Tag: eminent domain

Supporting Individual Rights, Opposing Eminent Domain Abuse

A recent blogpost published by Doug Kendall of the Constitutional Accountability Center (with whom we sometimes work with on op-eds and briefscriticized Cato’s involvement in Mount Holly v. Mount Holly Gardens Citizens in Action as cowardly, and inconsistent with our ideals. While Cato has great respect for any organization that, like the CAC, works “to preserve the rights and freedoms of all Americans,” their criticism of our brief is baseless, and grossly mischaracterizes Cato’s position in the case and track record generally. 

While I’m wary of misrepresenting the post through over-simplification, it can be boiled down to the following: 

  1. Mount Holly is a case about eminent domain;
  2. Pro-property rights groups (including Cato) have a history of “howling” against eminent domain;
  3. Those groups’ failure to argue against eminent domain in this case (and their support of the Township of Mount Holly), is inconsistent with their previous stance on property rights, and evinces a lack of moral courage;
  4. That failure can be explained because this case is also about civil rights and equality, and conservative groups hate equality, and live to help the state further oppress the downtrodden masses. 

 CAC’s criticism stems from an incorrect framing of the case at hand:

an important case out of Mount Holly, New Jersey, that involves Fair Housing Act (FHA) claims in the context of an effort by Mount Holly Township to use eminent domain to redevelop its only predominately minority community—and in the process, displace and raze the homes of its residents.

While that description is accurate in that the case is important, originates in Mount Holly, and concerns the applicability of the Fair Housing Act to a redevelopment plan, the case before the Supreme Court has nothing to do with eminent domain. The question to be argued before high court couldn’t be plainer: “Whether disparate impact claims are cognizable under the Fair Housing Act.”

It’s surprising that CAC would make such a basic mistake about the case, given that they filed a brief in the case, supporting the Mount Holly residents (a brief which makes no mention of eminent domain – at all).

“Eminent domain” refers to a specific way that the government can acquire private property against the will of the owner. So far, Mount Holly Township hasn’t resorted to eminent domain. Of the 329 properties that the township wants to include in the redevelopment plan, it has been able to acquire all but 70 of them through voluntary sales. If those remaining 70 owners – some of whom are parties to the case – were to challenge any attempts to expropriate their homes, Cato would be first in line to file a brief in their support, probably joined by those “howling”  pro-property groups like the Institute for Justice and Pacific Legal Foundation. (Sadly, it’s unlikely that we would garner CAC’s support, because the group has “long supported the reasonable use of eminent domain for redevelopment purposes.”)

No, this case isn’t about eminent domain because the residents aren’t challenging the township’s acquisition of property, but what it intends to do with that property. In a nutshell, the plaintiffs argue that the Fair Housing Act – which forbids governments and private individuals from refusing “to sell or rent … or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin” – bars not just intentional discrimination like restrictive covenants, but also any action that, even if entirely neutral and colorblind,  has a “disproportionate impact” on the ability of members of a protected class to buy or rent a home. They argue not that Mount Holly is intentionally discriminating against minority residents, but that the increase in property values as a result of redevelopment would effectively price the poor out of the neighborhood – and that counts as discrimination because the poorer residents are disproportionately drawn from minority groups

Cato opposes that theory of law generally, for the same reason that we oppose governmental abuse of eminent domain: we stand firmly against attempts by the government to control how people may dispose of their property. A homeowner should be able to sell his house for whatever price he thinks fair – without worrying that if his asking price is too high, he’ll be accused of racism and forced to defend himself in court. Our position in Mount Holly is the product of the reasoned and consistent application of well-articulated liberal principles, not “cowardice.”

As a closing note, we take issue with the implication that Cato “detests civil rights statutes.” Cato supports laws that protect individual freedom and opposes those that don’t. We may disagree with CAC on whether a law falls in the first or second category, regardless of whether it’s a “civil rights” statute or otherwise, but make no mistake that we support individual civil (and other) rights.

Indeed, we believe that the first and foremost duty of civil rights legislation (and constitutions) is to protect citizens from undue state interference with their daily lives and liberties. A reading of the FHA that embraces disparate impact claims doesn’t protect individuals from the state but instead represents an expansion of state interference. Behavior that was once lawful – selling your home for whatever price you wish – would become sanctionable. Disparate impact theory holds private individuals responsible not for personal bigotry, or the direct consequences of their actions, but for economic realities beyond their control – and that makes no one freer, nor more equal.

Update: Repeating what happened in the previous disparate-impact FHA case, Magner v. Gallagher, this case has apparently settled. The only question now is what the administration did to keep this issue away from the Supreme Court again. 

