property rights

Another Bleak Day for Property Owners

Property owners have long suffered under the Supreme Court’s erratic rulings. It got worse today. In Murr v. Wisconsin, the Court ruled against the owners, 5-3, with Justice Kennedy writing for the majority, Chief Justice Roberts writing a dissent, joined by Justices Thomas and Alito, Thomas writing a separate dissent, and Justice Gorsuch taking no part. The problem isn’t simply with the majority’s holding and opinion, it’s with the dissent as well. Only Thomas points in the right direction.

This was a regulatory takings case arising under the Fifth Amendment’s Takings Clause, which prohibits government from taking private property for public use without just compensation. In separate conveyances in 1994 and 1995, the Murrs, four siblings, inherited two contiguous lots on the St. Croix River that their parents had purchased in 1960 and 1963. The parents had built an ancestral home on the first lot. They bought the second for investment purposes.

The trouble began in 2004 when the Murrs sought to sell the second lot, valued at $410,000, and use the proceeds to upgrade the ancestral home. But they were blocked by a 1975 local zoning ordinance that treated the two lots as one, even though they had long been deeded and taxed separately. Under the ordinance they had to sell the lots together or not at all. Out $410,000, the Murrs sued, claiming that the ordinance had deprived them of their right to sell their property.

The Economics of the Saudis’ “Take-the-Money-and-Run” Strategy

As the Financial Times reported on 12 July, Saudi Arabia’s oil-output reached record highs in June 2016. Increasing production 280,000 barrels/day to 10.6m b/d, Saudi Arabia has once again waved off OPEC’s request not to glut the market with oil. 

As it turns out, economic principles explain why the Saudis began, in late 2014, to pump crude as fast as they could – or close to as fast as possible. In fact, there is a good reason why the Saudi princes are panicked and pumping. 

The Constitution Protects Against NIMBYism

It should surprise no one that the government isn’t particularly good at respecting property rights. Still, the Constitution requires that property owners be provided with “due process of law” against arbitrary and unjustified deprivation of their right to put their property to beneficial use. According to several federal appellate courts, however, landowners lack such protections unless they show that they have a statutory “entitlement” to use their land.

This is circular Humpty Dumpty logic. Indeed, that approach impermissibly presumes the legitimacy of restrictions, without considering whether they are lawfully applied.

Most recently, the New York-based U.S. Court of Appeals for the Second Circuit employed the “entitlement” theory to deprive a small developer of its right to upgrade run-down apartment buildings. The NYC Landmarks Commission deprived Stahl York Avenue Company of its property rights by designating these nondescript buildings as landmarks—this despite a previous ruling that these exact buildings lacked any architectural or cultural merit worth preserving.

Respecting Property Rights Means Paying Just Compensation for Takings

There’s no such thing as a free lunch. Or as the Fifth Amendment puts it, “nor shall private property be taken for public use, without just compensation.” Despite the clarity with which the Takings Clause proclaims that government must respect property rights, state and local governments have long been contriving ways to obtain private property without paying the constitutionally required just compensation.

In 2012, San Juan County, Washington—the islands in the Salish Sea between Seattle and Victoria—enacted a rule that conditions shoreline owners’ proposed land uses on dedicating a portion of their property as on-site conservation areas. This isn’t a new tactic. In Nollan v. California Coastal Commission (1987), for example, the Supreme Court rejected the government’s conditioning of a building permit on the landowners’ granting a public easement across their property to access a beach. The Court acknowledged that conditioning a benefit on the property owners’ giving up their Fifth Amendment right to just compensation is “an out-and-out plan of extortion.” The Court elaborated seven years later in Dolan v. City of Tigard (1994), ruling that courts must apply a high level of scrutiny to conditions attached to land-use permits to prevent government “gimmickry.”

Alexander Hamilton: Defender of Property Rights

Treasury Secretary Jack Lew’s proposed degradation of the ten-dollar bill (read: the removal of Alexander Hamilton as the featured figure on the ten-spot) is wrongheaded. In addition to being the first and most distinguished U.S. Treasury Secretary and a renowned journalist, Hamilton also excelled as a lawyer and defender of property rights.

