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Montana Viewpoint©

A MATTER OF PERSPECTIVE

August 17, 2009

Recently I was subjected to a telephone poll on eminent domain. It was painful because the person giving the poll couldn’t read very well, but it did give me plenty of time to think between questions. And the first thing I thought was, “There’s going to be a ballot measure on eminent domain.” And, lo, it came to pass that the following week United Property Owners of Montana (UPOM) announced that they were putting the question before the voters.

Eminent domain is the instrument that allows governments to condemn and purchase property for the public good if the owners refuse to sell; it’s referred to as a “takings.” Highway rights of way are the most obvious example. Highway departments do everything they can to purchase the needed land at a fair price from willing buyers, but can resort to taking it if the owner won’t sell. It is used sparingly; recently a road widening project near Thompson Falls was abandoned because of the reluctance of a few owners to sell property to the state.

Having been “eminent domained” a couple of times (once for a pipeline, once for a sewage treatment plant), I am not a big fan of the process, but I do agree that it is sometimes necessary for the public good.

A takings doesn’t have to involve just the transfer of land, it can involve the loss of value of the land due to government action. This is known as regulatory takings, and that’s what this ballot initiative is all about. The short version is that if a new regulation passed by a government—state, county, or city—has the effect of lowering your property value by 25% or more you are entitled to compensation. The figure 25% is arbitrary, but so is 95%, which was the standard set by the Supreme Court in Lucas v South Carolina Coastal Commission.

Lucas was a real estate developer who had bought two parcels of beachfront property on one of the hurricane prone Barrier Islands of South Carolina to build houses on. Two years after Lucas bought the properties the South Carolina Coastal Commission passed an ordinance that prohibited any new uses of island beachfront because of serious erosion problems. This prevented Lucas from building the houses, and substantially diminished the value of the property. He sued the Commission for the lost value and eventually won on appeal to the U. S. Supreme Court. It was in this case that the Court established that property had to be devalued by a minimum of 95% (and Lucas' had) to require governmental reimbursement.

But consider this; if Lucas had built and sold those houses, what reimbursement would the buyers have been entitled to if the homes had been swept away by the ocean? Yes, the erosion was that serious.

If the ballot measure passes, it could prove interesting for local governments and citizens alike. On the part of homeowners it will mean hiring lawyers and real estate appraisers without having any degree of certainty that you can win the case. On the part of local government fear of a jillion lawsuits will mean total inaction on ordinances that protect the public good no matter how minimal the effect on property values is. Of course, that’s the point-to prevent those people you elect from making decisions that could benefit you and the public in general.

Let’s go back to my supposition in Lucas. If a regulation needs to be passed to protect property in the long run, who is responsible for loss in value caused by NOT passing a regulation?

Spokesmen on UPOM s website www.unitedpropertyownersofmontana.com) say that the issue is necessary to protect farmers and ranchers in Central Montana from losing their farms. Call me unimaginative, but I can’t think of any believable example of governmental regulation that could devalue agricultural property by 25% or more. It seems to me that this measure is aimed more at urban and county areas where planning and zoning are more likely.

A similar ballot measure in 2006, I-154, had its ballot certification revoked because a judge found that thousands of signatures on the certification petition were fraudulent. I-154 was promoted by a group called Montanans in Action which was bankrolled with hundreds of thousands of dollars from wealthy New York real estate developer Howard Rich (no relation to wealthy cartoon character Richie Rich). It will be interesting to see where UPOM gets its money from.

Montana Viewpoint© is carried by 20 Montana weekly newspapers, including those in Helena and Billings, with a combined circulation of over 60,000.

Jim Elliott is Chairman of the Montana Democratic Party and a former state senator from Trout Creek.

Montana Viewpoint© has been distributed statewide since 1992 and is carried by over 20 Montana weekly newspapers with a combined circulation of over 60,000.There is no charge for publication.

Jim Elliott
Phone: 406-827-3671
Mail: 100 TC Road, Trout Creek, MT 59874

jim@jimelliott.org