TCS Daily

Big Developers Get Pinched

By Jacob Laksin - January 4, 2007 12:00 AM

When the Supreme Court handed down its verdict in Kelo v. City of New London in June of 2005, few imagined the development industry in the role of victim.

On the contrary, most opponents of the decision supposed, not unreasonably, that construction companies and building firms would be the likeliest beneficiaries of municipalities' disputed right to seize private property under the "public use" clause of the Fifth Amendment: Who else would be contracted to develop their dubiously gotten gains?

But a little-noticed case from New Jersey suggests that the battle lines in the political war over eminent domain are more ambiguous than critics have heretofore assumed.

In 2002, the development company MiPro won approval from the zoning commission of Mount Laurel Township, a residential community of 41,000 in Southern New Jersey, to develop a 16-acre parcel of land for 23 single-family homes. The deal aptly underscored Mount Laurel's motto: "A Home for Businesses and Families."

Then the township had a change of heart. Reasoning that a new residential development would mean urban sprawl, and all its attendant complications, the city sought to buy the land from the developer. MiPro, as was its right, declined the offer.

And there the trouble began. Rather than accept the refusal, the town moved to condemn the entire property. It justified the decision with reference to the "public use" clause and its powers of eminent domain. In fact, though, the town's plan was to set the land aside as open space; its sole "public" purpose in acquiring the land was to block further development.

It's possible to sympathize with the township's land grab. New Jersey is already the country's most densely populated state. A 2001 study of urban growth in New Jersey by Rutgers University found that "the daily urban growth rate in New Jersey was equivalent to adding 41 football fields worth of new urban land every day while losing 20 football fields of farmland, 9 football fields of forest and 6 football fields of wetlands." Thus the problem the town's political leadership sought to address is real.

At issue, however, are their methods. To use eminent domain solely to thwart residential development is to expand the meaning of "public use" beyond all recognition. Such was the sensible conclusion of a state Superior Court Judge, who in a 2003 suit sided with the developer. Conservation, while a noble cause, was not a defensible use of eminent domain, the judge ruled.

But the judge's ruling proved an aberration. An appeals court overturned his decision in 2005. And late last year the state's Supreme Court rendered its ruling in the case of Mount Laurel Township v. MiPro Homes, L.L.C. The state's highest court issued a near-unanimous ruling repeating that mistake. The lone note of disapproval was sounded by state Supreme Court Justice Roberto Rivera-Soto. In his dissenting opinion, Rivera-Soto noted that the town had abused its eminent domain powers and dismissed as grossly inadequate the damages it would have to pay to the developer.

Just as dismaying as the court's ruling has been the public response. Local newspapers from the start lined up with the township and have hailed the Supreme Court's verdict as a triumph of legal wisdom. Meanwhile, environmentalist groups like the Sierra Club and the New Jersey Conservation Foundation have rushed to proclaim the ruling a victory for land preservation.

The latter's embrace of eminent domain is not without irony. Conservationist organizations, it may be remembered, originally emerged as vocal critics of the Kelo ruling. Groups like the American Farmland Trust fretted that local governments could use eminent domain to acquire private agricultural land and turn it over to the mercies of unscrupulous developers. Now that eminent domain may favor their cause, these same groups seem more interested in preserving property than principles.

The legal drama playing out in New Jersey may seem to be of parochial concern. What gives it broader import is the precedent set by the state's highest court. At the time of the Kelo ruling, many worried that activist governments, backed by sympathetic judiciaries, could use eminent domain statutes to seize private property on the thinnest of pretexts. With preservation of open space now deemed an appropriate "public use," their worst fears have been realized.

Still, there may be one consolation. The case demonstrates concretely what some critics have been suggesting theoretically: When governments abuse eminent domain, big developers, no less than small property owners, stand to loose.



This is N.J. after all.
The developer is actually lucky to get anything here in New Jersey. Between the Pinelands Moritorium, Cafra, Riparian Rights Law, and other state-sponsered "Green" land grabs, most property owners get no compensation at all. NJ's gambit is that they don't take the land, they only prohibit building on it. If anyone thinks that there's even a vestige of private property rights left here I've got some nice South Jersey land to sell them. Cheap.

Property Rights
Once you take away private property rights you have lost the last of your freedoms. This article represents the level of arrogance governemnt has reached. Welcome to 21st Century liberalism. This is what the big government liberals have brought us. They can simply take your land either by force or legislation. Until we, as citizens, stand up and stop being sheep to the slaughter and get rid of these do gooder liberal socialist politicians and judges we are going to lose more and more until one day it is to late. In fact, it already may be to late.

Love Canal
Just remember threat of eminent domain resulted in a city authorizing the development of the property over a toxic waste dump.

Now cities don't want to develop property.

If this keeps up, cities won't have to worry about developers because the developers and the citizens will move to places more friendly to property rights and liberty.

