesss) responsive to the non-elite than are elected federal officials. The SCOTUS has singlehandedly made communism our political system.

On the positive side, under Kelo maybe local governments can drive out mosques that favor the advancement of Islam through violence. (Sarcasm)
1.18.2006 2:06pm
eddie (mail):
CORRECTION: Should read "local and state" not city. Also, would like to add to (Sarcasm) (Irony) or (Sorrow)
1.18.2006 2:11pm
FULawGuy (mail):
My point was that those who are unhappy about this should be criticizing the local officials who are doing it, not just the Supreme Court decision that permits,but does not require this action.


byomtov: The fact that the job of the Supreme Court is to
protect our constitutional rights is enough of a reason to criticize Kelo.


Your statement misses the economic reality of many large developments: Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay.


Cheburashka: If the sellers are willing to sell at a certain price, while the developer is willing to buy at that same price, there is no reason to resort to coercion.
1.18.2006 2:22pm
Freder Frederson (mail):
I don't have a problem with eminent domain being used so that a landowner gets fair value calculated at what they'd be willing to accept in the absence of the development.

Hey, whatever happened to supply and demand? Isn't that what free market capitalism is based on. I'm supposed to feel sorry for WalMart and their legion of high priced lawyers and real estate brokers up against Joe Sixpack who wants to sell his 1/4 acre lot for the highest price possible when it is the last piece of land standing between Walmart and their new superstore? So you're saying life is unfair to Walmart and they should be allowed to go crying to the local government because big old mean Joe actually wants WalMart to pay him what WalMart actually thinks his property is worth? My God, that is harsh! WalMart would never make any money if they actually had to pay people what they were willing to pay for their property. It's so much easier to convince the city council to condemn the land and get it for less, maybe they'll even throw in some tax breaks. That's how capitalism is supposed to work. That supply and demand stuff is only for people who have lots of money to start with.
1.18.2006 3:01pm
eddie (mail):
Well written Frederson.
1.18.2006 3:06pm
PersonFromPorlock:
I am not sympathetic to your anti-democratic argument that democratic processes should not be used to allow a community to grow in the manner that is most economically favorable.

This, of course, is the definition of democracy as "two wolves and a sheep deciding on dinner."
1.18.2006 3:11pm
Paddy O. (mail):
Seems to me that Wal Mart is full of all sorts of things which would help make the community better. Sure, they're already low prices, but think how happy the community would be if they could pay even lower prices.

I don't think Wal Mart can be trusted to determine their own prices, and so each local community should mandate exactly what prices Wal Mart should use.

We should not be dependent on Wal Mart to choose for itself what it can sell, and at what price.

By golly, I want eminent domain on a new toaster and television. For the good of the community of course. And if I offer them fair value, say wholesale, they should have to accept it.
1.18.2006 3:14pm
Tyrone Slothrop (mail) (www):
While I understand the dislike for Kelo, I think it is unfair to blame the decision totally for this sort of thing. After all, Kelo did not force state and local governments to condemn property for strip malls.

Shouldn't the local officials be the ones attacked here? That's who is actually taking the church, after all. They are the ones who should bear the vast bulk of the criticism.

This strikes me as a case of "small-government" types being absolutely unwilling to criticize local government, and looking for any excuse to blame evrything they don't like on the Federal government and the big bad Supreme Court.


There is a fair point here, one that reminds me of all the complaining by conservatives in the wake of Hurricane Katrina about the (poor) performance of state and local government.

OTOH, maybe this is less about incompetent local government, and rather about local government that acting predictably to convert non-tax-generating property into tax-generating property.
1.18.2006 3:27pm
Thorley Winston (mail) (www):
OTOH, maybe this is less about incompetent local government, and rather about local government that acting predictably to convert non-tax-generating property into tax-generating property.


Sounds like a case for the local government to petition the State government to change the property tax laws to remove the exemptions for churches.
1.18.2006 3:31pm
byomtov (mail):
byomtov: The fact that the job of the Supreme Court is to
protect our constitutional rights is enough of a reason to criticize Kelo.


FUlawguy:

And local governments have no such responsibility?

Did you notice the words "not just" which I put in bold in the comment you are responding to? I am not an admirer of Kelo. I don't think you can find anyplace where I said I agreed with it. My comment is about the selectivity of the criticism. Here is what you quoted, with my original bolding reinstated:

My point was that those who are unhappy about this should be criticizing the local officials who are doing it, not just the Supreme Court decision that permits,but does not require this action.
1.18.2006 3:35pm
Anonymous Liberal (mail) (www):
FULawguy writes:

The fact that the job of the Supreme Court is to
protect our constitutional rights is enough of a reason to criticize Kelo.


