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September / October 2009
Volume 21, Number 5

This Land is Your Land, This Land is Our Land
By Maria Sprow

Proposition 11 is just the beginning of imminent eminent domain reforms

When Susette Kelo refused to budge from her home of 10 years after officials in new London, Conn., condemned the property and announced plans to replace her small but cozy pink house with a hotel and health club at the request of Pfizer Corp., she and her neighbors took their plight all the way to the Supreme Court — and lost.

New London is a small city, with a population of 25,000. It’s an older city on the East Coast, and at the time, the area was struggling. There were not many jobs left, people were moving away, and offi cials desperately wanted to attract more employers. So when Pfizer off ered to move in if the officials would develop the coast into a business park and provide desirable amenities for residents, the offi cials had determined that the necessary condemnations were for the public good.

“The City of new London said we want to take the house away from Mrs. Kelo and we want to give it to the new London Economic Development Corporation, which will lease it to developers who will build condominiums and other nice things,” said Robert Soard, the chief of the Real Property Division in the Harris County Attorneys office.

“When you read Kelo, it’s actually a pretty conservative opinion that says that the Court should not second-guess legislatures. The Connecticut Legislature had said that condemnation for this purpose was okay. (The Court) said the Court should not second-guess local government; the City of new London had said that condemnation for that purpose was okay,” Soard said, speaking to county officials at the texas Association of Counties Annual Conference in August. “The Court also said nothing about this opinion keeps a state from passing additional laws or regulations to restrict eminent domain.”

So Kelo lost the battle.

But it seems she and her neighbors won the war, regardless. now, “every bad thing about eminent domain, they blame on Kelo,” Soard said, even though the decision hadn’t come as a surprise to most people following it.

Public opinion since then has driven legislatures in more than 35 states to update laws regarding eminent domain. Prior to Kelo, only eight states had outlawed the taking of land by a government agency for economic development purposes; according to a study done by researchers at university of north texas, San Jose State university and university of Central Arkansas, 37 states enacted eminent domain restrictions after Kelo. In 23 of those states, researchers deemed the restrictions “meaningful.” Changes made in texas were deemed “symbolic” at the time of the study, which was published in 2009 but current through June 2008.

The study was titled Pass a Law, Any Law, Fast! State Legislative Responses to the Kelo Backlash.

The Texas Legislature responded during a special session in 2005 by passing Senate Bill 7, Chapter 2206 of the texas Government Code.

That law — the only one passed and signed after Kelo to date — states that a government or private entitity may not use eminent domain to take a person’s private property if the condemnation “confers a private benefit on a particular private party through the use of property” or is “for a public use that is merely a pretext to confer a private benefit on a private party” or “is for economic development purposes, unless the economic development is a secondary purpose resulting from municipal community development or municipal urban renewal activities to eliminate an existing affirmative harm on society from slum or blighted areas.”

The Legislature approved of transportation projects, drainage projects, public buildings, parks, hospitals and “a sports and community venue project approved by voters,” among other exceptions.

“They said they are going to stop condemnation for economic development,” Soard said. “When you read the list of exceptions, it’s longer than the statute itself.”

An Economic Imperative
It’s difficult to outlaw eminent domain for economic development purposes because in the end, almost every project is the result of economic development or is tied to economic development.

“One of the earliest cases in texas, though, and I always like to think about this, is a 1863 case out of Harris County. It is the Buffalo Bayou Railroad Company vs. Ferris, and in that case, they took the land from Mr. Ferris and they gave it to the railroad company. And Mr. Ferris said, ‘wait a minute guys, they are taking my ranch away from me and giving it to a railroad that is going to make a whole bunch of money off of that.’ But the Supreme Court of texas said, that’s okay, because the government and the people of texas have an interest in travel, they have an interest in communications, and it is okay to take property from one person, one citizen, and give it to another citizen,” Soard said. “If you think about it, just like that railroad case, at some point, all of these projects are some result of economic development. There is economic pressure to do these things. Someone in the office reminded me, why do you think we have Farm to Market roads?”

