Property Rights Under Siege

Since the Supreme Court’s poorly-reasoned majority opinion in 2005’s Kelo case, Americans have been aware of the grave threats facing their homes, businesses, and property. This awareness–while driving some meaningful reform–has unfortunately not translated into iron-clad property rights protections for most Americans. Municipal planners and rent-seeking private developers still engage in the back room wheeling-and-dealing that undermines our basic rights to own and use property as we see fit.

Today, I wrote about Detroit Mayor Dave Bing’s plan to “downsize” the city in the Detroit News, and warn city officials that redevelopment takings are far more harmful than most planners realize and to avoid using eminent domain–an issue I go into at greater length in my recently released CEI OnPoint. Put simply: government has an incentive to abuse redevelopment processes and is incapable of knowing key economic variables necessary to promote long-term growth. In addition to the actual land grab, cities often bungle the public financing mechanisms to such a great degree that they often end up far worse than they started from a fiscal perspective.

So what potential relief can property owners and taxpayers reasonably expect to get? Following the Kelo decision, a federal court redefining the public use doctrine seems like a long shot. The more promising avenues appear to be state courts and particularly state legislatures (or ballot initiatives, if your state permits them). As I’ve discussed before, implementing the following reforms would be a great first step forward:

  1. Enacting state legislation mandating the creation and maintenance of a public eminent domain database accessible via the Internet. Currently, data on development takings are difficult to obtain due to the fact that eminent domain condemnations are ordered at the local level. Right now, an empirical analysis of takings within a state would require contacting every county clerk and requesting specific filings. A central state database would allow social scientists, journalists, and the public to examine the economic effects of eminent domain use and abuse.
  2. Enacting state legislation defining “public use” as “use by a government body,” which would deny municipalities the opportunity to claim that their takings deals with private developers serve the “public purpose” because they will ostensibly increase tax revenue at some future date.
  3. Enacting state legislation mandating that blight be determined on a parcel-by-parcel basis.
  4. Enacting state legislation mandating that Tax Increment Financing (TIF) be limited to the length of time required to complete public infrastructure improvements within a given TIF district. This would reduce the ability of rent-seeking private developers to collude with local officials to subsidize development projects.