Reason Foundation - Authors > David Owsiany

Ohio Court Restores Balance to Eminent Domain

info@reason.org (David Owsiany) — Tue, 01 Aug 2006 00:00:00 EDT

Akron Beacon Journal

In a controversial case last year, a divided U.S. Supreme Court ruled that the use of eminent domain by local governments to take the property of private citizens for "economic development" purposes was consistent with the Fifth Amendment to the U.S. Constitution, which permits the taking of private property "for public use" with just compensation.

Traditionally, the government's exercise of eminent domain authority has been restricted to actual public uses, such as building roads or public schools. In recent years, courts have upheld governments using eminent domain to take private property in "blighted" or "slum" areas because eliminating blight served a public purpose consistent with the Fifth Amendment.

The U.S. Supreme Court's decision effectively did away with traditional "public use" limitations on eminent domain authority. Under the court's new doctrine, if a private developer can convince a locality that the developer can put property to "better" use than the current owners, including generating more tax revenue, the local government entity has a green light to condemn the property.

Justice Sandra Day O'Connor criticized the court's new doctrine in her dissenting opinion noting that "under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner."

O'Connor concluded the beneficiaries of the court's decision are "those citizens with disproportionate influence and power in the political process, including large corporations and development firms," at the expense of individual property owners.

A majority of the court did recognize, however, that "many states already impose public use requirements that are stricter than the federal baseline" as a "matter of state constitutional law." Last week, the Ohio Supreme Court did just that by concluding that the Ohio Constitution places stricter limits on the use of eminent domain in Ohio, thereby providing greater protection of private property rights, than the U.S. Constitution.

Like the U.S. Constitution, the Ohio Constitution provides that private property may only be taken for a public use, and the Ohio Supreme Court has always required an actual public use for a taking to be valid.

The Ohio case involved the taking of property by the city of Norwood, a Cincinnati-area suburb, for the purpose of transferring the property to a private developer to build a complex of offices, rental apartments and chain retail stores.

While the area at issue was not blighted, Norwood determined it was a "deteriorating" area in danger of becoming blighted. Some of the property owners objected to Norwood's actions and their case made it to Ohio's highest court.

Justice Maureen O'Connor's opinion for a unanimous Ohio Supreme Court acknowledged that the case involved "two competing interests of great import in American democracy: the individual's rights in the possession and security of property, and the sovereign's power to take private property for the benefit of the community." Ohio's highest court concluded that the rights of individuals to be secure in their own property outweighs the interests of local governments in taking that property merely for "economic development" and increased tax revenue.

The court specifically noted that eliminating slums and blight may be a valid use of eminent domain authority, even if the property is eventually transferred to a private entity for redevelopment. The court acknowledged that the elimination of blight may be a public use because taking such property destroys a threat to the public's general welfare and well-being.

Norwood's actions, however, went too far. The area at issue was not blighted and did not pose a threat to the public's general welfare or well-being. In fact, when concluding the area was "deteriorating," Norwood relied on such factors as high diversity of ownership and increased traffic congestion. The Ohio Supreme Court recognized that those factors exist all across Ohio and refused to give a green light to local governments to take property in those areas merely because a private developer could make "better" use of the property.

The Ohio Supreme Court struck the right balance. It preserved the ability of local governments to exercise eminent domain authority for true public uses while protecting the rights of individuals to be secure in their property.

David J. Owsiany is a policy analyst at Reason Foundation. Reason's eminent domain research and commentary is here.

States Left to Respond to Eminent Domain Abuse

info@reason.org (David Owsiany) — Thu, 12 Jan 2006 00:00:00 EST

Last June, the U.S. Supreme Court, in the Kelo v. New London case, upheld the taking of private property by a local government even when it intended to give it to another private party for economic development purposes. Reaction to the case drew significant media attention as property owners became outraged at the thought of the government taking property for the private gain of others.

The Fifth Amendment to the U.S. Constitution permits the taking of private property with just compensation only for "public use." Traditionally, the exercise of eminent domain authority by government entities has been restricted to actual public uses, such as building roads or public schools. Over the years, courts began to permit government takings even if the property was eventually transferred to a private entity, provided the taking served a public use or purpose, such as the building of a railroad or the elimination of a slum.

The Kelo decision effectively did away with the "public use" limitations on eminent domain authority altogether. Under the court's new doctrine, if a private developer can convince a locality that the developer can put property to "better" use than the current owners, including generating more tax revenue, the local government entity has a green light to condemn the property. The Kelo case has energized the growing trend across the country of local governments forcing the sale of private property for transfer to private entities in the guise of economic development.

The majority in Kelo, fortunately, said states have the authority to place their own limits on eminent domain, acknowledging that "many states already impose public use requirements that are stricter than the federal baseline" as a "matter of state constitutional law." It is up to the respective state courts, they said, to determine what is an acceptable public use or purpose to justify a taking. The first test of that freedom is playing out now before the Ohio Supreme Court.

In Ohio, the city of Norwood, a suburb of Cincinnati, sought to force the sale of several homes and businesses on behalf of a private property developer so he could build a multimillion dollar complex of offices, rental apartments and chain retail stores. By all accounts, the homes and businesses in the area were well kept and the neighborhood was in good condition.

