Wednesday, October 18, 2006

Follow the Money

Before the notorious Kelo case, most Americans would be shocked to find that local governments could take private property from one citizen and give it to another citizen. Most of us understood the eminent domain law to apply to cases where schools or roads needed to be built in a particular area. But in the case of Kelo v. City of New London, Connecticut, the city took privately owned homes in order to transfer the property to Pfizer Corp. (a group of citizen shareholders) for a new research facility. The city’s redevelopment plan was intended to improve the faltering population and tax base.

On June 23, 2005, the Supreme Court found for the City of New London. Voting in favor were liberal Justices Stevens, Souter, Ginsburg and Breyer joined by moderate Anthony Kennedy. In opposition were conservatives Rehnquist, Scalia, and Thomas and moderate Sandra Day O'Connor.

Justice O'Connor suggested that the use of this power to take from the poor and give to the rich would become the norm, not the exception: "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms."

This clearly unconstitutional decision was seen by the American public as a gross violation of property rights. Polls show opposition in the range 65% to 97%. In the aftermath there have been a host of state laws and initiatives to specifically prohibit the use of eminent domain for economic development, thus joining the eight states (Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington) that already have such laws. California Prop. 90 is the Golden State's initiative.

I’ve heard it said that eminent domain abuse does not occur in California, that we currently have laws to protect against this kind of an alleged abuse. I respectfully suggest that is naive to believe that government does not abuse its power. A recent case:

On May 23, 2006, the city council of Hercules, California voted unanimously to use the right of eminent domain to seize 17 acres owned by Walmart corporation. In a variation on the Kelo theme, the council applied the force of the Kelo decision to prevent Walmart from depressing the city economy by driving small shops out of business.

An article “Highway Robbery” in The Orange County Register (10/18/06) describes the litany of eminent domain abuses by Caltrans that has repeatedly displaced property owners for highway projects that went nowhere.

It’s hard to understand why a measure to protect personal property rights would have such vociferous opposition. The primary opponents of Prop. 90 include groups that pushed hardest to get the $37 billion public works bond package on the ballot: the California Chamber of Commerce, the California Business Roundtable and the League of California Cities. The article in The LA Times today (“Initiative Could Undermine State Bond Issues”) lays out the case that “restricted use of eminent domain would hinder construction under Props. 1A to 1E.”

So if you don’t care much about personal property rights and if you are a big supporter of the Prop. 1 spending, a bad way to fund needed infrastructure, then vote NO on Prop 90.

I’m voting against Prop. 1 and for Prop. 90.


Anonymous Anonymous said...

Hey Dad,

Your favorite son John here. Coindidentally, my conservative buddy Sharon and I went to an event last night hosted by the Lead21 group honoring Sandra Day O'Connor. She was presented with the Lead21 Lifetime Achievement Award for 2006. (You can check out Lead21 here: )

Justice O'Connor was introduced at the event by former Secretary of State George Shultz. The MC mentioned that George Shultz started his career as an Economics professor and then department chair at MIT, then he worked with the presidential administrations of Eisenhower, Nixon, Ford, and Reagan, and he has been active in local and national politics since then.

In introducing Justice O'Connor, Secretary Shultz mentioned that Justice O'Connor has received many awards in her life, including most impressively, in 2002 she was inducted into the Cowgirl Hall of Fame! Apparently she grew up on a ranch in Arizona and she still considers herself a cowgirl. Ha!

Sandra Day O'Connor talked about how our (relatively) young Lead21 members could be a bridge in politics today, working with people of all political stripes to address universal issues. Now that she has some more free time, she asked us for help with a project that is important to her. This project is to get all schools, public and private, to require that students study civics again. She said that good citizens are made, not born. She is appalled that most young people have no understanding of how our country was formed, and how the government is run. They don't even know that there are three independent branches of government.

After the talk, Justice O'Connor took some questions. She reminded me of Judge Judy, except a lot more intimidating. One person asked about the apparent erosion of property rights in America. Justice O'Connor cut him off, and asked if he was referring to the Kelo case. Not waiting for an answer, she described exactly what the case was about, and how she came to the conclusion to dissent from the majority.

It was fascinating to hear how a Supreme Court judge thinks through a case, but the topic brought up another important issue for her. She mentioned that, while she thinks the Kelo Case was wrongly decided, that does not justify some of the reactive ballot propositions she sees in this election cycle. She specifically mentioned a "Jail for Judges" prop in North Dakota that she thinks infringes on the independence of the judiciary. While some people disagree, Justice O'Connor feels that the judicial system includes many safeguards and the fear of "activist judges" is overblown.

After hearing a lot of buzz about "activist judges", it was very interesting to hear another perspective.

5:03 PM  
Anonymous Anonymous said...

