Wednesday, March 08, 2006

COLUMN -- Choose robust reform over vague exceptions

Posted by Craig Westover | 4:48 AM |  

Wednesday, March 8, 2006

On Monday, the Pioneer Press ran an editorial ("Eminent domain: Keep it simple") supporting eminent domain reform and declaring property rights "one of the fundamental pillars of America's democratic republic." Simultaneously, it recommended legislation that "leaves flexibility for moments of crisis or profound opportunity."

Sounds like a reasonable objective, but there's just one little problem: When fundamental principle is compromised by vaguely defined exceptions, the result is legislation posing as reform that actually supports the status quo.

In its desire to avoid legislative gridlock, "keep it simple" and "get it done," the Pioneer Press underestimates the fundamental conflict between two major bills now in legislative committees, each purporting to be eminent domain reform.

Legislation introduced by Rep. Jeff Johnson, R-Plymouth, and Sen. Tom Bakk, DFL-Cook, is a direct response to the Supreme Court's opinion in Kelo. In Kelo, the Supreme Court held that using eminent domain to facilitate economic development is constitutional — even if property is transferred from one private party to another. However, it added, state legislatures may restrict that authority. That's exactly what Bakk-Johnson seeks to do.

The dueling legislation introduced by Sen. Don Betzold, DFL-Brooklyn Center, and Rep. Peter Nelson, R-Lindstrom, backed by the Minnesota League of Cities, is not a response to Kelo. It is a response to Bakk-Johnson. It is not eminent domain reform. It is an "inoculation" bill immunizing from criticism legislators appearing to vote for reform while actually voting to maintain state and municipal eminent domain power.

The key reform of Bakk-Johnson is that it prohibits the use of eminent domain for economic development without exception. Betzold-Nelson prohibits the use of eminent domain for economic development except when a project receives state funding.

"That is the exception that swallows the rule," said Lee McGrath, executive director of the Institute for Justice Minnesota Chapter (IJ is the public-interest law firm that represented homeowners in the Kelo case). "Private-to-private takings are still authorized when they are state financed — something that's true in nearly all large-scale developments. The league-supported bill doesn't end eminent domain abuse; it simply shifts decision-making to St. Paul and enlarges the lobbying power of the Minnesota League of Cities."

Both bills permit the use of eminent domain to redevelop "blighted" areas, but that is hardly an area of near-agreement.

Bakk-Johnson provides a straightforward definition of a "blighted" area — an urban area in which more than 50 percent of the buildings have building code violations that have not been remedied in the previous 12 months and are unfit for human use. Betzold-Nelson offers a Chinese menu of configurable "blighted" scenarios that enable gerrymandering parcels suitable for large-scale economic development projects — even if the majority of properties in a parcel are in good condition.

For example, consider an urban neighborhood where 20 percent of the houses are structurally substandard, meaning 80 percent are in acceptable condition. The entire neighborhood could be condemned and subject to eminent domain if an additional 30 percent of the homes were declared "obsolete" — defined by not having taken out a building permit in the past five years — and one of the following conditions is met: the area has a crime rate higher than other areas of the municipality; market values are lower, increasing at materially lower rates or decreasing when compared to surrounding areas; or there is other comparable evidence of negative market conditions in the blighted area compared to surrounding areas.

"The blight definition could cover many neighborhoods in the Twin Cities," said Nick Dranias, an attorney with the Institute for Justice. "It is too complex and it doesn't provide a check on a city's potential abuse of its powers."

In short, Betzold-Nelson provides eminent domain legislation with the collectively motivated "flexibility for moments of crisis or profound opportunity" the Pioneer Press desired, but it does so by knocking down the "fundamental pillar" of individual property rights. It does virtually nothing to prevent eminent domain abuse. It is pseudo-reform.

Bakk-Johnson builds on the fundamental pillar of individual property rights. There is room at the edges of Bakk-Johnson to modify some definitions or haggle over the limits of compensation for takings, but "fundamental principles" tolerate no vague exceptions. Bakk-Johnson is robust eminent domain reform and the bill that should come out of committee, pass the Legislature and be signed by the governor.

Correction: Don Betzold is from Fridley. His business is in Brooklyn Center.