Saturday, June 25, 2005

"Grand redevelopment schemes, cooked up by government officials, often lack a sound economic basis and carry the potential of becoming boondoggles."

Stealing home

Decision to let government take private property fordevelopment risks abuse of eminent domain .


Staff Editorial
Houston Chronicle Copyright 2005

It seems a bizarre anomaly. The government in China or Russia might take private property to hand over to wealthy developers to build shopping malls and office plazas, but it wouldn't happen in the United States. Yet, that is the practice the U.S. Supreme Court narrowly approved this week. Local governments, the court ruled, may seize private homes and businesses so that other private entities can develop the land into enterprises that generate higher taxes.

The Supreme Court found, 5-4, that local elected officials are not barred by the Constitution from condemning whole neighborhoods and small businesses if, in their view, doing so would lead to redevelopment that increases tax collections.

A majority on the court was convinced that the possibility of improving the tax base for the benefit of the wider community satisfies the Fifth Amendment's requirement that private property can be taken by eminent domain only for a public purpose.

Justice Sandra Day O'Connor, who dissented, pinpointed the problem with the majority's argument. It cedes "disproportionate influence and power" to a community's most powerful and well-connected residents.

Public parks, schools and right of way for thoroughfares traditionally have provided the sort of public purpose to justify government's use of eminent domain . Grand redevelopment schemes, especially when they are cooked up by government officials, often lack a sound economic basis and carry the potential of becoming boondoggles that hurt taxpayers.

Justice John Paul Stevens wrote for the majority that local officials are qualified judges of whether an economic development project will benefit the community. In this case, city officials in New London, Conn., plan to tear down private homes to make way for a riverfront hotel, offices and a fitness club.

"The city has carefully formulated an economic development that it believes will provide appreciable benefits to the community, including - but by no means limited to - new jobs and increased tax revenue," Stevens wrote.

But is that universally true? Municipal and county governing bodies frequently miscalculate or wildly overestimate the benefits of tax abatements and other incentives.

Besides that, individual taxpayers don't necessarily benefit from increased government revenues.

Sometimes the increased revenue proves insufficient to cover the cost of providing services to new development. Sometimes increased revenues are wasted on things other than essential services.

Now that the high court has cleared the way for elected officeholders to trump private property rights, abuse of eminent domain becomes more likely, particularly in neighborhoods populated by the least influential citizens. In Texas, lawmakers would do well to pass restrictions on this distasteful form of eminent domain.

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