There is too much "law making" done by the judges in this land. That's not what they're supposed to be doing...we know that and still it goes on. I'm not sure, but perhaps it's because those who lose their property against their will don't live in the prime spots of America. Can you see the gov't trying that eminent domain thing in Palos Verdes?? Hmmm...


9:34 PM  
Blogger Mahndisa S. Rigmaiden said...

10 19 06

Hey Bill I was thinking of you when I did my post check it out. I cited a coupla new articles that you may find interesting! Have a great weekend:)

12:19 PM  
Blogger L. Riofrio said...

Hi Bill. Phil Plait the Bad Astronomer has posted Katie Couric is a Bonehead for her ridiculous criticism of NASA. Check it out. Does anyone like this woman?

1:01 PM  
Anonymous Anonymous said...


Have you read this carefully? Our interpretation of Prop. 90 is that it goes way beyond eminent domain. Say for instance, a city or jurisdiction has laws pertaining to low density housing (like RPV - which is why this city was formed). Say a developer (i.e., Trump at Ocean Trails) owns 14 acres in that area and wants to build 45 homes. Say the jurisdiction has low density ordinances that says that development can only be in 1 acre parcels therefore only 14 homes can be build on that 14 acre property.

The contractor can then invoke eminent domain and say that the jurisdiction has unlawfully taken 31 homes away from him and the city/jurisdiction (i.e., residents) now has to pay the contractor for those 31 unbuilt homes because it was a "taking." This is a boon ordinance for contractors and developers as written.

We agree that the law as interpreted by the Supreme Court is wrong - it's not right to take from one private party to give to another for any reason. But this proposition "as written" does not right that wrong. It will take away from all cities in California the right to limit the amount of development.

This is a sneaky proposition - it appeals to one's anger with the Supreme Court's decision yet is insidious in the way it is written. Any developer is salivating that this will pass -- thing about it. Being paid to build nothing!

Betty & Ken

3:25 PM  
Blogger Bill Lama said...

Betty and Ken,
I believe that Prop 90 would not allow what you suggest. If a city has zoning laws then they are in force. For example, if Trump bought his property when the zoning was say 1/2 acre, he would be allowed to build 28 homes on the 14 acres. If the city then changed the zoning to 1 acre, it would have to reimburse Trump for the loss. That's not only fair, it protects us all.

What's more, I think your concern is on the wrong side. You say that Prop 90 will take away from all cities in California the right to limit development.

Most cities in Calif. have no interest in limiting development. RPV is an exception. Most cities and government agencies act like New London, Connecticut -- all for development if it increases the tax base and/or allows them to spend money.

And Prop 1 is a golden boondoggle allowing them to spend money like a drunken sailor. If Prop 90 slows them down, then I'm all for it.

It is a bigger issue than RPV. It's the financial health of the state I'm concerned about.


3:28 PM  
Anonymous Anonymous said...

Bill, while I appreciate your concerns, I respectfully disagree on both of your conclusions.

If you think that our City of Rolling Hills Estates will irresponsibly spend $400,000 additional dollars that we will get for our infrastructure then feel free to vote against proposition 1. If the proposition does not pass we will come to you for the dollars that we may need to make your streets safe. The infrastructure package is not perfect, but it is much needed money for local governments throughout the state.

The State found a way to literally steal your money in the past with impunity. Under this governor we have made great progress and working together we passed proposition 1A and now hopefully the infrastructure package under proposition 1 (A, B etc.)

As to the so called eminent domain proposition, I implore you to look at it very carefully. If it were the solidification of the existing California law which by the way is clearly better than the Connecticut law, I would be right along with you. I care about individual property rights as they are protected under both Federal and State constitutions, which I swore publicly to uphold. I am with you and the 65 to 97% of Americans on this issue. Unfortunately, Proposition 90 throws the baby with the bath water.

First, the impact of any eminent domain law to individuals who live on the Palos Verdes Peninsula is slim and none. As far as I know none of the Cities on the Hill chose to establish a Redevelopment Agency with powers outlined in your examples. While each jurisdiction has basic eminent domain powers for public uses only the examples you gave cannot occur in PV (at least for sure not in RHE).

