By Richard A. Epstein

Richard Epstein LAW ’68 is a professor at the University of Chicago Law School and a senior fellow at the Hoover Institution. His many books include Takings: Private Property and the Power of Eminent Domain. 

Many important cases before the United States Supreme fail to excite the popular imagination. But among the raft of technical decisions on federal preemption, bankruptcy, securities, and taxation lies the occasional constitutional law case that grabs the public imagination. One such case there was none during the past year was Kelo v. City of New London, which the Supreme Court handed down in June 2005. There the Court held that the City of New London could invoke its comprehensive plan for economic redevelopment as the sole reason for condemning about a dozen private homes located within the proposed development zone.

A Notorious Decision

The instantaneous and widespread of outrage toward Kelo stemmed from two sources. First, the public had a clear sense that the Supreme Court had strayed beyond the acceptable boundaries of constitutional interpretation by treating private economic development as a taking “for public use.”  If Kelo counts as a public use, then the public use language is a dead letter, for no one could identify any use of state or local condemnation power that violates the provision.

The second reason relates less to text and more to popular conceptions of government power. Most people think that government power to take property for redevelopment menaces the peace and security of the community. Thus Justice Sandra Day O’Connor struck a raw nerve when she declared simply that Kelo allows any local government to condemn a Motel 6 in order to put a Ritz Carlton in its place. Her homey example crystallized the oft-forgotten sense that private property is a bulwark for the little man, not the plaything of the rich. It was no surprise that poll after poll gave Kelo disapproval ratings over 80 percent numbers that no working politician could live with.

The one silver lining in this sorry tale was that Justice Stevens’s majority opinion made took pains to say that it was just an interpretation of the Takings Clause of the United States Constitution. At the federal level Congress could pass legislation that limited the use of the eminent domain. Similarly, states could impose limits on their own power, either through their own constitutions or through state legislation.
As expected, a large cottage industry developed in the aftermath of Kelo as Congress and the states grappled with this issue. At least one state, Ohio, invoked its state Constitution to limit takings of the Kelo variety. Simultaneously, the many opponents of Kelo sought both by legislation and referendum to overturn the decision. At the federal level, there has been no movement to date. In some states, moreover, stout political resistance from local governments and some developers has bottled up all reform measures. Nonetheless, a popular groundswell has produced legislation of varying strength in thirty-four states. (For a summary, see Castle Coalition, Legislative Action Since Kelo: http://castlecoalition.org/pdf/publications/State-Summary-Publication.pdf.) Some states, including Alabama and Florida, have placed a substantial crimp on the power of state and local government to order condemnations for economic development only. In other states, such as California a close popular vote on Proposition 90 defeated a measure that would both limit the power to take for economic development, and the power to regulate land use through zoning.

The Political Economy of the Public Use Question

These three state responses to Kelo tell an instructive tale. When public use issue is raised in isolation, voters tend to support some restriction on the use of government power. But where the Kelo issue is tied to any proposal, as in California, that also attempts to limit the power of state and local governments to impose zoning restrictions most commonly by requiring compensation for the loss of land values popular sentiment shifts in the opposite direction. The straight public use measures can pass. The combined public use and anti-zoning measure fails.

This dichotomy raises something of an intellectual puzzle. As a simple descriptive matter, the local zoning power is invoked far more frequently than the condemnation power. In addition, its effects are often quite substantial on the regulated landowners who can easily lose 80 percent of their land value to zoning restrictions. Why then do voters frown on condemnation for economic development, but tolerate or even embrace zoning regulations of all sorts and description?  
Part of the answer turns on questions of constitutional interpretation. It is easy to see why taking land for private development does not count as a public use. It is much harder to understand why even the extensive regulation of land use counts as a taking of private property. It is necessary to have a clear understanding that a single plot of land contains multiple interests in order to make the case that land use restrictions take a key stick out of a property owner’s bundle of rights. That of course is a mouthful that requires some explanation, even if the line between takings and regulation cannot survive careful scrutiny. But it is just this extended detour into the law of easements and restrictive covenants that insures for ordinary people the zoning issue will never achieve the dramatic clarity of the public use question.

A second explanation looks more to political economy and less to the fine points of property and constitutional law. The key inquiry asks who bears the brunt of various kinds of government actions and, conversely, who profits from them. The usual public use situation follows the pattern found in Kelo. Long-term residents within the community fall within the cross hairs of government agencies, which then transfers the property to out-of-town developers whose projects will provide homes and stores for persons who do not already live in the community. The insecurity faced by the eminent domain threat is local;  its benefits are widely diffused. There is little wonder that ordinary citizens are quick to see the looming peril.
The political economy of zoning is quite different. The first principle of zoning law makes it very difficult to cut out existing uses, so that local residents and businesses rarely do face displacement. The restrictions on local land use, however, tend to hurt the current owners of undeveloped land. Often they do not live locally, and even when they do, they are easily outnumbered. The persons most hurt by the restrictions on new development are outsiders, with little voice in the local politics. The political calculus thus changes because citizens are willing to support measures, at least in the short run, that advance their particular interests. Hence the relatively high local satisfaction with most zoning regimes, most of the time.

From a constitutional perspective, there is something decidedly awkward about the current treatment of public use and zoning issues. The usual rationale for the protection of property rights is that political majorities should not be allowed to vote their own interests at the expense of embattled minorities. Accordingly, it looks as though zoning, which is directed toward outsiders, should receive at least as much if not greater judicial scrutiny than outright condemnation, which is directed against present residents.

Public Use and Zoning Together

There is, of course, today, no evident public groundswell against local zoning activities, which have become, if anything, more intrusive over time. Most people think that zoning and condemnation raise separate issues that do not have to be considered together in evaluating local use regulation. But this position is in fact short-sighted  because when the two different types of government action are intimately related.
Zoning has strong effects in both the short and long-run. In the short-run, those cities and towns with strong zoning law get lots of kudos when neighbors celebrate their ability to keep out a new apartment complex or shopping mall. But the long-term consequences are dire when the forces of exclusion prevail in case after case. These cumulative short term victories erode the long term health and tax base of the community, especially if outside developers shy away from the municipality because of an anticipated hostile response. In the end, therefore, towns like New London suffers from economic stagnation and lose out to nearby communities with more receptive land use policies.

At this point, local governments, like the City of New London, find it difficult to answer the wake-up call. No private developer wants to duke it out with the local planning commissioners. Instead savvy developers want their deals sealed in advance. There is only one way to do this. Have the local government condemn the land which it then transfers to the developer under a long term agreement that provides advance approval for the project. Just that sequence defined the New London experience.

Now, the tight connection between public use and zoning issues becomes clear. Any local government that uses heavy zoning restrictions courts public use fiascos down the road. A constitutional regime that curbed the excesses of local zoning would give greater security of property rights to insiders and outsiders alike, and thus obviate the need for government land grabs like Kelo. Regrettably, our Supreme Court has washed its hands of oversight for both zoning and public use decisions. But state courts, and state legislators should work to rein in these dangerous tendencies, which requires a stronger and more systematic defense of private property. To get this right, we must disabuse ourselves of the supposed conflict between private property and some ill-defined notion of the public interest. These two are not in opposition. In the long run, the systematic protection of private property advances any viable conception of the public interest.

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