Kelo Backlash Ignores Benefits of Eminent Domain for Redevelopment

John, as the point person for the redevelopment agencies of California, it's important to solicit your reaction and your members' reactions to the Kelo v. City of New London decision by the U.S. Supreme Court on eminent domain.

The reaction from CRA and our members was one of relief. We were afraid that the Supreme Court might not only overturn the Connecticut Supreme Court's initial Kelo decision but also issue some sort of sweeping opinion that would jeopardize the use of eminent domain nation-wide. So there was relief that the Court ruled in favor of the City of New London. However, none of us were prepared for the adverse public reaction that followed.

That adverse public reaction has been manifested in nearly every statehouse in the country and in the United States Congress and, consequently, we're now facing serious attempts to eliminate or greatly curtail the ability of redevelopment agencies to use eminent domain for redevelopment. In retrospect, while we were relieved to see the way the decision went, we would have been better off if we had lost.

Elaborate, if you would. What was the legal issue in the Kelo case? And how significant is the Court's decision to the mission of California redevelopment agencies and others across the country?

Only a few issues were at stake in the New London case. One was whether or not Connecticut law – which allowed the use of eminent domain for economic development purposes outside a finding of blight – was within the context of previous precedents and other legal parameters that would allow the use of eminent domain for that purpose. The Supreme Court ruled that it was permissible. That was not an issue for us in California because our law is more restrictive than Connecticut law – California law permits the use of eminent domain for economic development only if it is for the removal of blight.

So, it would have been better for us, as it turned out, if the Court had overruled the Connecticut Supreme Court's decision and thrown out the use of eminent domain for economic development purposes without a finding of blight. That decision would have been written up in newspapers and broadcast on TV news shows as a loss for New London and a victory for the opponents of eminent domain, but such a narrow decision would not have affected us in California. As a result, there wouldn't have been the adverse public reaction and, consequently, we wouldn't be seeing all of these proposals in the United States Congress and the California Legislature to overturn the use of eminent domain.

And how is the "adverse reaction" to the Kelo decision playing out at the state and federal levels?

At the federal level, Congress does not really have authority to tell local governments what to do, but it can constrain the use of federal funds. The approach at the federal level has been to tie strings to the use of federal funds or to tie the authority to use federal funds to whether or not a local government uses eminent domain. So, it's a back-door approach using the power of the purse to, in effect, either prohibit or greatly limit the use of eminent domain at the state and local level.

At the state level, the approach can be more direct. The Court's majority opinion clearly said that the states can control the use of eminent domain as they see fit. In California we have proposals to place before voters a constitutional amendment that would prohibit the use of eminent domain unless the property acquired would be both owned and occupied by government. Other proposed measures would place further restrictions on the use of eminent domain or tighten the use of redevelopment in California and indirectly control the use of eminent domain.

One thing that I would add is that it's inappropriate for Congress, far away in Washington, D.C., to make sweeping decisions that ought to be decided locally. We are much more comfortable with a state government making a decision about an issue like the use of eminent domain than we are having the United States Congress get into this. In general, I think that both the U.S. Congress and the California Legislature should let local decisions be made locally. We have seen that generally when the use of eminent domain is a local issue, the final decision gets made based upon what the local community wants.

Elaborate on the bedfellows and political combinations that have come together in reaction to Kelo.

The politics of the situation are remarkable, because we have seen people from both ends of the political spectrum coming together. We have, on one hand, Congressman Richard Pombo – who anybody would view as on the far right – partnering with Congresswoman Maxine Waters – who just about every political observer would say is on the far left – to co-sponsor legislation that would all but prohibit the use of eminent domain at the local level if a local government wants to continue receiving federal funds. The same sort of thing is not occurring to that extent in the State Legislature, but we are seeing support for putting controls on eminent domain and redevelopment by people in both political parties.

In recent testimony on redevelopment and blight, you said that many Californians do not understand the benefits of redevelopment. Elaborate on what those benefits are and what you believe explains why so many citizens do not understand its benefits.