Further update: A couple of readers familiar with the facts on the ground in Mount Holly point out that while it’s technically correct that Mount Holly “hasn’t resorted to eminent domain,” the town’s redevelopment plan is indeed all-too-typical of eminent-domain abusers. That is, while not employing eminent domain – no condemnation proceedings have (yet) been filed – the town threatened to use it and then claimed “voluntary” sales when the homeowners capitulated. The redevelopment authority has represented that the incentives it offered for relocation were greater than what homeowners would’ve gotten from the eminent domain process – that alas is probably true, because the compensation paid for government takings is rarely “just” – but of course they would’ve had to sweeten the deal even more if they couldn’t threaten eminent domain in the first place. In other words, as we and our pro-property-rights allies have long argued, the ultimate solution is to reverse Kelo v. New London and take away the government’s ability to forcibly transfer property from one private party to another. If such eminent-domain-abuse claims aren’t foreclosed by the Mount Holly settlement, I suggest that the town’s residents hire IJ to litigate them. Cato would look forward to filing an amicus brief in support.

This blogpost was co-authored by Cato legal associate Gabriel Latner.

Eminent Domain for a Soccer Stadium?

Taxpayers in the District of Columbia have agreed – well, their agreement has been attested to by the mayor – to pony up $150 million to build a new stadium for D.C. United, the Major League Soccer team owned by Indonesian media magnate Erick Thohir. And just in case money isn’t enough to get the job done, the city administrator has made clear that the mayor has other tools in his kit:

A top District official reiterated Wednesday that the city is prepared to seize land in court to build a new soccer stadium after questions emerged over the ownership of a key plot needed for the project backed by Mayor Vincent C. Gray and D.C. United’s owners.

City Administrator Allen Y. Lew said the District was ready to exercise eminent domain should it be unable to come to terms with the current owners of the proposed site. “That’s always out there, that the mayor has the power to do that,” he said at a news conference Wednesday. “We’d like to work this out in an amicable way.”

Eminent domain. That is, taking land by force. For a soccer stadium. 

I am reminded of Justice Sandra Day O’Connor’s scathing dissent in the case of Kelo v. New London:

Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded–i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public–in the process….

The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory….

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

The Founders may well not have intended this perverse result. But alas, O’Connor was writing in dissent. Five justices of the Supreme Court upheld the taking of Susette Kelo’s home to give it to Pfizer. And now, the owners of the Super Salvage scrap yard know that “nothing is to prevent the State” from taking their property to benefit “citizens with disproportionate influence and power in the political process.”

It’s one thing to argue that the Founders intended to give the government the power to take private property “for public use,” such as a military installation, a road, or a school. But for a corporate office park? Or a soccer stadium? The Founders cannot have intended this perverse result.

Using Eminent Domain to Personally Benefit the Mayor Is Unconstitutional

One of the biggest dangers of not providing adequate constitutional protections for private property is that public officials can misuse their power to take property for private gains. Government actors, after all, have an incentive to act in a way that maximizes political gains and minimizes costs, so without adequate protection from the courts, they can be expected to use eminent to take private property for political (or even personal) benefit.

In 2005, in the now infamous case of Kelo v. City of New London, the Supreme Court unfortunately eroded the protections of the “public use” portion of the Fifth Amendment’s Takings Clause — “nor shall private property be taken for public use without just compensation” — by ruling that the potential for increased tax revenue from a large corporation can count as a “public use.” Suzette Kelo’s house was thus taken and given to Pfizer (which ended up not doing anything with the land).

It’s hard to imagine that government abuse of the Takings Clause could get any worse than that, but one such unfortunate case has arisen in Guam — which, as a U.S. territory, is covered by the Constitution. Artemio Ilagan owns and operates an apartment building in Agana, Guam. His neighbors, Engracia and Felix Ungacta, own an adjoining, residential lot that once lacked access to a road. Unfortunately for Mr. Ilagan, Mr. Ungacta was also the mayor of Agana when the city took a parking lot from Mr. Ilagan and gave it to Mayor Ungacta.

When challenged, the city claimed that the taking was done in accordance with a post-World War II “economic development” plan — the “Agana Plan” — that was enacted to reconfigure irregular lot lines in Agana. At the time of the taking (1981), the Agana Plan had not been used for seven years and, during the years it was used, was never used to take any lots. Moreover, the Plan has not been used in the 30 years since the taking of Mr. Ilagan’s lot.

The Guam trial court held the taking unconstitutional, but Guam’s Supreme Court reversed the holding by purportedly applying Kelo’s standard of judicial deference. Mr. Ilagan is now petitioning the U.S. Supreme Court to review his case, asking the Court whether it wants to allow other courts to use Kelo to cross the final bridge in eviscerating the Takings Clause — the blatantly pretextual taking of private property to give it to a public official.

