In 2005, the U.S. Supreme Court upheld a Connecticut city's right to seize through eminent domain the waterfront homes of longtime residents for private development. The court held that, like the construction of schools and roads, economic development itself constitutes a "public use" under the Fifth Amendment. Both liberals and conservatives were outraged. As dissenting Justice Sandra Day O'Connor wrote, "The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."
Some 40 states responded by passing laws to tightly define "public use" so that the government could not take land from one taxpayer and hand it to a richer one. Despite strong voter disapproval of the Kelo decision, as the Connecticut case is known, California lawmakers have failed to act. Thanks to Sacramento's three-year void, various groups have placed three different initiatives on the ballot, including two voters must choose between on June 3.
The first, which property-rights advocates put together for 2006, was Proposition 90. It banned eminent-domain takings for private developers. California voters rejected the measure because it delved into other issues, and at an unpredictable cost.
Don't worry, groups representing local governments, such as the League of California Cities, told critics. They promised that if voters rejected Proposition 90, then they would work with the Legislature to craft a better measure that would correct the private-use abuse made infamous in Kelo. Didn't happen.
Instead, when the Legislature again failed to pass a reform bill, property-rights advocates and government groups trotted out rival measures, Propositions 98 and 99.
According to its ballot argument, Proposition 99 represents "real eminent domain reform -- no hidden agenda."
Bunk. Sure, it protects homeowners from having the government transfer their houses to private developers. But Proposition 99 does not protect business owners, the usual target of such takings.
Proposition 98 would prohibit state and local governments from taking private land from homeowners and businesses and transferring it to another private party. As Joel Fox of the Small Business Action Committee noted, Proposition 98 is the only measure that helps small businesses.
The bonus for the property owners' lobby: Added language would phase out local rent-control ordinances and might limit laws that require developers to build affordable housing.
For many Californians, the rent-control provision, which also applies to mobile home parks, is a deal killer. If Proposition 98 fails, it will be because the authors were greedy in adding rent control to the mix. So be it.
That said, ending rent control would be good for Californians. Landowners would have more of an incentive to maintain their properties well. As former state Legislative Analyst Bill Hamm noted, rent control "discourages the construction of housing. If we're trying to help people get decent housing, we want to encourage it."
UC Berkeley's Center for Environmental Law & Policy warned that Proposition 98 would spawn countless lawsuits. The center's executive director, Rick Frank, told me, "If Proposition 98 passes, it will be the property-rights and eminent-domain lawyers full employment act."
But the status quo is unacceptable. Local governments should not be able to take prime location from one taxpaying business and give it to a pet developer.
The Proposition 99 folks claim there is no hidden agenda in their measure. Not so. The nonpartisan Legislative Analyst reported that "government seldom uses eminent domain to take single-family homes" -- so it safeguards property seldom seized.
Worse. A "poison pill" provision means that if both propositions pass, but 99 gets more votes, 98 is null and void. This puts property-rights advocate like Howard Jarvis Taxpayers Association President Jon Coupal in the awful position of telling voters to reject a measure that could save Suzette Kelo's home (if she lived in California) in order to pass a measure that would protect homes and small business like Revelli Tire Company in Oakland and Bernard Luggage Company in Los Angeles.
Keep in mind that if Proposition 98 passes, local governments still will be able to use eminent domain to take land for schools and roads, as well as to curb urban blight and crime. Local governments will even be able to use eminent domain for private development -- if they present a sufficiently attractive price for the property. But they won't be able to force law-abiding small business owners to forfeit their place of business so that government can hand it over to a well-connected corporation.