John Locke Foundation resident Legal and Regulatory Analyst Daren Bakst drops in to answer some questions about what the General Assembly is doing to strengthen property rights against Kelo-type takings by government. Short answer, not much.
It sounds like one of the few changes being contemplated is a repeal of the kind of local economic development takings provision the city of Charlotte was granted in 2000. Is that correct?
A: Yes, while the House Select Committee on Eminent Domain Powers recommended a draft bill that would do very little, it would repeal all local acts that specifically allow for economic development takings.
When BB&T announced it would no longer lend on projects involving such takings it was widely reported that this was a moot point North Carolina because these takings never happen. As it turns out, a bank’s policy in this regard still very much matters because lawmakers have yet to address and clarify the issue, right?
A: First, if North Carolina wasn’t taken into consideration, BB&T’s policy matters because it affects their lending practices in all of the states where they do business. According to their Web site, they are currently doing business in 11 states and Washington, DC.
Most importantly though, their policy isn’t a moot point when it comes to North Carolina. While a draft bill came out of the committee addressing local acts, it hasn’t passed yet. The bill also would repeal a buried provision that allowed economic development takings in conjunction with revenue bonds—this is a provision that was not known about, even by the legislative research staff, until just recently. What other buried provisions in the law expressly allow for economic development takings that we don’t even know about?
There is an assumption that we only have to worry about economic development takings if a statute expressly permits these takings. The problem is law isn’t that simple. States across the country have been using their blight statutes as a pretext for economic development takings.
North Carolina’s blight statute or urban redevelopment law is an example of a law that doesn’t expressly say the government can take property for economic development, but for all practical purposes accomplishes the same thing. For example, there is a provision that says property, with some conditions, can be taken if it causes economic harm. How is this different from an economic development taking? The law even allows the government to take property if it might become blighted or cause economic harm in the future. Whether BB&T’s policy would cover eminent domain abuse caused by the state’s urban redevelopment law is unclear, but given their stance so far, it seems that it would.
When BB&T announced their new policy, it was at a time when North Carolina did (and still does) expressly allow for economic development takings. For this, they should be commended. Their actions, no matter how much anyone wants to diminish them, have made a strong statement. They took a principled position to protect property rights. Let’s hope that legislators and other businesses show the same commitment to North Carolinians.
