|
Imagine
the government kicking you out of your home or
business only to give your property to another
private individual whom it prefers? It may seem
implausible in a country like the
United
States,
but uses of the “eminent domain,” or
“condemnation,” power by government to wrest
private property from one person for the benefit of
special interests is hardly unheard of.
A
January
10, 2003,
court opinion examined this issue. In Ottofaro v. City of Hampton, the Virginia Supreme Court heard a case
in which the city of
Hampton
condemned the property of private landowners, Frank
and Dana Ottofaro. A small portion of the condemned
property was to serve as a road. The residue of the
land was to be transferred to the Hampton Industrial
Development Authority, a political subdivision of
the
Commonwealth
of
Virginia.
Two months after the condemnation decision was made,
the development authority entered into an agreement
with a commercial development project for the use of
the former Ottofaro land as part of a retail
shopping center.
The
Virginia and U.S. Constitutions specifically
restrict the condemnation power to “public
uses,” forbidding government from taking private
property unless the government proves that the
property is necessary for its operation or otherwise
needed to meet its obligations to the citizenry.
This vital concept is too often lost on government
officials and, unfortunately, on many courts.
Quoting
past precedent, the Virginia Supreme Court cautioned
that “a due protection for the rights of private
property will preclude the government from seizing
it [from] the hands of the owner, and turning it
over to another on vague grounds of public benefit
from the more profitable use to which the latter may
devote it.”
Despite
this strong language which sounds protective of
property rights, the court nonetheless upheld the
condemnation of the Ottofaro property against a
challenge that it constituted an illegitimate
“taking” for private use. The portion condemned
for the road, it found, would be used by the public.
That seems to pass the public use test, so long as
there is no evidence the road is only necessary to
provide access to a shopping mall.
However,
the court’s justification for the condemnation of
the rest of the Ottofaro property seems less
convincing. The court found no evidence that the
residue would be “conveyed to a private entity.”
Why? Because it would be transferred to the
development authority which, in turn, “will lease
the property to a private developer.” Does
filtering the ultimate transfer to private
development through a Commonwealth agency really
remove any potential “private use” taint?
Condemnation
for private commercial development projects has long
been sanctioned by many courts, so long as the
legislature or a municipality can claim that the
ends are in the “public interest.” Yet
governments have proven themselves to be poor
economic planners and susceptible to the influences
of special interests.
Regardless
of whether the full factual record in the Ottofaro
case proves the landowners’ claims, it serves as
an instructive example of the potential harm
inherent in the condemnation power when political
entities have broad discretion in its application
and commercial development is in play.
There are
dangerous incentives. Suppose Company Z wants to
build a new factory, but there are homes in its way.
The homeowners, for reasons either economic or
sentimental or both, refuse to sell.
So Company Z
uses its political clout to convince the city to
condemn the private property, force the owners out,
and grant Company Z title or a lease. Typically, the
transaction costs far less than if the
company had to buy the property on the open market.
Municipalities
have at least two incentives to engage in such
transactions: first, to curry favor with private
companies; and second, because the new owners will
likely generate significantly more tax revenue. At
the end of the process, the coercive power of
eminent domain has been used to kick a private
property owner off his land for the mutual benefit
of the developer and the municipality.
Private
negotiations in property disputes are often more
costly than an investment in convincing the state to
condemn. If an owner refuses to sell or demands a
price higher than the interested buyer is willing to
pay, the market provides no means by which the
interested buyer can force the owner off the land.
When takings for private use are allowed, the state
becomes merely an agent of coercion, with the
interested buyer as its principal.
As
James Madison observed in 1792, a just government
“impartially secures to every man, whatever is his
own.” Without judicial
reanalysis of constitutional limitations on
condemnation or legislation that specifically reins
in the condemnation power, private property rights
in
Virginia
may not receive this impartial protection.
--April
28, 2003
|
