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The Ramifications of Post-Kelo Legislation on State Transportation Projects (2012)

Chapter: III. TRENDS ILLUSTRATED BY THE POST-KELO REFORMS

« Previous: II. THE KELO V. CITY OF NEW LONDON DECISION
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Suggested Citation:"III. TRENDS ILLUSTRATED BY THE POST-KELO REFORMS." National Academies of Sciences, Engineering, and Medicine. 2012. The Ramifications of Post-Kelo Legislation on State Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/14631.
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Suggested Citation:"III. TRENDS ILLUSTRATED BY THE POST-KELO REFORMS." National Academies of Sciences, Engineering, and Medicine. 2012. The Ramifications of Post-Kelo Legislation on State Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/14631.
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6 is, and the Court has erased the Public Use Clause from our Constitution.”35 One commentator argues that although the Kelo Court rejected a heightened degree of judicial scrutiny of takings for economic development, “the Kelo deci- sion…offers meaningful oversight of both the substance and procedure of eminent domain actions for essentially the first time.”36 The reason is that Justice Stevens’ opinion emphasized the careful planning process that produced the revitalization plan at issue and recognized that “one-to-one transfers” outside of a careful planning context would call for more intense judicial scrutiny of the public purpose of a taking.37 Although the subject of much controversy, the Kelo decision imposes some sub- stantive limitations on the use of eminent domain by prohibiting the government from taking private prop- erty solely for the benefit of another private party and by prohibiting a taking under the pretext of a public purpose when the actual purpose is to confer a private benefit.38 The Kelo Court made it clear, however, that states were free to impose restrictions on such takings; in varying degrees 43 states did so. Nevertheless, in virtu- ally all states enacting post-Kelo reforms, takings are permitted of blighted property or of property in blighted areas. Consequently, because of an exception in the states’ laws for the taking of blighted property, it has been argued that the post-Kelo reforms will have a lim- ited impact.39 Nevertheless, a New Jersey court has observed, although New Jersey did not enact post-Kelo reforms,40 that “[s]ince Kelo was decided, greater judi- cial and legislative scrutiny of redevelopment-based takings has occurred.”41 Moreover, the court stated that 35 Id. at 506, 125 S. Ct. at 2678, 162 L. Ed. 2d at 468 (Thomas, J., dissenting). 36 Blais, supra note 2, at 670. 37 Id. at 670 n.87 (citations omitted). 38 Id. at 670 (citations omitted). 39 Anthony B. Seitz, The Property Rights Protection Act: An Overview of Pennsylvania’s Response to Kelo v. City of New London, 18 WIDENER L.J. 205, 211 (2008). 40 Castle Coalition, 50 State Report Card: Tracking Emi- nent Domain Reform Legislation since Kelo, July 16, 2009, available at http://www.intellectualtakeout.org/research- analysis-reports/50-state-report-card-tracking-eminent- domain-reform-legislation-kelo, hereafter cited as the “Castle Report,” last accessed on July 5, 2011. 