Hijacking Eminent Domain: Bait and switch with regulatory takings

“They’re baiting you with eminent domain, telling you that this is going to fix eminent domain, and then they’re switching in regulatory takings, and actually getting you to vote for that, when you might not if you really knew what it was about.”Councilwoman Elaine Clegg, Boise, Idaho

Ever since the June 2005 Supreme Court Ruling in the Kelo case, eminent domain, its abuse, and related property rights issues have generated stories; and in turn, those stories have grown legs, appearing daily in all forms of local and national media – radio, television, print, and the internet. A disturbing trend has developed around eminent domain abuse issues, post-Kelo: Charlatans and opportunists are showing up in droves, and their tactics and misuse of the eminent domain abuse issue is hurting the movement.

The latest example is Howie Rich and his efforts to pass so-called “eminent domain propositions” and other measures in California and 12 other states. These stealth propositions are like wolves in sheep’s clothing. Using an emotional call to action (eminent domain abuse), these ballot initiatives really mean to prevent communities from passing zoning laws and prevent government from adopting zoning regulations because those laws will ultimately be considered “takings:”

In fact these provisions are not “takings” at all, but more like “givings.” They give special rights to big landowners and developers, whose demands for compensation cannot be met by local governments, and who will use the new law to remove all barriers to runaway sprawl. (See Howie Rich from New York City: What Does an East Coast Millionaire Want with Your State?)

So, who is Howie Rich? He is a New York real estate developer who has, over the years, donated millions of dollars to libertarian causes such as Americans for Limited Government, filtering his money through a maze of organizations. Despite his activities, Mr. Rich is not widely known. He is a 66-year old nominal Republican. He sits on the board of the Cato Institute of Washington, D.C., a libertarian think tank, founded by billionaire Charles Koch. Rich has also been active in the Libertarian Party. See last week's PBS special, Taking the Initiative.

Mr. Rich uses eminent domain abuse as the lead card in his hand, but the deck is stacked with other more controversial issues. His real focus is on so called “regulatory takings.” He equates the genuine outrage that many feel about eminent domain abuse to government zoning regulation or DEP regulation which restricts use. Government regulation, is in most instances, a legitimate exercise of the police power to regulate what can and cannot be done on a particular piece of property. Generally, regulation takes the overview and seeks to protect the greater community and the environment. In order to be a considered a “taking”, the courts have said that regulation must deny the property owner ALL beneficial use and enjoyment of the property.

What Rich is attempting to achieve, through public referenda in those states that permit such initiatives on their ballots, is a mandate that government must compensate property owners for diminution in value resulting from regulations which restrict use. Rich puts forth this proposal by equating takings for redevelopment, which are overwhelmingly despised, to legitimate regulations which are needed to control use. Let’s look at some of the practical effects in states where Rich’s proposals have either passed or are pending this November as reported in The Left Coaster:

In California, Howie Rich's baby is Proposition 90. The fine print in this proposition is that Californians are being asked to prevent government from using regulations except where there are health or safety issues without paying the property owner because regulations "take
away" his property value. This proposition seeks to do what Measure 37 did in Oregon. As one of the first "takings" amendments that won passage in the United States, it is a sobering look at what Rich wants to achieve. Oregonians, even many who voted for the Measure, are distressed at what it means for their future.

"The way Measure 37 was presented to the public, prior to the election, they paraded the little old lady who had 20 acres in the ads, they had (her) saying, 'Well, my retirement was going to (rely on the) 20 acres, and I was going to sell 5 acres, and the land-use laws won't let me,' " says Ted Schroeder, a doctor in the rural Grande Ronde Valley in northeast Oregon. "In my naiveté, I thought I was voting to help relieve those sorts of situations." Now, a neighboring family, operating as Terra- Magic Inc., has filed a Measure 37 claim seeking to brush aside agricultural zoning and subdivide 1,400 acres of prime farmland into 335 home sites.

Bill Rose, who breeds specialty grasses on 2,100 acres in the Willamette Valley, about
20 miles south of Portland, says he voted for Measure 37 because he wanted to relax
regulations enough to allow modest subdivisions on hilly, unfarmable rural land. Then one of his neighbors filed a Measure 37 claim to convert a 40-acre berry farm into lots one-seventh of an acre for a total of 280 houses. The developer wanted Clackamas County to waive the
agricultural zoning or pay him at least $3.6 million. The county had no choice but to approve the claim. Now Rose is making a last-ditch attempt to persuade the county to limit the number of new septic tanks. He says Measure 37 claims "will destroy this valley -- the best place to live and farm that I know of."

