Something stinks in California...

In the coming days, we will be examining two California Propositions, Prop. 98 and Prop. 99, both of which purport to save your property from unfair confiscation by governmental sources.

The two competing propositions both have a distinguished line of of supporters and both claim to protect the "citizens of California."

However, something stinks -- if both propositions are intended to protect the citizens of California from the confiscatory clutches of government, why are two propositions needed to advance the agenda and why is the dirty, stinking hand of politics trying to grab the issue?

It all starts with the "eminent domain" process...

Eminent domain (also known as condemnation): the process by which a government entity (federal, state, local) transfers title to real estate from the legal owner to itself without the owner's approval or consent. Even though the law demands fair and equitable compensation, what does that really mean?


1.  Purposes behind the "eminent domain" procedure:

Most citizens will agree that the use of the eminent domain procedure to acquire land to enhance the public's infrastructure of roads, highways, parks, schools, fire stations and other civic projects should be well-supported by the process.

However, when such property acquisition is made by a governmental entity to take property from its legal owner and gives it to another private (non-government) individual for the purposes of "redevelopment" which results in tax revenue enhancement for the government, does the subject become murky.

Imagine you are the owner of a downtown lot which you acquired and want to develop yourself, possibly to be used by a large store sometime in the future. The lot is currently bare land and the area around it appears to most observers to be decaying.

The main issue is should your local government be able to take your property and give it to another individual who will then re-develop the area, your property included, and reap substantial profits from the development?

To make this determination, you need to define both "public use" as it currently embodied in the Fifth Amendment to our beloved Constitution and "public purpose" which is something altogether different.

2.  Valuation:

What is the fair valuation of the property that is being taken by the governmental entity?

Is the value the current cost to acquire a similar piece of property under similar conditions?

Does the value of the property fairly reward the legal owner if the property was purchased as a long-term retirement investment and the legal owner kept paying property taxes and maintained the property over a number of years.

Should the property owner be recompensed with a suitable "return on investment?"

Does the acquisition fairly reward the legal owner for the value of the lost opportunity to purchase other property which would have resulted in a significant increase in property value?

Returning to our example of a lot confiscated for a re-development effort, does the value of the property that will be paid to the legal owner fully reflect the purpose to which it will be put? And, by way of counterpoint, does the developer unjustly enrich himself by acquiring the property at an artificially-manipulated lower price?

3. Property control:

Another significant piece of the puzzle involves a government entity mandating what can be done with the property (zoning) which should serve to satisfy the public welfare. Thus restricting the density of housing to maintain "community values," prevent noisy industrial environments from encroaching on residential neighborhoods, restricting commercial enterprises to a certain portion of town are all worthy and allowable controls.

Question: does the re-zoning of a property to a lower, less profitable use, amount to a government  "taking" which requires the legal owner to be fairly compensated?

Question: does the imposition of rent control which denies a legal owner the right to charge market rental rates amount to a government "taking" which requires the legal owner to be fairly compensated?

4. Collusion:

Is there any remedy for the legal owner of the confiscated property should the property's valuation be affected by a direct or indirect association between the politicians (to whom they may provide legal campaign contributions and support) and their actions to reward their loyal supporter with a juicy property deal, upon which the government will benefit with increased tax revenues, the developer will certainly benefit and the individual politicians will benefit by securing additional campaign financing?

The courts...

As you can see, matters involving land use can quickly become complicated and conflicting matters which often can only be resolved in the courts. First in municipal courts, then to state courts, then to the State Supreme Court, then to Federal Court, the Court of Appeals and on to the United States Supreme Court... which is exactly what they mean when they say you are taking your case to the limit.

But what if the Supreme Court made a mistake?

One reason that the position of the President of the United States is so important is that the President nominates members to the Supreme Court which must then be confirmed by the Senate.

In recent years, the fight has been over "activist" judges who liberally interpret the Constitution as a living document and who tend to "make law" from the bench in a usurpation of the duties of Congress. Other judges are "strict constitutionalists" who merely interpret the Constitution as it was written by our founding fathers. With the biggest point being that anything not specifically enumerated in the Constitution shall be left up to the individual States to decide.

With that said, the Supreme Court handed down the "Kelo" decision.

From Wikipedia...

Kelo v. City of New London, 545 U.S. 469 (2005), was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another to further economic development. The case arose from the condemnation by New London, Connecticut, of privately owned real property so that it could be used as part of a comprehensive redevelopment plan. The Court held in a 5-4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

"The decision was widely criticized by American politicians and the general public. Many members of the general public viewed the outcome as a gross violation of property rights and as a misinterpretation of the Fifth Amendment, the consequence of which would be to benefit large corporations at the expense of individual homeowners and local communities."

Voting for the Kelo decision were those judges which have been viewed mostly as liberal activists: Justice John Paul Stevens wrote the majority opinion; he was joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer.

Voting against the Kelo decision were those judges who are often viewed as strict constructionists: Justice Sandra Day O'Connor wrote the principal dissent, joined by Chief Justice William Rehnquist, Justice Antonin Scalia, and Justice Clarence Thomas.

Many people believed that the activist judges were more concerned with the "collective" rights of the governmental entities rather than the rights of the "individual." Somewhat the same battle being fought between liberals and conservatives today.

The key to understanding Kelo...

At issue was the apparent majority's agreement to replace the Fifth Amendment's "Public Use" clause with a very different interpretation involving a "public purpose" test. Thus opening the door to all types of development deals which do not satisfy the "public use" test but can be supported under a more liberal "public purpose" test.

Reverse Robin(g) Hood...

Under the Kelo decision, the wealthy developers could simply purchase political support to initiate the profitable redevelopment of so-called "blighted" areas. Those who held legal title to the property would be forced to accept a payment which was a pittance compared to the future value of the development.

Steve's solution...

Should governmental entitites continue to engage in redevelopment activities, it seems to me, in my not so humble opinion, that the legal owner of the property should be provided with fair and equitable compensation prior to the start of redevelopment and then granted shares in a trust which would continue to provide a return on the owner's original investment for a specified period of time. The shares would be granted in some proportion to the value of the property to the whole development and would be administered as a public trust.

It's now up to the individual states...

Since the Federal government does not engage in redevelopment issues, many states have decided to define and otherwise limit the statutory authority of the state and local governments to use the power of eminent domain.


What can YOU do?

Now that you have seen the power of liberals and activist judges, make sure the next President will appoint strict constructionists. It is now time to take the Supreme Court away from those who cannot win at the ballot box and look to the Court to make those laws that cannot possibly be passed by Congress without alienating a majority of citizens.

-- steve

Quote of the Day:  "The Right of property is the guardian of every other Right, and to deprive the people of this, is in fact to deprive them of their Liberty” -- Arthur Lee

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