Oh really, and where in the constitution does it say that economic redevelopment is not a legitimate public use? Where is this right you speak of? The fact is, it's not at all clear from the takings clause that such a right exists. Maybe if you want to look at penumbras and emanations and such, you can build an argument, but that sounds an awful lot like the judicial activism conservatives hate so very much.

Look, I don't like this use of the eminent domain power any more than the next guy, but that doesn't mean that these states and municipalities are acting unconstitutionally. The Kelo court was not faced with the question of whether or not economic redevelopment is a public use. That question was decided over 50 years ago. The Kelo court was asked to draw an arbitrary line between economic redevelopment in poor neighborhoods and economic redevelopment in other neighborhoods. Given that there is no basis in the constitution for drawing such a line, the Court rightly decided not to. That was not only the correct legal conclusion, but it was the right policy decision as well. If the dissenters had won out, this form of eminent domain would still exist; it would just be limited to poor neighborhoods. And if history teaches us anything, it's that our political system is very bad at remedying or preventing injustices that only affect the poor.

Post Kelo, it is clear that anyone's property can be taken in the name of economic redevelopment, not just the poor. As a result, political momentum is building to put in place laws protecting against abuse of the eminent domain power. That's the way things should be. The solution to this problem is political, not judicial.
1.18.2006 3:49pm
Marcus1 (mail) (www):
David Nieporent,

>But elect someone to a rinkydink job with a city council somewhere, and suddenly liberals think he can successfully centrally plan the economy of his town.<

Maybe then state legislatures should be limiting the power of these city councils. And are they really liberals sitting on city councils in Oklahoma?

I think liberals simply accept that the Consitution (or state constitutions) allows governments to exercise eminent domain. Conservatives apparently think this is "what's troubling about Kelo," but it wasn't Kelo that created or exercised the power. I find it disingenuous to try to trash the courts for something the courts had nothing to do with. These are 100% political decisions that the courts are simply staying out of.

What's troubling to me about Kelo is that the Conservatives on the court were suddenly willing to invent broad constitutional rights independent of the text of the constitution, simply because the subject was land rather than personal liberties.
1.18.2006 3:54pm
David M. Nieporent (www):
Byomtov:
My point was that those who are unhappy about this should be criticizing the local officials who are doing it, not just the Supreme Court decision that permits,but does not require this action.

When I see such obviously selective outrage
You've heard the parable about the scorpion and the frog? The frog doesn't want to carry the scorpion across the river because he thinks the scorpion will sting him while he's doing it? The scorpion points out that if he stung the frog, then the frog would drop him and they'd both die. The frog sees the sense in that, so he carries the scorpion across the river. Sure enough, halfway across, the scorpion stings him, and they begin to drown. The frog gasps out, "You fool, we'll both die now! Why did you do that?" The scorpion shrugs: "It's my nature."

It's the nature of local officials to act in ways that benefit rich, politically connected businesses. Complaining about that is like complaining about the weather. But the Supreme Court is supposed to uphold the constitution, and it's reasonable to demand that it does so. So the outrage is directed appropriately, at the people who enabled this to happen.


Cheburashka
Your statement misses the economic reality of many large developments: Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay.
Your statement misses the definition of "market value." What you describe is a feature, not a bug.
1.18.2006 4:00pm
Anderson (mail) (www):
Centenniel Baptist Church is part the National Baptist Association, one of the oldest African-American organizations in the country.

The fact that it's a black church in Sand Springs just points up how "religion" is a red herring in TZ's post.
1.18.2006 4:02pm
eddie (mail):
Re: Anonymous liberal

I am not a lawyer and was unaware that the SCOTUS had already established the public use clause to mean whatever a local or state government wanted it to mean. Is every on on board with Anonymous liberal in this statement?
1.18.2006 4:05pm
Cabbage:
Remember when self-described Liberals and small black churches were natural allies?

I don't either, but then, I'm only 27!
1.18.2006 4:07pm
Cabbage:
I think we all know where MLK would come down in this dispute. He'd say, "close down that small black church -- let's trust the local officials to have the best interests of the whole community at heart." Right?