"It's happening all over Oregon," says Renee Ross, who lives on 32 wooded and pastured acres near Molalla, southeast of Portland. Two of her neighbors have filed Measure 37 claims: One wants to build nine houses on 60 acres, and the other wants to dig a gravel mine on 80 acres. Handcuffed by Measure 37, the Clackamas County government approved both claims. "We went from having a very strict landuse policy to having no policy," Ross says.
"We don't have any rights at all. It leaves us no say in the types of surroundings we
live in, the undesirable businesses that can be put in right next to our property."

The western states targeted by Rich have provisions in their state constitutions or statutory law that allow the passage of new laws by ballot initiative. New Jersey does not permit this. Whenever I see the New Jersey Legislature working its magic, I’m tempted to urge this system for our state. A good example where public referendum might be useful is A-3257, the Burzichelli Bill, which seeks reform of the Local Redevelopment Housing Law, N.J.S.A. 40A:12A-1, et seq. This bill overwhelmingly passed the Assembly and has languished in Senator Ronald Rice’s Committee of Community and Urban Affairs for the past six months. So, effectively, the bill is “dead.” Neither Governor Corzine or Senate President Codey have expressed a real interest in passing eminent domain reforms.

But imagine if we had the ballot initiative in New Jersey! It would then be possible for the people to regain the power that has been effectively seized and thwarted by their elected representatives. A ballot initiative would allow Burzichelli’s Bill, or a revised version more acceptable to property owners, to appear on the ballot and be voted into law directly by the people, and not held hostage by elected officials who refuse to act.

But, be careful of what you wish for. Ballot initiatives are susceptible of being co-opted by wealthy proponents of particular issues, like Howard Rich. Imagine what could happen to the Pinelands, the Highlands, and the Hackensack Meadowlands, which are governed by commissions and governmental regulations that limit growth in sensitive areas. This type of regulation would become too expensive for government to implement because government would be obligated to pay for the restriction of use. A regulatory restriction would then be deemed a compensable taking which must be compensated for by the government.

But the ultimate price the citizens will pay in deregulation is the loss of large swaths of precious land and resources to overdevelopment and sprawl. 

Written By:Diphda On October 2, 2006 12:38 AM

How are they going to "Lose" large swaths of precious land that they don't own?

I don't think anyone is seriously suggesting that all regulations that restrict use will have to be compensated. The president's recent executive order makes that point explicitly.

Where it is a problem is when restrictions allegedly for some public purpose are cynically designed to restrict use without coming afoul of the takings law, such as it is.

The question came to the U.S. Supreme Court in 1992 in the case of a South Carolina builder. David Lucas had paid almost a million dollars for two waterfront lots. The lots were zoned for beach houses, many of which were there already. Shortly afterward, however, the state said it needed to protect the sand dunes, and forbade any more beach houses.

Had the state taken Lucas' property? He thought so. State officials thought not; they had only regulated him. He still had his lots. He could pitch a tent on them or spread out a blanket and have a picnic on them. The court, however, ruled that the thing for which he had paid a million dollars � the right to put up a house � had been taken, and that the state had to pay for what it took.

Here is another example. In 1977, Edwina Johnston bought land south of Interstate 90 at Preston in rural King County. In 1991, the land was zoned for one house on five acres. Johnston still has 30 acres, which should accommodate six houses. But since 1996, she says, King County government has imposed a wide buffer around two seasonal streams. Of these streams, she says, "One is two inches wide and the other is about a foot wide, and neither has any fish." That doesn't matter. No building is allowed in a buffer.

In addition, she says, the county's Critical Areas Ordinances mandated that 65 percent of each lot remain untouched and that no more than 10 percent be covered by waterproof surfaces like roofs or pavement. Requirements for scientific studies have made dividing 20 of the 30 acres so complicated that it would eat up most of the property's value.

This means, she says, that the county has taken away much of the value of her land. She is 73. "I bought this for my retirement," she says. "I have no pension."

If Edwina Johnston had a pension, it would be unconstitutional for the government to take it from her. You might think the same would hold for her rights to her land. The Washington Constitution of 1889 says, "No private property shall be taken or damaged for public or private use without just compensation having first been made." The Fifth Amendment to the U.S. Constitution, passed in 1791, says, "Nor shall private property be taken for public use without just compensation."

That would seem clear, but the courts have had great difficulty defining the word "taken."

