Eduardo Penalver on California Proposition 99 and the Kelo Backlash:

In this interesting post on Prawfsblawg, prominent property scholar Eduardo Penalver argues that California Proposition 99 institutes a useful distinction between homes and other properties by protecting the former, and not the latter against takings:

Prop. 99 would bar governments from taking owner-occupied homes through eminent domain for redevelopment, but permit the taking of other sorts of property (or the taking of owner-occupied homes for other purposes). Prop. 99's focus on residential property makes it (to my knowledge) unique among anti-Kelo legislation and also dovetails with a suggestion I made in an essay I wrote on Kelo a few years ago. Insofar as the backlash against Kelo was rooted in the popular views about the special status of residential property, I argued, it seemed strange to me that the proposed legislative responses have tended to sweep much more broadly, encompassing all privately owned land. It has always seemed to me that property rights groups were trading on the rhetorical and cultural power of homeownerhip in the service of a much more expansive agenda than the public reaction to Kelo merited on its own terms.

One problem with Penalver's defense of Prop 99 is that it doesn't actually provide any real protection even for owner-occupied homes. I documented this point elsewhere (e.g. - here). Penalver himself notes that he would have preferred protection against eminent domain to be extended to "long-term renters as well, and even to certain categories of commercial property."

Penalver is perhaps correct to say that the general public cares much more about protecting homes against takings than about protecting other types of property. He is also right that some libertarians want to use the reaction against Kelo to provide protection for property rights that goes beyond protecting homes.However, both statements need to be qualified.

I. Is Public Opposition to Eminent Domain Limited to the Taking of Homes?

The fact that the public cares more about protecting homes against takings than protecting other property doesn't mean that it is indifferent to the latter. Other than homes, the most common type of property condemned for development purposes is small business property. I suspect that most of the public is only slightly less sympathetic to small businesspeople who lose their commercial property to eminent domain than it is to homeowners who lose their residences. Indeed, survey data compiled in recent articles by Janice Nadler and Shari Diamond (here) and yours truly (here) suggest that public opposition to Kelo is pretty stable in polls using different kinds of wording, regardless of whether the question refers to the taking of homes or not. Some of the surveys cited in Nadler and Diamond's piece show that anywhere from 39 to 53 percent of the public oppose the use of eminent domain against any property for any reason. As the authors caution, these results should not be taken literally. But they do suggest that public opposition to takings isn't narrowly confined to concerns about homes.

II. Have Libertarians Used Kelo to Establish Greater Protection for Property Rights than the Public Wants?

Penalver is right that libertarians would like to see broader protection for property rights than majority public opinion currently supports. However, he exaggerates somewhat when he states that "[y]ou can see this manipulation of Kelo not only in the attempt to protect all private land from redevelopment takings, but also in the tendency of property-rights groups to bundle anti-Kelo initiatives with other elements of the property rights agenda, such as the anti-rent control provision of Prop. 98." The comment about California's Proposition 98 is accurate, but Prop 98 is the exception not the rule. Of the thirteen anti-Kelo referendum initiatives placed on state ballots since 2005 (ten of which passed), only four included regulatory takings or rent control provisions that covered "other elements of the property rights agenda." And two of these, Proposition 98 and Proposition 90 (narrowly defeated in 2006), were sponsored by the same California group. The other nine ballot initiatives (all of which passed overwhelmingly) stuck narrowly to the Kelo issue of forbidding the condemnation of property for transfer to private properties. I discuss these initiatives in detail in my forthcoming article on post-Kelo reform (pp. 35-38).

Penalver is also wrong to assume that state "legislative responses to Kelo" usually protect "all privately owned land." In reality, as I document in detail in this article, the vast majority of the new laws exempt "blighted" land, often under a broad definition of blight that allows the condemnation of almost any property. Many also exclude vacant lots, property that poses a threat to public health, and other categories.

In sum, it is true that libertarians want more protection for property rights than does the majority of the public. We wouldn't be libertarians if we didn't! On the other hand, the public's concerns go beyond a narrow focus on homes. And in many respects, the libertarian view is closer to the general public's position than is the current law in most states, which continues to allow the condemnation of both residential and other property with few or no restrictions. As I document in detail in my paper on post-Kelo reform linked above, the majority of the 42 states that passed reform legislation in the wake of Kelo have enacted laws that pretend to protect property rights without actually doing so to any significant extent. In that respect, Proposition 99, with its fake "protections" for property rights, is far closer to the norm than Proposition 98.

