June 24, 2005

Symmetrical disinformation  

From Justice Thomas's dissent (thanks to Will for pulling the quote):

The consequences of today's decision are not difficult to predict, and promise to be harmful. So-called "urban renewal" programs provide some compensation for the properties they take, but no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted by uprooting them from their homes.
But this is America -- of course compensation is possible. My first inclination is to agree with Mithras and others who see this expansion of the takings doctrine as problematic only because there's a practical problem with computing appropriate compensation. If you're not repelled by the idea of takings in the first place (which I'm certainly not), then you have to see at least some logic in this decision. And the compensation problem, while significant, has to be exactly the same here as it would be if you were building a highway, since individual property owners in that situation are equally able to chaotically misrepresent the value of property to them in order to extort higher compensation.

The problem though, for me at least, is that businesses that stand to gain can bring a lot more political power (ie money) to bear on the situation, because they can spend against a promise of what may be massive future profits, which may end up distorting the public interest involved. In my mind this distortion effect is almost symmetrical with the compensation extortion the property owners can engage in, and the changes after Kelo will seriously disrupt that balance of power.

MORE: Nathan Newman's argument for the Kelo decision strikes me as a little condescending, but at the same time you could probably argue that poorer owners (or even non-owners) have a more difficult collective action problem to overcome because their own interest is relatively smaller. In that case though I think I'd rather see more protections for the poorer owners rather than none all around.

Also, I should have mentioned before that this isn't meant as a legal interpretation at all, since I know nothing about the relevant law; I'm thinking about this purely from a policy persepctive.

MORE: Will has more on the problems with fair market value compensation.

Mithras  {June 24, 2005}

The problem though, for me at least, is that businesses that stand to gain can bring a lot more political power (ie money) to bear on the situation, because they can spend against a promise of what may be massive future profits, which may end up distorting the public interest involved.

May? It certainly does. And this is not limited to takings - obviously, it's a systemic problem of wealth inequality in this society that distorts the political process.

But how does the proposed solution address this problem? You say that the distorting effect of idosyncratic valuation "is almost symmetrical", but I would say it's both overbroad and underinclusive. Obviously, capricious land owners could demand unreasonable amounts for any project, whether benefitting private wealth or not. And in the absence of a capricious land owner, a project that primarily benefits private wealth could sail right through.

I understand the impulse to try to even things out. But like in areas media concentration or campaign finance reform, the proposed solution doesn't do what we want it to do and does things we don't want it to do.

Frolic  {June 24, 2005}

Wow, I hate to agree with Thomas, but he's right on the money here. He seems to fully realized that a community is more than a collection of physical structures.

How many African American business districts have been bisected or wiped out by freeway construction? That was true where I grew up in Tulsa, OK, and it's true in New Orleans where I now live. I seriously doubt that these are the only two examples in the country. No exchange of cash can compensate for this damage.

This concern may not be explicit in Thomas' dissent (I haven't read it yet), but it's hard to believe that his views aren't informed by similar examples. As with his personal reaction to the cross burning cases, occasionally Thomas reminds us that even a conservative African-American brings a valuable perspective to the court.

barrett  {June 24, 2005}

I see this as adding a tool to the kit of powerful politicians. Now, not only can a politico in the right place redistrict a foe out of his natural base, but in the right circumstances, he can move foes out of his area altogether with the help of any motivated corporation that needs a new location.

I also wonder about the long-term effect of moving people out of their homes and splitting communities in favor of commercial real estate will be. I'm willing to bet that ten years on many of the retailers who benefit from the ruling will have closed their stores in favor of bigger big-box locations elsewhere (perhaps displacing even more people in the process).

This was a bad decision.

Will Baude  {June 24, 2005}

2 points. 1, one is always tempted to say "of course this is compensable" when courts speak of irreparable harms, but this claim applies across a range of legal topics and the simple fact is that courts never do, and are rightly wary of the task of having to figure out the full range of compensation for subjective loss. 2, compensation aside, there are still reasons to treat property and liability rules differently, which has been pretty well recognized in law for decades.

paul  {June 24, 2005}

Mithras -- My contention here is that the individual property owners' ability to game their comensation demands (ie under the law before yesterday's decision they could ask for more than the property was really worth to them or just refuse to sell altogether) is a good balance for businesses' ability to bring overwhelming political resources to the table. I'm not against takings in general, for highways or schools or what have you, so cases where there's no private interest to pollute the political process wouldn't even be affected.