Cato has joined the National Federation of Independent Business, 10 other organizations, and a group of constitutional and property law professors, on an amicus brief arguing that the Court should take the case in order to clarify, if not overrule, the broad language of Kelo. Kelo itself says that the government may not “take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.”

In Kelo, taking the property as part of an “economic development plan” was held to constitute a public purpose. Here, however, the “economic development plan,” was clearly a pretext to take property to benefit a known private party who just “happened” to also be the mayor. We point out that, despite the Court’s distaste with “pretextual takings” articulated in Kelo, courts across the country are split over what a pretextual taking is. Some courts have even ruled out the possibility of their existence. Yet, from the misuse of “blight” condemnations—a designation often used to tear down old neighborhoods for the purposes of gentrification—to situations like Mr. Ilagan’s, pretextual takings occur far too often.

The egregious case of Ilagan v. Ungacta is a perfect vehicle for the Court to clarify the concept of a pretextual taking and to bring some semblance of coherence back to a vital constitutional provision. More on our brief from Ilya Somin at the Volokh Conspiracy.

Public Financing of Vikings Stadium a Bad Deal for Fans, Taxpayers

The collusion between big business and big government that fleeces the rest of us has struck again – Tim Carney, iMessage your office – this time in the sports world. 

Minnesota governor Mark Dayton recently signed the midnight deal that state lawmakers struck with the owners of the state’s football team, the Minnesota Vikings, to build the team a new stadium.  This caused plenty of celebration in Minneapolis and elsewhere across the Gopher State.  Alas, the hangover is about to come for taxpayers regardless of their gridiron allegiance or level of fandom.

As former Cato legal associate (and Minnesotan) Nick Mosvick and I write in the Huffington Post, these stadium deals hurt most fans:

That’s because they lead to increased taxes and higher prices, squeezing the average fan for the benefit of owners and sponsors.  And that’s not even counting the overwhelming majority of taxpayers, regardless of fandom, who never set foot in these gladiatorial arenas.

Let’s look at this particular deal.  The stadium costs $975 million on paper, with over half coming from public funds, $348 million from the state and $150 million from Minneapolis—not through parking taxes or other stadium-related user fees, but with a new city sales tax.  In return, the public gets an annual $13 million fee and the right to rent out the stadium on non-game-days.

Vikings ownership, NFL commissioner Roger Goodell, and local politicians make a typical pitch for the deal: the stadium will attract investment to the area; local establishments will see a rise in game-day sales of $145 million; jobs will be created, including 1,600 in construction worth $300 million ($187,500 per job?!); tax revenues will increase $26 million; property values will rise; and, of course, the perennially underachieving team’s fortunes will improve.

Such arguments are always trotted out for these sweetheart deals, but the evidence regarding the economic effects of publicly financed stadiums consistently tells a different story.  For example, Dennis Coates and Brad Humphreys performed an exhaustive study of sports franchises in 37 cities between 1969 and 1996 and found no measurable impact on per-capita income.  The only statistically significant effects were negative ones because revenue gains were overshadowed by opportunity costs that politicians inevitably ignore.

An older study looked at 12 stadium areas between 1958 and 1987 and found that professional sports don’t drive economic growth.  A shorter-term study looked at job growth in 46 cities from 1990 to 1994 and found that cities with major league teams grew more slowly.  Even worse, taxpayers still service debt on now-demolished stadiums, including the $110 million that New Jersey still owes on the old Meadowlands and the $80 million that Seattle’s King County owes on the Kingdome.  And we shouldn’t forget that local governments often employ property-rights-trampling eminent domain to facilitate these money-squandering projects.

Read the whole thing.  It’s not a matter of ideology; we even quote Keith Olbermann approvingly!

The point is that these deals benefit team owners and the politicians who get to wrap themselves in team colors to the exclusion of taxpayers or fans (who are priced out of the games their increased taxes support).  If luxury stadiums were hugely profitable, why would the savvy businessmen who own the teams let the politicians in on the windfall?

Texas Court Rules For Eminent-Domain Critic

Good news from Texas, where a state appeals court has handed a major win to investigative journalist Carla Main, whose book Bulldozed: ‘Kelo,’ Eminent Domain, and the American Lust for Land took a critical look at the seizure of private land under eminent domain laws for purposes of urban redevelopment. Dallas developer H. Walker Royall didn’t like what Main wrote about his involvement in a Freeport, Texas marina project and proceeded to sue her, publisher Encounter Books (which I should note is also my own publisher on Schools for Misrule), and even liberty-minded law professor Richard Epstein over a dust jacket blurb Epstein had given for the book. (Earlier coverage of the suit here and here.)

