Negotiating at Gunpoint

Cities can't be trusted with sweeping eminent domain powers.

Indianapolis Mayor Bart Peterson wants to dispel "innacuracies and stereotypes" about the use of eminent domain for economic development, a practice the U.S. Supreme Court upheld in last year's notorious Kelo v. New London decision. Last fall Peterson told a Senate subcommittee that when the government threatens to condemn people's property because it thinks someone else can make better use of it, "a majority of the time, most people agree to sell."

Interesting. Given the choice between selling and fighting an expensive legal battle they will almost certainly lose, after which they will have to give up their land anyway, probably on less advantageous terms, most people "agree" to sell.

"Cities use eminent domain most often as a negotiating tool with property owners," explained Peterson, who was speaking for the National League of Cities. "Just having the tool available makes it possible to negotiate with landowners." Sure it does—in the same way just having a gun available makes it possible for a bank robber to negotiate with a teller.

As the February 22 anniversary of the oral arguments in Kelo approaches, state legislatures across the country are considering bills to rein in the use of Peterson's "negotiating tool." They should not fall for the false assurances of local politicians, city planners, and developers—a powerful triumvirate determined to block meaningful eminent domain reform.

The opponents of reform say Kelo did not really change the law, since the practice of forcibly transferring property from one private owner to another had been upheld by state and federal courts. But until Kelo, the U.S. Supreme Court had never said the Fifth Amendment, which restricts eminent domain to "public uses," allows local governments to take perfectly good homes and businesses (as opposed to "blighted" property) on behalf of private developers.

By agreeing that any private use expected to increase tax revenue and create jobs counts as a public use, the Court gave a green light to politicians who might otherwise have hesitated because of the lingering legal uncertainty. As Justice Sandra Day O'Connor put it in her dissent, "nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping center, or any farm with a factory."

Peterson claims "eminent domain is used sparingly." Yet the Institute for Justice, which represented the property owners in Kelo, found 10,000 cases in which condemnation was used or threatened for the benefit of private developers during a five-year period. The true number is probably much higher, since the study relied on newspaper articles and recorded cases, which reflect only a fraction of such land grabs.

But don't worry, Peterson says: Cities can take your property only if they have a plan and follow certain procedures. When politicians draw up plans to justify decisions they've already made and follow procedures they themselves specify, these requirements provide little protection for property owners.

Speaking of phony safeguards, Peterson is willing to go along with "legislation that prohibits the use of eminent domain solely to provide for private gain" (emphasis added). Such condemnations are illegal even under Kelo and in any case do not officially exist, since any private use can be said to provide ancillary public benefits.

In practice, that is all it takes to seize people's homes and businesses: the unilateral judgment of politicians that society would be better served if the property were in different hands. Peterson asserts "a natural tension…between individual rights and community needs" that wise men like him must resolve to "achieve a greater public good that benefits the entire community."

Peterson is not talking about public nuisances or about traditional public uses such as roads or courthouses; he is talking about systematically overriding people's plans for their own property. State legislators should reject this collectivist vision, which elevates amorphous "community needs" above individual rights.