Or is this entirely beside the point, Anonymous Liberal?
1.18.2006 4:11pm
Mucus Maximus:
Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay.

EVERYONE who sells a property is unwilling to sell at less than the highest price the buyer is willing to pay! When John Smith sells his house to Jane Doe, he is not looking to give Jane a bargain or leave any money on the table - and if he asks too much, Jane will walk away. On the other hand, if it is a "seller's market", Jane will bid significantly higher than "fair market value" if she wants to buy the place. I don't see how any of this changes just because one party is a developer, and I don't see why there should be government coercion just so things are "more fair" to the developers.

I don't have a problem with eminent domain being used so that a landowner gets fair value calculated at what they'd be willing to accept in the absence of the development.

I agree completely with Freder - there is no reason to feel sorry for WalMart, and there is no reason to allow them to enlist local governments in order to force people to do what they don't want to do.
1.18.2006 4:12pm
Anonymous Liberal (mail) (www):

I am not a lawyer and was unaware that the SCOTUS had already established the public use clause to mean whatever a local or state government wanted it to mean. Is every on on board with Anonymous liberal in this statement?


The case I'm referring to is Berman v. Parker, decided in 1954. The Supreme Court held that economic redevelopment constituted a valid "public use" under the takings clause. Not even the dissenters in Kelo questioned Berman's validity. The issue in Kelo was whether such takings should be limited to "blighted" neighborhoods. The Court correctly held that drawing such a line would be arbitrary and there was no constitutional basis for doing so.
1.18.2006 4:33pm
Cheburashka (mail):
Cheburashka: If the sellers are willing to sell at a certain price, while the developer is willing to buy at that same price, there is no reason to resort to coercion.

I think people thought that before Coase. One reason to resort to coercion is because the legal process of eminent domain can, in fact, have lower transaction costs than a developer trying to negotiate with dozens of individual landowners.

I do not understand why you folks feel that the landowner is entitled to more than the market value of the property less the planned development. It seems to me that the developer is entitled to the value generated by the development.
1.18.2006 4:39pm
Anonymous Liberal (mail) (www):

I think we all know where MLK would come down in this dispute. He'd say, "close down that small black church -- let's trust the local officials to have the best interests of the whole community at heart." Right?

Or is this entirely beside the point, Anonymous Liberal?


Yes, that is entirely beside the point. I'm not supporting such use of eminent domain. But I agree with other commenters who say that the people to be critized here are the state and local governments, not the courts. If you don't trust local officials, lobby to have state legislatures pass laws limiting the use of eminent domain by such officials. That's the solution, not asking the Court to invent some sort of constitutional property right.
1.18.2006 4:40pm
Anderson (mail) (www):
Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay.
Mucus already highlighted this, but it's so preposterous, it's worth a second look.

Funny how the free market just isn't good enough for some people, ain't it?
1.18.2006 4:44pm
Freder Frederson (mail):
I do not understand why you folks feel that the landowner is entitled to more than the market value of the property less the planned development. It seems to me that the developer is entitled to the value generated by the development.

I don't know why you think that real estate developers are such an oppressed and disadvantaged class in this country that they need the help of local government to protect them from big, bad, evil, retired folk and churches. I always thought "market value" was determined by what somebody was willing to pay for a piece of property, not what the government says you should sell your property for. It's funny how people become raving communists when it behooves them.
1.18.2006 4:48pm
JGR (mail):
"Economic development is good for the whole community; sometimes minority interests need to compromise a little for the greater good."
The reason this post is horrible has little to do with constitutional interpretation. All of the evidence indicates that the use of eminent domain for economic development does more damage than good. Consider just the case that that brought this to the Supreme Court. As Richard Epstein wrote:
"...the declining economic fortunes of New London spurred the city elders to embark on a general urban development plan, underwritten by $73 million in state money devoted to general planning, physical infrastructure and environmental cleanup. The plan lacked only one ingredient--some real live developer prepared to risk his own capital to build any office or hotel on part of the 90 or so acres the city already had.

Not content with its overheated vision, New London's plan envisioned taking down about 15 old homes overlooking Long Island Sound, to be used for some unidentified form of "park support." Fancy new private homes were not listed on the plan. None of the endless frustration and delays in implementing its grand plan were attributable to the decision of some landowners to fight New London. Quite simply, the slow rate of development made obsolete some of the original projects, such as a luxury hotel to support a new nearby Pfizer facility. Pfizer could not wait 10 years to house its visiting dignitaries. One obvious compromise position, therefore, should have appealed even to the five-member majority on the Supreme Court: to force the city to postpone the condemnation of these private homes until the city revealed its hand."

