Eminent Domain: The Biggest Property Rights Issue Deserves the Right Solution

The following was released earlier this week by The John Locke Foundation:

This week, the North Carolina House is expected to consider a constitutional amendment (H B 1268) to address eminent domain abuse. While the House should be commended for taking up this crucial issue, the proposed amendment is a cure worse than the disease. Through some minor changes though, this amendment could offer real protection.

The Latest Amendment

“Private property shall not be taken by eminent domain except for a public use. Public use does not include the taking of property in order to convey an interest in the property for economic development. This paragraph does not apply to the taking of physically blighted properties as defined by general law, nor to takings for access to property. Just compensation shall be paid and, if demanded, shall be determined by a jury."

The Problems with the Amendment

I. Blight Abuse

This amendment would expressly allow economic development takings so long as the property is “physically blighted.” The problem is that “physically blighted” can mean almost anything (e.g. an unattractive house, an old building, a home that is outdated, etc).

By not properly defining blight, the amendment would give the green light for abusing blight (urban renewal) laws to seize private property for economic development. It would actually undermine statutory protections the legislature put in place a few years ago to address the abuse of blight laws. Here’s what others have said about the abuse of blight laws to seize private property:

Indeed, the displacement of African-Americans and urban renewal projects are so intertwined that “urban renewal” was often referred to as “Black Removal.”
- Senate Testimony of Hilary O. Shelton, NAACP Washington Bureau Director (2005).

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“Under that act [Federal Housing Act of 1949], which was in force between 1949 and 1973, cities were authorized to use the power of eminent domain to clear ‘blighted neighborhoods’ for ‘higher uses.’ In 24 years, 2,532 projects were carried out in 992 cities that displaced one million people, two-thirds of them African American.
— Institute for Justice study

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Eminent domain abuse cannot be effectively addressed without limiting blight condemnations, which have caused more harm than any other kind of taking…

Moreover, a ban on economic-development takings is unlikely to be effective without parallel restrictions on blight condemnations. Effective reform efforts must address the two major flaws of current blight takings: over-expansive definitions of blight and abusive takings in truly blighted areas.
- Ilya Somin, George Mason University law professor and national expert on eminent domain

Simple Solution: By properly defining blight, these problems can be addressed. For example, the amendment could state: “does not apply to the taking of blighted properties that are abandoned or pose a risk to the health and safety20of the public.”


II. Allows Government to Make End-Runs Around the Prohibition on Economic Development Takings

When the government seizes private property for economic development, it rarely comes out and admits it. So long as the government identifies a secondary reason for taking private property, which is easy to do, courts will defer to this reason. The amendment provides little to no protection against these end-runs.

Like Michigan has done with its new constitutional amendment, there should be a burden of proof requirement.

Simple Solution: Require that the government have the burden of proof to show, by clear and convincing evidence, that the taking is for a public use, and that the taking would not have occurred but for the public use.


III. Other Problems

A) Technical Mistake: The current amendment would have the unintended consequence of not requiring just compensation for “physically blighted” properties or takings for “access to property.” This problem can be fixed by simply making the last sentence of the amendment its own paragraph.

B) Access to Property: Under the proposed amendment, an economic development taking would be allowed when it is for “access to property.” This could mean seizing a house so that a driveway could be built for a shopping mall. This language is far too broad.

C) Just Compensation: The amendment should specifically define just compensation to include relocation costs, loss of business goodwill, attorney’s fees and other costs necessary to make eminent domain victims “whole.”

Conclusion

North Carolina needs an eminent domain amendment — the legislature understands that as evidenced by the bipartisan support for the proposed amendment. At best, there will be one bite at the eminent domain reform apple—this amendment would waste this critical opportunity. Fortunately, by making only slight changes, the amendment could provide real eminent domain reform.