But some private property rights advocates believe Senate Bill 7 was not strong enough and left too many loopholes, and the Legislature is trying to appease those advocates and homeowners. In 2007 and again in 2009, the Legislature came as close as close comes to passing a bill that would make it more difficult for government entities to take private property for public use, as well as other proposed changes to the way Texas practices eminent domain.

Instead, they passed House Joint Resolution 14, which, subject to voter approval, would amend the constitution by more narrowly defining who can benefit from an eminent domain undertaking. Eminent domain is for “the ownership, use, and enjoyment of the property” by the State, a political subdivision of the State, the public at large or an entity granted the power of eminent domain under law. It also states that “public use does not include the taking of a property ... for transfer to a private entity for the primary purpose of economic development or enhancement of tax revenue.”

The measure will be on the N ov. 3 ballot as Proposition 11. That proposition is expected to pass, and several legislators have promised that if and when it does, they will retackle issues leftover from the failed eminent domain bills.

In effect, Prop. 11 seeks to limit the ability to sell condemned land to a third party, though the final product takes the benefits of eminent domain into greater consideration than the original version of the bill.

“The wording on that (constitutional amendment) could cause us some concern,” Soard said, adding that he expects to see future case law revisiting the question of whether roads are really an economic development venture. The Legislature “wanted to take care of Jerry Jones, we wanted him to build his Dallas Cowboys stadium. ... In the original version of Proposition 11, it said the state or political subdivision had to ‘possess’ the property. They took out the word possession when it was pointed out the state nor the city of Arlington would not be possessing the Dallas Cowboys stadium.”

All sports venues aside or included, eminent domain is a vital authority of government, and it’s a power many governments may like to use more often in the future as they make way for new population growth and changing demographics.

“Harris County is growing and growing, people are moving in, those people want roads, they want bridges, they want parks, they want hospitals, and at some point, in order to make those things happen, the government has to use its power of eminent domain,” Soard said, adding that other counties are beginning to see the need for eminent domain as well. “Some of you folks that are from counties that are considerably smaller than Harris County may be dealing with situations just like we deal with, where you’re just kind of running out of room, you just can’t put any more people in an area without making changes.”

“In Austin, the Legislature seems to only hear from the landowners, and only hear about the bad part of the condemnation or the eminent domain proceeding,” Soard said. “We are suggesting that the projects are talked up a little bit more. If we tell the folks that we are doing good things, we are benefiting the public, then maybe these things will go a little bit more our way.”

But several of the as-of-yet failed measures could have a significant impact on counties and other government entities that need land for public use. Failed measures include adding language that compensation for land taken via eminent domain be “just” (the current language states that compensation be “adequate”) and defining objective elements of a good faith negotiation.

Coming Down the Pipeline
The issue of compensation is particularly complicated. In the past, property rights advocates have attempted to gain compensation for what’s called “community damages,” such as noise, dust, construction and inconvenience, though those attempts failed because of the sheer amount of money it would cost government entities to pay.

Recently, they began focusing more on “impairment of access” compensation. In 2007, when the Legislature made its first attempt to close loopholes left from Senate Bill 7, it was this issue that resulted in Gov. Rick Perry vetoing the new bill, House Bill 2006. By law, homeowners are entitled to access their land, but only “material and substantial” impairments to access are compensable; generally if a property owner has any access to the property, he or she is not compensated for the losses. But an amendment to House Bill 2006 wanted to change that, and make any diminished access compensable.

“Any diminished access would mean that if you’ve got six entrances and exits to your parking lot, we take away one of them, you’re going to be paid for that loss of that one entrance and exit,” Soard said, adding that the amendment could have cost Harris County millions.

Relocation costs are another issue.

Soard said Harris County does not object to having to meet definitive, objective elements of a good faith negotiation, and he supported such an amendment to Senate Bill 18, which the Legislature attempted to pass during its most recent session.

“What we do not like is the concept of a subjective test for good faith where the jury just simply asks did the government negotiate in good faith. That means so many things to so many different people that we perceive that would be a dangerous thing and cause us to pay out a lot more money,” Soard said. “These are objective tests, we should be able to meet those.”