41 Harrison Redevelopment Agency v. DeRose, 398 N.J. Su- per. 361, 411–12, 942 A.2d 59, 89 (N.J. App. 2008) (citing Franco v. Nat’l Capital Revitalization Corp., 930 A.2d 160, 169 (D.C. 2007) (allowing a condemnee to plead claims that the government’s asserted public use for his property was pretex- tual, noting Kelo’s admonition that government may not “‘take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit’”) (quoting Kelo, supra, 545 U.S. at 478, 125 S. Ct. at 2661, 162 L. Ed. 2d at 450); Mayor of Baltimore v. Valsamaki, 397 Md. 222, 916 A.2d 324, 334 (2007) (rejecting the city’s exercise of “quick take” condemnation power for redevelopment purposes, citing the Supreme Court’s “controversial” decision in Kelo and the need for judicial scrutiny in enforcing the constitution’s public use in New Jersey “the municipal power to pursue redevel- opment is ‘not unfettered’” and that the state’s constitu- tion “‘reflects the will of the [p]eople regarding the ap- propriate balance between municipal redevelopment and property owners’ rights.’”42 This digest addresses the impact of post-Kelo reforms on such a balance, espe- cially in regard to takings for transportation projects. III. TRENDS ILLUSTRATED BY THE POST-KELO REFORMS A. Constitutional and Legislative Enactments in Response to Kelo The holding in Kelo proved to be controversial among the public, the media, and the political establishment.43 For example, a U.S. House of Representatives’ resolu- tion expressed strong disapproval of the Kelo decision.44 Forty-three states enacted post-Kelo reforms.45 Thus, transportation departments are unaffected in seven states that did not enact laws limiting the exercise of eminent domain for the purposes of economic develop- ment.46 Although some states amended their constitu- tion in response to Kelo, most of the states responding to Kelo did so by statutory amendments. Some states made both constitutional and legislative changes. For example, Arizona, Colorado, Florida, Missouri, Okla- homa, Oregon, and Washington amended the state con- stitution to provide that the courts are to decide when a taking is for a public use.47 Some states provided by statute that the question of public use is a judicial ques- requirement); City of Norwood v. Horney, 110 Ohio St. 3d 353, 2006 Ohio 3799, 853 N.E.2d 1115, 1138 (2006) (reversing a municipal finding that an area targeted for redevelopment was blighted or deteriorated, noting the courts’ “critical” role after Kelo in reviewing public use designations with “vigilance”)). 42 398 N.J. Super. at 412, 942 A.2d at 89 (citations omitted). 43 Daniel H. Cole, Why Kelo Is Not Good News for Local Planners and Developers, 22 GA. ST. U. L. REV. 803 (2006). 44 H.R. REP. NO. 109-340 (1st Sess. 2005). 45 Castle Report, supra note 40; Ilya Somin, The Limits of Backlash: Assessing the Political Response to Kelo, 93 MINN. L. REV. 2100, 2102 (2009), hereafter cited as “Somin, 93 MINN. L. REV.” See also Ilya Somin, Supreme Court Economic Review Symposium on Post-Kelo Reform: Introduction to Symposium on Post-Kelo Reform, 17 S. CT. ECON. REV. 1, at *1 (2009), hereafter cited as “Somin’s Symposium Introduction.” 46 Castle Report, supra note 40 (citing Arkansas, Hawaii, Massachusetts, Mississippi, New Jersey, New York, and Okla- homa). 47 ARIZ. CONST. art. II, § 17 (“Whenever an attempt is made to take private property for a use alleged to be public, the ques- tion whether the contemplated use be really public shall be a judicial question, and determined as such without regard to any legislative assertion that the use is public.”); COLO. CONST. art. II, § 15 (“[T]he question whether the contemplated use be really public shall be a judicial question, and determined as such without regard to any legislative assertion that the use is public.”). See also MO. CONST. art. I, § 28; WASH. CONST. art. I, §16; and OKLA. CONST. art. 2, § 24.

