“If this [reform] passes, I’m afraid we won’t have a level playing field to compete with other neighboring commercial areas.” – City Council President Rory Riddler, Frenchtown, MissouriLocal government should not use its power of eminent domain as an incentive to lure businesses into its jurisdiction. Sadly, the U.S. Supreme Court’s decision in Kelo v. City of New London signaled to tax-hungry city officials nationwide that the mere possibility of tax-revenue or job-growth sparked by a proposed development is enough justification to kick people out of their homes and businesses. This will invariably facilitate a race to the bottom, as municipalities speed to offer land they do not own.
City officials have a number of tools at their disposal to entice private companies to set up shop in town—all of which are more just, more fair, and often more successful than abusing eminent domain. These include relaxing zoning regulations, tax incentives, Main Street programs, expedited permitting, small grants and loans for façade improvements, and myriad other initiatives that do not transfer private property from one person to another private party. These alternatives do not bear the social and economic costs of eminent domain—not to mention its dubious moral or legal character—and they protect the fundamental rights of individuals to keep what they rightfully own.
Eminent domain for private profit, on the other hand, uses government force to accommodate preferred businesses at the expense of other businesses or honest homeowners who simply do not produce the same volume of jobs or revenue by their very nature. As Justice Sandra Day O’Connor wrote in her dissenting opinion to Kelo, “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process.” Not surprisingly, City officials now argue that they need the power of eminent domain simply to compete with neighboring cities.
Scottsdale, Ariz., which stonewalled $2 billion of successful redevelopment for years by threatening eminent domain abuse, finally learned its lesson. In 1993, Scottsdale designated four redevelopment areas setting the groundwork for government to seize the homes and small businesses of hardworking Arizonans. It was only after the City dropped its threats of eminent domain that it reported an influx of billions of dollars in private investment—unprecedented prosperity and revitalization for the area.
Scottsdale was only able to compete successfully with neighboring municipalities by abandoning eminent domain abuse—not by using it. So to contend, as eminent domain abusers typically do, that the use of eminent domain is critical to financial security or to compete with neighboring cities is disingenuous at best.