Voters in California last week approved a ballot initiative amending the state's constitution to restrict the use of eminent domain to seize homes for purposes of private development rather than public works projects. But the vote received mixed reviews from property rights advocates, with some critics saying that the measure, known as Proposition 99, does nothing to protect business owners from losing their property for the benefit of other businesses, and, in fact, offers little real protection to homeowners either.
The vote is part of a nationwide backlash against what critics term an abuse of eminent domain, in response to the U.S. Supreme Court's June, 2005 decision in the case of Kelo v. City of New London, Conn. In that case, New London had used eminent domain to evict a handful of holdouts in a residential neighborhood, in order to provide land for an urban redevelopment scheme anchored by corporate investors. In a close 5-4 vote, the Supreme Court ruled that the city redevelopment plan, although crafted to directly benefit private parties (including, for example, pharmaceutical giant Pfizer, which would build a research facility on the site), still amounted to a "public purpose" that fell within the scope of permissible takings under the U.S. Constitution. Many states have since taken steps to formally restrict similar "takings" that are designed to support privately owned development, not public facilities such as roads, dams, or parks.
Builders have largely sided with property rights advocates on the issue. The NAHB filed a friend-of-the-court brief in the Kelo case, pointing out that members stood to lose their rights to developable land any time a government chose to prefer some other private agenda for that location, instead of housing. As the brief noted, "NAHB recognizes that housing will almost never afford a community with the economic development benefits that a commercial application will." Letting local governments pick economic winners and losers, the NAHB argued, would leave the door open for localities "to abuse their eminent domain powers and take developable land from NAHB members as they could from any other property owner." Since the Court's contrary decision in the Kelo case, the NAHB has supported efforts at the state level to limit that risk.
The narrowly drawn California proposition offers little protection to developers, or to any business property owners-including owners of occupied rental housing. The proposition only stops the state, counties, or towns from taking owner-occupied homes and transferring the property to another private party. But there are exceptions: The prohibition will not apply if the government is taking the house in order to protect public health and safety, prevent criminal activity, respond to an emergency, remedy environmental contamination, or use the land for a privately operated public work, such as a toll road or airport operated by a private entity.
Critics scoff that Proposition 99, as written, amounts to little more than an empty gesture. Libertarian attorney Timothy Sandefur, a staff attorney at the Pacific Law Foundation, terms the measure a "catastrophe for both homeowners and business owners" that actually expands the powers of eminent domain, even though it was sold to voters as a restriction on that power," adding, "Proposition 99 will not be useful to protect private homeowners. The fine print in the initiative eliminates protections even for homeowners in almost every actual case of redevelopment."
Local officials in the state speak in less apocalyptic terms, but tend to agree that the measure will have little practical impact: Several San Francisco-area redevelopment agency officials told the San Francisco Chronicle last week they rarely seize private homes anyway. For instance, a plan adopted in 2006 for San Francisco's Bayview-Hunter's Point area specifically rules out seizing residential property or owner-occupied homes, according to San Francisco Redevelopment Agency General Counsel Jim Morales.
Proposition 99, now part of the state Constitution, may yet play a role in future redevelopment battles-as developers know well, any legal roadblock, however debatable, has the potential to stall or even torpedo a complicated project. But on the same day as they approved the new limits on government seizure of homes, voters in California also signaled their support for urban redevelopment: Sixty-one percent of San Francisco voters approved the city's Measure G, helping clear the way for Lennar Homes to move forward with a $1.2 billion project at Hunter's Point that will include 10,000 residential units along with shops, offices, a sports arena, and 400 acres of parks and open space.