If you live in an older section of town, this may already have happened to you.  You wake up in a cold sweat.  For the past 15 years, you and your husband have lovingly restored an old Victorian house.  It was pretty decrepit when you started; now, it is an object of pride and beauty.  You replaced all of the windows with custom-made units that replicated the original styles.  The classic wood floors, with a different type of wood on each level, have all been carefully refinished and add a warm glow.  All the plumbing is new—PVC and copper tubing—and all of the wiring has been changed from knob-and-tube to the latest and safest breaker boxes.  Your house looks so nice that several of your neighbors from the Elm Street Neighborhood Association have started fixing theirs up, too.

Unfortunately, there is that place down at the corner, the one that houses at least 40 undocumented workers and their families.  The gutters are falling to the ground; it has not had a coat of paint in at least the time you have lived in the neighborhood; and there are more families living in camper trucks and trailers parked in the yard.  Goats and chickens have reduced the lawn to dirt.

That house is much better than the one next door, which was broken up into small apartments many years ago.  It, too, has not seen any maintenance in years.  There are broken beer and whiskey bottles strewn about the seldom-mowed lawn.  Cars and motorcycles are coming and going at all hours of the day and night, and you are sure that drugs are being sold and used in copious quantities inside.  Last year, there was a fatal stabbing in front of it, and a friend on the police force told you that he thought the incident was drug related.

To top it off, there are the people directly behind you.  You had long dreamed of gazing out of your dining-room window across the formal garden in your back yard.  Now you could, thanks to all of your hard work, but you choose to keep the drapes closed.  Right over the property line, beyond your carefully trimmed hedges, are four smashed-up stock cars.  Tonight, and every night, a neon Budweiser sign flashes over the back door, reflecting on the glass of your bedroom windows.  As you watch it flicker, you shudder and wish the city would do something about all of this blight before the entire neighborhood tanks.

You roll over and go back to sleep, but your nightmare may only be starting.  The city may do something about all of that blight, but it probably will not be what you have in mind.

The next morning, at city hall, the planning department is meeting to discuss a redevelopment effort in the Elm Street Neighborhood.  The city planner, Rex Holmes, is talking with Nancy Reid, his administrative intern.  Rex tells her that the Elm Street Neighborhood meets all the criteria for blight and dilapidation in the state Tax Increment Finance District statute and is ripe for an urban-renewal project that would get rid of all those crummy slums and replace them with buildings in the New Urbanism style, with retail on the ground floor and offices and high-end condos above.

“But,” Nancy protests, “the Fentons’ house is in that area.  I’ve been in it many times, and it is beautiful!  And a number of their neighbors are fixing up their old Victorians, too.”

“That may be true,” Rex replies, “but the vast majority of them are hovels.  None of them meet the codes, and it would be prohibitively expensive to renovate them.  Besides, their owners are not going to rehab them, and even if they did, the tax base there would be far less than what we would have with a new development.  The city desperately needs to increase its tax revenue, and commercial and high-end residential is the way to do it.”

“But what about industrial development?” asks Nancy.  “Why tear down some nice houses to put in commercial and high-end residential buildings when we have the abandoned Acme Industries site to rehab?  Think of all the jobs that would create.”

“Manufacturing is dead,” laments Rex, somewhat disingenuously.  “It’s all going to China.  Besides, that place was in use for more than a hundred years.  I hate to think of what has been dumped in the ground.  Take it from me, you don’t even want to scratch the dirt with a shovel in that place if there’s anyone from the state EPA around.  Cleaning up a brownfield site like that could cost millions, and we would never get that money back.  No, we need to put together an agreement with NuTown Development Corporation, so we can start the condemnation proceedings on those Elm Street houses.  Thanks to the Supreme Court, all we have to do is show that taking those properties will result in a public benefit, and there’s nothing the Fentons or anyone else can do to stop us.”  Rex smiles, thinking of how good the Elm Street project will look on his résumé.  It might even get him noticed at the next state city-planning meeting and open up the possibility of a better job in a bigger city.

The U.S. Supreme Court decision in Kelo v. City of New London (2005), in which a municipality was allowed to take private property held by individuals and give it to developers, has stirred up considerable citizen outrage, causing home-owners to pressure state legislatures and spawning ballot initiatives in many states.  Kelo’s slight change in the understanding of the restrictions on eminent-domain takings has huge ramifications.  Acting in its modern legislative role, the Court effectively changed the reading of the Fifth Amendment’s Takings Clause from “nor shall private property be taken for public use, without just compensation” to “nor shall private property be taken for public benefit, without just compensation.”  This seemingly minor alteration has created a flood of eminent-domain abuses by local and state governments, who hide behind the veil of economic development and fighting blight.

At the root of this crisis is globalism.  Sending manufacturing and other skilled jobs to those foreign locales where wages are the lowest has become the norm.  While this has improved the fortunes of major finance capitalists and multinational corporations, it has proved catastrophic for local governments.  Chronicles has been one of the few voices discussing this process in depth—appropriately, since its hometown of Rockford, Illinois, has been particularly hard hit by it.  Municipalities that once could depend on property-tax monies from industrial concerns now host acres of empty factories and boarded-up downtown businesses.  Nonetheless, in these places, the demand for municipal services has not diminished and, in fact, has often increased as the equalized assessed valuation of properties within their borders has dropped.  These local governments are desperate for revenue, making them easy prey for rent-seeking developers and their allied consulting firms.  Nearly any project that promises jobs and increased tax revenues will be approved and promoted by revenue-starved municipalities, whether or not it is truly viable or even good for either the neighborhood it directly affects or the city as a whole.  In this environment, private property is increasingly at risk.

