Up from Kelo: Ohio and Property Rights

One cheer for the State of Ohio for its recent attempt to protect private property rights, battered by the Supreme Court's  Kelo Decision

Private property rights of citizens are no less important to the protection of citizens from intrusive government than the freedom from unreasonable search and seizure or the right to a jury trial.  Thus, Alexander Hamilton called the protection of property one of the "great objects of government."  This principle is embodied in the Fifth Amendment of the United States Constitution, among other provisions, which states:

"...[N]or shall private property be taken for public use, without just compensation."
There is little controversy over the power of a governmental agency to take private property by eminent domain for a genuine public use.  Roadways, schools, and parks are examples of this sort of public use.

In 2005, the United States Supreme Court dealt a serious blow to property rights in the now notorious case of Kelo v. City of New London.  In an effort to increase its tax base and attract businesses, the City of New London, Connecticut adopted a waterfront development plan that required the removal of many private homes.  This property was to be turned over to private developers who would then own and develop the waterfront.     

Nine property owners refused to sell their homes.  One property owner had lived in her home since 1918.  The parcels of these homeowners were to be developed for office space, parking lots, retail space, all privately owned.  These homes were not "blighted" or "deteriorated."   The City sought to force the sale by its powers of eminent domain. 

In a five to four decision, the United States Supreme Court upheld the power of the City of New London to take the private property of citizens and turn it over to other private citizens for development. 

In its interpretation of the Fifth Amendment the Court essentially redefined the words "public use" to mean any purpose established by the governmental agency that has some public benefit. After Kelo a governmental agency may take private property by just coming up with a plan that has some arguable public benefit. ("Just compensation" was not an issue in the Kelo case).  The agency can then turn over the property to private developers for their ownership and profit. 

Justice Thomas's dissent in Kelo makes an interesting point about the standard of review by the majority and the level of deference that must be shown to local authorities.  Justice Thomas noted that the Court uses the highest "strict scrutiny" standard when evaluating whether a governmental agency can come into a citizen's home, but it uses the most lenient, deferential standard when reviewing whether that same government agency can destroy that citizen's home.

Furthermore, the dissents of both Justice O'Connor and Justice Thomas note the incongruity of the Court's supposedly compassionate wing siding with local politicians and real estate developers against the poor. Both noted that it will be the poor who are most likely to lose their homes in the name of some redevelopment plan.  Such is the incoherence when Justices find a "living constitution," where they can rule based upon personal preferences in an individual case rather than upon the constitutional text.

In the majority decision in Kelo, the Court limited its interpretation to the Fifth Amendment of the United States Constitution, and did not rule out the power of states to provide more stringent protections for private property rights.  As invited by the majority in Kelo, some states have taken the initiative to better protect private property rights in eminent domain cases.

The State of Ohio, to its credit, has shown more respect for private property in eminent domain cases than either the City of New London or the United States Supreme Court.  In 2006 the Ohio Supreme Court refused to allow the City of Norwood to do to homeowners what the City of New London did to its homeowners.  The Ohio Supreme Court, interpreting the Ohio Constitution, refused to find "economic benefits alone to be a sufficient public use for a valid taking."  It recognized that a "beneficial use is not necessarily a public use."  Unlike the United States Supreme Court which took the most deferential and least rigorous standard of review of the City's actions, the Ohio Supreme Court "strictly construed" the City's action, and it supported the principle of resolving doubt over the propriety of the taking in favor of the property owner. 

Also in response to Kelo, the Ohio legislature has acted to limit the ability of governmental agencies in Ohio to take private property by eminent domain for the purpose of redevelopment.  The power of eminent domain has often been used in the past for what has euphemistically been called "urban renewal."  The Ohio legislature has now narrowed the definitions of "blighted areas," "blighted parcels," and "slums" to put a much higher burden on local officials who try to use "slum clearance" as a pretext for use of its eminent domain power. 

The legislature has specifically defined "public use" to exclude "any taking that is for conveyance to a private commercial enterprise" unless the governmental agency establishes by a preponderance of the evidence that the area or parcel meets the tougher definition of "blighted." 

Most importantly in light of the Kelo decision, the Ohio legislature has mandated that when considering whether a property is "blighted," the public agency is not permitted to consider "whether there is a comparatively better use" for the property or "whether the property could generate more tax revenues if put to another use."  These were the two most important factors for the City of New London and they are now forbidden in the State of Ohio. 