Oh give me land, lots of land....
Wow, 41 football fields per day lost to development. NJ will be completely paved over any day now if we don't put a stop to it. Oh, wait, a football field at 360x150ft is 54000sq ft. At 43560sq ft/acre and 41/day and 640acre/sq mi thats about 29sq mi/yr. At that rate NJ (8729sq mi) will be paved over in about 300 years. Nevermind

Emily L

This is actually worse than it seems...
Of course, the sovereign has eminent domain. So we should harbor no illusions that the government of the United States is not in an irresistable position to deny you title to any tangible or real (estate) property that you think of as "yours". Let's not forget the "life, liberty and health" part of our social contract with the sovereign. He only grants those natural rights to "we the people" at his pleasure, as well.

However, the sovereign's eminent domain has been assigned by the Federal Courts all the way down past State government to incorporated municipalities. Indeed, unicorporated county lands adjacent to cities are routinely annexed by municipal governments.

Under the Kelo ruling (2005) the majority held: "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community...Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the Fifth Amendment...The Court declines to second-guess the wisdom of the means the city has selected to effectuate its plan." That pretty much settles it. Any municipality can do whatever it wants as long as it has a plan.

All levels of government have well composed land use and zoning plans with very long timeline horizons. This process is universally a fundamental feature of government. Such plans are constantly revised and are typically reviewed far in advance of approval or implementation.

Certain players, such as County Commissioners who are quietly elected and reelected to long terms are privy to such plans far in advance. Some of them, at least, enrich their friends and families by alerting them years ahead of time which specific properties will be zoned for development and will be adjacent to new infrastructure and thereby become astoundingly more valuable. City Council Members and Mayors come and go with some regularity. County Commissioners are below the radar because they have stepped off the political fast-track. No one watches them very closely and no one else in government is around long enough to notice any such games.

If the city can now seize raw farmland as open space according to its current plan and subsequently rezone that same acreage for development according to a later plan (10-20 years later) a great deal of money will be made by someone other than the original owner. Why would the city and the County Commissioners "not" do this? Of course, some of them will. Many of them might. All of them will think about it.

A left-leaning municipal government could take these properties and later sell them to developers for the benefit of all the people. So those evil, wealthy, capitalist landowners should not enjoy a windfall. "Power to the People!"

Alternatively, self-serving County Commissioners will add such raw land to their own portfolios (at bargain prices) as soon as it is released from conservancy.

In other countries this is called "land reform" (under Socialist regimes) or "land grabbing" when organized criminals are also politicians. Here we call it democracy and the "rule of law".

We have a socialist government.
What's new?

add this together with your Castro post
and it's quite obvious that in your perfect world, govt rules all without having to worry about what mere mortals say.

When was the last time a sovereign state did not feel above its own laws? I am not talking about the individual politicians or the government workers in the various agencies. I am talking about the "group behavior" of the state.

The sovereign (group) will sacrifice any of its own team members (individuals) to appear to be in complience with the law. If he gets caught and the criminal becomes an inconvenience. However, the state itself knows no such restraint.

Impeach a President. Indict a Senator. Remove a judge. Fire a GS worker. The state points to its self-imposed mechanisms to police itself. Of course, if the state doesn't like a law it repeals the law, fails to enforce it or simply writes a new one.

The behavior of the state has a life of its own and mere mortals (as you say) are literally property of the sovereign. Of course, government workers execute the tasks of group behavior. But it does not matter very much which one of us joins such a group. The culture of government defines those tasks and we either perform tasks well or we perform poorly (and get tossed out of the group).

But you are right, Mark. My world is ******* glorious.

private vs. public use
I am a long time property developer. I was very unhappy with the Kelo case. It was plain wrong. It involved the "state" decideing which private property owner got to develop a particular property. The current owner vs. an "owner" with plans more in line with the state's vision. States/governments tend to be terrible decision makers. That is why we like to leave things to private forces.

However, in the case cited above, I really don't have a problem with States/governments "grabbing" land for the purpose of holding it for the good of the public. How is this any different than the state/government siezing land for a public park?

Teddy Roosevelt...
It is one thing for the Federal or State government to convert public lands into National Forests or State Parks but it is quite another for a municipality to condemn private property to create a nature conservancy or some other such "open space".

I am not saying that the sovereign should not enjoy eminent domain. Such is the nature of sovereignty. But for that most serious application of one of our most sacred protections under the Constitution to be delegated all the way down to part-time city managers, without oversight or the legal right of challenge for even the United States Supreme Court to "second guess" what might be venal stupidity is to fundamentally abrogate this civil right. As a practical matter, it is a licence for local (socialist) "land reform" or for the execution of (larcenist) "land grabs".

The Fifth Amendment provides: "...nor shall private property be taken for public use, without just compensation."

Please see the dissenting opinion of Justice Clarence Thomas in the Kelo decision:

Justice Thomas focuses closely on the meaning of "public use" and argues forcefully and convincingly that the Kelo decision is in error.

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