Frolic -- I don't disagree that grievous wounds have been inflicted on black communities (among others) everywhere by the takings doctrine -- I drive that evil Dan Ryan Expressway in Chicago every day. But I don't see how we can do without it for things like highways, schools, etc. These seem like vitally important government responsibilities, and I don't see any other practical way of making them happen. Somebody's property has to be taken; that it ends up being those without political power is unfortunate, but hardly surprising. Can you think of a way around this that allows for the concept of public good? My point here was just to rationalize drawing a line at Kelo.

paul  {June 24, 2005}

Will -- the courts' ability to determine the correct rate of compensation isn't a condeition for something to be compensable! And in any case, people were already compensated for takings under the law before, so obviously somebody was making a determination about it (although I'll quickly agree if you say these have historically been lowball determinations).

Ted  {June 24, 2005}

This ruling disgusts me. I think of all the businesses in Oak Park that have been Eminent Domained fot the betterment of the community just since I bought into OP. Orlisses Restaurant for an OPRF practice field. The bike shop, Burrito fast food place and Arby's at South and Harlem for a parking lot which is hardly ever used. Tasty Dog for a condo complex although they got to have a Shell Station eminent domained so they could move across the street. The BIG HOLE on Lake I believe also was an eminent domain of various properties. And these are the ones that I know in the last 5 years.

Sarah  {June 24, 2005}

I am actually a little frightened by this decision. To take property away from one private home or business owner and hand it over to another one is appalling. Living as I do in a town that already takes free advantage of the eminent domain laws, and living in a part of that town that seems ripe for this kind of development (adjacent to a major thoroughfare), I fear it is only a matter of time before I am "made an offer I can't refuse".

Will Baude  {June 25, 2005}

Compensation of all sorts-- in eminent domain cases, compensatory tort damages, and so on-- have always traditionally been lowball estimates.

Sweth  {June 26, 2005}

I'm wondering how many people who are commenting on this as a bad ruling have actually read the ruling, and reviewed the NLDC plan that is at the heart of this.

For one thing, the government isn't taking property away from one private owner and giving it to another; it's taking property from a private owner and giving it to a non-profit whose explicit goal is the revitalization of the local (significantly depressed) economy.

Even if it were giving it to a private owner, the majority opinion is very clear that this isn't an open invitation to transfer property to benefit a particular entity; one of the major factors supporting the New London plan, as the ruling makes clear multiple times, is that NLDC did not have any particular developer in mind to benefit from the plan, so that there was no argument to be made that the plan was designed to do anything other than benefit the larger community (in many ways, of which a higher tax base was only one).

Even O' Connor's dissent agrees, saying in part (paraphrasing) "well, yes, in this particular case it sure seems like NLDC went to great pains to do this correctly, and yes, Justice Kennedy's concurring opinion emphasizes the need for the appropriate checks to make sure that the plan really is for the public good, but he doesn't give a clear definition of those checks and so it will be hard to test future cases easily".

It's also worth noting that this ruling doesn't prevent localities from setting up their own higher standards for public purpose takings; a handful of states, in fact (including Illinois, so you Chicagoans need not worry about being eminent-domained out of a home), already have laws on the books limiting economic redevelopment takings only to areas that are actively deemed as "blighted" (rather than just economically depressed, as New London was), and this ruling, in deferring to local legislatures, reinforces those laws.

Sarah  {June 26, 2005}

Actually, Sweth, as Ted points out in his comment, these eminent-domain property tranfers happen all the time, and they are, in fact, transferred from one private property owner to another. For example in my Oak Park, IL, where we live, they eminient-domained a very successful restaurant to build a condo complex. I never thought they were necessarily in bed with that particular developer. My argument is that it doesn't matter if it's designed to benefit a particular entity. The issue at hand is the definition of "public use". Is the vague attempt to "benefit the larger community" a definition of "public use"? That is a stretch.

paul  {June 27, 2005}

Compensation of all sorts-- in eminent domain cases, compensatory tort damages, and so on-- have always traditionally been lowball estimates.

I agree (as promised).

Sweth  {June 27, 2005}

My info on Illinois' ED restrictions was based on what I had read in the media (e.g. http://tinyurl.com/a832t and http://www.suntimes.com/output/news/cst-fin-property24.html); some quick searches now show no evidence that the legislative restrictions those articles spoke of exist, and the original Kelo filings with the CT Supreme Court list a half-dozen states with ED restrictions but doesn't include IL among them, so it might be that the only extra protection IL residents had was a 2001 IL Supreme Court ruling, which the Big Court just trumped. Mea culpa on that; although I'd be very interested to hear just how the Oak Park EDs were handled in light of the 2001 case; I suspect that, as is the case with most situations like this, the true story is a lot more complicated than the 30-second sound bite that people hear about.

