Minimizing The Effects Of The Kelo Decision

While many local governments have been utilizing the eminent domain powers granted to them by the Kelo case, the American Planning Association hasn't been successful in finding ways to limit the decision's negative effects. But as Richard May, FAICP explains, there are many ways to reduce any damage done.
Photo: Richard May

Continuing attempts by American Planning Association leadership and its chapters to minimize the adverse impacts of the Supreme Court's decision in the Kelo case, and to provide a coordinated approach to damage control seem to be failing, as reported in the variety of state legislative actions described in the March issue of Planning by Paul Shigley. Those who wrote and presented APA's amicus curae to the Court did not seem to realize the potential volatility of the takings issue, nor did they foresee the opportunities that would be created for the ever-present property rights crowd. Instead of providing guidance and knowledge based on our nationwide professional experience they misled the Court in not citing the hazards involved in this case.

The APA seems also to be having difficulties in its subsequent damage control efforts to minimize the catastrophic effect on nationwide legitimate urban development and redevelopment programs. Most devastating is the compounding of the damage by creating new opportunities to the opposition for proposing and passing far-reaching "regulatory takings" legislation. This legislation would emasculate the long-standing legitimate power of zoning as an effective planning and development control.

There are numerous provisions that could be added to state urban redevelopment statutes to preserve the rights of property owners subject to eminent domain. For example, states could limit any taking by eminent domain until at least 50% of all properties and the total project area have been acquired by negotiation.

An interesting professional approach to the basic aspects of the takings issue is provided by the Lincoln Institute of Land Policy in an article by Amnon Lehavi and Amir N. Licht in the January issue of Land Lines titled "Squaring the Eminent Domain Circle - A New Approach to Land Assembly Problems". They point out that "post-Kelo reality may not necessarily be heading in one direction". The article suggests a unique approach to the takings issue by pointing out that the government and private project developers "enjoy the entire increment in the assembled land value (a windfall gain!) since compensation to the previous landowners is based on the pre-project fair-market value".

To correct this inequity the Lincoln Institute researchers propose "a novel solution which would turn the (prior) landowners into pro rata shareholder in a development corporation that would acquire unified ownership of the land and the development project." To accomplish this, the authors propose that "a public authority exercising its eminent domain powers [create] a special purpose development corporation for that project. Land owners whose land was condemned would have the choice of two forms of compensation: 1. compensation based on fair value; or 2. shares in the development corporation in proportion to the landowner's contribution."

The authors of the Land Lines article cite recent developments in British planning law as one source of their proposal. They point out that "in contrast to the United States (although some American skeptics would argue otherwise, the English Crown holds all landed property development rights and in theory, private land owners have no development rights in their property until these are explicitly granted by a governmental agency. This gives local governments in England substantial latitude both in deciding whether to grant planning permission, and in negotiating with the developer over its planning obligations."

This is of particular interest to me as I recall that when I was student at the London School of Economics in 1951 I became familiar with the provisions of the 1947 Planning Act under which the future development rights to all private property in Britain were purchased by the government with a global fund of 300 million pounds. Unfortunately, due to the difficulty in apportioning this fund to the millions of claimants and the later opposition of Conservative MP Maggie Thatcher, this Act was rescinded. Now the government claims that it always owned these future development rights! Wow! What an impact that would have on the US property-rights crowd who now claim payment for any potential future value taken from them by zoning enactments. Some chutzpah!

Note: This piece is an expanded version of a letter that was published in the April 2007 issue of Planning.

Richard May, FAICP, has worked with the U.N. and the World Bank, managed two of his own firms, and served as president of the New York APA chapter and as chair of the International Division.

Comments

Comments

RE: Minimizing the Effects of the Kelo Decision by Richard May,

That's a serious allegation, and a bit puzzling too! Mr. May says APA "misled the Court in not citing the hazards involved in (the Kelo) case." As the staff liaison to the APA Amicus Curiae Committee, I'm curious about the "hazards" Mr. May wishes we had raised.

APA has filed many amicus briefs over the years (see http://www.planning.org/amicusbriefs/) on many different issues of importance to planners and the planning profession. Never, not once, has APA misled or misrepresented the legal or factual issues to the Court. There's certainly room for disagreement about the position APA asserts as an amicus curiae, but there's no room for such unfounded allegations.

APA's Kelo brief was crystal clear -- we asked the Supreme Court to affirm long-standing precedent rather than create a new rule. Justice Stevens, writing for the majority, agreed. APA explained the importance of integrating eminent domain into "land use planning that includes broad public participation and a careful consideration of alternatives to eminent domain." Justice Stevens acknowledged the importance of planning when he referred to "planning," "plans" and "planners" more than thirty times in his opinion.

Mr. May cites with approval the new approach that researchers from Lincoln Institute advocate where landowners might become pro rata shareholders in the new development and reap some of the increased value. This is a great idea! APA suggested as much in its amicus brief when it maintained that "adjusting compensation awards to provide more complete indemnification [over and above fair market value] would be a far more effective reform of the existing system of eminent domain than increasing federal judicial review of public use determinations." The brief noted that eminent domain should be a "second-best alternative to market exchange."

APA was very fortunate to have Professor Tom Merrill (Columbia Law School) and John Echeverria (Georgetown Environmental Law and Policy Institute) who are both recognized experts in takings and condemnation law. They wrote a superb amicus brief! Planners were well-served.

Lora A. Lucero, AICP, Esq.

KELO DEMANDS SOCIAL JUSTICE AND EQUITYPLANNING

I am intrigued by the plethora of soultions to Kelo as advanced by Mr. May and the PLANING journal article among others.

The overaching point that seems to get lost within the argument is that it is wonderful to talk about equity for homeowners, building owners and those with a standing financial interest in an areas that may be touched by takings, post-Kelo under various state legislative intitiatives.

The group that gets lost in the search for creative solutions are the renters that compose a signficant number of residents in blighted neighborhoods, particulary urban neighborhoods.

I would propose that legislation call for land banking for future projects for renters or for an equity fund that provide renters the ability to find suitable and similar housing.

An even better solution is for developers and municipalities to develop low interest loans for home purchase(the sub prime market problems notwithstanding). If we are indeed to find equitable solutions for Kelo we need to look beyond property rights to issues of economic justice.

Equity planning as espoused by Cornell professor Pierre Clavel most certainly should be part of the post-Kelo mix. I say this as one who is an economic development
and urban redevelopment professional.

I have learned that the most vibrant and intersting communites are those who have a mix of people including renters. Richard Florida has been advancing THE CREATIVE CLASS for years now--I can assure you that many of those CREATIVE CLASS members are renters.

So, creative ideas are advanced by Mr. May and others indeed, however social justice and equity planning need to be part of the mix.

Chuck D'Aprix [Charles D'Aprix]
Economic Development Visions
The Downtown Entrepreneurship Project
downtownproject.com
economicvisions.com
DAPRIXBLOG.com

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