Private property rights: In Florida, a win. In San Diego, a loss.

Posted: Apr 30, 2004 12:00 AM

I can?t remember who first issued the warning, but they were more on-target than they would ever know.  No man?s life, liberty or property is safe while the legislature is in session.  If quotes won Pulitzers, this one would qualify.  Make it a Nobel.

Let?s add the United States Supreme Court to this list of entities dangerous to the basic concepts of liberty and to your property rights.  In 1795 the Supreme Court described the power of eminent domain as ?the despotic power.?  Things change.  In the mid-1990s the Supreme Court opened a floodgate of government abuse of private property rights with its interpretation of the ?public use? restriction on government seizures of private property contained in the Fifth Amendment.  The Supremes essentially said that any use of private property that could in any way benefit the public legitimizes the seizure of that property from its rightful owner, including the general catch-all of increasing tax revenue. 

Since the date of that Supreme Court evisceration of private property rights, local governments have engaged in an orgy of land seizures, often at the behest of private developers, for projects that in no real sense constitute a ?public use.? 

For an example let?s pay a quick visit to San Diego?s popular Gaslamp District.  There we will find Ahmed Mesdaq?s Gran Havana Cigar Shop and Coffeehouse.  Mesdaq has owned his business in the Gaslamp District for 13 years.  He recently spent $2.5 million to purchase and renovate his current location.  Someone else, though, has their eyes on Mesdaq?s property.  A private developer named GRH LLC wants to build a Marriott Renaissance Hotel on the site of Mesdaq?s business.  They have tried to buy his property, but Mesdaq says no.  He likes his location, he just spent big bucks renovating it, and he wants to stay there.  He feels that he can?t find another suitable location in the district for the price that has been offered.  That should be the end of the story.  Sadly, it?s not.

Enter the San Diego City Council.  On April 27th the city council voted to take Mesdaq?s land away from him and hand it over the GRH.  The council decided that a nice 334-room Marriott on that property is more to their liking than a cigar and coffee shop because the hotel will generate more in property taxes.  Mesdaq will be paid a ?fair? amount for his property.  ?Fair,? as determined by the city council, not the free marketplace.  Mesdaq will essentially be out of business.

How many members of the San Diego City Council actually managed to stand up for the concept of private property rights?  Just one.  The vote on the seizure was 8 to 1.  Nice going, San Diego.

Eminent domain abuse is epidemic across America in the wake of the hideous SCOTUS decision.  In Alabaster, Alabama 12 landowners are being forced out of their homes to make way for a Wall Mart. 

The Alabaster city council wanted the sales tax revenue that the superstore would generate.  You would be surprised to learn how many cases of eminent domain abuse across the country involve Wall Marts, though they certainly aren?t alone when it comes to using government to avoid the free market.

While there?s bad news for property rights in San Diego this week, there?s good news in Florida.  Earlier this week Florida residents were alerted by talk radio to a set of bills moving through the Florida House and Senate.  These bills, if passed, would allow local municipalities and counties to seize private property and turn it over to private developers for office buildings, shopping centers, bowling alleys, automobile dealerships, apartment complexes or virtually any private use. 

The owner of the seized property would, again, be paid a ?fair? price for his property ? using the government?s definition of ?fair,? not the property owner?s.  The anti-property rights bill was on the fast track for passage by the end of the week.  Developers and city governments were licking their chops.

For many, the American dream is to own real estate.  The majority of Americans who manage to build a million-dollar net worth do so through investments in real estate.  The methodology is simple. 

You figure out where people are going, then you get there before they do and buy a piece of real estate that you think will appreciate in value when the hoard arrives.  You then wait until someone else wants that real estate more than you do, and is willing to pay you a handsome profit. 

Developers aren?t particularly fond of this system.  They don?t like paying some private land owner a million dollars for a piece of property he bought ten years ago for one-tenth that amount.  This eminent domain law in Florida would have changed all that.  Instead of going to the individual property owners to negotiate a price, developers would simply have identified the property they want to their local politicians.  The politicians, with visions of more tax revenue rattling in their political skulls, would begin the condemnation process while the developer counts the money he saved by circumventing the free market.

Well ? It didn?t work.  Tuesday morning Florida residents were flooding legislative offices with emails and telephone calls.  By Tuesday afternoon some legislative sponsors of the bill were withdrawing their support.  By Wednesday evening  the bill was dead, with all mentions of eminent domain removed.  In Florida, at least for the time being, private developers will still have to negotiate with property owners to purchase property.

Meanwhile, in San Diego, Ahmed Mesdaq wonders why GRH isn?t negotiating with him any further over the purchase of his property.  It?s simple.  GRH has a new business partner ? government ? a partner can use force to simply take the property.  With a partner like that, why negotiate?

By the way ? the Marriott folks should be ashamed.