Ohio Supremes Limit Eminent Domain:

Landowners challenging the use of eminent domain for economic development in Norwood, Ohio have emerged victorious. According to a unanimous Ohio Supreme Court, the economic benefits of redevelopment projects, by themselves, do not satisfy the "publc use" requirment of Article I, section 19 of the Ohio Constitution. The Court further held that the relevant standard for a blight designation — a "deteriorating area" — was void for vagueness and also unconstitutional.

The decision is here. Some local news coverage is here. I am sure my co-bloggers will have more to say about this decision later.

UPDATE: How Appealing rounds up some more early coverage here. The Institute for Justice, which represented the homeowners challenging the use of eminent domain in this case (as well as in Kelo), has background on the case here.

FURTHER UPDATE: Here is how the court describes its holdings:

We hold that although economic factors may be considered in determining whether private property may be appropriated, the fact that the appropriation would provide an economic benefit to the government and community, standing alone, does not satisfy the public-use requirement of Section 19, Article I of the Ohio Constitution.

We also hold that the void-for-vagueness doctrine applies to statutes that regulate the use of eminent-domain powers. Courts shall apply heightened scrutiny when reviewing statutes that regulate the use of eminentdomain powers. Applying that standard, we find that Norwood's use of "deteriorating area" as a standard for appropriation is void for vagueness. We further hold that the use of the term "deteriorating area" as a standard for a taking is unconstitutional because the term inherently incorporates speculation as to the future condition of the property to be appropriated rather than the condition of the property at the time of the taking.

Finally, we hold that the provision in R.C. 163.19 that prohibits a court from enjoining the taking and using of property appropriated by the government after the compensation for the property has been deposited with the court but prior to appellate review of the taking violates the separation-of-powers doctrine and is therefore unconstitutional. We further hold that the unconstitutional portion of R.C. 163.19 can be severed from the rest of the statute, and, accordingly, the remainder of the statute remains in effect.

FINAL UPDATE (FOR NOW): Based upon a quick read of the opinion, this seems to be quite a resounding victory for opponents of eminent domain. It also seems to me that this opinion relies upon (or at least cites to) academic commentary far more extensively than the typical Ohio Supreme Court opinion. Indeed, it is not every day that one sees an opinion issued by any court that cites both Richard Epstein and Edith Wharton!

The Ohio Supreme Court's decision in Norwood v. Horney - A Major Victory for Property Rights:

The Ohio Supreme Court's unanimous decision in Norwood v. Horney, issued today, is an important victory for property rights. It is probably the most important judicial decision on eminent domain since Kelo v. City of New London. Perhaps the most significant element of the decision is the fact that the Court went beyond banning "economic development" condemnations of the sort permitted by the U.S. Supreme Court in Kelo, and also suggested that there are state constitutional limitations on the governments' power to condemn property that is designated as "blighted." The Ohio Supreme Court has also become the 11th state supreme court to ban Kelo-style condemnations under its state constitution, a decision which largely negates the shortcomings of Ohio's woefully inadequate post-Kelo "reform" law.

I. Banning Economic Development Takings.

First and most obviously, Norwood bans the condemnation of property for transfer to another private party in order to promote "economic development." The Ohio Supreme Court has now become the eleventh state high court to ban Kelo-style takings under its state constitution, and the second to do so since Kelo was decided (following Oklahoma):

Although we have permitted economic concerns to be considered in addition to other factors, such as slum clearance, when determining whether the public-use requirement is sufficient, we have never found economic benefits alone to be a sufficient public use for a valid taking. We decline to do so now....

We hold that an economic or financial benefit alone is insufficient to satisfy the public-use requirement of Section 19, Article I [of the Ohio Constitution]. In light of that holding, any taking based solely on financial gain is void as a matter of law and the courts owe no deference to a legislative finding that the proposed taking will provide financial benefit to a community.

Unfortunately, there is an important problem here, because the Ohio Court still permits "economic concerns to be considered in addition to other factors, such as slum clearance, when determining whether the public-use requirement" has been met. If this exception is interpreted broadly, it could greatly undermine the impact of Norwood, since local governments can often cite some "other factor" to justify a condemnation that is in reality undertaken for development purposes. A categorical ban on the "economic development" rationale would have been better. If the "other factors" are sufficient to justify condemnation in their own right, well and good. But it is a mistake to allow otherwise inadequate factors to go through because of claims that the condemnation will also promote development. Hopefully, Ohio courts will interpret the "other factor" exception narrowly.

II. Potentially Limiting Blight Condemnations.

The most unique and original aspect of the Norwood decision is the way in which it may limit "blight" condemnations, as well as those purely for "economic development" purposes.

As I have pointed out in both blog posts (e.g., here), and in my academic work (see here and here), broad definitions of blight of the sort which are all too common in state legislation can undermine a ban on economic development takings by licensing local officials to declare virtually any area blighted, thereby allowing the property there to be condemned. Recent state court decisions have concluded that such areas as Times Square and downtown Las Vegas are "blighted," thereby justifying condemnation of property to build a new heaquarters for the New York Times and new parking lots for politically influential Las Vegas casinos. See Las Vegas Downtown Redev. Agency v. Pappas, 76 P.3d 1 (Nev. 2003) (Las Vegas case); In re W. 41st St. Realty v. N.Y. State Urban Dev. Corp., 744 N.Y.S.2d 121 (N.Y. App. Div. 2002) (Times Square case).

