Property Rights

Property rights have received renewed attention in large part because of the Kelo v. City of New London case and the resulting public outcry. In that case, the United States Supreme Court held that the government could seize private property solely for economic development reasons.

In other words, if the government can find a better economic use for your house, it can seize it and transfer the property to a private developer.

This opinion has sent shockwaves throughout the country. If anything good came out of Kelo, it was putting eminent domain abuse and other property-rights violations (e.g., forced annexation) on policymakers' radar screens.

Eminent Domain: A Constitutional Amendment Is Necessary

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." After Kelo, the term "public use" basically has been deleted from the U.S. Constitution.

In response to Kelo, seven states already have passed constitutional amendments to protect against eminent domain abuse, including neighboring states Georgia and South Carolina (see chart below).

The North Carolina House passed an eminent domain constitutional amendment in 2007, but the amendment died in the Senate, as is usual with anything that protects property rights. There was bipartisan support for the amendment — the vote was 104-15.

This bipartisan support demonstrated the critical need for an amendment in North Carolina. The state constitution has the weakest property rights protections in the country.

It is the only state in the country that does not have an express constitutional provision that limits the taking of private property for a public use with just compensation.

Forced Annexation

In North Carolina, a city may force property owners living in unincorporated areas to become a part of the municipality. Under state law, these affected property owners have no say about the annexation — there is no vote or representative process.

Cities must be allowed to grow through annexation, but this type of forced annexation is undemocratic and an embarrassment to the state. Only a handful of states still have this type of forced annexation. Virtually every state in the country has abandoned this outdated practice.

Municipalities can do almost anything they want when it comes to forced annexation because the law allows them to. The major problem with forced annexation is not municipalities abusing the law, but the law allowing municipalities to abuse citizens.

A Sham of a Law: The Water and Sewer Example

One of the "best" examples of the abusive nature of the annexation law is how the provision of water and sewer service is handled. Many people think that water and sewer must be provided to property owners within two years after the effective date of the annexation.

The reality is that the two-year requirement only applies to when municipalities must construct major water and sewer lines, not the connecting lines that travel through neighborhoods and eventually hook up to properties.

If affected property owners do not know about an obscure detail to request water and sewer within five days after the public hearing, they may not be provided water and sewer for more than a decade. This is precisely what is happening to the thousands of people in Fayetteville who are likely to wait as long as 15 years for water and sewer service, if not longer.

Forced Annexation: Failing to Meet its Purpose

According to the North Carolina Supreme Court in Nolan v. Village of Marvin (2006), the primary purpose of involuntary annexation, as described in the annexation statute, is to provide meaningful and significant municipal services to fringe geographic areas.

This purpose has been lost. Municipalities provide services to areas that do not need services, in many instances duplicating services. They target affluent areas, by their own admission, because of the additional tax revenue. The opposite is true as well. Municipalities ignore communities that do need services. As research from the UNC Center for Civil Rights and the Cedar Grove Institute for Sustainable Communities shows, many minority communities that need services have been excluded from municipalities.

Recommendations

1. Pass a constitutional amendment that would, among other things:

• Expressly prohibit the seizure of private property for economic development and for all private uses (except as necessary for common carriers). A general prohibition on seizing property for economic development and private reasons, though, is not enough protection because the government always will come up with an alternative reason for taking property.

In fact, there genuinely may be multiple reasons for taking property. An amendment must recognize this problem and close end runs around the law. It must ensure that if there is some economic development reason for taking property, it is clearly incidental to a public use.

The most common pretext for taking property for economic development reasons is "blight." Blight or urban redevelopment laws have been abused for two primary reasons. The definition of "blight" often is subjective and excessively broad, and property in pristine condition can be seized so long as it is in a "blighted area."

North Carolina's legislature amended the state's urban redevelopment law a couple of years ago to address these critical problems — however, an amendment is needed to protect against this pervasive form of eminent domain abuse.

• Clearly define "blight" so that only properties that cause a clear health and safety risk can be seized.

• Define just compensation to ensure that individuals are made "whole."

• Require the government to have the burden of proof to demonstrate that (1) a taking is necessary and no reasonable alternatives exist, (2) a taking is legal, and (3) the compensation offered is just.

2. Reform the state's annexation law:

• Allow citizens in the affected area to have a vote or some form of meaningful representation (such as county approval) prior to the passage of an annexation ordinance.

• Codify the clear holding of the North Carolina Supreme Court case Nolan v. Village of Marvin (2006): Prohibit a municipality from being able to annex an area unless it provides meaningful and significant benefits to affected property owners.

• If an area already has major municipal services (such as water and sewer) and a municipality is unable to prove that the services are inadequate, then it should not be able to annex that area, except through voluntary annexation.

• Prohibit a municipality from annexing any contiguous area if another contiguous area is in more dire need of municipal services — this will help protect against the problem of minority communities being excluded from municipalities.