The mechanism normally utilized to advance these rent-seeking developments is the fight against blight.  However, blight is not easily defined.  The great satirist Tom Leher once sang that, “When correctly viewed, everything is lewd!”  Like obscenity, blight is largely subjective, in the eye of the beholder.  And sadly, as viewed by many municipal officials and their developer friends, your home, your small business, and even your church may be blight.  So, not surprisingly, property owners have started to fight back.

Some people are property-rights fundamentalists.  (Nobody can tell me what to do with my property!)  Many of them take their cues from libertarians who never read far enough in Locke’s Second Treatise of Civil Government to get out of the state of nature and into civil society.  Outside of the state of nature, many municipalities do suffer from problems with blight.  Frequently, property owners either cannot afford or have no incentive to exercise proper stewardship over their holdings.  The property degrades and is often abandoned; then, the municipality has to condemn and demolish it under unsafe-building statutes.  This places a heavy burden on already financially challenged local governments and their taxpayers.

Because state and local governments have legitimate interests in public safety and public health, not all takings that invoke eminent domain for economic-development purposes are illegitimate.  However, since much of their ethos comes out of the Progressive Movement, many city managers firmly believe that Progress inevitably trumps even reasonable property rights.  Consequently, groups such as the Illinois Municipal League and the Illinois City/County Management Association have worked together to try to stymie eminent-domain reform.  For them, fighting blight means increasing the local tax base, getting rid of less-desirable residents, and promoting an upscale image.  The problem is that perfectly adequate older homes and businesses are branded as blighted because of their small size, lack of multiple bathrooms, or age.  Your lovingly restored Victorian house may be their next target.  Your home or business may already be in the crosshairs of your local community development or planning department.  My friend’s car-repair shop has been kept up well since it was built in the 1940’s; it is now slated for “redevelopment” into retail shops and condos—all in the name of fighting blight.

According to the Institute for Justice, 17 states have acted to try to prevent at least some of these exercises of eminent domain, in which property is taken from one private owner and given to another.  One method is to reform overly loose definitions of blight.  Another 17 states have increased protection against eminent-domain abuse.  Three states had no legislative sessions in 2006.  Thirteen states have failed to pass any eminent-domain reform legislation.  The states of Florida, Georgia, Louisiana, Michigan, New Hampshire, and South Carolina approved constitutional amendments reforming eminent domain.  Some of these also added statutes that further protect private property from Kelo-style assaults.  Michigan adopted Proposal 06-4, a constitutional amendment that prohibits government from taking private property for transfer to another private individual or business if the purposes are for economic development and increasing tax revenue.  If an individual’s principal residence is taken by government for public use, he must be paid at least 125 percent of the property’s fair-market value.  The amendment also makes it more difficult for government to take a private property.  If a municipality wishes to exercise eminent domain in order to eliminate blight, it must now meet a higher standard of proof that the taking is for a public use.  The ballot proposal was passed in November 2006 with 80.1 percent of the vote.

The Alaska legislature passed HB318, which was signed by the governor.  This law prohibits the transfer of private property from one individual to another for economic development unless the taking is authorized by the state legislature.  In Arizona, a strong eminent-domain reform bill was passed by the legislature but vetoed by the governor.  It was then presented as a ballot referendum and passed with 64.8 percent of the vote.  This proposal greatly tightened the definition of blight and prohibited the use of eminent domain for economic development.  Despite much sound and fury, California’s Proposition 90 was defeated in the last election, garnering only 47.6 percent of the vote.  California’s legal definition of blight is very loose, and the proposed measure did not sufficiently tighten the public-use loophole, leaving the door wide open to government takings for economic development.  While Colorado has improved its private-property protections, the state still allows the courts to determine what constitutes public use.  At least it now prohibits takings for economic development and increased tax revenues.  Connecticut, the home of the Kelo case, failed to do anything to restrict the abuse of eminent domain.

Illinois passed SB3086, which was signed by the governor.  The law essentially uses the standard of blight defined in the Illinois Tax Increment Finance District statutes as the overall criterion for determining blighted property.  Proving that a property is blighted now falls on the governmental entity seeking to condemn it.  The new law allows for the use of eminent domain for economic development if the action is secondary to a project of urban renewal; property can only be taken from one party and handed over to another if it is in a blighted area and the project conforms to a regional plan adopted within the past five years.  The law upholds the right of the state and its subsidiary governments to use their police powers to attack slums and other properties that pose a threat to public health and safety.  Agricultural land is protected from seizure for economic development.

Interestingly, Florida—a state that has been in the forefront of intensive development for many years—has done more than most other states to address this problem.  Florida’s House Bill 1567, which has been passed and signed by the governor, should serve as a model for other states.  Under the new law, property condemned and seized must not be transferred to another owner for ten years.  This removes the threat of Kelo.  Sensibly, local governments are required to address issues of genuine blight by using their police powers.  The law still allows eminent domain for traditional public uses—roads and government buildings.  In addition to this statutory approach, the Florida legislature also put a referendum on the November 2006 ballot that would require a three-fifths vote by both houses of the state legislature to allow any exceptions to the prohibitions on using eminent domain to transfer private property from one owner to a developer.  This bill passed with 69 percent of the vote.

Florida shows that the rights of property owners can be protected against rent-seeking developers and their allies in local governments without removing the tools necessary to protect public health and safety.  Blighted and unsafe properties are a major headache to most city managers and administrators.  If used properly, eminent domain can help to remedy that problem; if no restrictions are placed on its use, it can create more headaches.  Ultimately, the best way to fight blight is to see that it never gets a chance to gain a toehold in the first place.