The Volokh Conspiracy - A Pyrrhic Victory for Property Rights in Colorado:

The Colorado Supreme Court recently issued its decision in the important property rights case of Wheat Ridge Urban Renewal Authority v. Cornerstone Group. The litigation in question arose because a city had committed to condemning some private property in order to transfer it to a developer. The planned condemnation was similar to that which the US Supreme Court upheld under the federal Constitution in Kelo v. City of New London; both were undertaken to promote "development" in the area. In the Colorado case, however, the city decided to cancel the project, and the developer thereupon sued to compel the city to go through with the condemnation and transfer against its will. The state supreme court has now ruled for the city.

As Tim Sandefur of the Pacific Legal Foundation explains, the decision is a victory for property owners of sorts, but its reasoning is likely to undermine property rights in the long run. The Court's reasoning was not based on any potential violation of constitutional property rights inherent in transferring private property to another private party for purposes of "economic development," but rather on the theory that private parties such as the developer generally have no right constrain the government's ability to exercise its power of eminent domain as it sees fit. The Court emphasized that state and local governments retain broad authority to condemn property, and that the state "remains empowered to take...property...and redistribute it in any manner that future circumstances and the public welfare demand."

Well-informed VC readers might wonder why such Kelo-style takings are still occurring Colorado, given that the state recently enacted legislation that was supposedly intended to curb them. The answer is that Colorado is one of numerous states that have enacted flawed post-Kelo "reform" legislation that allows "economic development" takings to continue under other guises even as it purports to ban them. The Colorado law is briefly discussed on pp. 16-17 of my paper on post-Kelo reform.

UPDATE: Just to be completely clear, the reason why the state supreme court's decision undermines property rights more than it protects them is that it holds that the City had the right to cancel the taking because of its broad power to use (or not use) eminent domain anytime it believes doing so may promote "the public welfare." This implies nearly unlimited authority to initiate condemnations as well as to cancel them. In this case, under the Court's reasoning, the property owners won only because the City ultimately decided that it didn't want to condemn their land. In cases where a local government actually does want to take the property in question, this decision will actually hurt property owners by giving the government a virtual blank check to condemn property as they see fit.

	[Ilya Somin, December 3, 2007 at 4:14pm] Trackbacks A Pyrrhic Victory for Property Rights in Colorado: The Colorado Supreme Court recently issued its decision in the important property rights case of Wheat Ridge Urban Renewal Authority v. Cornerstone Group. The litigation in question arose because a city had committed to condemning some private property in order to transfer it to a developer. The planned condemnation was similar to that which the US Supreme Court upheld under the federal Constitution in Kelo v. City of New London; both were undertaken to promote "development" in the area. In the Colorado case, however, the city decided to cancel the project, and the developer thereupon sued to compel the city to go through with the condemnation and transfer against its will. The state supreme court has now ruled for the city. As Tim Sandefur of the Pacific Legal Foundation explains, the decision is a victory for property owners of sorts, but its reasoning is likely to undermine property rights in the long run. The Court's reasoning was not based on any potential violation of constitutional property rights inherent in transferring private property to another private party for purposes of "economic development," but rather on the theory that private parties such as the developer generally have no right constrain the government's ability to exercise its power of eminent domain as it sees fit. The Court emphasized that state and local governments retain broad authority to condemn property, and that the state "remains empowered to take...property...and redistribute it in any manner that future circumstances and the public welfare demand." Well-informed VC readers might wonder why such Kelo-style takings are still occurring Colorado, given that the state recently enacted legislation that was supposedly intended to curb them. The answer is that Colorado is one of numerous states that have enacted flawed post-Kelo "reform" legislation that allows "economic development" takings to continue under other guises even as it purports to ban them. The Colorado law is briefly discussed on pp. 16-17 of my paper on post-Kelo reform. UPDATE: Just to be completely clear, the reason why the state supreme court's decision undermines property rights more than it protects them is that it holds that the City had the right to cancel the taking because of its broad power to use (or not use) eminent domain anytime it believes doing so may promote "the public welfare." This implies nearly unlimited authority to initiate condemnations as well as to cancel them. In this case, under the Court's reasoning, the property owners won only because the City ultimately decided that it didn't want to condemn their land. In cases where a local government actually does want to take the property in question, this decision will actually hurt property owners by giving the government a virtual blank check to condemn property as they see fit.