There is a reason, as many others have noted, why the free market exchange of money is a drastically better way of ordering economic development than government fiat. One doesn't need to be a libertarian extremist to support the superiority of the free market in this limited realm. If someone wants to argue that the Kelo decision was constitutionally correct, that is at least a valid argument that can be discussed. The argument that it is the best way for economic development seems prima facie silly in the face of all the counter-evidence. (I would concede that one could probably come up with one or two counter-examples since that is the nature of statistics).
I'm not going to argue the constitutional issue because I already participated in a Volokh thread on this, and we are just rehashing the same issues. I will simply point out that I found the dissents by Justices such as Thomas to be pursuasive in a strict/originalist/constitutional sense. We have had eminent domain since this country was founded and it dates back much earlier to the colonies etc. We have had a relatively narrow interpretation of "public use" for almost all of our history, and its relatively recent expansion to include land swaps to a private party was a radical departure.
1.18.2006 4:50pm
Buckland (mail):
A couple of points from my background as an investor and developer.

1> Large developments can't be done in urban areas without eminent domain. The problem is that the remaining properties become more valuable as each one is purchased. With 10 identical properties needed for development, getting the first 9 is of no value unless the 10th can be obtained. There is a cost to society for taking property (even at an above market price) from an unwilling seller. There is also a cost to redlining urban areas as places that can't be developed. The lot size in urban areas is so small buying a tract large enough for a large project is impossible to do from one buyer.

2> Speculation is usually rampant in these cases. The papers speak of hundred year old churches or retirees in their family house. However once news that Home Depot or other large corporation is looking at an area the prices immediately jump because speculators want a piece of the action. Businesses open in formerly abandoned buildings just to temporarily increase the value. Paint is applied over rotting boards to make for a better appraisal. Houses are bought as rental property because the reimbursement on businesses such as rental property is higher than for single family homes.

One particularly common form even has a name -- interstate speculation is the business of buying fields in the path of a proposed interstate and putting up houses. This is very profitable (for the builder, not the taxpayer) if the interstate comes through.

This debate is often framed as a debate between a corporation [Home Depot, Pfizer, etc.] and a grandma. However frequently the question is whether the area can be developed or not. Urban areas have few development takers because of urban issues that businesses don't want a part of. There is a very real cost to not being able to develop in an urban area and without eminent domain development is an extremely difficult thing to do.
1.18.2006 5:25pm
Mucus Maximus:
Well, Buckland, all that is too bad, but none of it is an argument for aligning the coercive power of the state behind the developer.

Speculation is usually rampant in these cases.

So what? The developer is also speculating that the property they develop will be profitable. Why is developer speculation "good" while other types of speculation "bad"?
1.18.2006 5:39pm
Bill R:
Cheburashka, why should the fair value exclude all of the development value ("... so that a landowner gets fair value calculated at what they'd be willing to accept in the absence of the development.")?

Once the local government has demonstrated a willingness to accept (and, indeed, even encourage) development in a given area and once it becomes evident that at least one developer is interested in building such a development, property values in that area will generally go up. I fail to understand why someone who happens to own land right on the development site should be forced to give up this gain while adjacent property owners are enriched by it.

For example, consider two landowners: Ms. Poor and Ms. Rich. Ms. Poor owns property that is the target of one of these eminent domain processes. Ms. Rich owns vacant property that is not targeted by the eminent domain process but which is just across the street from Ms. Poor's property and will be a perfect place for another fast food outlet (and is currently zoned for this use). Why should Ms. Poor be forced to accept "pre development market value" for her land while Ms. Rich is free to, for example, sell her property today for a somewhat increased price (probably to a speculator who is betting the development project will go ahead) or hang on to her property until the development project is a "done deal" and then sell her property directly to the highest fast food bidder (Burger King, Del Taco, Baja Fresh, etc.) at a substantially higher price than its "pre development" value?

