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Question in Property Rights Fight: Who's Taking Whom?

A speculator's land grab?

July 28, 2000 | By Patty Cantrell
Great Lakes Bulletin News Service

Most people know better than to keep their neighbors up all night with rowdy reveling. But there are always some people who believe their right to party is greater than their neighbor’s right to peace and quiet.

The same is true when it comes to land. Thou-sands of communities have developed zoning rules to protect residents from the effects of sprawl, such as storm water flooding and traffic congestion, and to conserve valuable trees and green space.

Yet a growing number of real estate speculators have been trying hard in the past decade to thwart local land use rules with lawsuits in which they claim their right to make a profit on their plots is superior to the community’s right to protect wildlife, woods, wetlands, and people. The courts, in turn, have largely told them to go home and grow up.

But like a kid who doesn’t like Mom’s answer and tries an end-run with Dad, the nation’s development lobby is now working over Congress. And Congress may soon give speculators the privilege they want: A free ticket to federal court to decide local property disputes.

Senate Bill 1028, which has passed the House and is now under consideration in the Senate, would allow developers with complaints about local zoning rules to bypass state courts and normal local appeals. If approved, this bill would give well-financed developers the ability to drag communities into high-cost federal court cases to haggle over ordinances that hundreds of judges have already ruled are constitutional.

This strategy — to secure a special audience with federal judges far removed from the local, democratic planning and zoning process — would, as the developer lobby put it, be “a hammer to the head” of local officials. It would do so by undermining this country’s democratic decision-making process.

Millions of Americans own parcels of land that mean the world to them. Whether they live in a trailer in the woods or a bungalow in town, local residents use zoning ordinances and environmental regulations to establish in law how much they value their way of life and the natural world that supports it. In turn the U.S. Constitution and judicial system provide important checks and balances on those rules. Land use cases can go all the way from small claims court to the U.S. Supreme Court if they have merit.

Yet the developer lobby is seeking to twist the Constitution and the judicial system in order to have its way. This political maneuver is particularly telling because it comes as the competition for land in countless communities grows more intense. Citizens all across the nation are battling to protect open spaces, reduce congestion, and improve their quality of life by developing new zoning plans that slow haphazard sprawl and build healthy communities. Instead of complying with the public’s new expectations, however, real estate speculators are working to rig the rules at the federal level so that the citizens will have practically no say over how their communities develop and what happens to this country’s resources.

The framers of the U.S. Constitution, anticipating the fierce struggle over land and its uses, took care to set up a system that balanced individual liberty and the common good. In particular they wrote in the Fifth Amendment that government shall not take an individual’s private property for some public purpose without just compensation to the owner. Proponents of Senate Bill 1028, however, argue that regulations that limit the use, and therefore the profitability, of a piece of property amount to a Fifth Amendment “taking.” It follows, they claim, that governments should either back off regulations or pay off developers with “just compensation.” And because they believe their private profit disputes amount to constitutional cases, real estate speculators argue they should be able to take their local and state complaints straight to federal court.

The Supreme Court has already dismissed this flawed reasoning with rulings that clearly state developers have no constitutional claim for compensation unless they first seek and are denied compensation in state court. But the development lobby persists. Why? Because the judicial system is doing a good job of protecting the rights of both private property owners and the public.

The courts have, in a few takings cases, ruled that governments should compensate private property owners for regulations that eliminated all economic use of land. But in the vast majority of cases the courts have stood firm on the public’s right to weigh the damages of a mega mall or luxury housing complex against investors’ profit projections. The U.S. Supreme Court has clearly stated that taxpayers should not have to compensate companies simply for the loss of profit potential. “Mere diminution in value of property, however serious, is insufficient to demonstrate a taking,” said the high court in a 1992 case.

However the big money behind Senate Bill 1028, which could be voted on by the full Senate this fall, apparently doesn’t want to take the people’s “no” for an answer. As voters, Americans need to look at Senate Bill 1028’s end-run around the public and ask: “Who’s taking whom?”

VICTORY: U.S. Senate Judiciary Committee Chairman Orrin Hatch [R-UT] pulled S.B. 1028 from the committee's agenda in September 2000 because of strong opposition to the bill.

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