Eminent Domain Bill Will Protect Against Abuse

December 11, 2005

Andrea Neal column for Dec. 7 and thereafter
700 words

INDIANAPOLIS —  If Rep. David Wolkins had his way, he’d end all use of eminent domain for economic development. As chair of the interim study committee on eminent domain, he’ll settle for the next best thing: making it harder for government to seize private property and, when it does, ensuring owners get compensated fairly.
    "I don’t like takings at all, unless it’s for public use," says Wolkins, R-Winona Lake.
But Wolkins knew early on that lawmakers wouldn’t go for language that might slow down efforts to clean up blighted neighborhoods across Indiana.
    Under a bill to be introduced in the 2006 session, cities could still condemn property and hand it over to a private developer for commercial purposes, if of economic benefit to the community. But they would have to prove up front that the property is a nuisance, unfit for human habitation or tax delinquent. There will be no more reverse Robin Hood incidents – misusing eminent domain to give to the rich what belongs to the less-rich, the poor and middle class.
    More than a dozen states have passed, or are on the verge of passing, laws to rein in the government’s constitutionally prescribed power to take private property for public purposes. Historically, the power has been used to make way for utilities, rights-of-way and other public facilities. Recently, however, it has become a tool for economic redevelopment.
    The legislation was prompted by the June 2005 Supreme Court ruling in Kelo vs. City of New London. In that case, the court held that 15 homes in a waterfront Connecticut neighborhood could be acquired by the city and replaced by a luxury hotel, upscale condos and office buildings. The city justified the project as a way to generate tax revenue and jobs.
    Critics charged the taking was a blatant violation of private property rights since the homes and businesses to be leveled were not dilapidated, posed no health hazards and had not been classified as blighted. The high court, in a 5-4 ruling, said, "Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the Fifth Amendment."
    Since the decision, bills have been filed in more than a dozen states; several have taken preventive action:
    –Alabama passed a law that prohibits use of eminent domain for retail, commercial, residential or apartment development; for purposes of generating tax revenue; or in order to transfer property from one private party to another, except in the case of blight.
    –Delaware law now allows eminent domain "only be exercised for the purposes of a recognized public use as described at least six months in advance of the institution of condemnation proceedings."
    –Ohio put a moratorium on eminent domain for economic development purposes until Dec. 31, 2006 and created a task force to study the issue. One of the more radical proposals pending before that legislature would amend the state constitution so cities and towns could not use eminent domain at all, unless approved by the legislature.
    A report by the Institute for Justice found more than 400 instances of threatened or actual condemnations for private profit in Ohio cities in the five-year period from 1998 through 2002. In Indiana, the libertarian research organization documented 55 such cases.
    Wolkins said he understands why any eminent domain bill needs to have a blighted use exception in order to get through the General Assembly.
    In Indianapolis, an acclaimed neighborhood redevelopment project, Fall Creek Place, could not have happened without the threat of eminent domain. The project has transformed one of the most crime-ridden parts of the city into a national model with housing opportunities that range from affordable to upper-end.
    Wolkins’ bill is unusual in that it will essentially set the price at which government can acquire private property: 150 percent of market value for residential property and 125 percent of market value for farm land.
    "That means, by the time all is said and done, they’re at least getting just compensation for it," Wolkins said.
    That is, of course, what the Fifth Amendment requires. Wolkins’ bill will put a check on a government power that was becoming limitless in the name of economic health.

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Andrea Neal is an adjunct scholar and columnist with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.


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