The statute builds in other protections for property owners.  The burden of proof in contested eminent domain cases is now shifted from the property owner to the governmental agency.  When the governmental agency desires to take property that it claims is "blighted," there is no longer a legal presumption in its favor.  Generally, property owners have a more expedited appeals process if they lose at the lower court level.  There are new procedures that discourage low-ball offers from the governmental agency, and there are now circumstances where the property owners can recover their attorneys' fees.

These reactions of the Ohio Supreme Court and legislature to the trampling of property rights in eminent domain cases are commendable.  They help curtail the more arbitrary use of eminent domain power, especially for favored private developers.  So why, you may ask, only one cheer for the efforts of the State of Ohio?  Here are three reasons:

1. Justice Thomas in his dissent would limit the power of eminent domain for a governmental agency to those where there is a true public "use." By "use" Justice Thomas would restrict such takings to the actual use of the property that is open to public such as roads and parks. Even Ohio's more protective statute allows for some eminent domain takings as part of general redevelopment plans, where the public does not really have "use" of that property. The adoption of Justice Thomas's position would be in keeping with the meaning of "use."


2. The legislature missed an opportunity to define more broadly the concept of "taking." Governmental authorities don't necessarily have to seize property. They can effectively "take" private property without compensation through changes in zoning and building codes or other governmental enactments such as environmental laws. These regulatory changes can seriously harm the potential use or value of property with no required compensation by the government. Requiring compensation for detrimental changes in regulation of private property would likely discourage the more capricious forms of regulation. It would also limit the ability of the government to saddle an individual property owner with the costs of policies that are undertaken for a supposedly general public benefit.

3. Ohio has developed at the state level one of the most oppressive tax burdens in the country.  While Ohio now better protects its citizens from the confiscation of property by eminent domain, it has exacerbated the confiscation of property through taxation. Only the means of confiscation have changed.  The State easily takes currency rather than dirt, bricks, and mortar.

So, Ohio's political classes give to its citizens with one hand what they take away with the other.  As hard as I try to be grateful for the new protections in eminent domain cases, I can muster only one cheer for the efforts of state authorities.

Henry Wickham welcomes comments.
One cheer for the State of Ohio for its recent attempt to protect private property rights, battered by the Supreme Court's  Kelo Decision

Private property rights of citizens are no less important to the protection of citizens from intrusive government than the freedom from unreasonable search and seizure or the right to a jury trial.  Thus, Alexander Hamilton called the protection of property one of the "great objects of government."  This principle is embodied in the Fifth Amendment of the United States Constitution, among other provisions, which states:

"...[N]or shall private property be taken for public use, without just compensation."
There is little controversy over the power of a governmental agency to take private property by eminent domain for a genuine public use.  Roadways, schools, and parks are examples of this sort of public use.

In 2005, the United States Supreme Court dealt a serious blow to property rights in the now notorious case of Kelo v. City of New London.  In an effort to increase its tax base and attract businesses, the City of New London, Connecticut adopted a waterfront development plan that required the removal of many private homes.  This property was to be turned over to private developers who would then own and develop the waterfront.     

Nine property owners refused to sell their homes.  One property owner had lived in her home since 1918.  The parcels of these homeowners were to be developed for office space, parking lots, retail space, all privately owned.  These homes were not "blighted" or "deteriorated."   The City sought to force the sale by its powers of eminent domain. 

In a five to four decision, the United States Supreme Court upheld the power of the City of New London to take the private property of citizens and turn it over to other private citizens for development. 

In its interpretation of the Fifth Amendment the Court essentially redefined the words "public use" to mean any purpose established by the governmental agency that has some public benefit. After Kelo a governmental agency may take private property by just coming up with a plan that has some arguable public benefit. ("Just compensation" was not an issue in the Kelo case).  The agency can then turn over the property to private developers for their ownership and profit. 

Justice Thomas's dissent in Kelo makes an interesting point about the standard of review by the majority and the level of deference that must be shown to local authorities.  Justice Thomas noted that the Court uses the highest "strict scrutiny" standard when evaluating whether a governmental agency can come into a citizen's home, but it uses the most lenient, deferential standard when reviewing whether that same government agency can destroy that citizen's home.