The Norwood decision can help put a stop to such abuses, especially if courts in other states choose to adopt its reasoning. In Norwood, numerous homes in relatively good condition were condemned by a local government under an ordinance that allows condemnatin of property that was in a "slum" area, "blighted," or "deteriorated." Only the third of these ("deterioration") was claimed to be present by the government in the Norwood case. The Ohio Supreme Court refused to permit condemnation under this rationale because the city's definition of "deterioration" would permit condemnation of virtually any property in any neighborhood:

As defined by the Norwood Code, a "deteriorating area" is not the same as a "slum, blighted or deteriorated area," the standard typically employed for a taking. And here, of course, there was no evidence to support a taking under that standard. To the contrary, the buildings in the neighborhood were generally in good condition and the owners were not property-tax delinquent...

The Norwood Code sets forth a fairly comprehensive array of conditions that purport to describe a "deteriorating area," including those found by the trial judge in this case: incompatible land uses, nonconforming uses, lack of adequate parking facilities, faulty street arrangement, obsolete plotting, diversity of ownership. In addition, the trial court identified the following factors as supporting the determination that the neighborhood was deteriorating: increased traffic, dead-end streets that impede public safety vehicles, numerous curb cuts and driveways, and small front yards. But all of those factors exist in virtually every urban American neighborhood. Because the Norwood Code's definition of a deteriorating area describes almost any city, it is suspect.

(emphasis added).

Although Norwood addressed only the issue of condemnations of "deteriorated" areas rather than "blighted" ones, the exact same reasons why the Ohio Supreme Court rejected the City of Norwood's "deterioration" rationale can also be used to strike down overly broad definitions of blight.

Up until now, no other state supreme court has confronted the contradiction between banning "economic development" takings and permitting blight condemnations under a virtually limitless definition of "blight." Hopefully, other states will resolve this issue in a way similar to Ohio's approach.

III. Connection to Post-Kelo Legislation.

The Norwood decision is also noteworthy because Ohio recently enacted one of the least effective of all post-Kelo reform statutes. As I explain in greater detail in a forthcoming article (pp. 69-71), the new Ohio law accomplishes almost nothing. The centerpiece of the law is the establishment of a commission to consider eminent domain reform - a commission stacked with representatives of interest groups that benefit from economic development takings.

The conjunction of the Norwood decision and Ohio's virtually useless post-Kelo law emphasizes the need to recognize that we cannot rely exclusively on the political process to protect constitutional property rights, a point I previously stressed here and here. Sometimes, judicial intervention is also needed.

CONFLICT OF INTEREST WATCH: As noted here, I once briefly worked for the Institute for Justice, the public interest law firm that represented the property owners in Norwood and Kelo, and have written several pro bono amicus briefs for them.

UPDATE: I should have also noted the significance of the Ohio Supreme Court's holding that "Courts shall apply heightened scrutiny when reviewing statutes that regulate the use of eminent domain powers." This potentially could limit ALL uses of eminent domain, not just those that transfer the condemned property to private parties (as in Kelo and other "economic development" cases). Two other states (Michigan and Delaware) apply heightened scrutiny to condemnations that greatly benefit particular private interests, but Ohio will be the first state to apply it all uses of eminent domain. It is not yet clear exactly how demanding Ohio's "heightened scrutiny" doctrine is going to be, but it certainly strengthens protection for property owners against eminent domain abuse.

UPDATE #2: A small correction: the Norwood ordinance ultimately at issue in the decision is not the one that permits condemnations of blighted, slum, or deteriorated areas, but a similar one that allows the taking of "deteriorating" property. I missed this distinction in my first reading of the opinion, and thank Institute for Justice attorney Dana Berliner for correcting me.

Related Posts (on one page):

  1. Blight, Sweet Blight - The Problem of Blight Condemnation After Kelo:
  2. The Ohio Supreme Court's decision in Norwood v. Horney - A Major Victory for Property Rights:
  3. Ohio Supremes Limit Eminent Domain:
Blight, Sweet Blight - The Problem of Blight Condemnation After Kelo:

My op ed on condemnation of "blighted" property was published today by the Legal Times, and can be read here.

In the wake of Kelo v. City of New London, there has been a major backlash against condemnations of private property for "economic development," but not enough attention has been paid to the even greater harm caused by condemnation of supposedly "blighted" property. A brief excerpt:

...[E]ven many critics of Kelo ignore the danger posed by blight condemnations. In her scathing Kelo dissent, Justice Sandra Day O'Connor emphasized that she believes that such takings are constitutional. None of the 11 state supreme courts that banned Kelo-style economic-development takings have imposed parallel restrictions on blight takings. And only a handful of the states that have enacted post-Kelo reform laws restrict blight condemnations in any meaningful way. Unfortunately, blight condemnations have most of the same shortcomings as takings for economic development: They transfer property to private parties, often fail to help their supposed beneficiaries, and are vulnerable to exploitation by powerful interest groups. Moreover, a ban on economic-development takings is unlikely to be effective without parallel restrictions on blight condemnations. Effective reform efforts must address the two major flaws of current blight takings: overexpansive definitions of blight and abusive takings in truly blighted areas.