American Planning Association 11

EminentDomainAn update on post-Kelo battles.

S h i p l e y

pss than a month after voters in iime staOlapproved ballot measures Umiting thelof eminent domain, the conservativeInstitute in Washington, D.C., condiiLtcd

Isymposijim called "Property Rights on there From Here?" The fight is on,

and we're winning, was the message from theproperty rights crowd.

The spin went like this: Voters are fed up withthe government dictating who owns propertyand how owners may use it.

But the view from particular states and cities isless clear. Voters in November did indeed approveeminent domain restrictions in nine states, butthe new rules vary greatly from state to state. Inthe same election, voters in California, Wash-ington, and Idaho rejected "regulatory takings"ballot measures that could have altered planning

12 Planning March 2007

practices more dramatically than the eminentdomain measures did. Only Arizona voters ap-proved a regulatory takings measure, one thatalso amended eminent domain laws. In severalother states, courts blocked regulatory takingsmeasures from even reaching the ballot.

"Cle;irly, there is a widespread public demandfor reform of eminent domain. There is a desireto constrain eminent domain," says John Ech-everria, executive director of the GeorgetownUniversity Environmetital Law and PolicyInstitute. "One of the $64,000 questions iswhether the eminent domain reform boomhas spent itself. I just don't know the answer tothat question."

Others see little reason to believe that mo-mentum for eminent domain reform is waning,especially if voters are given a choice. TimothySandefur, an attorney with the Pacific LegalFoundation in Sacramento, calls November 7"an amazing day."

"We've hoped to see reform from the courts,atid some have refused to follow the Kelo theory,"says Sandefur, author of tbe book Cornerstone ofLiberty: Property Rights in 21st Century America."But other courts have remained silent, and thevoters have decided that they had to take reforminto their own hands."

More hullnl inoaHiiroH lo rcmieIn California, it appears certain that voters willsee at least one more state ballot measure thatattempts to bolster property rights claims insome fashion—and potentially limit planningoptions. The Howard Jarvis Taxpayers As-sociation, an organization that has focused onreducing taxes since the 1970s, has Hied withthe state attorney general a proposed initiativethatwould prohibit useof eminent domain forthe purpose of transferring property from oneprivate entity to imother. It would iilso strengthenregulatory takings law. If the attorney generalapproves, initiative supporters may begin col-lecting petition signatures. The Jarvis associationhopes to reach the ballot in 2008.

"We dont want private homes taken andhanded over to private developers," says Jona-than Coupal, executive director of the Jarvisgroup. The fact that voters in so many otherstates approved eminent domain restrictionsonly strengthens the cause, he says, and reform"iscomingone way or another."

Republican lawmakers in California havealready introduced state constitutional amend-tnents restricting eminent domain; if approvedby the legislature, they would appear on the stateballot in 2008. Even the League of CaliforniaCities and California Redevelopment Associa-tion are considering filing their own eminent

Ballot measurescalling for more

limits on repiUtorytakingsfailedat the polls in

both WashingtonState (above) andCalifornia (right).

domain reform initiative, in part so that theycan frame the issues in a different way.

The local government groups would like topreclude tbe use of eminent domain to takesingle-family homes, if only to remove thathammer from opponents' tool box. In Califor-nia, as in other Western states, property rightsproponentscombined eminent domain reformwitb far-reaching regulatory takings provisionsinto one ballot measure.

"After living through the campaign andseeing how the issues were put on the table, itcertainly has given me and my board of direc-tors pause," says Chris McKenzie, executivedirector of the League of California Cities. "Thewhole experience demonstrated to us over andover again that the public has a concern abouteminent domain."

Next door in Nevada, voters will definitelysee an eminent domain measure on the 2008ballot. That is because constitutional amend-ments in that state require affirmative votes inconsecutive general elections. Last November,

voters provided initial approval for Question 2,which restricts the u-se of eminent domain foreconomic development purposes and makesa number of procedural changes that favorproperty owners.

In Arizona, there are preliminary discussionsabout a potential ballot measure that wouldoverturn Proposition 207, which voters approvedlast November. The approved measure requiresthe government to compensate property own-ers whose property value is diminished by theenactment of new regulations, and prohibitsthe use of eminent domain for purposes ofeconomic development.

"People are pretty unhappy with the pace ofgrowth and the pace of development in Arizona,"says Grady Gammage, a land-use lawyer andsenior fellow atArizona State University's Mor-rison Institute for Public Policy. "I think peopleare going to be frustrated that this | Proposition207] limits the planning toots available."

