Protecting Private Property Rights: The Property Ownership Fairness Act

Abstract

In 2005, the Supreme Court’s decision in Kelo v. City of New London shocked the nation when it rubber-stamped a decision by state officials to seize private homes by eminent domain to make way for private redevelopment projects. In response, lawmakers on both sides of the political aisle began passing new state laws aimed at protecting property owners from government takings.

Despite these efforts at reform, governments have found plenty of loopholes allowing them to abuse property owners by condemning land or by changing the rules that govern how owners can use their property, sticking them with the mortgage, the taxes, the potential liability if someone slips and falls on the property — and often wiping out the property’s market value. Ten years after Kelo, most federal and state courts still do little to protect landowners when government declares their property “blighted” or takes away the right to use property as one wishes.

In response to the rampant abuses that remain even in the wake of post-Kelo reforms, the Goldwater Institute has developed a cutting-edge initiative to limit government’s power to seize land outright through eminent domain or through the more insidious method of overregulation. The Act (1) ensures that government can only condemn private property for truly public uses, not to help out developers or advance political agendas, and (2) requires government to pay owners when its regulations reduce their property values without actually ensuring public health and safety. The Act is a principled, practical solution that strikes a fair balance: it allows government to bar property uses that threaten public health or safety, but it also bars officials from sticking property owners with the bill when land-use restrictions go beyond what’s necessary to protect the public.

In 2006, Arizona voters approved a version of the Act1 by a 2:1 margin. It is by far the nation’s strongest protection for property rights. In its decade of operation, the Act’s success has sent a message to officials that they cannot expect to take Arizonans’ property without paying for it, nor can they redesign neighborhoods to serve the interests of politically powerful developers at the expense of home and small-business owners. Now, building on this success, the Property Ownership Fairness Act can be used to protect citizens in the other 49 states.

Keywords: property rights, Proposition 207, Prop 207, Arizona, regulatory takings, eminent domain, blight, just compensation, Kelo v. New London