Term Paper on "Eminent Domain"

Term Paper 7 pages (2083 words) Sources: 5 Style: MLA

[EXCERPT] . . . .

Eminent Domain is one of the most controversial, yet necessary issues that communities and courts face today. Variance, access and public projects for the good of the whole must take precedence over private property rights. Yet such property rights losses as can occur though the demands of eminent domain can literally bankrupt individuals, families and businesses, with regard to loss of property value, property usage or loss of property itself.

To confuse matters more each community entity, as well as the federal government can assess the right of eminent domain for public access or public works creating situations of differing eminent domain laws and compensation, or lack there of. Eminent domain regulations enforced in situations, for environmental or public green spaces uses are also difficult for some property owners to stomach and afford., though they are much more clear than other instances of eminent domain regulation.

Another sticky issue, that must be dealt with in many communities is the right of the community to assess eminent domain regulations upon individuals or businesses for the purpose of building private institutions that will likely be utilized by large numbers of the public, such as in the case of sports arenas and other large private/public complexes, like shopping centers and/or apartment complexes that will potentially generate tax revenue but do not have a clear "public" use component. Eminent domain legislation and rulings came to the Supreme Court in 2005 and changed, to some degree the manner in which eminent domain has been utilized in the past. Larry Morandi describes the Supreme Court ruling as follows.

State legislatures have been responding to the U.S. Supreme Court decision that was delivered on June 23, 2005, in Kelo v. New London (04-108). In this case, the court determined that the "public use" provision of the takings clause of the 5th Amendment to the U.S. Constitution permits eminent domain for economic development purposes that provide a "public benefit" pursuant to a Connecticut statute.

Morandi 9)

Many people believed in this case, that the commonwealth had gone to far, as compensation was not considered equitable to land that was taken as a result of the rulings. Yet, the Supreme Court determined that there was nothing in the Commonwealth's constitution that excluded the actions taken by the state. The addition of the Supreme Court's advice to states that though nothing was done incorrectly in this case, as per the constitution that individual states retained the right to further restrict eminent domain legislation to further protect property owners from unfair seizure. This sparked a sweeping set of state legislative debates and legislation, occurring during the legislative terms that coincided with the ruling, and will likely continue to do so in the near future.

Morandi 9) the debate, as it played out in many legislative bodies was rather interesting, as most states chose to restrict rights of eminent domain, only to a certain degree, leaving for later, some even choosing to retain the right to apply emenant domain regulations to private property, even in the case of occupied private property for economic development purposes while others chose to ban such uses or restrict them to only cases where property is considered blighted.

Morandi 9)

The constitution of the United States is clear on the issue of eminent domain and yet within the constitution is also the allowance of states to determine the exact manner in which such constitutional rights are played out. Adalberto Aguirre and Frances Vu begin their article on the subject by detailing the U.S. constitutional stand on eminent domain.

The framers of the U.S. Constitution considered the pursuit of life, liberty, and happiness to be fundamental rights nested in the ownership of property, especially homeownership...As a result, the framers of the Constitution regarded property as the foundation for freedom. Underscoring the importance of property, James Madison observed that, "as a man is said to have a right to his property, he may be equally said to have a property in his rights" (Cato Institute, 2005: 226). The Fifth Amendment to the Constitution enhanced the importance of property by protecting an individual's right to, and ownership of, property: "No person shall be... deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

Aguirre and Vu 101)

The value of one's property, one would assume would be retained if the state, municipality, or federal government chose to enforce an eminent domain regulation, possibly not at retail value but based upon tax assessed value, at the very least, yet this is not always the case, and this is particularly unlikely if property is considered blighted, or condemnable. According to Brett Talley of the Harvard Law Review the decisiveness of the Constitution is clear and that, there are two constitutional requirements for the exercise of eminent domain: that the use be public, and that the owner receive just compensation. These restrictions were intended to deter the legislature from applying this "despotic power" (2) with undue frequency.

Talley 759)

Talley, takes a decidedly historical view of the various national rulings that have taken place over the years, to alter and broaden the utilization of eminent domain rulings.

Beginning with Berman v. Parker (3) and continuing in Hawaii Housing Authority v. Midkiff, (4) the Court granted great deference to legislative determinations of valid public uses. (5) in fact, such deference extends even to forced private-to-private transfers of property. After the Court handed down these decisions, a debate ensued over whether the Public Use Clause of the Fifth Amendment retained any deterrent effect.

Talley 759)

Talley points out two very important issues with regard to these historical rulings, one that this is not the first or the last time the issue will be debated, even in the highest court, as it has been a constant struggle of debate and two that though deterrence is frequently debated, due compensation is very rarely debated at all.

Many commentators called on the Court to take a second look at the deferential standard, which it did, to those commentators' great chagrin.... In Kelo v. City of New London, (7) the Supreme Court reiterated and expanded... holding that economic development constituted a valid public purpose and that the government may legitimately take and transfer private property to another private entity to accomplish that end. (8) This ruling decisively rejected calls to limit eminent domain to transfers from private owners to a public authority. (9) Although the Kelo Court extensively examined the public use requirement, it barely discussed the just compensation requirement. (10)

Talley 759)

Talley moves on to imply that without debating or evenloosely defining due compensation the Supreme Court was amiss in its determined stance, as due compensation seems to be the very most important aspect of the enforcement of emenant domain regulations, on the part of the property owner, as it is the property owner who cares most about how such enforcement will effect their economic lives in the future.

If the Court is determined to persist in granting great deference to the public use determinations of legislatures, the Court should reexamine just compensation, lest the Fifth Amendment Takings Clause cease to deter improper uses of eminent domain.

Talley 759)

The answer given by Bruce Margolis, in the Journal of Accountancy is to train CPAs to effectively assess the due compensation of any properties that government entities are seeking to retain.

Eminent domain valuation cases are similar to estate valuations in some respects. In both, no party is at fault, per se. Further, the normal circumstance of willing buyer, willing seller does not apply. Unlike estates, though, in eminent domain cases the owners either suffer partial damage or are compelled to sell. For businesses, determining the proper compensation is often difficult since many assets are intangible. Of these, the most difficult to measure are potential loss of goodwill and going-concern value.

Margolis 63)

Margolis also brings up an important issue, regarding assets, intangibles. Intangible assets could be the destruction of public goodwill toward the business if the business resists eminent domain rulings or simply asks for more than a municipality is able or willing to pay for the property they wish to takeover. In a sense many businesses leave feeling as if they are damned if they do, and damned if they do not as well as other valuation that is beyond market value.

Abraham Bell, Gideon Parchomovsky of the Stanford Law Review also not ethe curious nature of the Supreme Court as well as frequent debaters of the subject of eminent domain are not more forthcoming with opinions and standards regarding due compensation.

It is curious, therefore, that while public use continues to attract scholarly interest, very little attention has been paid as of late to the arguably more important requirement of "just compensation." (2) as it currently stands, the law of eminent domain compensation suffers from two principal flaws. First, although the Takings Clause requires, in principle, the payment of compensation for the… READ MORE

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