Recent action by Utah lawmakers to limit cities' use of eminent domain in general will likely mitigate Thursday's decision by the U.S. Supreme Court ruling that cities may use it specifically for economic development.
Some government officials and legal experts here called the 5-4 decision a huge blow to the U.S. property rights ideal; others said as a practical matter, the ruling won't mean much.
"Fair compensation" is still required for the seized property under the Fifth Amendment, which permits eminent domain to be imposed as long as it's for "public use." A majority of the court on Thursday concluded that public use was properly defined more broadly as "public purpose" and expanded it to include economic development.
Dissenting Justice Sandra Day O'Connor said the ruling expanded the power of "those citizens with disproportionate influence and power in the political process, including large corporations and development firms. Any property may now be taken for the benefit of another private party."
The court also, however, ruled that state legislators may tighten eminent-domain laws — which Utah lawmakers did during this year's general session, stripping redevelopment agencies of any eminent-domain power.
Property rights experts nonetheless see the ruling as the government getting more power over a fundamental right provided by the Constitution.
Craig Call, with the state Department of Natural Resources and the state's only private-property ombudsman, believes the ruling makes private-property rights the "poor cousin" to other constitutional rights.
"It is significant," he said. "It marks a continual erosion of the protections that the courts are willing to offer" property owners.
"Nobody wants their mother moved out of a home of 60 years because they get more tax out of it," Call said.
That scenario probably won't happen in Utah, however, at least not until the Legislature changes the RDA laws to allow for eminent domain.
The RDA is "really the only economic development tool" cities can utilize, said Wilf Sommerkorn, director of community and economic development for Davis County.
Eminent domain was taken away under SB184, which also placed a one-year moratorium on RDAs for retail development and prohibited them for stadiums and other sports facilities.
While an RDA can still be developed if all sellers are willing, "it's very difficult to accomplish an RDA without eminent domain if you are dealing with multiple property owners," Sommerkorn said.
Inevitably, there are always a few hold-outs, whether it is the longtime resident or a seller who wants to avoid federal capital-gains taxes by having their property condemned.
The ruling will probably cause very little change in Utah, said Robert Rees, associate legislative general counsel.
Cities and state agencies can still exercise eminent domain outside an RDA, although that will generally be limited to infrastructure improvements such as water lines or widened roads that have long been accepted as necessary for the public good.
"I think it will have relatively minimal impact because the parameters of eminent domain are pretty well-defined," Rees said.
While it may not be allowed currently, eminent domain has been used by cities in recent years to push major economic development projects. Should the Legislature revise the laws to allow it again, this ruling would gives cities greater muscle to push economic development while pushing people out of their homes.
"This hits us square between the eyes," said Randy Hunter, a deputy attorney general who specializes in constitutional "takings" law. Hunter said Utah's Redevelopment Agency Act has been used to literally change the face of downtown Salt Lake City, with various blocks of run-down properties transformed into the Gallivan Center, the Grand America Hotel and, more recently, The Gateway.
Thursday's ruling by the Supreme Court involved a case brought by residents of a working class neighborhood in New London, Conn., who were fighting city officials who wanted to raze their homes for a riverfront hotel, health club and offices. The residents argued it was unfair for the city to take their land and sell it to another private owner to simply improve the tax base of the area, since it would primarily benefit the developer and not serve the public good the same way a road or school would.
Writing for the court's majority in Thursday's ruling, Justice John Paul Stevens said local officials, not federal judges, know best in deciding whether a development project will benefit the community. States are within their rights to pass additional laws restricting condemnations if residents are overly burdened, he said.
"The city has carefully formulated an economic development plan 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.
The power of eminent domain stems from a long tradition dating as far back as biblical times, when a king reserved the right to take as he needed, which grew into the concept of takings law.
The Fifth Amendment in the U.S. Constitution states a government cannot take property "without just compensation." Later the 14th Amendment clarified that property cannot be taken without "due process of law".
Some of the foundation for takings law in the U.S. actually sprang from two Utah cases that went to the U.S. Supreme Court in 1905 and 1906, Hunter said.
In 1905, Utah asked the Supreme Court if it had the right to build ditches across private land to help farmers irrigate. Before, Hunter said, the standard was private property could be taken if it benefited the community at large.
The Supreme Court ruled that building ditches was in the benefit of transforming Utah from an arid area to a thriving and productive community.
In 1906, the Supreme Court ruled that Utah could grant mining companies the right to seize land for the construction of trams to transport ore, pointing out that mining benefited Utah's economy and therefore its community.
With this latest ruling, the court has expanded the eminent domain powers and also placed much of the controls over that power in the hands of state legislatures.
Hunter said Utahns need to keep in mind that their rights as property owners are not absolute. "We have to realize in this country just compensation is an option," he said.
Contributing: Associated Press; Linda Greenhouse, New York Times News Service
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