Private property is one of humanity’s great discoveries, like fire, or DNA, or the scientific method. Like fire, property has the ability to release a kind of unseen power from nature, to transform a desert waste into a luxurious resort like Las Vegas, for instance. Like DNA, property represents something deeply ingrained in human nature; no society has ever been found that did not have some concept of property. The universality of property suggests immediately that the concept is not just an arbitrary social creation. Instead, property is something common to all human beings as human beings—it doesn’t have to be taught to people, because it is natural.
Private property is also a fundamental human right; it is the Cornerstone of Liberty. It is the guardian of all other rights. You cannot have freedom of press if you cannot own a printer, and you cannot have freedom of religion if you cannot own a church. That's why the US Constitution refers to private property more than to any other right. If we cannot be free to own, use, buy or sell property, then we cannot be free at all.
But, years of bad court decisions and government regulations have chipped away at this foundation of the American Dream.
A decade ago, the U.S. Supreme Court shocked the nation with its decision in Kelo v. New London by rubber-stamping a decision by state officials in Connecticut to seize private homes by eminent domain to make way for private redevelopment projects. The Court said taking private property for a private company was actually a public use because doing so would create jobs or increase tax revenue.
In response to the Kelo decision, lawmakers on both sides of the political aisle began passing new state laws aimed at protecting property owners from government takings.
Sadly, most of the state laws passed in the wake of Kelo left large loopholes allowing bureaucrats to abuse property owners by changing the rules that govern how owners can use their property. Ten years after Kelo, most federal and state courts still do little to protect the right to use property as one wishes.
For example, government can also take away property without taking title to it. So-called “regulatory takings” prohibit owners from using, selling, or building on their land. Such regulations are more common—and can be more insidious—than taking property outright.
When the government takes property by eminent domain, it is required to pay owners for it. But when the government regulates a property’s value away, it takes away rights just as much as with eminent domain. Yet since the government does not technically take title to the land, judges often hold that owners are not entitled to any “just compensation.”
People are therefore forbidden from using their property, but they are stuck with the taxes, the loan payments, and the possible liability if someone is injured on the land. Yet such regulations often destroy the property’s value, meaning the owner also cannot sell it.
One recent example restrictions on short-term rentals. The so-called Sharing Economy has opened new opportunities for property owners to make money and improve local economies—and to benefit consumers with more choice and lower prices.
Unfortunately, regulators are not welcoming these innovations with open arms, but are instead punishing people – sometimes by criminal penalties – for allowing overnight guests in their own homes. From Honolulu, HI, to Jerome, AZ, powerful hotels and vocal neighbors are successfully urging cities to ban property owners from offering their homes to travelers, despite the fact that these restrictions have no connection to the government’s legitimate functions of protecting health and safety.
Sadly, state courts routinely uphold vacation rental bans. And because owners can still rent their property long-term and live in the homes themselves, owners are not entitled to compensation.
In response to the rampant property rights violations that remain even after the wave of post-Kelo reforms, the Goldwater Institute developed the Property Ownership Fairness Act, a cutting-edge initiative that limits government’s power to seize land through eminent domain or through the technical loophole of overregulation. The Act requires state and local governments to pay owners when regulations reduce their property values without actually ensuring public health and safety.
In other words, while owners can be barred from polluting or using their land in ways that violate the rights of their neighbors, they cannot be prohibited from building or renovating homes or operating legitimate businesses unless the government pays them for taking away their property rights. And unlike under federal law, property owners must be paid even if the regulations only affect part of their property. If a regulation deprives an owner of 10 percent of the property’s value, the owner must be paid for that 10 percent loss.
In many states, as well as in federal court, it is typically property owners who must bear the burden of proving that restrictions on their rights are unconstitutional. Under the Property Ownership Fairness Act, government has the obligation of demonstrating—by real evidence—that restricting those rights protected the public’s health and safety in some meaningful way.
Ten years ago, Arizona voters approved a version of the Act by a 2:1 margin. It is by far the nation’s strongest protection for property rights because it’s changed the way regulators think about property regulation.
For example, only two years after the Act was passed, Maricopa County issued a moratorium on building near Luke Air Force Base. The value of newly zoned vacant residential lots dropped 95 percent, while existing home values were halved. Property owners suddenly found themselves barred from installing pools in their yards, mounting solar panels on their roofs, undertaking urgent electrical and plumbing repairs, or building new homes. As a result of the moratorium, nearly 200 property owners filed nearly $20 million in claims for compensation. The county, faced with the true costs that its regulation had imposed, rescinded its freeze on permits.
Officials sometimes complain that paying for regulations makes regulation too expensive. But remember, regulation always comes at a cost to someone. This reform gives lawmakers a choice: if they think an historic preservation ordinance or wildlife habitat requirement is important enough, they can pay owners. But if the regulation is not worth that cost to the government and community, it certainly should not be shouldered by the property owner alone. Requiring lawmakers to weigh the costs and benefits of the regulatory burdens they impose helps discourage excessive regulation and abuse.
Following on its decade of success in Arizona, the Property Ownership Fairness Act can protect homeowners in the other 49 states as well. Where the courts have failed, lawmakers can inaugurate a new era of respect for the most fundamental of all rights, the right to ownership.