Kelo: One Year Later

Outrage fuels surging property rights movement

Friday marks the one-year anniversary of the Supreme Court’s Kelo vs. New London decision, which gave cities a green light to seize private homes and businesses for the sole purpose of generating higher tax revenues through redevelopment. On the surface, this would appear to be a significant defeat to those who advocate for stronger protection of private property rights.

Yet, the Kelo decision was actually one of the best things that ever happened to the national property rights movement, as it clearly imprinted the precarious nature of private property rights in the public consciousness and has inspired significant reforms nationwide.

So where does the national property rights movement stand a year after Kelo?

The movement was clearly galvanized by the Kelo decision. Over the last year, 47 states have begun reviewing their eminent domain laws, and 23 governors have already signed laws that restrict the use of eminent domain to varying degrees. Eminent domain legislation awaits the governor’s signature in a handful of other states. In addition, voters in Florida, Georgia, Louisiana, Michigan, New Hampshire, and South Carolina, will head to the polls to decide the fate of state constitutional amendments that reform condemnation laws. Dozens of cities and counties nationwide have also either passed or are considering ordinances to prohibit the use of eminent domain for economic development purposes.

Further, the momentum generated by the Kelo backlash has spread to other efforts to protect private property rights. While eminent domain deals with the physical taking of private property, there has also been increased activity to restrict regulatory takings – de facto takings via restrictions on the ability of property owners to use their land in ways legal at the time they bought their property, dramatically reducing their property’s value and imposing an economic hardship on them.

Oregon’s Measure 37, passed by voters in late 2004, has become the model for addressing regulatory takings at the state level. Measure 37 requires that state or local governments either compensate landowners when land use restrictions reduce the value of their property or waive the restrictions, reinstating the rights owners had when they bought their land. Activists in neighboring Washington state are currently collecting signatures to place a similar measure on the ballot this fall. A similar measure in Napa County, California was defeated earlier this month.

Inspired by Kelo and Measure 37, property rights activists in a number of states – including Arizona, California, Idaho, and Montana – are taking things a step further by pushing to place initiatives on the November 2006 ballot that would effectively prevent the abuse of eminent domain and regulatory takings in one comprehensive property rights package, referred to as “Kelo-Plus” measures.

The burgeoning effort to prevent physical and regulatory takings nationwide is strong evidence that the property rights movement has been invigorated by Kelo and, to a lesser extent, Measure 37. But there is still a long way to go.

Though eminent domain reform is sweeping the country, it has not been able to stem a flood of continued abuses. A new report by the Institute for Justice finds that local governments have threatened eminent domain or condemned over 5,700 homes, businesses, and other properties in the pursuit of jobs and higher tax revenues in the year since the Kelo decision. That’s more than half of the roughly 10,000 properties threatened or taken by eminent domain for economic development purposes between 1998 and 2002.

Next, the federal government has failed to pass any meaningful property rights protections. Last September, the House passed H.R. 4128-the Private Property Rights Protection Act of 2005-which would cut off federal funding for governments using eminent domain for economic development purposes. But it has languished in the Senate Judiciary Committee ever since.

Further, property rights activists were emboldened by Rep. Richard Pombo’s (R-CA) Endangered Species Act reform bill, which passed the House last fall and included Measure 37-like compensation provisions to help landowners whose properties are rendered undevelopable under the Act. However, the Senate is drafting its own ESA reform bill and prospects seem bleak for passage this year.

Finally, almost one year to the day after issuing the Kelo decision, the U.S. Supreme Court issued its decision in the Rapanos vs. United States case on wetlands regulation. While the Court effectively found that federal agencies have overstepped their bounds in regulating wetland development under the Clean Water Act, the ambiguous ruling failed to capitalize on a golden opportunity to clearly define the scope of, and provide a check on the fed’s authority to regulate private property.

While the fight is far from over, the property rights movement has made considerable strides in the year since the Kelo ruling. Prior to Kelo, average citizens underestimated the power of government to trample on property rights and transfer private land to the highest bidder. Today, as a result of Kelo, property owners and citizens are more aware than ever of the need to protect their property rights from the expanding reach of government.

Leonard Gilroy is a certified planner and policy analyst at the Reason Foundation. He is the author of the new study Statewide Regulatory Takings Reform: Exporting Oregon’s Measure 37 to Other States. An archive of Gilroy’s research and commentary is here, and Reason Foundation’s eminent domain research is available here.