Forgive me Father, for I have sinned. It has been 693 days since my last blog post.
After co-authoring, on March 17, 2014, with Natalie Pregibon of the Concordia Summit, my last blog post, , Public Education and Job Readiness: What Can Be Done to Shrink the Skills Gap? I have been...preoccupied, to say the least. My various preoccupations have involved several research projects in my primary area of professional expertise: Real estate development and finance, including urban revitalization, redevelopment, and regeneration.
The undertaking that has consumed the lion's share of my time during this HuffPost blog stasis has been researching and writing a textbook on real estate law for Routledge, now scheduled to be published this summer, just in time for the Fall 2016 semester (he said wistfully). A specific area of my research and analysis for one of the chapters in the forthcoming textbook has afforded me a unique perspective on the recent, growing controversy sparked by GOP presidential candidate Ted Cruz leading up to the Iowa caucuses on February 1st: Eminent domain.
This issue was reiterated, with as much forcefulness as he could muster (you know, being "low energy"), by former Florida Governor Jeb Bush in the most-recent GOP presidential debate. Accordingly, the national visibility of eminent domain has now been raised, which may suggest that eminent domain may have staying power for the balance of the 2016 presidential election, particularly if Trump becomes the GOP's presidential nominee (with apologies, in advance, to those for whom this thought may cause night tremors).
The issue raised by Senator Cruz in Iowa alleged abuses of condemnation power by real estate development, casino, and resort mogul-turned-politician Donald Trump. In the fervor leading up to last week's Iowa caucuses, the issue of eminent domain was raised repeatedly by Cruz--and given his first place finish in Iowa, successfully so--as a cudgel with which to beat Trump over the head incessantly. When, as a result of Cruz's harangue, the topic made its way into the corporate-owned media, the extent to which the subject is almost completely misunderstood became clear. Even presumably well-informed and well-resourced media outlets appeared grossly under-educated on the subject. The Washington Post, for example, in a January 25th article, called eminent domain "an obscure legal issue," which it certainly is not, at least for real estate developers, local units of government (including redevelopment agencies of various stripes), elected officials, and community stakeholders ("How an obscure legal issue has found its way into the GOP race"). Among other things, eminent domain is the only aspect of real estate law that has its own clause in the U.S. Constitution; that hardly ranks as "obscure."
In essence, Cruz claims Trump is in favor of having local governments take people's personal residences so that developers, like Trump, can demolish them and use their land to build new projects, as well as building the developer's own wealth in the process. Cruz repeats, ad nauseum, an anecdote about Trump trying to take an elderly woman's home in order to build a casino in Atlantic City, New Jersey. As a very successful real estate developer--by his own admission--Trump most-assuredly is in favor of having access to such powers through public-private partnerships with local governments and redevelopment agencies. Trump's company may, in fact, have benefited from the taking of private homes to assemble sufficient land to undertake specific projects Trump has pursued.
It may be argued that public antipathy about and outrage over the legal ability of local governments to take owner-occupied, privately owned homes, to devote to revitalization projects undertaken by for-profit, private-sector developers, served as the genesis of what emerged as the Tea Party after the election of President Obama in 2008. Consequently, this line of attack on Trump makes for bloody red meat that Cruz has been more than happy to serve up to his Tea Party and Libertarian supporters. Its effectiveness is perhaps best-evidenced by Cruz's ultimate victory over Trump in the outcome of the Iowa caucuses.
Jeb Bush's entering the fray, however, during the most-recent GOP presidential candidates' debate on February 6th, is curious and, perhaps, a risky tactical error. As the poster-boy for mainstream GOP politics, this issue may be much more problematic for the former Florida governor. If Trump's campaign is taking seriously various criticisms of its ultimately losing effort in Iowa last week, such as lacking a viable ground-game, Trump's opposition research team should be busy ferreting-out and documenting the number of times private homes were condemned and taken in Florida between 1999 and 2007, synchronized with the number of times then-Governor Bush either remained silent or, worse still, praised those revitalization and economic development projects facilitated through exercises of the 5th Amendment's takings clause to condemn owner-occupied, private homes.
The current status of eminent domain law in the United States, however, doesn't square with Cruz's, and now Bush's, fear-mongering over the issue. In essence, Cruz and Bush are trying to make Trump the boogeyman here. And while there may indeed be plenty of grounds for pinning that moniker on Trump, eminent domain does not appear to be one of them. The fear of eminent domain run amok might have provided a legitimate threat to private property interests, a public concern about which real estate developer Trump might have been legitimately vulnerable, but for the fact there was such an almost-immediate and near-universal rejection, throughout the country, of the U.S. Supreme Court's ruling in its 2005 landmark, eminent domain case, Kelo v. City of New London, Connecticut.
