When Eminent Domain Is Just Theft

Government bodies often will take private property for genuinely public uses, and then try to stiff the owners.

Say you buy a car. Drive it around for five years, get plenty of use out of it. Then one day you decide you paid way too much. You really should have paid half what you did. Or even less. So you go back to the dealership and say the car is worth less now, and you want a refund.

Think you’d get it?

Precisely. Yet this is just the kind of stunt the Virginia Department of Transportation is trying to pull on James and Janet Ramsey.

The Virginian-Pilot told the tale a few days ago. In 2009, VDOT took a chunk of the Ramseys’ property to build an on/off ramp for I-264. Through a process called quick take, VDOT obtained title to part of their yard. The transportation agency brought in an appraiser, who estimated the value of the Ramseys’ land and damages at just under a quarter-million dollars. VDOT put the money in an escrow account and moved forward with the project.

The Ramseys wanted more. The disagreement went to court and, as the trial approached, VDOT brought in another appraiser — who said the Ramseys were entitled to only around $92,000. So VDOT asked for the difference back. By then the Ramseys had withdrawn the original deposit and invested it, as they are legally entitled to do. They couldn’t pay the difference back even if they wanted to, because they don’t have $158,000 in spare cash lying around.

Making matters worse: The rules of evidence prohibited the Ramseys from introducing either the original state appraisal, or the state’s escrow deposit, as evidence at trial. So it was their word against the state’s — instead of the state’s word against the state’s. Late last Tuesday, a jury awarded the Ramseys $234,000 — much more than VDOT's second appraisal but still short of its first.

Officials with VDOT say this isn’t intentional — the state isn’t deliberately lowballing later estimates as a litigation tactic. Appraisers retire before cases get to trial. Some die. They’re no longer available to give testimony — so the highway department has to bring in a new appraiser. And it’s perfectly natural for two appraisers to value a property differently. That doesn’t mean VDOT is putting the muscle on anyone.

Some lawyers in the field beg to differ. Paul Terpak told the Pilot the state is trying to discourage landowners from going to court — and that the maneuver is unique to VDOT. “I don’t have this problem with any other entity,” he said. He’s currently representing a client who is being asked to repay more than $232,000. WAVY-TV in Virginia Beach found other examples of VDOT coming in with astoundingly lower second appraisals — such as one that went from $210,000 to $17,000 and another that dropped from $214,000 to just $14,0000.

You could say the landowners who withdraw quick-take deposits are taking a risk — that they should leave the money in escrow until all the dust from a case has settled. Prudence might counsel just such a course. On the other hand, that means VDOT gets to take a citizen’s land right away, but the citizen has to wait for years to collect the compensation that’s rightfully his.

There’s another problem, too: Not every property owner gets to keep part of his land. Some are evicted outright. Gideon Kanner, a lawyer with more than four decades in eminent-domain law, points out that in those cases, the property owner has to use the escrow money to find another place to live: “Since the owner is being displaced, the owner has to draw the money out.” He or she can’t afford to let it sit in an account year after year.

When the government seizes private property, it has to meet two conditions spelled out in the Fifth Amendment: The property must be taken for public use, and the government must reimburse the owner with just compensation. Starting around the middle of the last century, the courts began to stray from the Constitution’s plain language. “Public use” became “public purpose” — if, say, the state wanted to condemn property to eradicate blight or break up a real-estate oligopoly.

Then came the 2005 Kelo case, in which the town of New London, Conn., took private property to give it to other private interests it hoped would use the land better. The Supreme Court gave that the green light, ruling that that any ostensible future benefit to the public — such as more government revenue — qualified as a public purpose and therefore justified condemnation.

As Sandra Day O’Connor noted in dissent, this new view did not “realistically exclude any takings,” and therefore did not “exert any constraint on the eminent domain power.” Earlier this month Justice Antonin Scalia, noting that the redevelopment hoped for by New London never materialized, told law students at the University of Hawaii that Kelo eventually will be overturned.