Perhaps this "unfairness" could be spread around by the government appraising all property in the area at "pre development" value. Then, when one of these properties is sold, the government (rather than the owner) gets the difference between the selling price and the "pre development appraised value" (perhaps adjusted by a metro area average appreciation and for improvements done by the landowner since the "pre development appraisal"). Also, even before sale, gains from any "increase in economic use" of these properties could be taxed at 100% to the extent those gains were reasonably related to the existence of the new development. [No, I don't seriously think this is a good idea, but it seems better than doing nothing to make the situation more equitable]
1.18.2006 5:46pm
Anderson (mail) (www):
The problem is that the remaining properties become more valuable as each one is purchased. With 10 identical properties needed for development, getting the first 9 is of no value unless the 10th can be obtained.
In other words, eminent domain helps developers avoid paying market price.

Great. That explains the utterly redundant, half-empty strip malls littering my community.

It probably also explains why Wal-Mart can afford to abandon one location and build another two miles down the road.

I went to law school in a town whose two main drags were left with big asphalt wastelands when Wal-Mart abandoned one location and Kroger another. Kroger moved even less than Wal-Mart did, literally just to the other side of an adjacent highway. (Caveat: no idea if eminent domain involved here; just illustrating the principle.)
1.18.2006 6:00pm
Scaldis Noel:
Byomtov,

You said, "My point was that those who are unhappy about this should be criticizing the local officials who are doing it, not just the Supreme Court decision that permits,but does not require this action."

I'm not quite sure where you're seeing the selective outrage. I haven't seen or heard anyone criticizing the Kelo decision while giving the local government a pass. The only reason I can think of that may give you that impression is that people are now reacting to the decision that the court made, as opposed to the original action by the local government. Just because they are reacting negatively to the court decision now doesn't mean they weren't just as vehemently opposing the original action before the decision.
1.18.2006 6:08pm
Marcus1 (mail) (www):
Scaldis Noel,

>The only reason I can think of that may give you that impression is that people are now reacting to the decision that the court made, as opposed to the original action by the local government.<

The reason we have the impression is because it is the approach that conservatives take. They court bash, regardless of who the real culprit is, or whether the court has anything to do with it. Why? Because it fits their entire scheme of pretending that if the people only got what they wanted and weren't constantly usurped by activist judges, that all our problems would just go away.

The entire discussion about "Kelo" is disingenuous. Kelo was not the problem. The problem is that conservatives don't like eminent domain. Why they freak out about it so much, I'm really not sure. Maybe it's because everybody likes sticking up for the little guy sometimes, and conservatives are so used to stomping him down that they just get overly-enthusiastic when they finally get a chance to take his side. In any case, if they were honest, they would be ranting not about Kelo, but about a person's fundamental right to his property. That's what they really care about. They don't, however, because bashing courts is just a whole lot more convenient. And of course, talking about rights would make it harder to go on and bash liberals.
1.18.2006 6:36pm
AlanDownunder (mail):
There's a movie about eminent domain called The Castle. Highly recommended.
1.18.2006 6:46pm
Scaldis Noel:
Marcus1,

You said, "In any case, if they were honest, they would be ranting not about Kelo, but about a person's fundamental right to his property. That's what they really care about. They don't, however, because bashing courts is just a whole lot more convenient. And of course, talking about rights would make it harder to go on and bash liberals."

I think you have been ignoring the conservative arguments against Kelo, which HAVE been all about fundamental property rights, because it is more convenient to bash conservatives. The reason it looks to you like they are bashing the courts is that you refuse to accept that conservatives do care about individual rights.
1.18.2006 6:55pm
Freder Frederson (mail):
The reason it looks to you like they are bashing the courts is that you refuse to accept that conservatives do care about individual rights.

No, I think that as several posts in this thread have eminently demonstrated, some conservatives really don't care about individual rights, all they really care about is getting property at the lowest possible price, even if it tramples on individual property rights. Who cares about supply and demand, market forces, and all those other ideals of capitalism. All that matters is maximizing profit. Of course we will couch it in terms of "maximizing tax revenue" and "urban renewal" like the good socialists we have suddenly become, but it is all in the name of the free market. Not to mention if that if the tables were turned and the municipality wanted to condemn our land and turn it in to low income housing we would be screaming that it was a taking. I'm so confused I'm afraid my head will explode.
1.18.2006 10:41pm
Brutus:
Wait a minute... I'm confused too... are we saying now that "most" conservatives side with WalMart or whatever in this debate?

some conservatives really don't care about individual rights, all they really care about is getting property at the lowest possible price, even if it tramples on individual property rights.