Second, I am confident that if this measure is defeated that the Legislature will come up with a more sensible law to deal with “grandma’s house”. All of us agree that “she” should be protected from giving up her house. However, the provisions of this law have far reaching effects that have nothing to do with eminent domain. This law is modeled after a law in Oregon that Oregonians were persuaded to vote for namely Measure 37. After 2000 claims in the total sum of $4 billion dollars, their land use at a very local level is at a halt. For our city or school district based on our property values on the hill the results may be devastating. Any land use decision we make at a very local level will become under scrutiny and never mind the scrutiny every land use decision we make locally will create a claim. You can bet that any half intelligent lawyer will be able to argue that our decision negatively impacts his or her client’s property value triggering a claim. I call proposition 90 the permanent land use lawyer’s employment act! I think we all agree that this effect has nothing to do with eminent domain. The most outlandish claim occurred in Oregon when a developer who owned a piece of land in Oregon’s Newberry National Volcanic Monument, a dormant volcano protected with open space and land conservancy laws. Under Measure 37, the owner filed a claim to build a mine and power plant inside the monument and on his land or demanded $203 million dollars in compensation because he argued the zoning laws protecting the monument and land conservancy devalued his property and restricted his development capabilities. When one of our cities on the hill makes a land use decision to protect the PV land Conservancy, we will come to you when a claim is filed. Bottom line maybe Right Problem, but definitely the Wrong Solution!

Finally, I hope that you exclude your humble local public officials from the category of officials who “abuse” laws.

My best regards to all of you!


3:31 PM  
Blogger Bill Lama said...

Thank you for your response. Please be assured that I have no fear of Rolling Hills Estates or any other city council on the Peninsula. (I live in RPV). Furthermore, I have every confidence that RHE will spend its $400,000 responsibly as will the other cities. And when RPV makes a land use decision to protect the PV Land Conservancy, I expect that it will also fully protect the rights of the existing land owners. This isn't Russia.

In favoring Prop 90, I am thinking of all the other areas of the state where abuses have occurred. While I understand your concern about lawsuit abuse, I think that fairness ought to trump (slip of the tongue) our concerns. Property rights are at the core of the Constitution and should be jealously protected. I've got to think that California will do it more intelligently than Oregon.

As for Prop 1, your argument that the State found a way to literally steal your money in the past with impunity does not inspire confidence. With a State budget of something like $130 Billion, and a terrible bond rating, they are now trying to pay for infrastructure with more bonds that will only increase taxes for years to come. Bill Simon says that the total infrastructure bill is more like $350 Billion in 2006 dollars, so the $37 Billion is just a drop in the bucket. When our bond rating falls below Tanzania's it will be difficult to get Wall Street to come up with the next $37 Billion.

Simon says that the solution is public-private partnerships like NY and Texas use to fund their tollways, etc. (That should be right up your alley.)

The bottom line, for me, is that I do not want to enable the State to be even more fiscally irresponsible. If we don't force elected officials to make choices they will spend all they can get from us.


3:32 PM  
Anonymous Anonymous said...

Hi Bill-

I used to litigate a lot of eminent domain cases, largely "inverse condemnation" cases in which private parties claimed the government had damaged their property for government purposes without paying compensation. People sued for many reasons; notably because airport noise was a problem or because light rail projects had consequences for adjacent businesses whose property was not taken but was adversely affected.

Although I agree with the main purpose of Prop 90, here's why I have to vote against it: it contains a little discussed provision which essentially says that cities can't change zoning ordinances without compensating everyone whose property becomes less valuable. I think that provision will eviscerate the ability of cities to conduct reasonable long range developmental planning because they won't be able to afford to restrict development (at a minimum, they won't want to pay the lawyers to litigate).

All municipal planning has to evolve. Some areas may be too restricted in terms of what can be built; other areas need to be more restricted. The flexibility that cities need will go out the window. I think the authors of the proposition just went out of control to protect big developers.

I don't have the proposition in front of me, but if you want to know more details, let me know.


3:33 PM  
Anonymous Anonymous said...

Greetings. Without getting into a large legal dissertation on the topic, in California in order for a Redevelopment Agency to force the sale of private property via eminent domain there has to be a finding that the area is "blighted," and this isn't a pro forma conclusion of the Agency; there has to be a detailed legal analysis and findings as set forth in the California Health and Safety Code. I honestly don't think that the abhorent abuses that occcur elsewhere (i.e. Connecticut) can occur here. They shouldn't occur anywhere in America.


3:34 PM  
Anonymous Anonymous said...

Thanks Bill,
I do know that you support our local governments on the Hill. Unfortunately, if very valuable and intelligent voters like you throw in the towel to punish the state bureaucracy, you will be punishing us here on the Peninsula as we will not be receiving our $400,000 nor will we be able to protect the land conservancy with appropriate land use decisions. I also did not mean to imply that the “stealing with impunity” continues today. Quite the contrary is true. I worked very hard with this Governor to stop the stealing and WE HAVE with proposition 1A. We now are even closing some of the loop holes in proposition 42 relating to transportation funding. I also say re-elect this Governor as he will in four more years bring back our bond rating and financial crisis created by the Davis administration. Bottom line I do understand your frustration with State government, but do not punish us for it! Cheers!


3:36 PM  

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