In the meantime, reaction to Kelo was ferocious. Most states — including Virginia — adopted legislation and even constitutional amendments intended to corral the power of eminent domain in the paddock where it belonged. Virginia’s constitutional amendment, for example, forbids using eminent domain for private gain, private benefit, private enterprise, increasing revenue or economic development.

That was a badly needed and welcome reform. But it still addresses only part of the problem. As the Ramsey case shows, government bodies often will take private property for genuinely public uses, such as a road — and then try to stiff the owners, especially if they don’t take the first offer that’s put in front of them.

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  • ||

    When are eminent domain takings theft?

    I think I know this one.

  • Swiss Servator, mehr Käse!||

    Oooh! Oooh!

    What do we win when we answer correctly?

    A free taking?

  • Dances-with-Trolls||

    Well, since government is just a word for things we do together, obviously these people who had their property stolen reclaimed simply changed their minds without even having to do so for the good of the politicians collective. What a wonderful world it is when Top Men can so clearly help us to do the moral thing. We don't even have to ask them to do it, either, such is their dedication to helping us all.

  • Andrew S.||

    Never. You can't own property, man.

  • Free Society||

    Yeah, man and you can't own yourself. And you have no right to live and blah blah blah collective blah blah privileges blah.

  • Brian D||

    BZZT! The correct answer is, "I can, but that's because I'm not a penniless hippie!"

    http://www.youtube.com/watch?v=5tbZ1zPSbf4

  • C. S. P. Schofield||

    Do you think it would help if it were made Law that, regardless of other considerations, the State must pay a minimum of the highest value the land has been taxed at in the previous decade?

  • Dances-with-Trolls||

    No, it would probably just make the problem worse. It's not their own money they are spending on it.

  • prolefeed||

    Why would it make the problem worse? Since eminent domain is theft, any restriction that would discourage the state from engaging in it is an improvement.

  • ||

    Here's an example. The city of Scottsdale, Arizona decides to build a freeway. The ideal location is on some unused Indian land bordering the city, but the Indians don't want to sell and they city can't ED it. So the city EDs a large swath of homes through the middle of a neighborhood big enough to lay a freeway through. Owners are paid and kicked out, plans for the freeway move ahead. Then the Indians come back and say on second thought, they'd be happy to lease their unused land for a freeway. So Scottsdale agrees to lease the Indian land, but now they have a huge bunch of homes on their hands that they previously took but no longer need. The city sells those houses at cut-rate prices to the mayor's daughter, the city manager's wife, and every other connected crony who has a couple of grand laying around. Then, lo and behold, the Indians don't want to lease their land for a freeway after all. So Scottsdale EDs, again, the same homes they took before. Despite selling them for a few thousand bucks to connected assholes a year before, they're now worth full market value and the cronies all make a mint. It's almost as if they knew how it would work out all along. The taxpayers, on the other hand, have bought a whole bunch of real estate effectively twice.

    I left Phoenix at that point in the story, but the last time I visited the highway had finally been built, on the Indian land after all. I don't know if the taxpayers revolted or got reemed.

  • Eggs Benedict Cumberbund||

    Oh they got reemed, the only question is was a reach around applied?

  • ||

    It would help if 'public use' were narrowly defined.

    I think property values are arrived at by appraisers via fairly strict formulas. In the cases cited in the article there is some serious chicanery going on.

    Your idea is aimed in the right direction, but you forgot just how slimy the people we are dealing with are. Looking ahead, tax assessors would just start lowballing the assessments on targeted properties.

  • GW||

    Well, that would be quite the predicament, since tax assessors are often in the process of *inflating* property values for the purposes of assessing property taxes.

    The real estate appraisal process is, at best, a shot in the dark. Sometimes there aren't comparable properties that have sold recently to assess value with, and in the case of home appraisals where a contract is in place pending the financing, the appraiser always knows what the agreed upon sale price is, and unless something is way out of whack then the appraisal is always in line with the purchase price. It's bullshit.