UPDATE: Eduardo Penalver clarifies his position somewhat in the comments here. I agree with much of what he says in his comment, but have two minor disagreements. First, I'm not convinced that a 25% rate of "bundled" post-Kelo referendum initiatives is unusually high - certainly not compared to the amount of bundling that occurs with initiatives on many other issues. Second, Eduardo is incorrect in claiming that Prop 99's focus on residential property is "a unique innovation in the anti-Kelo arena." Wisconsin's post-Kelo reform statute (discussed on pg. 24 of my article on post-Kelo reform) also provides greater protection for homes than it does for other land uses.

Eduardo Penalver (mail):
Ilya- I agree with many of these points, particularly with your concern about Prop. 99's unfortunate neglect of renters and small businesses. As to the frequency of these sorts of bundled initiatives, I suppose the question is whether you think 25% is a significant number. I think it is. More interesting, though, is the low success rate of the bundled initiatives relative to the unbundled ones.

I think you've misunderstood my assertion that these anti-Kelo laws by and large do not distinguish among land categories. (This is my fault, not yours, since my wording was not as clear as it might have been.) I was talking about categorical distinctions among land uses, not qualitative distinctions that cut across land-use categories, as with "blight." Any land use can be blighted or not. And so an anti-Kelo initiative with a blight exception protects (or fails to protect, as you argue) all land equally, provided they are not blighted. (Set aside for the moment your well-taken suspicion of the malleable concept of blight, which I share.) By singling out (owner-occupied) residential land uses for special protection, I continue to think that Prop. 99 represents a unique innovation in the anti-Kelo arena.
6.5.2008 3:02pm
Dilan Esper (mail) (www):
I agree that small business protections would be as popular as homes, but what about big businesses? Penalver specficially mentions protections for multinational corporations.

Look, I don't like Kelo, and in truth, I think that even a straight overturn of Kelo (without the categories Penalver advocates) will be mostly beneficial to lower-income and middle-income homeowners and renters and small businesses, because they are the people whose properties are targeted for "blight" takings in the first place. But I don't think that Penalver is wrong that the farther the protection migrates from homeowners, the less popular it is likely to be.
6.5.2008 3:09pm
Ilya Somin:

Thanks for the qualification, which indeed makes your position clearer. I have noted the low success rate of bundled initiatives (1 of 4) in several VC posts, and in my article.

I think a 25% rate is relatively low, particularly given the frequency of bundled initiatives on other subjects.

Finally, Prop 99 is not unique in singling out residential land for special protection. The Wisconsin Post-Kelo statute (discussed on pg. 24 of my article linked in this post) also singles out residential land uses for extra protection.
6.5.2008 3:10pm
Ilya Somin:
I agree that small business protections would be as popular as homes, but what about big businesses? Penalver specficially mentions protections for multinational corporations.

It doesn't matter much whether laws protecting them are passed or not because they usually have enough political clout to prevent their land from being condemned for "economic development" purposes anyway.
6.5.2008 3:11pm
Eduardo Penalver (mail):
Ilya -- thanks for the pointer towards the Wisconsin statute. I'll post an update to my original post noting the oversight.
6.5.2008 3:53pm
Layedback (mail):
Prop 98's involvement on rent control has allot to do with autonomous property ownership, in that it sought to limit government influence on how one is to use one's own property. Rent control has been shown to cause allot of what is deemed "blight" by redevelopment agencies across the country, in that, it limits the owner's ability to compete in the market and to alter or improve his property by putting artificial government limitations on the income he can receive from said property.

How does Mr. Penalver come to such an arbitrary distinction between homes and businesses? The words "private property" are applied to both. Prop 99 was a "lefty" response to an attempt to wrangle private economic interests out of the penumbra of the governmental purview. It was transparent, but the apparent lack of PR experience of those associated with Prop 98 seems to have been their downfall. (The Sacramento Bee actually asserted that eminent domain abuse was not that big of a problem in California, and with no retort from the Prop 98 people) However, a nicer bunch of people could not be found to feel the pinch of ominous government involvement and irresponsible voting than those found in the people's republic of California.
6.5.2008 4:13pm
Hmm.... (mail):
How does Mr. Penalver come to such an arbitrary distinction between homes and businesses?

Isn't there usually a distinction between commercial and residential property? Usually only residential property is called private property.

In any event, I thought the point was that in the wake of Kelo most people want special protection for homes, but not for businesses.
6.5.2008 4:19pm
I think you've overestimated the concern people have with commercial property, Somin.

I don't think people believe government is forcing people out of property without paying them the market value for their property, or something close to it. So why object to Kelo? Because people recognize that their personal value of a home may greatly exceed its market value, and they object to government being able to just ignore that fact.