WRT Sarah's "issue at hand", my question in response would be: what is the rationale for, say, a public road, if not to "benefit the larger community"?

Sarah  {June 27, 2005}

Sweth, nothing is ever as simple as a 30-second sound bite...I certainly agree with that! But as an OP homeowner, I followed the specific case of the restaurant being ED'd pretty closely and attended town meetings about it, etc. The reason for the ED was the belief of the village that the property in question was better used by having a large condo/mixed use development than having one smallish fast-food restaurant. This is my point about the definition of "public use". I think it is totally reasonable to ED property to be used for roads, for example, because the property becomes actual PUBLIC property...to be used by all. It is a different story when the property is handed over to a private entity...this is where I think the idea of "benefitting the larger community" can be stretched beyond the limits of what "public use" is supposed to mean. Of course this condo complex will not only increase tax revenue, but also increase the population of OP, which is of concern right now, and those may be worthy goals of the government. I simply don't believe that this fits the intended definition of "public use".

Sweth  {June 27, 2005}

What if the community couldn't afford to build the roads, and so after EDing the property, handed it over to a private developer to build a road that the developer then charged tolls to use (to recoup the construction costs)? Toll roads are just as much public-use as non-toll roads, regardless of who owns or operates them; if the public good is being served by the presence of a road, AND the public is using that road, is it OK to take land from one owner and transfer it to another?

I guess my problem is that most people that I speak to who oppose ED do so in very absolutist ways: either a) the taking of land from private owners at all is unacceptable, or b) that the taking of land from private owners and the giving of that land to other private owners is unacceptable. In both cases, however, when confronted with the many permutations of ED scenarios that are possible, those people almost always eventually concede that there ARE some scenarios where ED might be acceptable after all. Take one of the two big ED cases prior to Kelo, for example; in Berman v. Parker (the case that established that "public use" meant "benefit to the public", the DC government wanted to redevelop a completely run-down area of Southwest, where nearly 2/3 of the buildings were deemed unrepairable, and "7.8% of the dwellings had outside toilets, 60.3% had no baths, 29.3% lacked electricity, 82.2% had no wash basins or laundry tubs, [and] 83.8% lacked central heating"; the government simply wasn't the best entity to undertake such a large-scale redevelopment, however, so private developers were brought in. Most people that I talk to concede that a project like that is, in fact, at least as much of a valid "public use" as building a road or a stadium.

Once you've made that concession, though, then you have to give up on the hopes for a bright line of demarcation such as public ownership, and at that point, the only reasonable course of action is exactly what the court ended up doing in Kelo: you emphasize how important it is that the appropriate bodies go to great lengths to ensure that the public as a whole is benefitting, and that the taking is not just a way to give a backdoor gift to a particular private entity, and then you leave it to the judgment of the local governments to make sure that those checks and balances are property enforced.

If the takings in OP are as egregious as you describe, then, the problem isn't with the law under which the takings were made--it's with the local government for not effectively enforcing the law, or for actively abusing it. Did the local populace complain about the taking? Did the owners of the fast food place appeal the taking? There has to be something more to this story, as the Illinois Supreme Court case that all of the more recent Kelo articles refer to comes down very strongly against purely economic redevelopment takings that go to a private party.

Sweth  {June 27, 2005}

(That's supposed to be "57.8%" of the homes in Berman that had outside toilets, by the way, rather than "7.8%". Razzafrazzin' cut&paste...)

Ted  {June 27, 2005}

When they come for YOUR home I will lead the parade of laywers.

Ted  {June 27, 2005}

Oh by the way the "not for profit" wants to build a conference center, hotel complex, offices, condominiums, and eventually, an aquarium.

paul  {June 27, 2005}

Sweth -- the problem I have with what you're saying is that it really seems like we have to draw a line somewhere. Democracy in its American incarnation is about balancing majority and minority rights -- so, the rights of the government (which represents the majority) vs the individual. I agree with you that there's an attactive logical consistency in having this kind of rule apply equally to highways and other nontraditional public goods -- and I'm the last person you need to convince of the existence of these goods. But that doesn't change the fact that there may be serious rights balancing problems in a post-Kelo world, because when corporate entities stand to gain, the political system tends to get corrupted. You can put in all the checks you want, but any system can be gamed for profit -- and while this is equally true when you're talking about contractors for highways and bridges and schools, I think you have to draw the line somewhere if you're going to have a functioning society...