Proponents of combination eminent domainand regulatory takings measures that were

American Planning Association 13

Hm LeToumeux ofYamhill County. Oregon, tvorries that his tree farm will bethreatened by development on a nearh^ property—something that could happen underthe provisions of Oregon's Measure 37.

blocked from ballots in Missouti, Montatia, andOklahotiia during 2006 are making pteliminarymoves in anticipation ofthe 2008 elections. Inall three states, courts precluded die measiitesIrom the ballot for technical reasons, such asfraudulent signature gathering. Proponentshope to cure the defects and place their ini-tiatives before the voters. These measures allspring from a campaign financed by New Yorkreal estate investor and libertarian crusaderHoward Rich.

Elsewhere, however, the prospect for ftirtherballot measures appears dimmer. In Florida,passage ofa stringent eminent domain consti-cucionai amendment last November could makethe way more difficult tor a toilow-up measurethat restricts land-use regulations, because the"eminent domain cloak" has been removed,says Nancy Stroud, AICP, a land-use attorneyin Boca Raton. The Kelo backlash provided "anea.sy political win for the property rights folks,"she says. But, as in Arizona, Florida voters haveconcerns about the rapid pace of growth, so that

measures limiting government's ability to man-age that growth might prove unpopular.

In Idaho, the overwhelming, three-to-onedefeat ofa measure that combined eminentdomain and regulatory takings provisions haslikely killed thechances fora new ballot measurefor at least a tew election cycles.

"So manycommunities are just overwhelmed(by growth)," says Deanna Smith, administratorof the group Idaho Smart Growth. "Right now,I don't see the majority ot Idahoans as concernedabout property rights issues and takings issuesas about growth issues."

Krio and its a rThe seeds of all this election activity wereplanted on a June day in 2005, when the U.S.Supreme Court voted 5-4 to uphold the useof eminent domain by the Connecticut cityof New London to make room for a mixeduse waterfront project. In Kelo v. City of NewLondon, the Supreme Court essentially said thateconomic development was a "public purpose"

for which the government had the authority toacquire people's property.

Many legal scholars, economic developmentproponents, and planners said the SupremeCourt decision did little more than affirm prac-tices that have been in place for decades. Otherssaid the Kelo ruling meant little because theirstates already had restrictions that would preventthe sort of condemnation that the New LondonDevelopment C.orporation employed.

Nevertheless, the Kelo decision did not playwell in the popular media, where the SupremeCourt was portrayed as siding with che govern-ment and a rich developer to the dettiment ofhome owners ot modest means. Public opinionpolls soon showed that more than three-quartersof Americans disagreed with the Kelo ruling, andeven Supreme Court Justice [ohn Paul Stevens,who wrote the Kelo decision, said during aspeech a few months later that he might havereconsidered if he had foreseen che politicaltirestorm touched oft by the decision.

Afteryearsofmaking limited progress in thecourts, property rights backers saw a politicalwinner and seized on public sentiment, Theypushed eminent domain reforms in nearlyevery state and in Congress. By the time statelegislatures had concluded their 2006 se.ssions,35 states had enacted some kind of eminentdomain reform, most often aimed at limitingor prohibiting the use of eminent domain foreconomic purposes.

Property rights advocates complained thatlegislative retorms fell short in some states.Thus, there was a shitt to direct democracyduring the fall of 2006, and the passage ofnine ballot measures chat altered state eminentdomain laws. Nine measures were on the ballotin November and one—in Louisiana-—in laceSeptember. No eminent-domain-only ballotmeasure failed at the polls.

At the same time, groups with ties to How-ard Rich sponsored balloL measures, mostlyin Western and Plains states, that sought, tooverhaul both eminent domain and regula-tory takings laws. The.se " AW(?-plus" initiativessought compensation for property owners whowere impacted by land-use regulations. In theend, the measures reached voters in only fourstates, and only the Arizona electorate providedapproval.

\Miat h all meansFor planners active in redevelopment efforts,changes in everyday practices may be necessary.In Florida, for example. Amendment 8 prohibitsthe transfer ofprivate property taken by eminentdomain to anocher private entity unless three-fifths of both houses ofthe state legislature pass

Planning March 2007

a law allowing the transfer. The amendment,which passed in November, will impinge onlocal officials' ability to assemble properties forredevelopment projects, says Stroud.

"I think it's very significant for planners,especially planners who are involved in rede-velopment issues," she says. "It's going to makeeverything harder."

Florida has a number of very old cities, andsome of them are crowded with dilapidatedbuildings on tiny lots. In addition, the state iscrisscrossed with antiquated subdivisions drawnup during the first half of [he 20th century thatdo not come close to meeting today's standards.Often, eminent domain is the only way to as-semble usable pints of land in these downtownsor antiquated subdivisions, Stroud explains.

"It's very difficult to simply negotiate the saleof a lot. Sometimes you can't find the owner,there are multiple owners, or there is one hold-out who is holdtng up the whole deal," Stroudsays. Ultimately, redevelopment projects inFlorida either will cost taxpayers more moneyand take longer to accomplish, or they will beabandoned, she adds.