Hence the most powerful arguments against Kelo have most to do with stories of so-and-so, who's lived here for umpty years, raised children in the house, has many happy memories, yadda yadda. It's very much the personal, emotional investment in a property that people feel should be somehow protected.

But few people imagine that commercial property owners feel similarly. If the state wants to take your mom 'n' pop hardware store or restaraunt, and is willing to pay you the market price for the property, people feel that's generally good enough. They don't imagine you (the property owner) have some deep emotional connection to this particular shopping center location -- yes, it's here that we made our first dollar oh! the sweet sweet memories -- I don't know how I'll bear leaving good old Shoprite Town Centre. So they don't see any great wrong that's being done to you, and they don't feel the same compulsion to protect you as to protect Grandma Moses living on her pension in the ol' family farm house that's been in her family for eight generations.
6.5.2008 5:46pm
Dilan Esper (mail) (www):
Splunge has a good point here. Reminds me of one of the seminal articles of property law, Margaret Radin's "Property and Personhood".

Kelo hits home (to use a bad pun) for so many people because people don't think that being paid market value for your house is an equal outcome to being able to continue to own it and live in it, because of the nonmonetary aspects of people's personhoods that they attach to their homes.

In contrast, being paid market value for business property and keeping it should be equivalent, so long as the compensation really includes all the transaction costs and any lost opportunity costs and lost nonrecoverable revenue streams. (Defining what compensation is "just", of course, is a different issue than the Kelo issue.)
6.5.2008 6:28pm
Dilan Esper (mail) (www):
Here's a portion of "Property and Personhood", minus the footnotes, if anyone is interested:
6.5.2008 6:30pm
Timothy Sandefur (mail) (www):
Prof. Somin

The difference, if any, between my approach to the Kelo backlash and yours is in your greater focus on rational ignorance, contrasted with my focus on the political-philosophy legacy of the Progressive Era. I think that the attempt at "homes-only" reforms is an attempt to exploit the Progressive legacy, which is of course extremely strong in California, much stronger than in, say, Arizona. See generally Kevin Starr, Inventing The Dream, or Democracy in California ed. by Jones &Masugi.

Among other things, the Progressives believed strongly in government's power to control the uses of property, although they were not so keen on the government actually owning it. In California, they inherited this idea from the Populists (the dividing line between the two is impossible to draw precisely) who in the 1879 Constitutional Convention rejected an expansive interpretation of eminent domain for private use--while simultaneously adopting provisions allowing the government to set prices and impose other restrictions on property rights. The Progressives taught Americans and particularly Californians to believe that they could both have their own property rights as well as a fundamental right to dictate how others (particularly rich folks) use their property. This was one component of the broader Progressive effort to replace liberty with democracy as the central concern of the constitution. And in few places was that effort more successful than in California. Progressivism, of course, largely means the refusal to think in principles. Thus the Californians raised on the mores inherited from the Progressives simply see nothing wrong with protecting their homes, while allowing government to confiscate businesses.

That meant that Californians were ripe for the kind of manipulation represented by Prop. 99. The bureaucrats at the League of Cities could afford to give up the power to take homes (which as you rightly observe, they did not actually do) because they know that homes are rarely taken anyway. So they throw away something they don't need to preserve (actually expand) their power to take businesses and apartment buildings. Californian voters, accustomed to government control over property use, and largely ignorant of both the moral and economic reasons for property rights, thus thought it perfectly reasonable to vote for what they thought of as "property rights protection for me, but not for thee."

While there is much to your argument that voter ignorance is reponsible for thus calamity, I think it is more accurate to blame the philosophical legacy of Progressivism, combined with the conscious, intentional lying on the part of public officials (members of the League of Cities), who though charged with the duty to protect the public welfare, decided instead to purposely misead voters into expanding eminent domain powers with their deceptive initiative.
6.5.2008 9:21pm
Provocateur (mail):
Ilya, I don't get it. You're quite interested in the well-being of long term renters when it comes to takings, but you're against rent control. I see this as a glaring inconsistency. After all, being displaced by a landlord answering to the market is just as awful, from the renter's perspective, as being forced to leave one's rented home as a result of a government e.d. decision. Indeed, I would think that if you believe that Kelo was wrongly decided, then you might also think that the failure of the government to enact rent control is a taking too. After all, the reason we don't like e.d. is because it displaces real people who live somewhere, right? So why is a displacement due to market forces any better? In other words, do we want to protect long term renters, or do we want to worship private markets?
6.6.2008 6:39pm