Courts to State: You Want It, You Pay for It
Tehama County, California, planners had a vision of the good life. So, like planners everywhere, they decided to make their vision law.
They dictated exactly what direction new homes could face. And how many windows they could have. What sort of paint could be used. And which homeowners could have wood stoves. They decreed that every home should have a water meter. And they made the citizens of Tehama County very mad.
So mad, in fact, that the citizens decided to put a stop to all that planning. A small group of property owners wrote a ballot initiative forbidding the county to impose any land-use restrictions other than those already established by state and federal law. Even more notably * the initiative required the county to pay for any drop in property values caused by restrictions for historical, archaeological, or "open space" reasons.
The initiative passed, but the county board of supervisors refused to obey it. The property owners sued and, after a ferocious legal battle, won on appeal. The victory "could be the spark of a bonfire," says Ronald Zumbrun, president of the Pacific Legal Foundation, which represented the initiative's supporters. Especially if combined with other sparks.
In another California case argued by Zumbrun's organization, a federal appeals court has paved the way for the owners of Santa Barbara mobile-home parks to demand compensation for property rights lost because of a very restrictive rent-control ordinance. Judge Alex Kozinski (see Spotlight, Aug. / Sept. 1986) wrote the decision for the Ninth Circuit Court of Appeals, one of the most influential federal courts.
The city's mobile-home rent control, he ruled, amounted to a "physical invasion" of property by city authority and therefore could be subject to compensation claims as in eminent-domain cases. Until now, rent control and other use restrictions on property rights have been considered "regulatory" taking, which almost never requires compensation, according to the courts. Mobile-home park owners would still have to bring suit specifically to claim compensation.
Legal theorists, most notably Richard Epstein of the University of Chicago, have been arguing for some time that land-use restrictions amount to legal "taking" by the state and should therefore be paid for. In these recent decisions, the courts have taken tentative steps toward acceptance of this philosophy in practice. The Santa Barbara case, Zumbrun told Reason, "sets us up with a precedent to make the argument" in future cases.
"At the Pacific Legal Foundation, we're looking for straws in the property-rights field-and that's a big one."
Profiting from Postal Service Imperfections
Ingenuity can't be squelched by the state. Even though the U.S. Postal Service is the only entity allowed by law to provide nonexpress letter delivery, entrepreneurs keep finding ways of getting in on the act. In the process, they're filling in the cracks-and gaping holes-in Uncle Sam's service.
Reed Watkins, for example, has devised a simple way to make a buck in the postal business.
He collects household mail in and around Salt Lake City, hands it over to the Post Office for delivery, and turns a profit. How? By using the Postal Service's bulk rates.
Through market research, Watkins discovered that 90 percent of household mail is bills, most of which go to the same places-utility companies, phone companies, credit card companies, etc. So he put his finding to good use by starting Mail America.
Mail America sells its own cut-rate postage stamps: 20 cents for a personal letter, 15 cents for a bill. The company collects mail from 100 Mail America boxes located in grocery stores and shopping malls. After sorting it by destination, the company then puts all the mail going to the same address-Visa, for example-in one big envelope, applies the Post Office's bulk-rate postage, and drops the envelope in the mail. The bulk rate costs Mail America only a fraction of what the company receives from selling its own postage. Although the company takes a 2-cent loss on personal letters and other items mailed singly, it makes up for this through the bulk-rate savings. And households save money compared to USPS rates.