    I've seen local examples of the eminent domain cases where "just compensation" was ruled to be $0. Why? Because the new highway going in was going to increase the value of the remainder of the owner's property. How convenient.

  • Brian||

    Suthenboy:

    It would help if 'public use' were narrowly defined.

    That defeats the purpose. "Public use" and "public purpose" are so general that it devolves into a truism. How, exactly, does the government confiscate property that isn't for a public purpose? Unless they're confiscating it by accident, then, they have a purpose, and they represent the public, therefore... public purpose.

    They might as well say that government can only confiscate property it wants. There will be no confiscation of property that is unwanted by the government.

  • Free Society||

    They might as well say that government can only confiscate property it wants. There will be no confiscation of property that is unwanted by the government.

    That is the general logic of minarchism now that you mention it.

  • OneOut||

    when appraisals are done years or decades apart the values most likely will differ.

  • ||

    Red Cockaded woodpeckers are on the endangered list. They only make nests in live, old growth pines ( valuable saw-logs). They hollow out the trunk of the tree 30-40 feet up and then drill small holes in the bark around the nest entrance. The sap that bleeds out is very irritating and repels pests and carnivores from invading the nest. This makes them easy to spot.

    A few years ago a private landowner near Woodworth, La sold his timber. I had gone and looked at his timber once. It was fantastic. 3-4 ft diameter logs, 80 feet up to the first limbs. He sold 100 acres worth and got nearly a million bucks for it.

    When the loggers showed up to cut they were met by U.S. Forest Service biologists and were informed that they could not cut. A woodpecker nest had been discovered on the property. He sued, but before it could get before a judge the woodpecker mysteriously disappeared. The FS biologists were mystified ( really they were ).

    Every landowner that I talked to after that told me through clenched teeth " There aint no woodpeckers on my land. I made sure of it.".

  • ||

    Shoot. Shovel. And Shut up.

  • SQRLSY One||

    I sure as hell wish we could apply “shoot, shovel, and shut up” to the GAWD-damned parasitical asshole politicians, cronies, and assorted BASTARDS whose stupid policies end up endangering innocent, endangered wildlife. Why, as a land-owner, can I not get a CARROT instead of a malfunctioning stick? Why can I not be PAID to attract endangered wildlife onto my property? Oh, duh, it costs taxpayer MONEY that might otherwise go to fat-cat parasites in D.C., sorry I asked…

  • SIV||

    Must of been a flying squirrel. Those things are hell on RCWPs.

  • Almanian!||

    Meant to respond to this earlier and got dsitracted. Therefore:

    When Eminent Domain Is Just Theft

    Pretty much all the time, lately, A. Barton.

  • prolefeed||

    A. Barton Hinkle on When Eminent Domain Is Just Theft

    Hmmm ... always and invariably, without exception, since officials working for a really large protection racket with good PR can not legitimately take your property without your consent?

    OK, now I'll go and RTFA, see if Hinkle got it right.

    Next question?

  • ||

    "When Eminent Domain Is Just Theft"

    Always.

  • optimusratiostultum||

    If the government ever takes any land of mine the IED's will be complimentary. oh and fuck you NSA.

  • Stevecsd||

    Opponents of eminent domain in Virginia need to look at those rules of evidence issues. Can't show the state appraisal or the escrow account??!! Talk about rigging the trial in your favor. The appraisal should be public record. And the plaintiff (landowner) can't show it in court! Absurd!!

  • PRX||

    the same assholes who think appraisers are crooks who will put whatever the person who hires them wants on an appraisal also think appraisers hired by the government come up with fair market value. assholes like joe from lowell.

    and most people don't know the difference between an appraisal and a tax assessment.

  • Strelnikov||

    Is this a trick question?

    It's always theft.

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