BB&T Ahead of the Curve

While Virginia’s General Assembly and some three dozen other state legislatures wrestle with the implications of the Supreme Court’s decision in Kelo v. New London, BB&T, the bank with No. 2 market share in Virginia, is taking action on its own. The Winston-Salem, N.C., bank has announced that it “will not lend to commercial developers that plan to build condominiums, shopping malls and other private projects on land taken from private citizens by government entities using eminent domain.”

The Supreme Court ruling expanded eminent domain authority historically used primarily for utilities, rights of way and other public facilities.

“The idea that a citizen’s property can be taken by the government solely for private use is extremely misguided, in fact it’s just plain wrong,” said BB&T Chairman and Chief Executive Officer John Allison. “One of the most basic rights of every citizen is to keep what they own. As an institution dedicated to helping our clients achieve economic success and financial security, we won’t help any entity or company that would undermine that mission and threaten the hard-earned American dream of property ownership.”

Now, let’s see if Virginia’s lawmakers have as much respect for property rights as BB&T.

A bill submitted by Sen. Ken T. Cuccinelli, R-Centreville, would limit the use of eminent domain to public utilities and specifically exclude broader applications such as or private development, or an increase in the tax base, tax revenues, employment, or general economic health.


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7 responses to “BB&T Ahead of the Curve”

  1. Ray Hyde Avatar

    It is perfectly clear to me that government(s) are ethically conflicted on this issue. On the one hand if government takes your property for public use, then they must pay. That seems perfectly clear to me. But as a result of special interests and government actions we are now engaged in a protracted debate about what taking means, and what public use means.

    At present, absent other circumstances taking is defined to mean that substantially all of the economic value of the property is removed. In turn, “substantially all” generally means 95%+.

    Suppose you have 100 acres. Does this mean that the government can take 95 acres for an interchange or whatever and not pay? Suppose you have a hundred building rights, can the government take 95 of them and not pay? I would say no, but some people would say yes.

    Suppose you have 100 acres and a rare bird builds a nest in the middle of it. You are out of luck. In this case, public use extends to a last ditch effort to save a particular species, and taking does not even come into play. The entire world’s responsibility for caring for that species will fall on your back. If the government wants me to take care of that bird for them, I’m happy to do it, but I expect to get paid for my work.

    If somebody else decides your property is historic, environmentally sensitive, a scenic viewshed, too steep, or suddenly the 100 year flood plain is redesigned, you could be out of luck. The Anasazi didn’t have any idea about too steep, but that wasn’t what killed them off. there are beautiful Italian towns that you could never get built here, because of some ill defined social benefit.

    Under Cuccinelli’s bill, tax revenue, or general economic health would no longer be considered a public use. Yet tax revenue is exactly the argument Fauquier and other counties use to prevent growth and preserve open space.

    Governments are willing to accept payments (in various forms) to increase density rights, yet they are not wlling to pay when density rights are reduced. And this problem is entirely of the governments own making, since they defined the density rights to begin with. Yet the government is willing to pay for some density rights in limited special circumstances. So now the government finds itself in the position of a) declaring density rights b) reducing them without payment c) accepting pyment to increase density rights d) buying density rights with public money and e) throwing those rights and the money they represent away. This is unacceptable.

    Even worse, the way they throw the density rights away is to transfer them to a non-profit, non-government agency, which places them in a perpetual conservation easement. By doing so the government is violating a fundamental principle that one administration may not tie the hands of a subsequently elected administration. They have eliminated the right to vote on land use regulations the government is entrusted to manage, by abdicating their authority to a non-government agency. Even the Constitution is subject to revision, but these people want their hand to reach beyond the grave.

    This was explicitly stated by a former Fauquier county administrator who said “Zoning works only so long as the body politic has the political will.” Who does he think the body politic is? Does he think that if the body politic changes its mind about what works that zoning has failed, or failed in his estimation.

