Eminent Domain

The Chamber does not support state ballot Proposal 4, which is on the November 2006 ballot.   We do not believe amending the Constitution of the State of Michigan is the appropriate means to rectify deficiencies that may exist in the use of eminent domain.  Although we are sensitive to public entities taking private land, this proposal will place constitutional restrictions on public entities that may be against the best interests of business and a community. When conducted in cooperation with private business, economic development is a legitimate function of government that will be adversely impacted by passage of this ballot proposal. We urge Chamber members not to support this proposal in November.

Analysis against Proposal 4

This proposal could limit a government’s ability to pursue important economic development projects that benefit the overall business community.

It forces governments to pay at least 125% of the fair market value for residential property, which would significantly raise the cost to governments and ultimately the taxpayer.

This proposal could make it more difficult to address blighted property.

Current Michigan legislation and Michigan Supreme Court rulings already place sufficient constraints on the use of eminent domain to protect property owners.

Analysis in favor of Proposal 4

It constitutionally protects the rights of private property owners, particularly the rights of businesses that own property.

Public entities still have the right to take land for a public use. This proposal limits their ability to take private land and transfer ownership to another private entity.

Background

Senate Joint Resolution E addresses the grounds by which public entities in the state of Michigan can take private property. This ballot proposal would require that takings be for a "public use" and would not include the taking of private property for the transfer of ownership to a private entity for the purpose of economic development or enhancement of tax revenue. The joint resolution also provides that if an individual's principal residence is taken for a public use, the amount of compensation would have to be at least 125 percent of the property's fair market value, in addition to any other reimbursement allowed by law.

The joint resolution would further add that in a condemnation action, the burden of proof is on the condemning authority to demonstrate, by a preponderance of the evidence, that the taking of private property is for a public use. If, however, the action involves the taking of property for the purposes of eradicating blight, the condemning authority would have to demonstrate by clear and convincing evidence that the taking is for a public use.

Ballot Language

SENATE JOINT RESOLUTION E: Adopted by the State Senate December 13, 2005; adopted by the State House December 13, 2005; deposited with the Secretary of State December 15, 2005.

BALLOT DESIGNATION: 06-4 BALLOT LANGUAGE: The following ballot language was approved by the Board of State Canvassers on August 25, 2006.

More Background Information

Under the United States and Michigan Constitutions, the government may take, or “condemn”, private property for a public use--that is, exercise its power of eminent domain--as long as the government provides the owner with just compensation. The question of what constitutes “public use” has been the subject of litigation at the State and Federal levels.

In 2004, the Michigan Supreme Court issued an opinion in County of Wayne v Hathcock (471 Mich 445) overturning its 1981 decision in Poletown Neighborhood Council v Detroit, which had allowed the condemnation and transfer of private property to a private entity for the purpose of economic development--in that case, a General Motors plant.

In 2005, the U.S. Supreme Court decided Kelo v City of New London, Connecticut (545 U.S. ___), affirming that economic benefit constitutes “public use” or “public benefit”, and determining, therefore, that a city’s taking of private property for that purpose is constitutional. (Both Hathcock and Kelo are described below, under BACKGROUND.)

The U.S. Supreme Court noted, however, “…nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.” Some people believe that the Hathcock decision should be codified in State statute, and incorporated in the State Constitution, in order to prohibit a unit of government from taking and transferring private property to a private entity by eminent domain solely for the public benefit of economic development or increased tax revenue.  (Source: Senate Fiscal Agency Analysis)

Senate Bill 693 has been passed by the legislature and will go into effect if the ballot proposal passes.  SB 693 stipulates the conditions for taking private land:

“The taking of private property by a public corporation or a state agency for transfer to a private entity is not a public use unless the proposed use of the property is invested with public attributes sufficient to fairly deem the entity’s activity governmental by 1 or more of the following:

(a) A public necessity of the extreme sort exists that requires collective action to acquire property for instrumentalities of commerce, including a public utility or a state or federally regulated common carrier, whose very existence depends on the use of property that can be assembled only through the coordination that central government alone is capable of achieving.

(b) The property or use of the property will remain subject to public oversight and accountability after the transfer of the property and will be devoted to the use of the public, independent from the will of the private entity to which the property is transferred.

(c) The property is selected on facts of independent public significance or concern, including blight, rather than the private interests of the entity to which the property is eventually transferred.

(3) As used in subsection (1), “public use” does not include the taking of private property for the purpose of transfer to a private entity for either general economic development or the enhancement of tax revenue.”

(Source:  SB 693 as passed by the Michigan Legislature)