Eminent domain and the ballot box
Numerous challenges to the government's right to seize or regulate private property are up for vote this election day.
By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Eminent domain is a hot-button issue this fall - 12 states have measures on the ballot to restrict the government from taking property for private uses.

The spark for all this activity is Kelo v. New London: The Supreme Court ruled in 2005 that the Connecticut city could seize well-maintained private homes and give them to a developer.

kelo_eminent_domain.03.jpg
When the Supreme Court said it was okay for the town of New London to seize Susette Kelo's home and give it to a private developer, the case jumped started the eminent domain opposition.

Arizona, California, Florida, Georgia, Idaho, Michigan, Montana, Nevada, New Hampshire, North Dakota, Oregon, and South Carolina have all scheduled votes on the issue. Louisiana approved a similar measure in September.

California is the issue's epicenter, and its Proposition 90 asks: "Should the California Constitution be amended to require government to pay property owners for substantial economic losses resulting from some new laws and rules, and limit government authority to take ownership of private property?"

Prop. 90 proponents say the government's seizing of property for private development is almost never justifiable. And, when eminent domain is applied for a public purpose, such as a dam or school, they want higher compensation for property owners.

"It will protect the American Dream," says Mimi Walters, a state assemblyman and chair of Yes on 90, "and stop government abuse of eminent domain."

It could also redefine what "just compensation" actually means. Gideon Kanner, a property rights advocate and professor emeritus of law at Loyola University in California, says, in past practice, payments have been "neither just, nor compensation." He says the state has routinely paid market - or less than market - value for properties seized under eminent domain.

Kanner says home owners should be paid much more than market value to make up for the hassle and expense of moving and the emotional attachments owners feel for their homes and neighborhoods.

The opposition

Tom Adams, who co-chairs the "No on 90 Campaign" and is board president of the California League of Conservation Voters, says that a broad coalition of groups have come together to fight Prop. 90.

Many of the opponents usually find each other on opposite sides of the fence. Left-leaning conservationists - including Robert Redford - are lining up with conservative business organizations to oppose the initiative. Also against it are middle of the road groups: homeowners, police and firemen, labor organizations, seniors, educators, local governments and even some property rights advocates.

A lot of the opposition centers on wording that would require that the government compensate property owners if it imposes any new conditions or restrictions that result in a substantial economic loss for property owners. The only exceptions are to protect health and safety.

Some possible examples:

Prohibit plowing that field because there are kangaroo rat nests there? Pay the farmer for lost crops.

Refuse to allow a hotel to switch from residential to transient trade because you want to preserve low-income housing? Pay the hotel owner for its lost room rates.

Environmentalists, including Robert Redford, worry this will tie the government's hands in enacting tough conservation regulations. Worker, such as teachers, worry about the tab for compensating big property owners.

Adams thinks Prop. 90 could even wind up hurting property owners. It could result in claims for lost revenue, for example, for night clubs or bars forced to curtail hours or operations because of noise complaints.

Prop. 90 would cover private property of all kinds, according to Adams, including businesses and intellectual property such as patents.

"The definition [of new government action] is so broad," says Adams, "it would prohibit the administration of present law."

Heavy impact?

For how much impact Prop. 90 might have in the state, Adams says to look to Oregon, which passed a similar referendum in 2004.

"Oregon," he says, "is one tenth the size of California. There have already been more than $6 billion in claims filed there."

That translates into tens of billions of dollars a year in California.

Walters says that a false argument. "In Oregon, the claims could be retroactive and every single claim that was settled there has been retroactive, some as far back as the 1970s. In California, only prospective claims are allowed."

But if Adams is right it might mean that government agencies would have to either agree to plans made by property owners - no matter what the impact on the public interest - or redirect budget dollars from their intended purposes into the hands of private businesses and individuals.

As for how the campaigns are faring, Walters sounds a lot more sanguine than Adams, who admits defeating Prop. 90 is an uphill fight.

According to Walters, 56 percent of Californians in the latest poll said they would vote Yes on Prop. 90.



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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.