The Grapes of Wrath: California Raisins Are Back at the Supreme Court

When Marvin Horne told the United States Raisin Administrative Committee (yes, there’s a raisin administrative committee) that he wasn’t going to turn over nearly 30 percent of his crop to the government in exchange for nothing, he probably didn’t expect his case would go to the Supreme Court—twice. That little act of civil disobedience was thirteen years ago, and the Hornes now stand on the precipice of vindicating an important constitutional right—the Fifth Amendment right not to have your property taken without just compensation—as well as putting a wrench in the gears of what Justice Elena Kagan called “the world’s most outdated law.”

Like much of our agricultural policy, the Raisin Administrative Committee (RAC) is a relic of New Deal-era cartelization schemes. Trying to understand the logic behind American agricultural policy is like trying to find the logic in a Marx Brothers movie—it can’t be done and you’re better off just sitting back and laughing at the antics. Yet our agricultural policy has real-world effects on farmers like the Hornes, who are subject to the whims of the RAC as it tries to stabilize the price and supply of raisins. Sometimes the RAC pays for the raisins it takes, and sometimes not. In 2002-2003, the RAC offered far less than the cost of production for 47 percent of the Hornes’ raisins, and in 2003-2004 they offered nothing for 30 percent of the raisins. The Hornes had had enough, and they refused the order, arguing the seemingly simple point that the confiscation would be a taking without just compensation under the Fifth Amendment.

An Innovative Way to Title Property in Poor Countries

Over the past couple of decades, a consensus has emerged among development practitioners and over a broad ideological spectrum about the need to legally recognize and protect the property rights of the world’s poor. Yet land tenure and the holding of other forms of property of billions of poor people remains informal.

Ignoring the Law of Supply and Demand

A recent report from Fannie Mae finds that baby boomers are not leaving their comfortable suburban homes for lively inner-city communities with walkable streets. As a news article about the report observes, this challenges the “conventional wisdom that ‘empty nester’ baby boomers would eventually downsize from the homes where they raised families, flocking instead to apartments or condos.”

Rather than conventional wisdom, it would be more accurate to say that this notion was wishful thinking among urban planners who believe more Americans should be packed into high-density “compact cities” where they will get around by foot, bicycle, or transit rather than by automobile. In contrast, demographers have known that populations of virtually all age groups, whether millennials or empty nesters, are growing faster in the suburbs and exurbs than in the cities. After all, the baby boomers’ parents overwhelmingly preferred to “age in place” rather than move when their children left home; why should baby boomers be any different?

Despite this, regional planning agencies all over the country are writing plans that presume America will need no more single-family homes, especially on large lots, and instead will need lots of apartments, condos, or townhouses. Many of these plans effectively zone away the possibility of new single-family homes on large lots while they subsidize construction of high-density housing. For example, the San Francisco Metropolitan Transportation Commission’s Plan Bay Area mandates that 80 percent of all new housing be in high-density urban centers.

To justify these plans, the planning agencies often hire Arthur C. Nelson, the University of Utah urban planning professor who in 2006 predicted that the U.S. will soon have 22 million surplus single-family homes on large lots. Nelson wrote a 2011 report predicting that the Bay Area, which has one of the most acute housing shortages in America today, would have a surplus of nearly 572,000 single-family homes by 2040; Plan Bay Area relied heavily on this report to justify its strict land-use policies.

The Right to Own Includes the Right to Rent Out

Since 2005, the city of Winona, MN will not grant rental licenses to property owners if more than 30 percent of the lots on their block already have rental licenses (the 30% “rule”). The rule contains a “grandfather clause,” however, that allows property owners who had licenses prior to the rule to continue renting even if their block has already reached the 30 percent threshold. Therefore, many blocks in the city violate the rule, which the Minnesota Supreme Court is now reviewing.

Connecticut, Drunk on Power, Uses Bottle Bill to Steal Money

For nearly 30 years, Connecticut beverage distributors received the unclaimed refund value of recycled bottles as part of the state’s Bottle Bill, which set up a refund system for used bottles as an attempt to encourage recycling. As in other states, the law requires beverage dealers to pay refunds for every bottle turned in.

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