Eminent domain

Eminent domain is the government's power to seize private property. The Fifth Amendment of the United States Constitution states "Nor shall private property be taken for public use, without just compensation." In other words, the government may seize private property for a "public use" if just compensation is provided.

For nearly a century, however, the United States Supreme Court has effectively deleted the phrase "public use" from the Fifth Amendment by allowing the taking of property for "public benefits" or "public purposes." These broad terms give the government power to take property for almost any reason. The demise of property rights was evidenced in the case of Kelo v. City of New London (2005).

The Supreme Court held in Kelo that the government can take private property from one citizen and transfer it to another so long as it is for economic development. In other words, if the government thinks it could generate more tax revenue by seizing someone's house and giving the property to a developer to build a shopping mall, it can legally do so.

Key Points

  • Eight states have passed constitutional amendments in response to the Kelo decision and other eminent domain abuses. Two of those states are North Carolina's neighbors Georgia and South Carolina.
  • North Carolina has the weakest constitutional property rights protection in the country. The state constitution is the only one in the nation that does not have a "takings" clause — a provision that says property may only be taken for a public use.
  • It would not be enough, however, merely to prohibit "economic development" takings. The government rarely admits when it is taking property for economic development. Instead, the government prefers to use a different justification, usually blight or urban development, for taking property for economic development. The most common eminent domain abuse connected to economic development is the seizure of private property through blight laws.
  • By defining "blight" in very broad terms, the government can take property for whatever reason it wants.
  • A recent Institute for Justice study states: "Under that act [Federal Housing Act of 1949], which was in force between 1949 and 1973, cities were authorized to use the power of eminent domain to clear 'blighted neighborhoods' for 'higher uses.' In 24 years, 2,532 projects were carried out in 992 cities that displaced 1 million people, two-thirds of them African American."
  • Just compensation only covers "fair market value" without regard for relocation costs, loss of business goodwill, and other factors that financially harm property owners.

Recommendations

  1. Amend the North Carolina Constitution to protect property owners from eminent domain abuse. A fundamental right such as property rights should not be protected through statutory changes. That would be akin to protecting free speech through a state statute.
  2. Prohibit economic development takings. There needs to be a clear prohibition against the taking of property for economic development. Unless such a change is made, all property owners will be at risk of losing their homes, businesses, and places of worship to politically connected developers who "promise" to bring in money to the community.
  3. Properly define blight and seize properties only if the properties themselves are blighted. Under this reform, the property to be seized must present a concrete threat to the health and safety of the public.
  4. Impose the burden of proof on the government. Courts improperly defer to the government over whether something is a "public use" or a property is blighted. This deferment makes it virtually impossible for a property owner to challenge eminent domain abuses. The government should have the burden to prove that a taking is for a public use, that a property is really blighted, and that compensation is just.
  5. Include relocation costs, attorneys' fees, and loss of business goodwill in just compensation. Just compensation should make property owners whole. When the government seizes a home, it currently has to pay the property owner fair market value only, causing the owner to suffer significant financial loss.


Analyst: Daren Bakst, J.D., LL.M.
Director of Legal and Regulatory Studies
919-828-3876 • dbakst@johnlocke.org
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