Setting boundaries: state and local governments have abused power to seize: eminent domain crucial tool in developing communities.

SINCE California has failed to join over 40 states in reforming its eminent domain statutes, a diverse group of business, farm and taxpayer organizations has taken a leading role in restoring private property protections for California business property by qualifying Proposition 98 for the June 2008 ballot.

Small-business owners are the most common victims of eminent domain abuse because of local governments' appetite for sales tax revenue to finance unsustainable levels of spending. In the never-ending chase to generate greater sales tax revenue, it is increasingly common for public agencies to use the power of eminent domain to replace existing businesses with big-box store projects that hold the promise of generating more tax revenue.

As a result, it is not just homes and businesses in blighted neighborhoods that are seized from property owners who don't want to sell, but modest homes and productive businesses that have the responsibility of supporting their employees and families as well.

The good people of Baldwin Park know this firsthand. Their elected leaders have plans to bulldoze an area of about 125 football fields, forcing more than 100 homeowners and 300 small-business owners off their property!

As the Business Journal wrote last month, Ken and Carol Woods, owners of Woods N' Sons, had their Baldwin Park business seized by eminent domain some 20 years ago for a Sizzler that went out of business a mere 18 months later and remained vacant for years. They borrowed $125,000 to move to the new location, and now the city has plans for yet another redevelopment plan that involves bulldozing their business for the second time!

Biggest abuser

According to the Institute for Justice, the organization that litigated the U.S. Supreme Court's Kelo v. New London, Conn., case, California is among the biggest abusers of eminent domain in the nation--more than 1,000 cases of abuse in recent years--and, absent any reforms, the problem is only getting worse.

Fortunately, California's business community and voters in our state have the opportunity to restore private property protections in California by supporting Proposition 98, a ballot measure that offers substantive, yet reasonable reforms that specifically prohibit government from taking private property from unwilling sellers for a "private" purpose while allowing government to continue to use eminent domain for legitimate "public" projects like roads, schools and water projects.

Proposition 98 will not restrict government's ability to regulate property in ways that protect the general public. Cities and counties maintain the ability to abate public nuisances or close down sites of criminal activities.

Unlike the story of Baldwin Park, successful efforts to revitalize communities in California take place all the time without resorting to eminent domain to forcibly take property from property owners who don't want to sell. In fact, the city of Anaheim is using such progressive redevelopment practices to develop over 9,500 housing units, 2.2 million square feet of new commercial space and 5 million square feet of new office space--all without infringing on the property rights of its existing residents and business owners.

Outdated practice

Unfortunately, too many public agencies have embraced the dated and highly destructive practice of forcibly seizing and demolishing peoples' homes and livelihoods. This should come as no surprise when powerful government interests such as the League of California Cities and the California State Association of Counties have spent over $4 million to qualify Proposition 99, a competing ballot measure that denies the business and farming community, and even places of worship, real property rights protections. Read it. No private property protections for business!

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Developers salivate at the prospect of eminent domain because it allows local government to take property at a whim, and they have advanced Proposition 99 with no other end game but to lure voters away from true eminent domain reform and to protect and perpetuate the status quo.

While California is the leading agricultural state in the nation and its small businesses support over two-thirds of all jobs, it is no big surprise that these government interests would write a ballot measure that denies private property protections for those responsible for keeping our economy strong and creating jobs.

Voters should not be deceived. Government and big business will go to any extreme to protect their bottom line instead of the precious livelihood and property of working Californians.

John Kabateck is executive director of the National Federation of Independent Business in California.

PROPOSITION 98, or the Property Owners and Farmland Protection Act, is nothing more than a "Trojan horse ingeniously crafted by the Howard Jarvis Taxpayers Association ostensibly to protect landowners from eminent domain.