    So here is a guy who thinks zoning shouldn’t change, unless it changes downward, and having changed downward, it should become immutable. If, I’m correct the has since left government and now works for VOLF. Talk about a revolving door.

    If we can’t take property and give it to a for profit agency based on some public benefit, then we can’t take it and give it to a non-profit either. Sure, the government pays for the building rights it gives away, but the government sets the price, and the government also sets the allowable use of the land. I’m not sure a take it or nothing offer is all that different from taking outright.

    I’m in favor of preserving open space, but this isn’t the way to do it. What this is going to turn out to be is the full employment act for our great gandchildrens lawyers.

    If taking is defined as 95%+ then we can’t very well argue that if our neighbor builds a home he is taking our property by causing a tax increase, and under Cuccinelli’s bill, tax considerations would be non-actionable in a takings case anyway.

    You can argue that zoning and eminent domain are different, but if it walks like a duck, and costs like a duck……

    I don’t see this as a property rights issue, I conced that my property rights are whatever the government says they are. This is a fairness issue. What BB&T is suggesting is, if you take it, you pay for it. Seems reasonably fair to me.

  2. Anonymous Avatar

    Sen. Cucinelli and 34 other Delegates and Senators

  3. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Anon,

    I find your comment interesting. Yes, those other Senators (and delegates in the HoD version) did sign on. However, Sen. Cuccinelli was the Patron. In other words, it was his bill. Interestingly, he submitted pretty much the same bill last year and it was defeated in committee.

    Good for BB&T. There are still some good corporate citizens out there.

  4. E M Risse Avatar

    We continure to be amazed at the ink that is spilled over the New London Hotel case.

    As we noted on this Blog in “New London Hotel Panic” on 23 June 2005, almost all the discussion completely misses the point.

    Why cannot pundits and pandering politicians see past the gay bashing / who can marry who / property rights uber alles and damn the general welfare “issues” and consider the underlying imparitive: evolving functional human settlement patterns?

    EMR

  5. Anonymous Avatar

    You wouldn’t think it was spilled ink if it was your house.

  6. Jim Bacon Avatar

    Ed, you and I see eye-to-eye on most things, but not this. I see property rights as a bedrock issue in defining the relationship between the individual and the state. I recognize that property rights are not absolute, and that they must evolve. But I worry that our system is already so corrupted in favor of people with access to power that the last thing we need to do is tip the scale in the favor of the rich and powerful.

    Of course, I totally agree that we need to evolve to more rational human settlement patterns. But I think we can get there by (1) requiring people to pay the transportation, utility, pollution-related and government service costs associated with their locational decisions, (2) reforming zoning codes and subdivision ordinances to allow a wider range of choices as to what is built and where it is built, and (3) creating mechanisms to stimulate the evolution of more balanced communities (though, I’ll confess, I haven’t given a lot of thought to what those mechanisms might be).

    With new financial tools (new for Virginia, that is) like Community Development Authorities and Tax Increment Financing, communities have the means to re-develop old neighborhoods without the necessity of taking peoples’ land from them.

  7. Ray Hyde Avatar

    Jim,

    Eminent domain is just the tip of the iceberg. Some communities are now using Zoning Amortization. Note the key words here: “legally and without compensation to the owners” and “terminate undesirable land use”.

    Sounds pretty much like stealing, doesn’t it?

    “What kind of local legislation could remove an undesirable and non-conforming land use? Zoning amortization can terminate undesirable land uses. Municipalities use amortization to quicken the demise of buildings, uses or signs that are deemed nonconforming or potentially harmful.

    ” …Well-crafted local legislation may reduce both the likelihood of future lawsuits and produce desirable land uses at lower out-of-pocket costs.”

    “How does amortization work? If we pass a local law adopting amortization for a specific land use, we would determine a period of years over which that use would be fully amortized. At the end of that period, any such land use would cease, legally and without compensation to the operators or owners. After such an amortization period, the owner of the land would have to change to a conforming land use that fit into the existing zoning.”

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