7 tion,48 possibly without regard to whether the legisla- ture has determined that a use is a public use.49 For instance, Missouri’s constitution now provides that “[w]hen an attempt is made to take private property for a use alleged to be public, the question whether the contemplated use be public shall be judicially deter- mined without regard to any legislative declaration that the use is public.”50 Although the state legislatures and the public (the latter through referenda for constitutional amend- ments) expressed opposition to the Kelo decision, only about 19 states enacted post-Kelo reforms that are gen- erally regarded as being stringent restrictions on the use of eminent domain for economic development.51 Al- though the legislative responses varied, the most sub- stantive changes included defining public use so as to restrict (or otherwise including provisions to restrict) takings of private property for economic development and in some states to tighten the definition of blighted property.52 B. Impact of the Post-Kelo Reforms on Takings for Economic Development It has been observed that some of the states with the most stringent post-Kelo reforms have little or no his- tory of condemning property for economic develop- ment.53 In any case, almost all of the reaction to Kelo through constitutional or legislative amendments 48 ARIZ. REV. STAT. § 12-1132(A); GA. CODE ANN. § 22-1-2(a) (stating that public use is a matter of law to be determined by the court and that the condemnor bears the burden of proof) and § 22-1-11 (stating that “[b]efore the vesting of title in the condemnor…the court shall determine whether the exercise of the power of eminent domain is for a public use….”); and OR. REV. STAT. § 35.235. 49 ARIZ. REV. STAT. § 12-1132(A); MO. CONST. art. I, § 28. 50 MO. CONST. art. I, § 28. 51 Somin, supra note 45, 93 MINN. L. REV. at 2116 (citing Alabama, Arizona, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, Pennsylvania, South Da- kota, Virginia, and Wyoming). Moreover, Iowa and Minnesota, for example, narrowed their definition of blight. See Nadia E. Nedzel, Reviving Protection for Private Property: A Practical Approach to Blight Takings, 2008 MICH. ST. L. REV. 995, 1014 (2008), hereafter cited as “Nedzel.” Another source identifies Alabama, New Hampshire, and Virginia as having enacted “meaningful restraints on economic development.” James W. Ely, Jr., Supreme Court Economic Review Symposium on Post- Kelo Reform: Post-Kelo Reform: Is the Glass Half Full or Half Empty?, 17 S. CT. ECON. REV. 127, 137 (2009), hereafter cited as “Ely.” See also Castle Report, supra note 40 (giving 19 states a grade of “B” or higher on the extent to which their post-Kelo laws restrict the use of eminent domain for economic develop- ment). 52 Andrew P. Morriss, Supreme Court Economic Review Symposium on Post-Kelo Reform: Symbol or Substance? An Empirical Assessment of State Responses to Kelo, 17 S. CT. ECON. REV. 237, 244–45 (2009), hereafter cited as “Morriss.” 53 Somin, supra note 45, 93 MINN. L. REV. at 2105. “stopped short of categorically barring economic devel- opment takings.”54 One study of the constitutional and legislative changes after Kelo concluded that there were not enough data to assess the impact of the laws’ restric- tions on the use of eminent domain for economic devel- opment.55 Nevertheless, the study concluded that there was little evidence that governments use eminent do- main “for the primary purpose of favoring private inter- ests.”56 A more recent survey, published in April 2010, found “that there has been little substantive impact from the state-based laws” enacted after Kelo.57 The study’s au- thors reported that “[b]oth supporters of state-based Kelo laws and independent researchers found little change in what local and state governments are actu- ally doing…as a result of the laws.”58 C. Impact of the Post-Kelo Reforms on Takings of Blighted Property In regard to post-Kelo reforms restricting takings of blighted property, the most sweeping changes occurred in Florida and New Mexico, where “all blight condem- nations” are banned.59 Elsewhere, many states prohib- ited eminent domain for economic development or for the purpose of acquiring property for transfer to a pri- vate party but continued to allow takings of blighted property.60 In some states the post-Kelo laws only disal- low takings if the primary or sole reason for a taking is for the purpose of economic development or to expand the tax base or increase tax revenue.61 Regardless of whether a state enacted post-Kelo laws, at least 34 states have a broad definition of blight that is an excep- tion to any prohibition of or restriction on takings for economic development.62 No transportation depart- 54 Ely, supra note 51, at 148. 55 Dreher & Echeverria, supra note 2, at 2, 14. 56 Id. at 33. 57 Harvey M. Jacobs & Ellen M. Bassett, After “Kelo”: Politi- cal Rhetoric and Policy Responses, LINCOLN INSTITUTE OF LAND POLICY 17 (Apr. 2010), hereafter cited as “Jacobs & Bas- sett,” available at https://www.lincolninst.edu/pubs/dl/1773_ 992_1773_992_4%20Kelo.pdf, last accessed on July 5, 2011. 58 Id. at 18. 59 See Alberto B. Lopez, Revisiting Kelo and Eminent Do- main’s “Summer of Scrutiny,” 59 ALA. L. REV. 561, 591–92 (2008). See also Castle Report, supra note 40 (citing New Mex- ico House Bill 393 and Senate Bill 401). 60 Blais, supra note 2, at 673, 674 (citing as examples the states of Alabama, Kansas, Georgia, and Tennessee); see Nedzel, supra note 51, at 1014 (citing as examples the states of Georgia, Indiana, Iowa, and Minnesota) and Ely, supra note 51, at 137 (citing as examples the states of Alabama, New Hampshire, and Virginia). 61 See Pt. IV, infra. 62 Somin, supra note 45, 93 MINN. L. REV. at 2120–31. See Blais, supra note 2, at 674 n.112 (citing, e.g., as examples, Ala- bama, Arizona, Colorado, Georgia, Illinois, Indiana, Iowa, Kan- sas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mis- souri, North Carolina, Ohio, Oregon, Pennsylvania, South

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TRB's National Cooperative Highway Research Program (NCHRP) Legal Research Digest 56: The Ramifications of Post-Kelo Legislation on State Transportation Projects explores the consequences of legislation enacted by state legislatures that limits the use of eminent domain in response to the 2005 United States Supreme Court case of Kelo v. the City of New London, where the Court held that the use of eminent domain to take nonblighted, private property for a city-approved, privately implemented economic development plan was constitutional.

The report examines how state legislation has affected the use of eminent domain for economic development, for condemning blighted and nonblighted property, and for restricting transfers of condemned property to private parties. The report also examines how states have legislatively redefined the concept of “public use.”

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