By contrast, a measure approved by voters inNew Hampshire did little more than reinforcethe status qtio, according to Ben Frost, the state'slegislative liaison to APAs New England chapter.A1985 New Hampshire Supreme Court decision{Merrill v. Manchester and Manchester HousingAuthority) had already been interpreted to pre-vent condemnations for economic developmentpurposes in non-blighted areas. A few monthsbefore the election, state lawmakers changedthe term "public purpose" in eminent domainstatutes to "public use" to ensure tbat eminentdomain is not used for economic develop-ment. In Keio, the Supreme Court found thateconomic development in New London was apublic purpose.

Approved by New Hatnpshtre voters lastNovember, Question I e.ssentially placed in tbestate constitution sitiiilar protections for propertyowners. "In the end, I can't really say that muchwill chatige in New Hampshire," says Frost, whoworks for the group New Hampshire Housing."As always, though, time will tell."

Planners in Idaho and California took heartin voters' rejection of Ar/o-plus measures, whileplanners in Washington were happy to see votersreject a regulatory takings measure'—^fashionedafier Oregon's Measure 37—that would havethreatened the state's growth managementpolicies. In all three of those states, advocatesof good planning lined up support from thebusiness community to defeat ballot measuresthat might have held some appeal for businessand developmetit interests.

In Idaho, for example, environmentalists andsmart growth proponents convinced the powerfiilIdaho Association of Commerce and Industrythat the Howard Rich-sponsored Proposition 2would undermine development regulations onwhicheveryonerelies,andwouldimpingeon thelocal control that Idaho residents dearly value.

"We worked very hard to have certain spe-cific types of messengers," explains Smith, ofIdaho Smart Growth. "We had a lot of farmersand ranchers in the front. We also used a lot ofbusiness leaders."

The election result was satisfying, says Patri-cia Nilsson, AlCP, manager of comprehensiveplanning for the city of Boise. "There seemed

initiative. Proposition 207 was the only A?/o-ptusinitiative to pass last November. The measurerequires the government to compensate propertyowners whose property value is diminished bythe enactment of new regulations. Proposition207 also prohibits the use of eminent dotiuitifor the purposes of economic development,increased tax revenues, or job creation. While theeminent domain provisions of Pro position 207are fiiirly clear, the regulatory takings languageis somewhat ambiguous.

"It really calls into question what laws amunicipality may pass," says Alan Stephenson,a planning supervisor for the city of Phoenixand vice president of legislative affairs for the

NV

to be some support for the system we havenow," she says.

In Washington, as in Idaho, a number ofrespected elected officials of both parties declaredtheir opposition to a property rights ballotmeasure. That was also true in California, whereGov. Arnold Schwarzenegger won reelection ina landslide—while helping to defeat the Kelo-plus Proposition 90.

John Shirey, who heads the California Re-development Association, says he and otherswho battled Proposition 90 are trying to keeptogether the campaign coalition, which includedmost major business and development groupsin the state.

"We still thinkwe need to do some eminentdomain reform," says Shirey. "As to what formthat's going to take, I don't know yet."

Slale hy staleThe eminent domain rules differ in every state.Here is what voters approved last November:

Arizona: Billed as the "Keep What You Own"

Arizona Planning Association. "That's one ofthose things that is going to have to be interpretedby the courts over time,"

The immediate upshot is that cities are requir-mg landowners who submit project applicationsto sign waivers saying the landowners will notpursue a Proposition 207 takings claim as a resultof the city's project review process.

Unlike Oregon's two-year-old Measure 37,Arizona's Proposition 207 is not retroactive.Tbe government is liable only for the effects ofnew regulations. So another upshot is extretiiecaution regarding rezoning and local generalplan updates.

Florida: Amendment 8 is a straightforwardconstitutional amendment that prohibits thetransfer of property taken via eminent domainto a "natural person or private entity" unlessthree-fifths of the state legislature approves.

Property rights proponents see approval ofAmendment 8 as a major victory because itprohibits use of eminent domain to eliminateblight. They contetid that public officials in

American Planning Association 15

Florida have abused che blight provision topursue whatever projects they wish.

"Florida," the Pacific Legal Institute'sSandefur said after the election, "has chosen acourse of respecting people's right to keep anduse the land that they have honesdy boughtand paid for."

Georgia: HR 1306 prohihits the use ofeminent domain by a local, unelected housingor development authority unless the electedgoverning authority approves. The measure alsorestricts use of eminent domain for redevelop-ment purposes to the elimination of harm,and provides that all use of eminent domainby counties or municipalities is limited bygeneral law.

Michigan: Proposal 06-4 essentially codifies a2004 Michigan Supreme Court ruling on emi-ni.'nt domain and imposes procedural changes.

use," and would be eligible tor compensationbased on the property s highest and best use orbased on the proprietary purpose for wh ich thegovernment intends to put the property.