I don't see this as conservative at all. Which conservatives are saying this?
1.18.2006 11:45pm
David M. Nieporent (www):
Cheburashka:
I do not understand why you folks feel that the landowner is entitled to more than the market value of the property less the planned development. It seems to me that the developer is entitled to the value generated by the development.
With all due respect, you simply don't understand the concept of "market value." The fact that the property can be used for development to generate more revenue is included in market value. (The developer, incidentally, isn't "entitled" to anything.)

Thought experiment: you have written a manuscript. Lots of publishers bid on it, and they all offer you about $50,000 for all the rights to it. Then a film studio happens to hear about your book, jumps in and offers you $500,000. What is the market value of this manuscript? The $50,000 some people are willing to pay? Or the $500,000 someone who sees a different use for it is willing to pay? Do you think the movie studio is "entitled" to obtain the manuscript from you for only $50,000, just because that's what other people are offering?


Buckland:
Large developments can't be done in urban areas without eminent domain.
It is a shame that you can't "develop" someone else's property, isn't it?
Speculation is usually rampant in these cases.
Yes, and? So what? Some speculators will do well; some will get screwed. So what? Is there some reason developers are entitled to speculate but existing owners aren't?
1.18.2006 11:53pm
Marcus1 (mail) (www):
I agree with Christine Hurt's premise that eminent domain isn't liberal. As a liberal, I don't much like the idea either. Landowners definitely get well under-paid -- in fact, my family has intimate experience with getting screwed over by a government taking.

Nevertheless, you can't strike down a government taking just because you don't like the government purpose. The fact is that as long as there is "just compensation," the Constitutional test is met.

I don't believe the "liberals" all liked this taking. But I do think it's a tribute to their intellectual honesty that they upheld the law regardless. The conservatives, on the other hand, may have had noble motives in attempting to protect land rights. Unfortunately, that lead them very clearly to betray their legal principles. I don't think that is something liberals should simply let slide.
1.18.2006 11:54pm
Marcus1 (mail) (www):
David Nieporent,

The problem is that market value can be manipulated through things like monopolies. How about with domain names, do you think a person should be allowed to buy them all up, and then charge big businesses millions of dollars in order to obtain their name? The free market allows and encourages this kind of behavior. Most of us, though, recognize that this is extremely wasteful and counterproductive, allowing certain people who are really providing no service to benefit extraordinarily from other people's hard work. It is also an economic drain.

Likewise, there are circumstances where one individual can try to sap the entire profit from a project, simply because he happens to be the one obstacle left in the way. I wouldn't say this is generally a reason for the government to step in, but it is certainly a perversity of the market. And of course it is a big reason why eminent domain is necessary for the government rather than simple negotiation, which would result in huge costs and extraordinary windfalls to certain lucky individuals.
1.19.2006 12:13am
dick thompson (mail):
I am surprised that the liberals are not accepting the blame for the Kelo decision. It is not a conservative position to use the government to take property for development uses; that is a liberal position. Conservatives think that the market should determine the costs.

Likewise as a conservative I am angry at the court and at the city of New London for what happened. Once Pfizer had built its headquarters then New London really didn't need the land. They had a hotel already going up. Now they want to build a marina on this property that they are taking. Connecticut really needs another marina so that the wealthy boat owners can park their boats and suck up some more booze. In fact New London now has the property and cannot get the developers interested in doing anything with it. There is so much bad feeling and real anger over what they did that developers are staying away in droves. The city planners really screwed up this time and the Supremes helped them do it. That is what most conservatives are upset about. Both groups messed it up. Now you have displaced families and unusable property and neither problem has been solved.

When you consider that most of the eminent domain cases where governments in their infinite planning wisdom are taking land to sell it to developers were on hold until the Supremes came down with Kelo and said it was OK, then you see what we are facing in places like LA with the dog kennels and Sacramento with all the big development downtown while the housing market has already gone south and Sandy Springs with the displacement of the black church. City planning of this sort is not a conservative viewpoint. It is a liberal cause and now liberals won't even accept it.

I really think at some point the Supremes will have to revisit this case and fix their mess. Justice Stevens came very close to admitting that they screwed up a week after the decision in a speech in Las Vegas. He wouldn't admit publicly that they were wrong but he certainly skirted all around the subject.
1.19.2006 1:35am
dweeb:
Cheburashka said:Courts calculate fair market value all the time. What's the big deal?

That is the big deal. Fair market value can only be legitimately determined by a freely operating fair market - supply and demand determining at will transactions. You want to know where government bodies are supposed to calculate the value of things? Places like Cuba and North Korea.

