The NewStandard ceased publishing on April 27, 2007.

State Initiatives May Use ‘Property Rightsâ€TM to Deregulate

by Michelle Chen

On Election Day, voters in four states will consider allowing property owners to claim financial damages when public-interest regulations cost them money.

Oct. 19, 2006 – When the Supreme Court last year empowered governments to take over private property for private commercial development through "eminent domain," community activists bristled at the prospect of unilateral land-grabs. But this election season, public-interest groups fear that one thread of the backlash is being manipulated to tear down protections that preserve the environment, keep neighborhoods intact and hold corporations accountable to communities.

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Seizing on public anxieties, "property rights" activists across the country are pushing ballot initiatives that would make it easier for property ownership to trump government regulation by attacking what they call "regulatory takings."

The ballot initiatives would essentially allow citizens to challenge state and local government actions they claim negatively impact property values, with some exceptions for health and safety protections. Under this scheme, if property owners prove they have suffered economic losses as a result of some measure – for example, a zoning ordinance – the government would have to either offer compensation or simply waive the regulation.

The problem, critics say, is that sometimes the government has good reason to restrict private-property owners.

"These measures completely subvert our traditions of communities getting together and having a say in how they change," said Eric de Place, an analyst with the Seattle-based sustainability think tank Sightline Institute.

Libertarian activists are pushing ballot initiatives to make it easier for property ownership to trump public-interest regulations.

By creating a legal channel for anti-regulatory claims, he said, the so-called "pay or waive" system "basically allows individual property owners to extort from their communities."

In Washington State this November, voters will decide on Initiative 933, which would enable people to claim compensation over government decisions that affect property, such as restrictions on construction, tree removal or water diversions. Critics say the definition of "private property" in the Initiative is so vague it might be read to include not just real estate, but also personal possessions and financial investments. People could bring claims against regulations enacted as early as 1996.

Voters in Arizona and Idaho will weigh similar ballot measures on compensating property owners. Property-rights advocates have pushed regulatory-takings initiatives in Montana and Nevada as well, but those proposals have been stymied by legal challenges.

In California, Proposition 90 would amend the state constitution to allow all property owners to seek damages for government actions that have allegedly caused "substantial economic losses."

Like some other state initiatives, Proposition 90 contains rules that would curb the government’s authority to seize property through eminent domain. Yet the real danger posed by the initiative, opposition groups say, is separate provisions attacking fundamental government functions.

Critics say the initiatives play on fears of eminent domain as a diversion tactic in an anti-government campaign.

The measure does establish some limits, including exemptions for existing laws and public-health regulations. But Proposition 90’s opponents, including environmental, labor, business and other civic organizations, argue that the law’s language is so broad, virtually any action in the public interest could be fair game for a legal complaint.

Kathy Fairbanks, a spokesperson for the No on Proposition 90 campaign, said the amendment could be used to undermine labor standards, consumer financial protections and endangered-species laws.

Fairbanks predicted that if enacted, Proposition 90 would burden taxpayers with the cost of litigation. In most cases, she added, the government would be subject to an onslaught of conflicting claims. A business might sue to suspend a zoning ordinance, for instance. But if the government relaxes the regulation, local residents may then claim that reducing the regulation has damaged their property values.

"Local governments, state governments are going to be unable to take a step forward because of these lawsuits," she told The NewStandard. "They will be severely hamstrung in their ability to protect their communities and quality of life."

Playing on Fear

The high court’s decision in Kelo v. New London, which affirmed governments’ authority to take private property in cooperation with private developers, stoked fears that eminent domain could be abused for commercial gain, rather than used for a public purpose, as originally intended. But critics of the ballot initiatives being pushed in the name of opposing the Supreme Court ruling say proponents are playing on fears of eminent domain to camouflage an anti-government campaign.

Rather than digging into state coffers to pay claimants, Oregon is simply opting not to enforce land-use regulations.

For instance, opponents note that the introduction to Washington’s Initiative 933 refers to eminent domain, calling it "an extraordinary power… potentially subject to misuse." Yet the measure does not actually address the state’s existing eminent domain laws.