First, the public doesn't understand what the Supreme Court ruled in Kelo v. New London. The public believes, based on what it has heard, that the Court made new law and somehow opened up the use of eminent domain for state and local governments when, in fact, the Court did nothing of the kind. Second, there are important protections in state law for property owners and restrictions on the use of eminent domain by local governments.

For example, people don't know that governmental agencies that acquire land through eminent domain must offer, as their first offer, a fair market value for that property at its highest and best use – as determined by an independent appraisal. They do not understand, as another example, that people are entitled to relocation benefits and help finding another property or another place to live.

People are not familiar with the fact that there is a long, involved process to establish a redevelopment project area and that there are numerous notifications to property owners about the establishment of that project area through what is normally a yearlong process to formally designate a project area. We've also found that people don't know that a very large percentage of redevelopment project areas in this state have no authority to use eminent domain.

We surveyed our members and found that about 40 percent of project areas have no authority to use eminent domain and that another 30 percent of the project areas in this state have some sort of limit on the use of eminent domain, such as no use of eminent domain for acquiring single-family, owner-occupied residences.

Those sorts of protections have been there for years, but people are not aware of them. So, when they hear about a Supreme Court decision that suggests that somehow there is greater authority to use eminent domain, naturally they are alarmed. The result is this sudden spate of proposals to further limit the use of eminent domain. I don't think the majority of the Supreme Court that signed the opinion ever intended that kind of reaction.

In fairness to our readers, and because we're not interviewing the plaintiffs, is it not possible that even though California now limits eminent domain to "takings that involve blight", that the U.S. Supreme Court has in Kelo affirmed that California could legally remove this restriction?

Certainly the Legislature has the authority to change state law on the use of eminent domain. But I can't ever foresee that occurring in the direction of making it more lenient because of the fact that eminent domain has long been a sensitive political issue, and now it's even more sensitive. One remedy would be to place California's current law into the constitution through a vote of the people. I don't think that's a good way to make law, but that would add another measure of security for people worried that the law might be changed in the future.

Let's refocus on the benefits of redevelopment as a tool for economic growth in the state. How does eminent domain usually work in California, and what's at stake re Kelo and the backlash to it for California's redevelopment agencies?

Citizens have heard about Kelo and they may have heard about the Legislature's discussion of the issue. Their first assumption is that eminent domain is used to take away people's homes. They don't think about what is more generally the use of eminent domain, which is to acquire property that is vacant or run-down, or that has been contaminated by some former industrial use. They don't think about property owned by slumlords, who are usually absent and won't invest in their property despite considerable efforts by local governments to bring about code enforcement.

These are all uses of eminent domain to take care of community-based problems where, if people only knew about the circumstances, they wouldn't think eminent domain was such a bad tool after all. But because the public naturally fears for their own property, they don't understand that it's very seldom used for residential property and is more often used for problem properties.

I would also hasten to add that people also don't understand that eminent domain is seldom used for redevelopment. Out of the many properties that redevelopment agencies acquire, the overwhelming number of them are acquired through negotiated purchases. Only a very few go to a decision by a court resulting in a final eminent domain action.

Your thoughts on State Senator McClintock's and Assemblymember Doug LaMalfa's proposed initiative, SCA 15, regarding the subject of property rights, would be helpful. Do the redevelopment agencies of California have a position on SCA 15?

CRA is opposing Senator McClintock's and Assemblymember LaMalfa's legislation, which is an extreme measure that would disallow the use of eminent domain unless the property to be acquired is going to be owned and occupied by governmental agencies. That legislation would prevent the instances that I spoke about earlier such as acquiring property because it's contaminated, doing something about the absentee slumlord that forces poor people to live in squalor – or doing something as simple as taking care of problems where there's a willing seller, but the property is clouded by title problems.

Again, such measures are overreactions to a Supreme Court decision that did nothing to change California law. This legislation preys on the fears of citizens because of what they don't understand about the Supreme Court's decision. It's unfair to Californians, and it won't make for better communities.