Imagine you're an affluent Iraqi living in a ritzy neighborhood of Baghdad before the fall of Saddam Hussein's regime. One of Saddam's friends stops by your house for a visit. "Nice place you have here," he says.
The compliment worries you. You know Saddam could, if the whim struck him, take your home and give it to his friend. If he were in a particularly magnanimous mood, he might pay you for the property, but it would be an offer you couldn't refuse.
Anyone who thinks that sort of thing happens only in Third World dictatorships will be shocked by a new report from the Institute for Justice. In Public Power, Private Gain, the Washington-based public interest law firm reveals that during the last five years state and local governments in the U.S. have threatened to take more than 10,000 pieces of property and give them to well-connected developers.
Such transfers violate state and federal constitutional provisions that limit the power of eminent domain to situations involving a "public use," such as a courthouse or a highway. They have nevertheless been upheld by state and federal courts, and they may be much more common than the report suggests, since there is no systematic record of condemnations for private use.
"Cities love eminent domain because they can offer other people's property to lure or reward favored developers," explains the report's author, Institute for Justice attorney Dana Berliner. "Developers love eminent domain because they don't have to negotiate for property. In the end, developers get the land and property owners get the boot."
Here are a few of the many examples Berliner catalogs:
* In Mesa, Arizona, the owners of an Ace Hardware franchise got the city to condemn Bailey's Brake Service, a small business in operation since 1970, so they could gut it and build a new, bigger store.
* The City Council of Imperial Beach, California, condemned a Mexican restaurant and gave the land to the Sterling Development Corp., which replaced the long-established eatery with a Sav-On Drug store.
* To accommodate the developer of an industrial park, the city of Bristol, Connecticut, is evicting four elderly siblings from a home in which they've lived for 60 years.
* With help from a state redevelopment agency, Donald Trump tried to throw an elderly widow out of her Atlantic City home to make room for expansion of his casino. (She successfully challenged the plan in state court, where she was represented by the Institute for Justice.)
The common thread running through such cases is an astonishingly arrogant assumption by government planners that they know the best use for someone else's property. They decide a big business is better than a small one, a parking lot is better than a house, a retailer is better than a church, or fancy condominiums are better than middle-class homes.
The U.S. Supreme Court opened the door to such arbitrary exercises of power by declaring that condemning land and turning it over to private parties can meet the "public use" test if the aim is to eliminate "blight." It turns out blight is in the eye of the beholder; in practice, it can mean just about any property use a politician or bureaucrat doesn't like.
City officials commonly argue that forcibly transferring property from one person to another is justified because it will increase tax revenue and employment, thereby serving a public purpose. But as Berliner notes, this argument proves too much.
"If the promise of greater jobs or profits is enough to take someone's property," she writes, "then almost no one is safe. Practically any home in the United States would generate more tax dollars as a Costco. Small businesses provide fewer jobs than an industrial park. And houses of worship produce no tax dollars and few jobs. The implications of the jobs/taxes mantra is that everyone's home, everyone's business is up for grabs."
Striking an optimistic note, the Institute for Justice suggests "the tide is turning" against eminent domain abuse. In cases heard by courts, property owners prevail around 40 percent of the time; local activists have defeated 20 or so redevelopment projects; and state legislators have passed six bills aimed at protecting people threatened by condemnation.
I'm not sure this constitutes a turning tide. But if it does, much of the credit goes to the Institute for Justice, which tirelessly defends the private domain that distinguishes our country from places like Saddam Hussein's Iraq.