A trial court had declined to dismiss Royall’s claims on summary judgment, but yesterday Judge Elizabeth Lang-Miers reversed in substantial part, ruling that Royall had failed to make the requisite showing that key passages in Bulldozed had in fact defamed him. The case is not yet over, but Institute for Justice senior attorney Dana Berliner, who argued for the defense, is understandably jubilant: “Walker Royall has failed in his attempt to use this frivolous defamation lawsuit as a weapon to silence his critics,” she said. Moreover, outrage at Royall’s suit contributed to Texas’s enactment this summer (joining 26 other states) of strong “anti-SLAPP” legislation aimed at curbing lawsuits intimidating speech. You can read the opinion here, and early coverage at Gideon Kanner’s blog, the Dallas Observer and D Magazine.

March Madness: Eminent Domain Abuse Goes Coast-to-Coast

This is a big week for private property rights.  Two epic eminent domain struggles are playing out on opposite sides of the country. 

First, National City, California, is ground zero for eminent domain abuse.  City officials declared several hundred properties blighted even before conducting a blight study that was riddled with problems. The city wants to seize and bulldoze a youth community center (CYAC) that has transformed the lives of hundreds of low-income kids, so a wealthy developer can build high-rise luxury condos:


CYAC has numerous volunteers, including local law enforcement officers, providing free mentoring in boxing as well as academics.  The gym is famous for getting kids off the street and back into school.  As Rick Reilly explained in a feature in Sports Illustrated (boy, how I miss his inside-back-page column):

You know what, Mayor? National City doesn’t need more luxury condos. It needs good men like the Barragans teaching kids respect for neighbors and property, manners you could use a little of yourself.

And if you kick the Barragans out so some slick in Armani can buy a bigger yacht, I hope your car stereo gets jacked—weekly—by a kid who would’ve otherwise been lovingly coached on their jabs and their math and their lives.

Question: Can you declare politicians blighted?

This week, the gym’s battle is in trial before the Superior Court of California.  Represented by the Institute for Justice (who else?), a victory will help protect private property far beyond National City and clarify the use and misuse of blight designations.

Second, moving to the other side of the country, we go to Mount Holly, New Jersey:


Mount Holly is another classic case of “Robin Hood-in-Reverse.”  Officials have been dismantling a close-knit community known as the Gardens for the last decade so a Philadelphia developer can bulldoze the area and build more expensive residential properties.

Homeowners in the Gardens are primarily minorities and the elderly.  The row-style houses are being torn down while still attached to occupied homes, and officials refuse to offer the remaining homeowners replacement housing in the new redevelopment.  Further, owners are being offered less than half the amount it would cost to buy a similar home blocks away.

Here, IJ just launched a billboard campaign and did a study that concludes the eminent domain abuse project may result in a loss of a million taxpayer dollars a year, or one-tenth of the Township’s budget.

I previously wrote about eminent domain shenanigans here and you can read more from Cato on property rights here.

Cato Unbound: Property, the State, Libertarians, and the Left

Talk between libertarians and the left usually follows one of two scripts, each of which frustrates me.

In the first script, both sides find things that they can safely dislike together – war, eminent domain, small business licensing – while carefully avoiding all the contentious areas. They’re a lot like that recently divorced couple at the Christmas party you’ve just attended, chattering as much as they dare… but mostly about the weather.

In the second script, someone yells “Taxation is theft!” or “You hate the poor!” and it’s not long before someone gets a drink thrown in their face. Perhaps also like that Christmas party you’ve just attended.

If I may say so myself, this month’s Cato Unbound has been quite different. The disagreements have been sharp, but well-informed and polite. (Even the libertarians are disagreeing among themselves; it’s a good sign that our movement isn’t just a set of dogmatic propositions, as some have claimed.)

As readers may already know, the December issue is about the role of property rights in social democracy. Discussants Daniel Klein, David D. Friedman, Ilya Somin, and Matthias Matthijs are arguing about whether social democracy entails the concept of overlordship – that is, the idea that the state must be the final, true owner of all property in a social democracy. If it’s not explicitly and by declaration, then at least it’s implicitly and by inference from its actions.

Klein shows that social democrats were once quite explicit on the point, and did indeed portray themselves as would-be overlords. Today they have to be cagier, but the claim remains logically implicit, he says.

Friedman argues that property has existed without the state, and perhaps even before the dawn of the human race. The state might claim any number of things, but we should judge it by what it actually accomplishes.

Somin suggests that today’s social democrats aren’t really overlords; they’re pragmatists without much in the way of theoretical principles at all.

And Matthijs actually is a social democrat. A proud one, by the look of it. He’s even European! Rights aren’t meaningful unless something enforces them, he argues, and the state does the work we all depend on. In this sense, all rights are artificial; all rights are created by the state. And he’s gamely defending his claims against a barrage of libertarian criticism.

Is your blood boiling? Or are you giggling behind your hand? Either way, grab yourself another egg nog, promise not to throw it at anyone, and go read the discussion for yourself.

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