There was no suggestion that the neighborhood is a slum or blighted as most people think of the term. The neighborhood didn't have high crime, large numbers of abandoned buildings, or poor. Indeed, the city doesn't even claim the neighborhood was blighted in this sense. It said the neighborhood was "deteriorating" because, in essence, it was an older neighborhood, and that was enough to justify a public taking.

Norwood relied on such factors as "high diversity of ownership of property" and an "increase in traffic congestion" in the area. Such factors exist in thousands of areas across Ohio. Will private property in all of these neighborhoods now be subject to government taking? That outcome will be much more likely if the Ohio Supreme Court follows the U.S. Supreme Court.

After Kelo, concerned citizens across the country formed coalitions and went to their respective state capitols in an attempt control eminent domain abuse. About forty states are currently considering legislation to limit the use of eminent domain as a result.

As outrage over Kelo dissipates over time, however, it is unclear whether state legislatures will place real limits on eminent domain abuse. Special interests that benefit from the expansive use of public takings, including local governments, chain retailers, and private developers, put immense pressure on state legislators to permit the broad use of eminent domain authority.

Retiring Justice Sandra Day O'Connor crystallized the concerns of property owners in her dissenting opinion, pointing out that "under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner." O'Connor concluded the beneficiaries of the Kelo decision are "those citizens with disproportionate influence and power in the political process, including large corporations and development firms," at the expense of individual property owners.

Oral arguments in the Ohio case were held this week and a decision is expected this spring. By ruling in favor of the property owners, the Ohio Supreme Court can provide a roadmap for other state courts to protect private property rights and reverse the trend of eminent domain abuse that the U.S. Supreme Court legitimized in Kelo.

David J. Owsiany is a legal policy analyst at Reason Foundation.

Eminently Important Rights

info@reason.org (David Owsiany) — Sun, 18 Dec 2005 00:00:00 EST

Akron Beacon Journal

Carl and Joy Gamble owned their home in the Cincinnati suburb of Norwood for 35 years. They raised their two children in the house and expected to enjoy retirement there with all their fond memories. By all accounts, the house was well-kept and the neighborhood was in good condition.

Last year, the city of Norwood exercised its power of eminent domain to force the sale of the Gambles' home and several other nearby homes and businesses, for transfer to a private developer to build a complex of offices, rental apartments and chain retail stores.

Next month, the Ohio Supreme Court is scheduled to hear oral arguments in the Gambles' appeal of their lawsuit challenging Norwood's actions.

Earlier this year, the U.S. Supreme Court upheld the taking of private property by the city of New London, Conn., for transfer to private developers for an "economic development" project.

The property owners challenged New London's exercise of eminent domain arguing the city violated their rights under the Fifth Amendment to the U.S. Constitution, which permits the taking of private property with just compensation only "for public use."

Traditionally, the government's exercise of eminent domain authority has been restricted to actual public uses, such as building roads or public schools.

The U.S. Supreme Court's decision upholding New London's actions effectively did away with traditional "public use" limitations on eminent domain authority. Under the court's new doctrine, if a private developer can convince a locality that the developer can put property to "better" use than the current owners, including generating more tax revenue, the local government entity has a green light to condemn the property.

The court's decision caused a passionate response from property rights advocates and others. Retiring Justice Sandra Day O'Connor crystallized those concerns in her dissenting opinion, pointing out that "under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner."

The court's majority opinion, however, acknowledged that states have the authority to place their own restrictions on eminent domain. In fact, Gov. Bob Taft recently signed legislation that creates a moratorium on Ohio municipalities using eminent domain for private economic development in Ohio for a year while the issue is studied by a newly created task force.

Such interim measures are not a long-term solution. Once outrage over the court's decision dissipates, the General Assembly will come under immense pressure from local governments and private developers to permit municipalities to exercise eminent domain authority broadly.

The U.S. Supreme Court, however, also recognized that "many states already impose public use requirements that are stricter than the federal baseline" as a "matter of state constitutional law." Ohio has done just that.

Like the Fifth Amendment to the U.S. Constitution, the Ohio Constitution provides that private property may only be taken for a public use, and the Ohio Supreme Court has always required an actual public use for a taking to be valid.

For example, Ohio's highest court has permitted the taking of private property for "urban renewal" purposes only where the property is located in a slum or blighted area, because a taking for the "primary purpose of eliminating slums" is a public use.

Norwood's actions, however, go beyond Ohio's existing rules on eminent domain by taking private property merely because local government officials believe that the proposed use of the property would be more beneficial than the current use.

The area at issue is not a slum or blighted area. In finding the area is "deteriorating" enough to justify a public taking, the city of Norwood relied on such factors as "high diversity of ownership" of property and an "increase in traffic congestion" in the area. Such factors exist in thousands of areas across Ohio. In the future, will private property in all of these neighborhoods be subject to government taking?

By ruling in favor of the Gambles, the Ohio Supreme Court would protect the private property rights of all Ohioans by limiting the use of eminent domain authority to true public uses, and not private gain.

David J. Owsiany is a legal policy analyst at Reason Foundation.