There’s little support for property rights in the North Carolina legislature. In fact, this past legislative session may have been one of the most discouraging sessions for those that care about this fundamental right.
The two major property rights issues before the legislature, real eminent domain and annexation reform, weren’t addressed. The legislators largely fell into two camps. There were the legislators that simply didn’t want to limit eminent domain and forced annexation abuses. Then there were the other legislators that may like to see reforms but pushed legislation that was so ineffective and actually so harmful that many property rights advocates deemed their “efforts” to be insulting.
First, there’s eminent domain reform. In 2005, the United States Supreme Court, in a case called Kelo v. City of New London, held that the government could seize private property from one private citizen and transfer it to another private citizen so long as it is for economic development.
This means, for example, if your house would generate more tax revenue for the government if it was seized from you and given to a developer so it could be turned into a hotel, this would be constitutional.
While North Carolina law doesn’t expressly state that “economic development” takings are allowed, in practice, these takings are in fact permitted. For example, the government can seize property when it is “blighted.”
For decades, the single biggest form of eminent domain abuse has been state and local governments calling properties “blighted,” which has meant almost anything, and using this designation of “blight” as the excuse for seizing private property.
There’s no need for the government to claim it’s taking property for “economic development” when it can take property under the guise of “blight.” In 2006, the North Carolina legislature actually took steps to tighten the definition of “blight” in the statutes, yet the definition still remains too broad.
This past legislative session, an amendment to the state constitution was introduced that would have done more harm than good. It would have made it expressly clear that the government could seize private property for “blight,” and the legislature could define “blight” any way that it wanted.
This amendment would have permitted the biggest source of eminent domain abuse. Any constitutional amendment needs to protect against this abuse practice, not help to promote it. There were many other significant problems with the amendment as well, yet proponents of the amendment didn’t seek to resolve these problems.
This isn’t a situation where the perfect is the enemy of the good. Nobody in their right mind thinks the North Carolina legislature, which has little respect for property rights, is going to pass the best amendment. However, any amendment needs to be somewhat beneficial. Also, there aren’t going to be many bites at the apple when it comes to amending the state constitution to protect against eminent domain abuse.
Secondly, there is annexation reform. North Carolina is one of only a handful of states that allow municipalities to force people living in unincorporated areas to live within municipal boundaries.
The House did pass an annexation reform bill. However, the bill was so bad that many property rights advocates opposed the bill. Legislative supporters of annexation reform were trying to sell the bill as a “first step” and argued something was better than nothing. That isn’t the case when “something” is worse than the status quo.
True annexation reform would require a vote of the property owners, a neutral third party to determine the merits of an annexation, and meaningful services to be provided to property owners.
The annexation bill in many ways is far more insulting than the eminent domain amendment because it not only is filled with attempts to trick the public but many proponents of the bill have tried to sell it as beneficial.
There is a vote provision that is designed to make it virtually impossibly to ever have a vote. Even more “amusing,” in the unlikely event that there is a vote, it would include the voters in the municipality and the annexed area—in other words, since many more people live in a municipality than an annexed area, the property owners in the annexed area still would have no voice. Instead of a city council forcibly annexing them, city residents would be forcibly annexing them.
There is no neutral third party to judge the merits of the annexation. A true compromise would have been to require county commissions to review annexations. At least the commissioners represent the annexation victims and the municipalities.
The biggest problem with the bill though is that it makes things worse for annexation victims. The primary purpose of forced annexation, according to the North Carolina Supreme Court in Nolan v. Marvin (2006) is for municipalities to provide services to unincorporated areas that offer a significant and meaningful benefit to the property owners.
The bill undermines the court’s decision. If no bill were passed, annexation victims could still try and go to the Supreme Court and challenge forced annexations where municipalities tried to justify forced annexations based on the provision of unnecessary and meaningless services.
The bill would protect municipalities to ensure that they don’t have to provide truly meaningful services. In fact, the bill would make it clear that municipalities could duplicate existing services that an area already has—an area could have excellent police protection and if a municipality provides one extra police officer, that would be enough to meet the service requirements of the law.
The good news is that there’s always 2010. In the 2010 legislative short session, the legislature needs to pass a real eminent domain amendment and a real annexation reform bill. These reforms shouldn’t be passed at all costs though. Those legislators that support reform need to stand strong for property rights and not be afraid to oppose sham bills masquerading as real reform.
Daren Bakst, Esq. is the Legal and Regulatory Policy Analyst for the John Locke Foundation. Prior to joining the Foundation, he was Policy Counsel for the National Legal Center for the Public Interest in Washington, DC. In this position, he examined critical regulatory and legal issues, primarily affecting the business community.
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By Daren Bakst
