By Larry Jones
December 20, 2006

After months of investigation, the Government Accountability Office (GAO) released a November 30 report that fails to shed new light on state and local use of eminent domain. The study falls far short of addressing many questions that government groups and property rights organizations hoped the study would answer. The report states that no aggregate national or state data exist on state and local use of eminent domain.

As a result, the report states that the GAO was precluded from conducting a statewide or national assessment of: (1) how frequent eminent domain is used; (2) how often private-to-public or private-to-private transfer of property occurs; or (3) the purposes for which eminent domain has been used by state and local governments. The report cites two key factors as causes of the data limitations: multiple authorities within each state that have the power to invoke eminent domain; and no centralized authority responsible for collecting such data.

The GAO was mandated to look into government use of eminent domain following the Supreme Court’s 2005 decision in Kelo v. City of New London. The decision generated wide'spread opposition when the nation’s highest court affirmed local use of eminent domain for economic development. A number of property-rights organizations claimed the decision enhanced local governments’ ability to abuse their eminent domain powers. The decision, they claim, allows local governments to seize any private homeowner’s property and turn it over to a private developer any time the city determines the property is needed for economic development that results in the creation of more jobs and increased city revenues.

The Conference of Mayors and other local government groups believe local governments seldom use eminent domain to seize owner-occupied property. They believe it is most often used to deal with vacant and abandon property and to alleviate blight. It is also used to acquire land to develop low and moderate-income housing. In all of these instances, they believe eminent domain serves a legitimate public use.

Although the GAO was unable to locate aggregate state or national data, the report provides anecdotal information on: (1) the purpose for and extent to which eminent domain can be used; (2) the process states and selected localities use to acquire land including eminent domain; (3) how the use of eminent domain has affected individuals and communities in selected localities; and (4) the changes state legislatures made to laws governing the use of eminent domain. To gather information for the report, GAO officials reviewed constitutional provisions in all 50 states, made site visits to five cities—Baltimore, Chicago, Denver, Los Angeles and New York; interviewed multiple national associations including those that represent state and local government officials, planning professionals and property rights groups; and interviewed ten state-level transportation departments.

State and local officials who met with GAO cited various purposes where eminent domain can or has been used, including: building or expanding transportation projects; the elimination of and prevention of conditions that are detrimental to the physical, social, and economic well-being of an area; remediation of environmental contamination; and economic development. City officials in Baltimore reported that their city most often used eminent domain to assemble land for redevelopment projects that involved blight removal, while officials in Los Angeles said their city most often used it for street improvements. Officials in New York City reported that the city used eminent domain most commonly to assemble land for parks and street widening. New York City officials also reported using eminent domain for many other projects including: the assemble of land for the construction of a tunnel to enhance and improve the city’s water system; and to eliminate blight by constructing a major housing development.

According to the report, “State and local laws set forth basic procedural requirements—that share similarities nationwide—for how authorities acquire land, including by eminent domain.” These procedures are divided into four stages: (1) project planning where officials consider and approve a redevelopment plan; (2) land valuation process where legal ownership of the parcels of land needed is determined; (3) land acquisition where authorities attempt to negotiate a purchase price and if unsuccessful begin proceedings to acquire the property by eminent domain; and (4) compensation where the owners are provided just compensation.

Also, when authorities acquire property for a project in which federal funds are involved, state and local governments must comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1979 (URA), which establishes relocation payment amounts and procedures to assist individuals displaced by eminent domain. The report states that many state and local officials feel the URA limits on payments are too low and need to be revised.

In selected projects reviewed by the GAO where eminent domain was used, the report provides mixed reviews. On the one hand, it acknowledges some of the benefits realized by communities after the projects were completed. It points out that local officials from most of the selected projects reported that their areas generally could be characterized by different conditions, such as modernized roadways, additional housing, and increased commercial activity. On the other hand, it cites some of the negative effects of eminent domain mentioned by property rights groups, including assembled land going unused, loss of small businesses and jobs, and decreases in affordable housing.

City officials in Chicago and Los Angeles reported that the construction of state buildings in their downtown areas had a positive economic impact on their cities because the projects attracted private development. Officials in Denver used eminent domain to assist a developer in refurbishing a downtown property of architectural and historical significance. They believe this project prevented the property from becoming vacant and potentially having a negative impact on surrounding areas.

Following the Supreme Court’s June 2005 Kelo decision, most states made changes to their eminent domain laws. The report found that as of July 31, 2006, 29 states had enacted at least one of three general types of change. First, a total of 23 of the 29 states imposed further restrictions on the use of eminent domain, such as prohibiting its use to increase property tax revenues, to transfer condemned property to a private entity, or to assemble land for projects that are solely for economic development.

Second, the report states that 24 of the 29 states established additional procedural requirements, such as providing further public notice prior to condemnation. Finally, 21 of the 29 states adopted changes that defined or redefined blight or blighted property, public use, or economic development. In some cases for example, states made clear that economic development and the public benefits resulting from it, including increased tax revenue and increased employment, do not constitute a public use.