Furthermore, the dissents of both Justice O'Connor and Justice Thomas note the incongruity of the Court's supposedly compassionate wing siding with local politicians and real estate developers against the poor. Both noted that it will be the poor who are most likely to lose their homes in the name of some redevelopment plan.  Such is the incoherence when Justices find a "living constitution," where they can rule based upon personal preferences in an individual case rather than upon the constitutional text.

In the majority decision in Kelo, the Court limited its interpretation to the Fifth Amendment of the United States Constitution, and did not rule out the power of states to provide more stringent protections for private property rights.  As invited by the majority in Kelo, some states have taken the initiative to better protect private property rights in eminent domain cases.

The State of Ohio, to its credit, has shown more respect for private property in eminent domain cases than either the City of New London or the United States Supreme Court.  In 2006 the Ohio Supreme Court refused to allow the City of Norwood to do to homeowners what the City of New London did to its homeowners.  The Ohio Supreme Court, interpreting the Ohio Constitution, refused to find "economic benefits alone to be a sufficient public use for a valid taking."  It recognized that a "beneficial use is not necessarily a public use."  Unlike the United States Supreme Court which took the most deferential and least rigorous standard of review of the City's actions, the Ohio Supreme Court "strictly construed" the City's action, and it supported the principle of resolving doubt over the propriety of the taking in favor of the property owner. 

Also in response to Kelo, the Ohio legislature has acted to limit the ability of governmental agencies in Ohio to take private property by eminent domain for the purpose of redevelopment.  The power of eminent domain has often been used in the past for what has euphemistically been called "urban renewal."  The Ohio legislature has now narrowed the definitions of "blighted areas," "blighted parcels," and "slums" to put a much higher burden on local officials who try to use "slum clearance" as a pretext for use of its eminent domain power. 

The legislature has specifically defined "public use" to exclude "any taking that is for conveyance to a private commercial enterprise" unless the governmental agency establishes by a preponderance of the evidence that the area or parcel meets the tougher definition of "blighted." 

Most importantly in light of the Kelo decision, the Ohio legislature has mandated that when considering whether a property is "blighted," the public agency is not permitted to consider "whether there is a comparatively better use" for the property or "whether the property could generate more tax revenues if put to another use."  These were the two most important factors for the City of New London and they are now forbidden in the State of Ohio. 

The statute builds in other protections for property owners.  The burden of proof in contested eminent domain cases is now shifted from the property owner to the governmental agency.  When the governmental agency desires to take property that it claims is "blighted," there is no longer a legal presumption in its favor.  Generally, property owners have a more expedited appeals process if they lose at the lower court level.  There are new procedures that discourage low-ball offers from the governmental agency, and there are now circumstances where the property owners can recover their attorneys' fees.

These reactions of the Ohio Supreme Court and legislature to the trampling of property rights in eminent domain cases are commendable.  They help curtail the more arbitrary use of eminent domain power, especially for favored private developers.  So why, you may ask, only one cheer for the efforts of the State of Ohio?  Here are three reasons:

1. Justice Thomas in his dissent would limit the power of eminent domain for a governmental agency to those where there is a true public "use." By "use" Justice Thomas would restrict such takings to the actual use of the property that is open to public such as roads and parks. Even Ohio's more protective statute allows for some eminent domain takings as part of general redevelopment plans, where the public does not really have "use" of that property. The adoption of Justice Thomas's position would be in keeping with the meaning of "use."


2. The legislature missed an opportunity to define more broadly the concept of "taking." Governmental authorities don't necessarily have to seize property. They can effectively "take" private property without compensation through changes in zoning and building codes or other governmental enactments such as environmental laws. These regulatory changes can seriously harm the potential use or value of property with no required compensation by the government. Requiring compensation for detrimental changes in regulation of private property would likely discourage the more capricious forms of regulation. It would also limit the ability of the government to saddle an individual property owner with the costs of policies that are undertaken for a supposedly general public benefit.

3. Ohio has developed at the state level one of the most oppressive tax burdens in the country.  While Ohio now better protects its citizens from the confiscation of property by eminent domain, it has exacerbated the confiscation of property through taxation. Only the means of confiscation have changed.  The State easily takes currency rather than dirt, bricks, and mortar.

So, Ohio's political classes give to its citizens with one hand what they take away with the other.  As hard as I try to be grateful for the new protections in eminent domain cases, I can muster only one cheer for the efforts of state authorities.

Henry Wickham welcomes comments.