When a developer buys property with ten building rights and asks for a rezoning that allows him 20 or fifty, most jurisdictions will respond with a request for impact fees or proffers or some payment in return for the "Giving" you describe. Frequently, much if not all new infrastructure is not actually "given" by the government but is bought and paid for by the developers through such fees.

But if an owner buys land with ten development rights and those are subsequently reduced to two, or one, or none, then clearly a taking HAS occurrred and similar payments should flow in reverse.

Fair is fair.

In some jurisdictions the county has eliminated as much as 80% of development rights without payment. Then subsequently they initiated a program to buy up still more development rights. By doing so they have admitted that the development rights are valualbe property and that the previous ones must have been stolen. I don't see any way out of their ethical dilemma.

What's worse is, that these counties, having purchased valuable property then let them expire or give them away to nongovernment conservation agencies. This is probably in violation of their own surplus property regulations. Imagine if they bought citizen's cars for the "community purpose" of reducing traffic and global warming, and then gave them away!

By giving the rights to a nongovernment conservation agency, the current administration is abdicating its control over that land use for themselves and all their successors. Essentially this amounts to stealing the right to vote on land use from our grandchildren.

In order to be a considered a "taking", the courts have said that regulation must deny the property owner ALL beneficial use and enjoyment of the property. But at the same time property is considered under the law to be a bundle of sticks. If you take one of my sticks you have taken ALL of the value of that stick.

This is a hotly contested issue. And one of the problems is that you cannot get to court until you have exhausted every possible alternative in order to prove that you have lost ALL the value. This is a catch 22 that is cynical in the extreme and governments regularly use it to starve potential litigants to death. Several governments have already been slapped around by the courts for this behavior. There is presently a bill in congress to rectify this and make access to the courts easier and to modify what constitutes a taking. Just because the courts have, so far, held that nearly all the value must be taken doesn't mean that it is right, or that citizens don't have the right to make themselves heard about what is right and fair.

This is exactly what happened in Oregon, twice. Curiously, when Measure 37 passed, 1000 Friends of Oregon said, "Hey, you can't change those rules. I bought this property with the expectation that my view would be unspoiled. You are going to owe me compensation if you chnage the rules." This is exactly the argument they said had no merit whe the land use regulations were passed: "You have no right to expect that the rules will remain the same, and the government can devalue your property."

Now it appears that both sides agree they would be better protected if compensation was required when rules change. So, the issue has shifted to which side has the upper hand when we set the date when we agree to start being ethical and fair.

But let's suppose that some regulation really is for the public benefit and that it has not been crafted cynically for the purpose of stealing what you don't own. Shouldn't the test for inclusive public benefit be that the winners can compensate the losers and all come out ahead? If it really benefits the mass of the public, it shouldn't be that hard to raise the money.

If you cannot raise the money then what that says is that you don't value the benefit enough to pay for it.

There is a lot of demonization of money grubbing developers, but here is the thing. If a developer wants the use of my land for his purposes he offers me money. But if my neighbors want the use of my land to enhance their quality of life, they don't offer money. They just form a gang and go get the county to do their thuggery for them.

To my way of thinking it is the neighbors and community that are greedy. Central Park in New your must be the most valuable piece of open space anywhere, but citizens gladly pay to own and maintain it, and that is as it should be.

Of course there are legitimate rules to control use. I don't think that is the issue. The problem is when the rules change arbitrarily to prevent a further use that others have already enjoyed. When the rules pose as being legitimate when they are designed soley to limit use while skirting the takings law, or when multiple little laws overlays etc. are passed such that property rights are pecked to death by ducks. Under such conditions, those that preserve their land the longest get punished the most in the end. Surely that has got to be counterproductive to what we wish to achieve.

The county makes itself a party to land transfers by taking on itself the responsibility for recording the deeds. Owners by the property with expectations and valuations based on the rules in place at the time. The county should record them along with the deed, just as they do with easements for ingress and egress. Then do their job, which is to protect people and property. If some special interest group comes along and wants to change the agreement then they can buy an easement, same as anybody else.

Frequently rules to control use are designed to protect current owners from future owners who have, as yet, no voting rights. The big bad developer's customers, after all are homeowners, so it isn't a case of rich developers against homeowners, it is old homeowners against new homeowners.

So, go down to the courthouse and look at your deed and see if it says you have the right to prevent others from doing what you have already done: buy a piece of property that was subdivided from something bigger.

As for the wealthy, in my county the land use regulations are promoted by the wealthiest of the wealthy, in fact, one county official told me to my face that his goal was to see to it that somebody wealthy bought my property, so that it wouldn't be subdivided.

