House Passes "The Private Property Protection Act of 2005"


The House of Representatives passed HR 4128, entitled "The Private Property Protection Act of 2005." This bill, propelled by a bi-partisan group of 97 co-sponsors, overwhelmingly passed 376-38.

Specifically, HR 4128 severely limits the authority of states and local governments to use eminent domain with ANY funds – local, state, or private – in the taking of private property for economic development activities. This piece of legislation was drafted by House Judiciary Committee Chairman F. James Sensenbrenner, (R) from Wisconsin, one week after the Kelo Supreme Court decision.

If you recall, in June, the Supreme Court ruled 5-4 that the City of New London, Connecticut was within its rights to invoke eminent domain in the taking land that included a one-acre parcel on which there were several modest, well maintained homes to pave the way for a large scale, high-end commercial development, that included an office park and hotel complex. The U.S. Supreme Court, concurring with the Connecticut Supreme Court felt that the City of New London had correctly exercised its Constitutional right to invoke eminent domain in the taking private property for a public use. And, in this case the public use was defined as creating jobs, expanding the local tax base through economic development activities. Many across the country did not share the views of the City of New London or the U.S. Supreme Court, particularly Rep. Sensenbrenner. In this bill economic development means..."the taking of private property, without consent of the owner, and conveying or leasing such property from one private person or entity to another private person or entity for commercial enterprise carried on for profit, or to increase tax revenue, tax base, employment, or general economic health..." The bill also includes some commonly accepted exceptions, such as road, airport, hospital, military base construction; sighting public utilities, taking properties that prose an immediate health and safety threat, etc. The following is the gist of this bill.

Prohibition of States and Local Governments to use Eminent Domain for Economic Development

No state of political subdivision (local government) of a state shall exercise eminent domain, or allow the exercise of such power by any person or entity to which such power has been delegated, over property to be used for economic development or over property that is subsequently used for economic development, if the state or local government receives federal economic development funds during any fiscal year in which it does so.

A violation by a state or local government shall render the state or local government ineligible for any federal economic development funds for a period of two years following a final judgment on the merits by a court of competent jurisdiction that such violation has occurred, and any federal agency charged with distributing those funds shall withhold them for a 2-year period, and any such funds distributed to the state or local government shall be returned or reimbursed to the appropriate federal agency or authority of federal government.

A state or local government shall not be ineligible for any federal economic development funds, if the state or local government returns all real property the taking of which was found by a court of competent jurisdiction to have constituted a violation of this act, and replaces any other property destroyed and repairs any other property damaged as a result of such violation.

Right of Property Owners to Bring Action Against States and Local Governments

A property owner who feels that he or she is a victim under the provisions of this act may bring action against the state or local government in federal court within seven years following the conclusion of the taking of the property in question and the subsequent use of the condemned property for economic development.

In the Senate

On the Senate side there is a companion bill S 1313, introduced by Texas Senator John Cornyn that already has 30 co-sponsors. Hearings have been held, however no legislative action has been scheduled. Typically, the Senate acts with much more deliberation before proposing legislation, particularly when the effects could have considerable impact on local determination. And, the Senate has so many other issues to consider, such as nominees to the Supreme Court, which will keep them occupied well into the fall.

Obviously, the impact of this legislation on state and local governments' ability to undertake redevelopment activities through eminent domain could be disastrous. The Congress is exerting tremendous control over a state or local government's ability to govern itself in the best interests of its citizens, even if the funds used to complete the eminent domain action are not federal dollars. We do not expect this bill to go any further than it already has this year. However, with such broad political support in the Congress and across the nation, it is without a doubt that the Congress will take up legislation that addresses the use of eminent domain in taking private property for economic development.

In the mean time, before Congress has a chance to pass broad sweeping legislation on eminent domain, community development practitioners must be mindful of what is going on in the state legislatures on this issue. It is without a doubt that states will seek to define the conditions under which local governments can invoke eminent domain activities. It will be up to you to advise your Mayors, City Managers and City Councilors of how harmful, to any revitalization effort, an overly restrictive eminent domain statute can be. Hopefully, cooler heads will prevail.

Lastly, the Bond Amendment to the TTHUD Appropriations bill is a good compromise. The language can be found in the October 21 issue of the NCDA Washington Report.

If you have any questions on this issue please contact Chandra Western at 202-887-5521.

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