By Jon Coupal
The United States Supreme Court has just heard arguments in a community redevelopment case that may loosen your grip on your own house.
The court battle began when several New London, Connecticut homeowners including one who has lived in her home since she was born in 1918 objected to the city’s use of eminent domain to seize their property so that it could be turned over to a developer who would return more tax revenue.
At issue is the scope of protection of the U.S. Constitution’s Fifth Amendment which states “nor shall private property be taken for public use without just compensation.” Specifically, what do the words “public use” mean?
The Fifth Amendment, it has been traditionally argued, allows for the taking of private property for such public benefits as road or school construction. This makes sense because, especially with roads, one hold-out property owner can frustrate the purposes of an entire community.
However, can this definition of public use be expanded, as it has been by New London officials and redevelopment agencies across the nation, to apply to any seizing of property simply for the purpose of putting more money into a city’s budget?
In response to a question by Supreme Court Justice Sandra Day O’Conner, an attorney for New London expressed the view that it would be okay for a city to evict a Motel 6 in favor of a Ritz-Carlton if the result would be greater revenue.
For many homeowners, the city’s argument has all the subtlety of the schoolyard bully who justifies taking your lunch money because, he says, he has a better use for it.
In California, we’ve seen redevelopment agencies run roughshod over property owners for years. Unspoiled homes and other property are declared “blighted” so they can be condemned and turned into car dealerships or supermarkets that will produce more tax revenue. The actual condition of the property that is condemned seems to have little relevance in at least one instance a golf course was declared blighted because it suited the goals of the redevelopment commission. Back in New London, the homes targeted by the city would be regarded by most people as middle class.
Bad behavior by redevelopment agencies is not all that surprising when one realizes that in many communities the redevelopment commissioners are city council members wearing a different hat. What better way to repay a developer’s campaign contribution than to reward them with a piece of prime property for a new shopping mall?
While many California homes continue to be threatened by redevelopment agencies, there was a time before Proposition 13 when all were vulnerable to the machinations of government officials. In the old days, property was assessed at its highest and best use. If your single family home was in an area recently rezoned for apartment buildings, your property tax would reflect this potential use.
Needless to say, many homeowners could not afford the higher taxes so they sold their property to a developer of surprise apartment buildings. So, without ever having to mention the words “eminent domain”, officials were able to squeeze homeowners out and increase tax revenue through the use of zoning ordinances.
Now, thanks to Proposition 13, California homeowners have assurance that they won’t be forced to sell or give up their homes to the tax collector. This is because they are taxed based on what they were willing and able to pay for their home, not on the arbitrary decisions of politicians. In California, Proposition 13 gives us the reasonable expectation that we will keep our homes unless, of course, city council members put on their redevelopment commission hats.
Unfortunately, the protections of Proposition 13 do not protect against arbitrary exercises of the power of eminent domain. And, from early accounts from the Supreme Court hearing, we are not optimistic about the chances of a property owner victory in the New London case.
But California municipalities need to be careful about over-reaching in their own application of the “public use” doctrine. Folks in New London don’t have the initiative power. California homeowners do.
Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association California’s largest taxpayer organization with offices in Los Angeles and Sacramento.