"Your statement misses the economic reality of many large developments: Aware of the developer's need for a property, and the value the development will generate, landowners often become unwilling to sell at less than the highest price the developer is willing to pay."

And that's what we call supply and demand. That's why people pay more Joe Dimaggio's rookie card than for the rookie card of some outfielder who just moved up from the minors - rarity and the desirability of the commodity. Yes, prices are higher when demand is not elastic. Go figure.

"I don't have a problem with eminent domain being used so that a landowner gets fair value calculated at what they'd be willing to accept in the absence of the development."

Why should they be able to buy under last year's market conditions? Why do they get to pick the historic market conditions that favor them and apply them - do they have a time machine? That's like saying I should be able to buy Mirosoft for what it was trading for in 1980. Should WalMart have to sell me gasoline on a holiday weekend for the same price they charged on a random Wednesday in October?

"I do not understand why you folks feel that the landowner is entitled to more than the market value of the property less the planned development. It seems to me that the developer is entitled to the value generated by the development."

That's like saying that U2 fans are entitled to a break on concert tickets because they generated the demand. That's like saying a prostitute should cut the John a discount because he's horny. You're saying the developer is able to set aside market conditions just because he had a hand in forming them.
1.19.2006 1:31pm
dweeb:
Buckland,

you said"Large developments can't be done in urban areas without eminent domain"

and yet they are done all the time. Steelyard Commons in Cleveland, OH is one example - they reclaimed a large single parcel where a steel mill had once stood. In fact, most of the current large retail developments in Cleveland are on single parcels obtained from willing sellers at REAL market prices. The suburb of Cleveland Heights, a notably marxist city government, has worked several redevelopments while avoiding emminent domain for fear of backlash. In urban environments, factories close and large businesses fail almost as often as farmers retire in the rural areas. Brownfields awaiting redevelopment abound in every major city, not to mention military base closures (like El Toro Air Station.) You seem to be saying that lack of imagination on the part of developers is a problem for government to solve by redistributing land through emminent domain, much like some people think their lack of skills is government's job to solve via redistributing wealth through taxes and welfare. As another poster pointed out, it's amazing how some people become raving communists when it serves their own self interest.

You speak of all the shenanigans such as businesses occupying abandoned buildings that are part of the speculation - such things happen BECAUSE of emminent domain - they only impact a government calculation of value, not the free market. The free market doesn't care what the seller is currently doing with the property.
1.19.2006 1:43pm
David M. Nieporent (www):
Nevertheless, you can't strike down a government taking just because you don't like the government purpose. The fact is that as long as there is "just compensation," the Constitutional test is met.
Yeah, except for that pesky "public use" phrase which some liberals keep trying to pretend isn't in the Constitution.

That, or the liberal notion that generating tax revenues is a "public use," as if the purpose of the individual is simply to serve as a resource for others to exploit.


Why should they be able to buy under last year's market conditions? Why do they get to pick the historic market conditions that favor them and apply them - do they have a time machine? That's like saying I should be able to buy Mirosoft for what it was trading for in 1980. Should WalMart have to sell me gasoline on a holiday weekend for the same price they charged on a random Wednesday in October?
Exactly. The logic makes no sense. When Katrina temporarily caused a run-up in gas prices, I had many people claim to me that the stations were "gouging," and that since they didn't pay that much for the gas, they shouldn't charge that much. (The implication being that they should charge no more than they paid plus a small amount of profit.) I asked these people if, when they sold their homes, they planned to charge the buyers no more than what they originally paid, rather than current market value. They never seemed to have an answer.
1.19.2006 2:34pm
eddie (mail):
Thanks Anonymous Liberal for expounding a little on the SCOTUS previous interpretations of "public use". For me, it suffices to say that taking land from one private party and giving it (even with compensation to the first party) to another private party is an abuse of power. I understand that the government is supposedly the people, but in truth, without the Constitution government is simply the embodiment of a majority of voters. I agree that Kelo can and would best be overturned by the voters in electing different government decision makers. However, the reality of the situation is that government decision makers (in general -- not all) represent the elite of whatever electorate they represent. Consequently, Kelo and similar decisions primarily serve the elite. Considering the SCOTUS, this does not surprise me.
1.19.2006 2:45pm
markm (mail):
"The problem is that the remaining properties become more valuable as each one is purchased. With 10 identical properties needed for development, getting the first 9 is of no value unless the 10th can be obtained." Isn't this situation what options are for?
1.20.2006 2:30pm