"They’re using [eminent domain] as a Trojan horse to try to fool people into passing things that are harmful to them," said David Goldberg with the community-planning organization Smart Growth America.

But supporters of shrunken government see the same threat in both actual property takings as well as "regulatory" ones. Leonard Gilroy, a policy analyst with the free-market think tank Reason Foundation, said the ballot initiatives could hold the government accountable for "the true costs of what the regulation would do."

Ultimately, he said, such measures would make the state "more creative in terms of finding alternatives that are less impactful on property rights."

Lori Klein, head of the HomeOwners Protection Effort campaign, which promotes Arizona’s Proposition 207, said the initiative would not undermine essential health and safety regulations or preempt community planning efforts. "All this does is make governments more responsible when they plan," she told TNS.

But to Len Barson with the Nature Conservancy of Washington, Initiative 933’s impact on the planning process is akin to "using a chainsaw when pruning shears would work much better." While the Initiative contains exceptions for human health and safety protections, he said, it would still leave wildlife vulnerable to destructive development projects that override community interests.

Steve Sakuma, who runs a family-owned fruit farming business based in Washington and California, said the initiatives in both states threaten his livelihood.

He said that his town in Skagit County, Washington has historically managed to rein in development with zoning criteria that set limits on residential property. But Sakuma said he fears Initiative 933 could make it easier for developers to sweep up tracts of farmland and parcel them into residential developments. Local farmers opposed to the initiative warn that such development breaks up the overall agricultural landscape and makes the community less suitable for farming.

"When a farmer… has to compete with a developer or those kinds of folks, we lose every time, because we can’t compete dollar-wise," he said.

The Oregon Experiment

Both supporters and opponents of the ballot measures point to Oregon’s Measure 37, passed in 2004, as a telling case study.

According to government data, the state has been inundated with more than 2,600 claims related to Measure 37, totaling about $6 billion in alleged damages. Another analysis by researchers at Portland State University shows that the highest reported categories of claims involve zoning for farm land or mixed farm-forest land. Rather than digging into state coffers to pay the claimants, however, the state is simply opting not to enforce the regulations.

In a report on Measure 37 published last week, the Sightline Institute presented stories of some residents’ bitter experiences with the law. One story documented a small ranch owner who was worried about potential noise and pollution from a planned 80-acre gravel mine to be built next door under a regulatory waiver. In another, families in a neighborhood outside of Salem complained that a rash of new development plans – the result of a developer’s challenge to a farmland zoning ordinance – could deplete the community’s water resources.

Eric Stachon, with the community advocacy group 1000 Friends of Oregon, said the explosion of ballot initiatives patterned after Measure 37 is "going to destroy farmland, it’s going to destroy forest land, and it’s going to destroy communities."

Meanwhile, the Chicago-based libertarian advocacy group Americans for Limited Government (ALG) is campaigning to spread Oregon’s example throughout the country. The group is chaired by New York real-estate tycoon Howard Rich, who also runs the ALG-affiliated Fund for Democracy, which "provides seed money to state initiative campaigns," according to the ALG website.

Rich and ALG do not disclose detailed information about their funding sources. But according to an analysis of campaign-disclosure documents by the watchdog group Center for Public Integrity, in the four states with active ballot initiatives this November, some 85 percent of the campaign funding, or $4.9 million, has filtered through advocacy organizations associated with Rich.

The movement against property regulation is also gaining traction on Capitol Hill. Last month, the House of Representatives passed the Private Property Rights Implementation Act, which would enable property owners to sue in federal court to oppose local land-use decisions.

Sightline’s de Place said that while libertarian groups claim to be advocating on behalf of individual homeowners, ordinary households would benefit little if regulatory-takings claims strip away local quality-of-life protections.

"Small-fry property owners [and] individual families are at the most risk under these ballot measures," de Place said, while "land speculators, people who have big property holdings and want to sell it off, and development corporations – those guys could make a killing."

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The NewStandard ceased publishing on April 27, 2007.

Michelle Chen is a staff journalist.

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