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Taking Our Property Back: Eminent Domain 2009

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Commentary by George W. Mantor

RISMEDIA, June 23, 2009-June 23 marks the four-year anniversary of the controversial Supreme Court decision in Kelo vs. New London, Conn., in which a homeowner, Susette Kelo, was attempting to stop the City from taking her modest pink, Victorian cottage with a view of the Thames River to make way for a private waterfront development project involving a hotel, condos and offices.

Not since Roe v Wade have we seen such an eruption of emotions; but unlike Roe v Wade, almost everyone, including four of the justices, is on the same side.

The court ruled that economic development, i.e., profit and progress, are more vital to the American fabric than the concept of a man’s home is his castle.

Eminent domain law asserts that governments should be able to take the real property of citizens, for just compensation, if the property is needed for a public benefit such as a hospital, library or park.

But the vagueness of what constitutes the “public good” and what is “just compensation,” have continued to pit competing interests against each other and have lead to heartbreak and despair for many Americans who learned the hard way that you can’t fight City Hall or Capital Hill.

The majority of justices ruled essentially that no benefit to the general public was necessary for government to seize the property of its citizens. That the use of the term public doesn’t mean everyone but need only be a single individual. Because most governments make good decisions they are the ones who are best to determine who should own what and how it should be used.

If someone wants your property they do not have to demonstrate any benefit to the public, only that they would get more benefit from owning the property than you do. And, further, they held that development projects needn’t even be viable for a taking to occur.

Meet the new king, same as the old king. The very idea smacks of imperialism and further underscores the disconnect between the elitists who have seized control of our country and the citizens on whom they inflict their vision of world order.

In her dissenting opinion, Justice Sandra Day O’Connor wrote this, “Any property may now be taken for the benefit of another private party…”

The right to own property would seem to be the ultimate personal freedom, well beyond the value of free speech. If governments can take away the real property of citizens, the right to complain about it isn’t much of a consolation. It sure didn’t help Susette Kelo.

Individual real estate owners control only a very small percentage of the land in America so a strong argument could be made that alternatives could easily be found. But, many times developers simply want to take advantage of what existing owners have been improving for decades.

What twisted logic would lead to the predicament in which owners of more desirable property would be at greater risk of a taking? Watch out if you own waterfront property. Developers love waterfront. From hotels to industrial parks, from timeshares to casinos, they all know that waterfront property brings the highest return per square foot.

The duty of the Supreme Court is to faithfully administer the spirit and the intent of the constitution. Our nation was founded by people who wanted the opportunity to own property, and pursue their goals with limited intrusion by governments.

Our founding fathers intention is apparent in both their words and their deeds. It’s all right there in the 5th and the 14th amendments, which state that no citizen can be deprived of property without just compensation and due process, respectfully.

Further, the fourth amendment guarantees the right of citizens to be secure in their homes against unreasonable seizures. Unless the home itself is seized? That seems patently illogical. Nothing seems more unreasonable than government seizing the real property of its citizens and trying to convince us that it is for the “public good.”

Real estate ownership is legally defined as a bundle of rights. Having title to those rights ought to preclude anyone, developers and politicians alike, from ever depriving the rightful owner of those rights.

Take the case of Ahmad Mesdaq, owner of the Gran Havana Cigar and Coffee Lounge, who 18 years ago took a risk on a rundown, seedy part of downtown San Diego, spent $2.5 million to buy and renovate his building, and was forced to close in 2005 to make way for a Marriott Residence Inn. Mesdaq’s lounge was part of a developing neighborhood’s fabric, a place to meet to socialize.

The public good in this case was the burning need for another hotel. For years, the citizens of San Diego have been clamoring for another Marriott Residence Inn and finally…

Most eminent domain cases boil down to how we, as individuals, value different aspects of life. Some value money and power, others value family and friends, while others value peace and fulfillment. When the seeker of money and power is thwarted by the preserver of the status quo, the government should remain neutral and let the principals resolve their own issues.

Money isn’t always just compensation if it’s a family home, unique property, or tied to one’s business or livelihood.

Because of my profession, I happen to believe that once you own real property, you are entitled to all the benefits including not selling it if you don’t want to.

Like most really bad decisions made by government officials, little thought has been given to the adverse consequences of this decision, and there are many.

Market values will decline. Market value requires free negotiation. If the developer no longer has to negotiate with a property owner, why should he? It’s cheaper to bribe an official.

Gentrification will be impaired. The first investors in blighted areas are usually small investors. They will be wary of the possibility that once an area is revitalized, bigger businesses can force them out.

Corruption will increase. Officials sell out so cheaply that it’s hard to imagine a developer willing to negotiate fair market value when a few thousand dollars under the table will net a far lower acquisition price.

Litigation will skyrocket. The stakes will be higher for property owners; they will lawyer-up earlier in the process, and make every step of the development process difficult and protracted. Lawyers will, as always, be the other class of winners in this transfer of wealth.

There will be confusion in the courts. The Supreme Court had the opportunity to clarify what has been ambiguous and confusing legislation in this area of property rights, but instead did the opposite.

No good can come of it. It smacks of bad Karma. Cities that take the assets of others to solve economic problems are likely to become the places people flee.

The very idea smacks of the worst in us, and makes everything about money. What is the value of the trees planted by your great grandfather or the view from the kitchen window?

The Supreme Court Majority ruled that economic development is more important than family, history, security, and justice. We don’t really need a Supreme Court to stick up for government; we need a Supreme Court to protect citizens from the unchecked abuse of government power. We know in our hearts this decision is wrong, mean spirited, and ultimately self-destructive.

It has been four years since Kelo, so why don’t I set aside my bitterness and check out the wondrous waterfront development that replaced Susette Kilo’s
neighborhood?

I’ll tell you why. Because after they removed a sobbing Ms. Kelo from her property, nothing ever happened. The City spent 80 million of tax payer dollars to fight all the way to the Supreme Court, and today there is nothing there but weeds and rubble staining the waterfront. The original developer has defaulted, and there are no plans for the project to go forward. Where is the public good in that?

And, what about Ahmad Mesdaq, of the Gran Havana Cigar and Coffee Lounge, who had his livelihood seized in favor of the Marriott? He won’t be getting any free nights at the hotel; it’s a parking lot, and other hotels in the area are failing. The developer is in default and there are no plans for the project to go forward.

Meanwhile, the big shots and politicians that wasted shareholders and taxpayers money on these follies, and the judges they own simply shrug and slink off to their private estates.

In the interim, all but a handful of States have passed legislation to give property owners additional protections but nothing near the absolute protection that ownership rights should guarantee.

As a lifelong property rights activist, I believe that the Justices were constitutionally out of bounds on this one, and we all need to fight for each other and fight back. It’s time to take back our towns, our states, and our borders, and say to career politicians and their appointed lackeys, we’ve seen enough.

And do not think that the majority of justices feel embarrassed about their decision or empathy for Kelo now that her neighborhood and home were destroyed for nothing. Quite the contrary, they would tell you that it is a fine example that proves that the system works.

The next time they try to push a Susette Kelo off of her property for the “public benefit,” we should all arm ourselves and go to her defense, while we the public still have a say about anything. How did we come to forget that government is the natural enemy of the individual? Eminent domain 2009 is a good reminder.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

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