Sarah  {June 28, 2005}

I maintain that, even in the case of the DC neighborhood, an owner should not be FORCED to sell...private property rights are more basic than the right of the goverment to try to improve neighborhoods.

Regarding the Oak Park restaurant, the restaurant owners objected vehemently. It was a huge controversy here...the Chicago Tribune wrote editorials about it, there were big protests, etc. Here is a link to a letter from the village board explaining their decision to pursue ED in the courts:


and another link to a flyer given out in the neighborhood, organizing a protest:

The owners did not want to sell, and many residents wanted Tasty Dog to stay, despite the claim in the village letter that the residents did not feel that gas stations and fast food restaurants do not fit in the character of the neighborhood. In the end, public pressure forced the village to build the owners a new restaurant.

The issue I have is that the village is very cavalier and arrogant when it comes to EDing property "for the public good". A neighbor of mine was stunned when, attending a village meeting in which the expansion of the local YMCA was discussed, the YMCA director casually mentioned that the village agreed to ED adjacent property if necessary...my friend's house!!! As far as resident input is concerned, doesn't it seem that the actual resident of the actual property to be ED'd should not be the last to know of the plans? And who decides whether enough "public good" will be gained by allowing the Y to expand at the expense of 2 or 3 private homes? How can this be quantified?

Sweth  {June 28, 2005}

Paul writes:

[T]here may be serious rights balancing problems in a post-Kelo world.

That's exactly the sort of statement that leads me to believe that most people who opine about this sort of thing are just discussing their gut reactions to 30-second sound bites, rather than what the actual cases in question are. What people seem to fail to understand is that in a "post-Kelo world", PROPERTY OWNERS' RIGHTS ARE GREATER THAN THEY WERE IN A PRE-KELO WORLD. Before Kelo, Berman and Midkiff v. Hawaii were the ruling precedents, and those granted hugely broad rights to governments to take properties for economic public use "unless the use be palpably without reasonable foundation"; after Kelo, the bar has implicitly been raised, especially by Kennedy's concurring opinion. Yes, there will be a spate of new ED takings now that were put on hold while Kelo was being decided, but that's not because Kelo gave governments new rights.

Sweth  {June 28, 2005}

Sarah --

It sounds like your stance is a purely libertarian one, then, rather than the more common liberal objection to ED that it shafts the common person to benefit the rich. Is that true? If so, then I can at least understand it as internally consistent. Most anti-ED people that I know, though, fall into the other camp, and fail to realize that ED takings are as often tools to help the poor. (Midkiff, the other big ED case, was another one of those. In the 60s, the legislature in Hawaii discovered that 92% of non-government owned land in that state was owned by just 72 people, and 85% of that land was owned by just 18 people, who leased the land out to almost everyone else on the islands. That real estate oligopoly claimed that the desire not to pay high capital gains taxes was the reason that they refused to sell any of the property to the people who lived on it, so the state, reasoning that if a majority of people wanted to purchase property at market price and were unable to do so then the market was broken and needed repair, passed a law that allowed lessees of single-family houses to, under certain circumstances, have their leased properties condemned and taken by the government in return for a fair-market compensation to the owner (who thus didn't have to pay the high cap gains tax), and then have the government sell it back to the lessee at that fair market price--in effect, it was the real estate equivalent of an anti-trust suit. Libertarians find Midkiff as offensive as the other cases, while liberals tend to see it as reasonable, until they realize that doing so means that they have to abandon their bright line objection to economic use ED.)

paul  {June 28, 2005}

Sweth -- Technically you're right that there are no new rights established by Kelo, but the legal and political environment is totally different now, and not just because a slew of cases will have been saved up. It's like the Court's failure yesterday to rule on the cases of Judith Miller and Matthew Cooper -- legally nothing has changed, but there's a huge chilling effect for journalists. And the same is true for property owners, even if the bar has implicitly been raised slightly, because the Court didn't move to create the rule the plaintiffs wanted. Calling this naive or uninformed doesn't make the effects any less real...

Sarah  {June 28, 2005}

I suppose you could call me a libertarian on this matter. There is nothing more basically American than a plot of land to call your own, that no one can take from you.

However, the fact that, in the case I cited, a small business owner was getting screwed to benefit a large-scale developer certainly did not make me feel any better about it.

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