However, for all intents and purposes, the measure contains a subterranean agenda to usurp the constitutionally mandated land-use powers of local government to protect the environment and chart orderly development of communities. Proposition 98 would stifle the flexibility necessary for policymakers to address our social and economic dilemmas at a time when depressed urban communities in Los Angeles County, including Compton, Watts, Boyle Heights, etc., are formulating land-use strategies to take back their cities by recycling underutilized lands, curbing incompatible land uses and abating negative effects of unsavory businesses.

'Regulatory takings'

Backers of the initiative argue that the eminent domain powers granted to state and local governments have often been utilized as vehicles to advance private interests and developers at the expense of landowners. They further argue that current land-use regulations as adopted and implemented in cities have transformed into "regulatory takings" in as much as such regulations (i.e., zoning ordinances, affordable housing, etc.) result in the decline of adjacent property values. Granted, the initiative would protect the rights of landowners, but what about the negative externalities imposed on the neighborhoods by existing businesses such as strip clubs, liquor shops and other environmental conditions detrimental to the health and safety of adjacent residents? Would the initiative protect affected neighborhoods?

Proponents are quick to invoke the spirit of Adam Smith. The free market system, they argue, left to its own devices would (through the invisible hand) rectify negative externalities by "creative destruction" for the common good. But such libertarian principles have outlived their usefulness in the modern city. Eminent economists from John Kenneth Galbraith to Nobel laureate Douglass North have demonstrated that free markets in absence of regulatory policies and governmental institutions cannot protect individual rights of residents (including property owners), which Proposition 98 professes to provide. The role of government in the marketplace has become imperative to ensure delivery of public and private goods that cannot be attained by the private sector acting alone.

Today, policy leaders, as social entrepreneurs, are challenged to adopt local land-use policies necessary to solve knotty social, environmental and economic issues confronting the complexities of modern societies. In the ever-challenging task of balancing individual rights against the common good, they are challenged to select optimum projects that could provide the highest benefits to the community. For example, if Project A would provide jobs, minimize auto dependence and enhance the environment, and if Project B would infer the opposite to the community--attract prostitution, traffic congestion and pollution--which project should the policy leader support for the common good of all residents? Of course, Project A!

Urban impact

Yet this power would disappear if Proposition 98 becomes a reality come June 3. Proposition 98 would eviscerate the power of local government to put into place land-use portfolios necessary for abatement of negative externalities that foster crime in neighborhoods. Nowhere would this initiative exert more devastating impact on the local economies than the urban communities of Compton, Watts, Boyle Heights, etc. Emerging from a legacy of urban decay in the wake of the Watts Riots of 1965 and the post-industrial era, these communities are challenged to assemble land, overhaul outdated zoning regulations, replace aging infrastructure, and remediate abandoned and polluted industrial properties in order to revive their economies. Land-use portfolios including specific plans, transit-oriented developments, smart growth and mixed-use developments are the framework to restructure their respective economies.

Unfortunately, Proposition 98 would eradicate this governmental land-use power. Under the initiative, affected property owners could sue local governments for "regulatory takings," exposing taxpayers to billions of dollars in lawsuits. Ironically, Proposition 98 would make pollution and other environmental injustice issues a property right, forcing taxpayers to pay billions to stop unfavorable land use. That's why I believe Proposition 98 is nothing more than a Trojan horse at the front gates of inner cities, masquerading as a white knight to deliver gifts to distressed property owners. Hidden inside the wooden horse (like the Greeks in Homer's account of the Trojan War) are slumlords--absentee owners with their attorneys ready to undo economic revitalization efforts in struggling communities.

Homer's epic poem in the aftermath of the Trojan War is very descriptive in Latin: "Timeo Danaos et dona ferentes," or "Beware of Greeks beating gifts."

Kofi Sefa-Boakye is director of the Compton Community Redevelopment Agency.

TWO VIEWS

Proposition 98 on the June ballot would restrict the ability of local government to seize private property and turn it over to developers in the private sector. These two editorials take opposing views on Proposition 98, particularly as it would affect more challenged neighborhoods in Los Angeles County.