When Eminent Domain Is Used for Economic Assassination

Government officials who wield land grabs to pick economic winners and losers now want to use them to kill disfavored businesses.

In 2005, the United States Supreme Court ruled that it's constitutional for government officials to use eminent domain to steal private property and transfer it to other private parties if they think the change of ownership will further economic development. The Kelo decision proved to be wildly unpopular and sparked legal reforms intended to block the practice. Now, the courts have a fresh opportunity to get ahead of public outrage as a New York town seeks to use eminent domain not to promote economic development, but to block it entirely.

"Southold Town will pursue eminent domain proceedings to turn a vacant Mattituck lot into a park to prevent the location from becoming a hardware store," as Newsday summarized the dispute in September 2020. "The property owner and other critics of the proposal said the town should have moved on the land — which cost the owner $700,000 — before a development plan was in place and that using the condemnation process this way sets a bad precedent."

Southold officials' insistence on seizing the land for a park came after the Brinkmann family, which owns the parcel and plans to use it to expand their hardware chain, won a legal challenge to the town's several-times-extended moratorium on building permits in the area. The moratorium was one of several tactics—including a $30,000 fee for a "Market and Municipal Impact Study" paid the month before the moratorium was imposed—invoked by the town to block development as some members of the community sought to freeze Southold in time as a museum of its current condition.

In response to the proposed land grab, the Brinkmanns have teamed up with the Institute for Justice (IJ) to sue Southold.

"The town says it wants to take the land for a park—not because the town was planning for a park, but because that appears to be the only way to stop the Brinkmanns," IJ announced this week as the Brinkmanns filed a federal lawsuit. The complaint maintains that Southold's intention to build a "passive" (unimproved with no facilities) park on the targeted property is nothing more than a pretext for blocking the family's effort to use the property as a location for a hardware store.

"The Town did not contemplate a park, much less engage in any planning for a park on the Brinkmanns' property, until after they applied for a building permit, and after the Town had exhausted every other regulatory avenue in its attempt to stop the Brinkmanns from obtaining a building permit," according to the complaint. "The Town has made no effort to purchase a larger parcel next door that is for sale and equally suitable for a small park."

Southold did first offer to purchase the parcel—for a sum that would leave the Brinkmanns eating hundreds of thousands of dollars paid to architects, engineers, and the town itself. When rebuffed, officials moved to seize the property.

Needless to say, brandishing eminent domain to prevent economic activity is an even more tendentious interpretation of the Fifth Amendment's "public use" requirement than was the hope that politicians' chums might someday use parcels for more profitable ends than legitimate current owners at the heart of Kelo. As such, even courts accustomed to deferring to vague assurances from government officials might be pushed beyond the limits of their credulity.

"This extreme tactic would not only deprive the Brinkmanns of their property, but could also provide a model for other towns to similarly misuse eminent domain to prevent legal development of property," IJ adds. 

That's a serious warning about the risks of extending the use of eminent domain even beyond its dangerous application in Kelo as a tool of industrial policy. Given the opportunity, politicians are happy to put such power to all sorts of uses that cause more harm than good.

"In the years since Kelo, controversy over eminent domain abuse has expanded from 'economic development' and 'blight' condemnations to include such questions as pipeline takings, and Donald Trump's efforts to use eminent domain to build his border wall," George Mason University Law Professor and Volokh Conspiracy contributor Ilya Somin warned last summer. "While each of these situations raises some unique issues, all involve efforts by the government to seize private property for dubious purposes that are likely to destroy more economic and social value than they create."

All of those applications of eminent domain incidentally destroy more economic and social value than they create; Southold seeks to use the power to deliberately destroy, effectively turning it into a weapon of economic assassination. If causing intentional harm can be interpreted as a "public use" under the Fifth Amendment, it is difficult to imagine any limits to the government's power to seize private property. But malice isn't the only danger; regulatory uncertainty is also a risk.

"The town hasn't been able to find a legal way to stop our hardware store, so now they want to just take our land," Hank Brinkmann maintains. "From the beginning we've tried to fit into the community and follow the rules, but the rules keep shifting under our feet."

That's another reason to reject Southold's attempt to wield eminent domain as a barrier to private enterprise. Even if government officials aren't being overtly malicious, it becomes difficult to make plans and investments when the regulatory environment is an ever-morphing maze of rules that change based on personal whims and public pressure. If officials want a parcel for a specific use, or no use, they should purchase it when it is available. Otherwise, they need to respect the property rights that provide certainty for what people can and can't do with what belongs to them.

"It's very, very concerning," Paul Pawlowski, a local developer, told a public hearing when Southold officials floated the idea of eminent domain. "When you buy property or sell property, we all have to live by a playbook and that playbook is our town code." He added that the moratorium and use of eminent domain effectively "threw the playbook out."

Deliberately or incidentally, eminent domain does a lot of damage to people's property rights and their ability to plan for the future. It's long past time to place tighter limits on government land grabs, and to prevent them from becoming weapons for killing businesses that politicians don't like.