That is perfectly OK with me. But he ought to have to compete in a fair market for it against 50 or more Regular Joe's who just want a place to live and who are willing to pay market price, as opposed to having my market artificially restricted to a handfull of wealthy buyers who have lobbied the county in such a way that their desires are met at a huge discount.

There are demons and charlatans on the antisprawl side as well as on the development side. At least on the development side they pay for what tey get. Not presenting both sides of the issue is charlatanism.

But in the end what is fair, and right, and ethical, and honest, is to pay for what you get. If you want me to be in the scenery business and work to maintain the view you enjoy, then you should be prepared to pay me for my effort. You don't get to view the movies for free.

I'm all in favor of preventing sprawl and overdevelopment, but at some level those two must be contraindicated. How can you control large swaths of precious land resources without paying a price for it? Isn't one of those prices that the rest of the precious land resources will be vastly overpriced and overdeveloped? If those large swaths are so precious, how much are you willing to pay for control? Or is it that you are a thief?

Written By:Rachel On October 15, 2006 1:28 PM

If you look into the fine print of the measures on California's November ballot, you will read that "President Bush has given Governor Schwarzeneggar the authority to acquire (STEAL) $200 billion in realestate to redevelop California." I went to www.calvoter.org and www.followthemoney.org and found that land developers gave them millions in campaign contributions and now it is payback time for the good ole boys club.

In June of this year, I was given notice of "rezoning and future use of our property" along with 33,000 others in Sonoma County, CA.

The government has a new tool, they rezone you because of "possible endangered species" of indiginous plants, animals, bugs and amphibians. I've got the "tiger salamander" - which is not present on my dry sunny piece of property. They also say I am in a "biotic habitat," which means anyone living within 20 feet of a rainwater ditch, weep, creek, spring, river, etc. I live across the street from a seasonal rainwater ditch that is on county property. "Riparian corridor" is where wild life walks.

I was not even going to tell them that I have seen fox, possum, racoon, moles, gophers on my property because they forgot to label me with the ones that are actually the truth! They have no scientific research to back their lies. I found out through U.S. Fish and Wildlife that they "did not find enough scientific data to conclude that the tiger salamander was facing extinction in Sonoma County." Rather they "found the local government is economically disadvantaging it's citizens as a result of this."

Down the road from me, an organic apple farmer owned 20 acres with a house and barns. The city of Cotati and Sonoma county told him he had the tiger salamander and condemned his business/livelihood and his house. A planning commissioner gave him $150,000 for his condemned land, which was rezoned, subdivided and sold in pieces for millions. The former owner was pushed out of the California market and bankrupted. Now, Lowe's is sitting on the apple orchard ,and new townhouses. There is a strip mall about to go in there and a business park.

Now the salamander is "possibly on my property" and I have to pay $20,000 to have it removed. Or pay a fine when I need to do minor repairs to my home. I call this government racketeering at its finest; some call it preserving "open space."

I also attended a Sonoma County General Plan meeting on July 18, 2006 at the Wells Fargo Center of the Arts in Santa Rosa, CA...where they announced to 500+ that attended to "donate our properties or face a legal battle we will lose for sure." Jess Jackson of Kendall Jackson Winery is being asked to "donate 1300 prime vineyard acres."

Please know that this stuff is happening all over the USA under the current greedy tyrannical rule. Something has got to change. Let's vote them out of office.

Written By:Susan Buck On October 15, 2006 4:29 PM

Be assured that regulatory takings are indeed happening all across the country and most are hitting the rural areas the hardest - areas without the votes or the money to fight it. In my area in rural northwest New Jersey, it has been devasting. In 2004, the Highlands Water Protection and planning Act was passed which totally prohibited any changes whatsoever to hundreds of thousands of acres and severely limited development on hundreds of thousands more. Property values have plummetted from 60 - 90%. There is no sound science backing up any of it, and the concept of protecting water has been lost in the frenzy to protect potential habitat. Endangered species need not be present at all for the land use to be totally restricted. The actual watersheds and recharge areas are often not related to the restricted areas. Most areas require 88 acres to build one house. Building permits for one house take years and can cost hundreds of thousands of dollars. No compensation is paid to the farmers or other property owners. It is an obvious violation of both the 5th and 14th amendments, yet the legal battle to prove it will take years and millions of dollars. Many farmers will be dead before it is settled. While some of the ballot initiatives preventing this sort of thing are not perfect, they are preferable to letting legislatures continue to yield to lobbyists armed with junk science and pass legislation that is bankrupting rural America.

See our website www.highlandsconservationassociation.org for more info.

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