Eminent Domain, Pt. 2

EMINENT DOMAIN ABUSES ALLEGED ACROSS THE COUNTRY

In our January issue we looked at the local, state and federal governments' power to seize private property, and the way in which the U.S. Supreme Court has expanded that power over the years. Since a 1954 decision allowing for the seizure of "blighted" property, the power of eminent domain was steadily expanded until last year, when the Court ruled that the government could take property that is in no way blighted, and turn it over to private developers to increase a city's tax base. What is just as troubling is the corruption, and suspected corruption, which sometimes seems to be a part of the government's eminent domain dealings. Many stories of abuse across the country have created a cynicism about the fairness and honesty of the government's property acquisition procedures, and have led people to question who really suffers most when the government seizes private property, and who benefits.

When property is bought up before plans are made public, there is sometimes speculation that there was inside information. Land deals which occur in affected areas before a new project is announced often fall under scrutiny. But such allegations are hard to prove. Even if they cannot be proven, it seems that politicians and those well-connected sometimes know far in advance where highways are headed, for example, and buy up land cheaply before plans are revealed to the public. In the past, it has been revealed that politicians owned tracts of land where new highways were built.

It is not always the owners of properties to be seized who are the beneficiaries of inside information. It is also alleged that under the new rules allowing property to be taken and turned over to developers, sometimes those to whom politicians want to give preferential treatment are left off the list of properties to be condemned. The owners of such "skipped" properties are free to sell them for the highest prices they can get from private interests. Such properties often increase dramatically in value because of the coming development. Politicians cannot tell us how inside information is protected, since there is usually no procedure for doing so. If some of these same abuses took place in the the stock market, they would be referred to as insider trading.

It seems that there is another reason government feels it beneficial to keep plans under wraps for as long as possible: to give the affected public less time to mount opposition. Critics have accused politicians of funding sham "studies" to determine the best places to locate projects when the outcome has already been decided. The same criticism has sometimes been made of public hearings.

Often it is poor and working-class families that are affected the most by eminent domain redevelopment projects. Many blue collar neighborhoods, especially those along waterfronts, are seen by politicians as potentially gentrified. Those caught up in eminent domain projects often feel bullied, pressured and threatened by government agencies, whom they feel have no respect for private property rights. Some of the biggest losers are those whose property is partially taken. Their property can become worthless, or unfit for the purpose for which they purchased it.

Eminent domain is an area where there have always been doubts about government honesty. Many people feel that by allowing government to take private property and turn it over to developers, the result is going to be local governments being taken over by big money deals and personal connections to a greater extent than ever before. Even in states where bills have been passed to make it more difficult to seize land for private development, lawmakers have resisted closing loopholes which would curb other abuses. Many politicians have connections to developers, and legislators have failed to prohibit campaign contributions from developers who benefit from eminent domain actions. They have also failed to prohibit relatives and others with close ties with politicians from profiting. Legislation which fails to outlaw basic abuses does not restore public confidence in the process, and in the eyes of many is worse than no legislation at all.

In Texas, a new law signed by the governor in 2005 says, "a government or private entity may not take private property through the use of eminent domain if the taking...is for economic development purposes." But the law has some built-in loopholes, two of the biggest being that it does not prevent the state from taking land for the privately developed Trans-Texas Corridor and Arlington Stadium.

So who wins and who loses when government exercises its power of eminent domain? Investors win when they make a profit on land bought at bargain prices, favored developers win when they get in on new projects, and politicians win with additional tax revenues to spend. Who are the losers? Usually the poor and middle class property owners, who don't have inside information to reap big profits, or the resources to battle the power of government.

(Near Northwest Banner, August 1, 2006)