Moreover, property owners could buy backtheir property at the original purchase price ifthe government does not use the property forits stated purpose within five years. And thegovernment is responsible for all attorneys feesin any eminent domain case.

Because the Nevada stateconstitutionra]uiresconstitutional amendments to be approved intwo consecutive general elections. Question 2is scheduled to reappear in 2008 before it canbecome law.

New Hampshire: Question 1 amends thestate constitution to say, "No part of a person sproperty shall be taken by eminent domain andtransferred, directly or indirectly, to another

could lease or sell non-possessory interestsin a condemned propert)' for the purpose offinancing the acquisition. This last exceptionappears to be a concession to public-privateredevelopment projects.

Procedurally, Measure 39 permits courts todetermine, independent of a public body s find-ings, whether the condemnation is legal. Andthe initiative makes the government liable fora landowner's attorneys fees if the amount ofcompensation awarded by the court is greaterthan the government's initial offer.

5o«i^GiTO//'«rt: Constitutional Amendment5 essentially restates existing case law, whichprohibits the use of eminent domain for eco-nomic purposes. But the measure does permitthe general assembly to allow condemnationfor a private purpose to remedy blight. Thestate constitutional amendment also deleted

There will continue to be some ballot activity on eminent domain, but at a lowerlevel than last year, and there will be a little activity on regulatory takings/

In Gotinty op^ayne v. Hatcheck, the state's highcourt ruled that the state constitution permits thetransfer of property taken by eminent domainto a new private owner in only three circum-stances—when a recalcitrant property owneris holding out, when the new private ownerremains "accountable" to the public, or whena "public concern" such as blight exists.

Procedurally, Proposal 06-4 requires thatwhen a person's principal residence is takenby tbe government, the government must payat least 125 percent of fair market value. Ad-ditionally, when a property is taken to eliminateblight, the government must provide "clear andconvincing evidence" to support the taking, ahigher standard of proof than usual.

Nevada: Question 2 amends the state con-stitution to limit the use of eminent domainfor economic development purposes. Thebroadly written initiative may even bar the useof eminent domain for some transportationand utility projects.

Question 2 also makes a number of proceduralchanges that favor the property owner. For ex-ample, property owners would have access to allgovernment appraisals of their property, couidhuve a jury resolve questions regarding "public

person if the taking is for the purpose of privatedeveiopment or other private use of the prop-erty." The measure would appear to prohibiteven leases of portions of public projects forwhich eminent domain was used.

North Dakota: Initiated Constitutional Mea-sure 2 prohibits the use of eminent domain forthe purpose of transferring property to a newprivate owner, unless the owner is a utility orcommon carrier. The specific exception dif-ferentiates Initiated Measure 2 from Nevada'sQuestion 2.

Oregon: While ballot measures in NorthDakota and New Hampshire were straight-forward, Oregon's Measure 39 was far morecomplex. The Oregon initiative prohibits theuse of eminent domain to acquire a "residence,business establishment, farm or forest opera-tion" if the government intends to convey theproperty to another private party. But there areexceptions.

The government could take property that isa danger to the health and safety of the com-munity, or condemn property for utility andtransportation projects. Additionally, the gov-ernment could sell off timber, crops, and gravelfrom condemned property. And the government

Both sides of the issue, www.propertyfairness.org. Castle Coalition: www.castlecoalition.org.Georgetown Environmental Law and Policy Institute: www.Iaw.georgetown.edu/gelpi. Idaho Smai tGrowth: www.idahosmartgrowth.org. Institute for Justice: www.instituteforjustice.org.

provisions in state law permitting housing andredevelopment authorities in nine counties toexercise eminent domain for redevelopment.

Roger Pilon, vice president for legal affairsat the Cato Institute, says that property rightssupporters are finding that they can sway votersmore easily than they can convince judges.

Thus, in the states that provide for initiativeand referendum, property rights advocates willpursue more ballot measures focusing on botheminent domain and regulatory takings, saysPilon, an adjunct professor of government atGeorgetown University. The eminent domainarguments are easily presented because takingsotnething from one person to give it to another"is just plain wrong," he says, and the takingsarguments aren't difficult to explain, either.

But John Echeverria, the Georgetown lawprofessor, contends that voters do not see theregulatory takings issue the same way theyview eminent domain. After property owners,developers, and speculators submitted claimsfor billions of dollars based on Oregon's Mea-sure 37, people in that state are wondering ifthey made a mistake at the ballot box in 2004,Echeverria notes.

"There will continue to be some ballot ac-tivity on eminent domain, but at a lower levelthan last year, and there will be a little activityon regulatory takings," Echeverria predicts. "Ithink the ATf^-plus agenda largely failed."

Paul Shigley is "^z ^MQX oi California Planning & De-velopment Report.