Without getting too deep into the weeds on the law of eminent domain, the "takings clause" under the Fifth Amendment to the Constitution provides that:
"no person shall be...deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." [Emphasis added.]
In a 1954 Supreme Court case challenging a comprehensive redevelopment plan for the southwest quadrant of the District of Columbia, Berman v. Parker, the Supreme Court broadened the Court's interpretation of what constitutes a valid "public use" under the takings clause. In its ruling, the Court made clear its reluctance to second-guess legislative bodies and local governments in their determination of what constitutes a public use. More than 60 years later, in its Kelo decision, the Court went beyond its ruling in Berman v. Parker, changing the "public use" test under the takings clause to a much broader and more-flexible "public purpose" test. From the forthcoming textbook:
In the case of purely public projects, ones where the project will be created, owned, and operated by a governmental entity--such as is the case with a public road or highway, a railroad right-of-way, a water treatment facility, or the installation of power lines for the local public electric utility--the "public use" portion of the Fifth Amendment is easily met, and the only issue to be resolved is what constitutes "just compensation."
It was not, however, until after the Urban Renewal movement in the United States in the early 1960's,..., that local jurisdictions started to get creative in partnering with private-sector companies to secure private land in the path of Urban Renewal that would be redeveloped for new, privately owned real estate development projects intended to revitalize their surrounding communities.
Although the Kelo decision remains the "law of the land" as far as Supreme Court precedent goes, it has very limited impact today because of the extremely negative reactions the Court's ruling engendered in its aftermath throughout the U.S. In response to the Kelo decision, the vast majority of states greatly curtailed what they would allow themselves, and the local governments within their borders, to do in the name of the 5th Amendment's takings clause. Again, from the textbook:
While it is fair to say that the Supreme Court's ruling in the Kelo case granted states and their municipal governments even broader powers of condemnation authority to effect the removal of blighting conditions and/or improve economic conditions, more than ten years later the holding has been largely overshadowed by how the vast majority of states responded to it. Concerned about the adverse impact the precedent of Kelo would have on private rights in real property, and lobbied heavily by property rights activists who had been following the Kelo case vigilantly, states began to adopt stricter laws pertaining to their own use of eminent domain. The expansions of the takings clause effected primarily due to the Supreme Court's holdings in Berman v. Parker and Midkiff, respectively, were very quickly being clawed back following the holding in Kelo, primarily due to the "unprecedented backlash in public opinion, citizen activism, legislative changes, state court decisions, and lessons learned from the New London case."
Five years following the Kelo ruling, 44 development projects involving the condemnation of privately owned land and private parties participating in the "re-purposing" of that land were rejected by citizen activists, 43 states enacted stronger laws to protect private land owners against "eminent domain abuse," and nine state high courts limited the use of eminent domain for private development. This strong, decisive, and almost-immediate reaction against the Kelo ruling is contrary to the aftermath of the Berman ruling where " no doubt emboldened in part by the expansive understanding of 'public use,'...cities 'rushed to draw plans' for downtown development," displacing families at a startling pace. [Footnotes in the original text omitted.]
With 43 out of 50 states having, since the 2005 ruling, significantly curtailed the ability of their local jurisdictions to exercise eminent domain except for purely public projects, like roads and highways, making Conservative and Libertarian voters fearful of the rampant excesses of the exercise of condemnation powers to benefit private interests, in 2016, is almost entirely a red herring. Other than in the few jurisdictions--such as New York and Washington, D.C.--that did not substantially curtail the exercise of eminent domain following the 2005 Kelo decision, that of which Cruz and Bush now accuse Trump, that a private developer's profit-taking interests may serve as the proximate cause for the condemnation and razing of a private citizen's owner-occupied home, cannot take place as a matter of law.
In addition to his other endeavors, Peter Smirniotopoulos is Adjunct Professor of Real Estate at The George Washington University School of Business and the George Mason University School of Business, respectively. The views expressed in this blog post are his own and do not express the views or opinions of the institutions at which he teaches. Excerpted passages, above, have been taken from the author's forthcoming Routledge textbook, Real Estate Law: Fundamentals for The Development Process (Summer 2016), which are copyrighted by the author, as are the contents of this blog post.