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Since the Supreme Court’s decision in Kelo v. New London1 last year, eminent domain and property rights issues have taken center stage in state courts.2 In July 2006, the Ohio Supreme Court in Norwood v. Horney3 placed significant limits on eminent domain.

Facts of the Case

In 2002, a group of developers approached the City of Norwood about building a commercial development in the appellants’ neighborhood. The proposed development project was a complex of private office space, rental apartments, condominiums, and retail stores. Norwood expected the development to generate nearly $2 million in annual revenue for the city.4

The developers successfully acquired the property of a substantial majority of the property owners in the area through private sales. They could not, however, convince the appellants, a small group among the property owners, to sell.5 The developers then asked Norwood to acquire the property through eminent domain and transfer it to them to develop.6

Norwood used funds provided by the developers to retain a consulting firm to prepare an urban renewal study. The study acknowledged that many of the homes in the area were in good condition, but concluded that the neighborhood was in a “deteriorating area.” It went on to estimate that, due to the construction of a major highway in the area and the continuing piecemeal conversion of property from residences to businesses, the neighborhood would continue to deteriorate.7

Based on the study, the local planning commission recommended approval of the redevelopment plan. The Norwood City Council then passed a series of ordinances: (1) to adopt the redevelopment plan to eliminate “deteriorating” and “deteriorated” areas within the City of Norwood, (2) to authorize Norwood to enter into an agreement with the developers to build the proposed commercial development in the appellants’ neighborhood, and (3) to appropriate the appellants’ properties. Norwood then filed complaints against the appellants to seize their properties.8

Following a hearing, the trial court found that the City Council had abused its discretion in finding that the neighborhood was a “slum, blighted or deteriorated area.” The court found but a paucity of evidence that the majority of structures in the area were conducive to ill-health and crime, detrimental to the public’s welfare, or meeting otherwise the criteria of a “slum, blighted, or deteriorated area.” Nevertheless, the court upheld the City Council’s determination that the neighborhood was in a “deteriorating area.”9

After juries rendered verdicts on the value of the appellants’ properties, Norwood deposited (with the court) the full amount awarded and obtained titles to the properties. Norwood then transferred the properties to the developers, which began demolishing the houses in the area immediately.10 The trial court refused to enjoin the developers from destroying the properties pending appeal, and the court of appeals denied a stay of the trial court’s judgment. Upon appeal of those rulings, the Ohio Supreme Court accepted the cases and issued orders preventing the appellees from destroying the properties pending review of the taking.11

Court’s Overview of Private Property Rights y Rights and Eminent Domain Authority

Justice Maureen O’Connor began her analysis for a unanimous Ohio Supreme Court by pointing out that the “rights related to property, i.e., to acquire, use, enjoy, and dispose of property” are among the “most revered in our law and traditions.”12 Citing Richard A. Epstein’s book Takings: Private Property and the Power of Eminent Domain, the court referred to the “Lockean notions of property rights” which the founders of Ohio expressly incorporated into the Ohio Constitution.13

The court also acknowledged the “state’s great power to seize private property”14 creates an “inherent tension between the individual’s right to possess and preserve property and the state’s competing interests in taking it for the common good.”15

The court noted that James Madison was “[m]indful of that friction and the potential for misuse of the eminent domain power.” Accordingly, Madison’s proposed draft of the Takings Clause included two equitable limitations on its use that were eventually incorporated into the Fifth Amendment: the “public use” requirement and the “just compensation” rule.16

The Ohio Supreme Court also provided an overview of the historical development of eminent domain, noting that in America’s “nascent period” takings usually had palpable benefits for the public, such as the building of roadways, navigable canals, and government buildings.17 As “America shifted from an agrarian society to an industrialized and increasingly urban one,” eminent domain authority was “used widely to support the creation of the nation’s physical infrastructure and those enterprises necessary for continued expansion and development, such as utilities, railroads, and mines.” Though these takings often involved significant benefit to individuals and corporations, “many legislatures and courts affirmed their use under the principle that they afforded some larger, general benefit to the public.”18

During the 20th century, the broad concept of public use “entrenched” itself in eminent domain jurisprudence.19 Eventually, almost every court, including of course the Ohio Supreme Court, “upheld takings that seized slums and blighted or deteriorated private property for redevelopment, even when the property was then transferred to a private entity,” because the elimination of such blight amounted to “a public use.”20

This trend, with its broad justification, culminated last year with the Kelo v. New London decision, wherein the U.S. Supreme Court determined that general economic development was a public use under the Fifth Amendment to the U.S. Constitution.

Applying Ohio Law to Norwood’s Actions

The Ohio Constitution provides that “[p]rivate property shall ever be held inviolate, but subservient to the public welfare.” Like the Fifth Amendment to the U.S. Constitution, the Ohio Constitution permits private property to be taken for “public use,” with compensation.21

In Norwood v. Horney, the Ohio Supreme Court made clear that determining whether proposed condemnations are consistent with the Ohio Constitution’s “public use” requirement is a “constitutional question squarely within the court’s authority.”22 It also noted that eminent domain is a power of last resort for the good of the public, not simply a vehicle for municipalities to finance community improvements.23

The state’s highest court also noted that due process demands that the state provide meaningful standards in its laws,24 and that laws that are too vague tend to “suffer a constitutional infirmity.”25

The court set out a two-part test to determine whether a law is void for vagueness:

(1) laws must give a person of ordinary intelligence a reasonable opportunity to know what is prohibited so that he may act accordingly; and

(2) laws must provide explicit standards for those who apply them in order to prevent arbitrary and discriminatory enforcement.26

The court also indicated that because statutes or regulations regarding eminent domain implicate a fundamental constitutional right, (the right to possess private property), courts should apply a “heightened standard of review” in determining whether they are void for vagueness.27

The Norwood Code permits the City of Norwood to appropriate property in “deteriorating” areas. Under the Norwood Code, factors to consider in determining whether an area is “deteriorating” include incompatible land uses, lack of adequate parking, and diversity of ownership. The trial court identified additional factors, including increased traffic, deadend streets, numerous curb cuts and driveways, and small front yards.28

Ohio’s highest court concluded that under the Norwood Code, the standard for designating a neighborhood a “deteriorating area” was not just ongoing or future prospect of deterioration, but also the “danger of deterioration.”29

The court therefore concluded that the Norwood Code provision was void for vagueness, because “deteriorating area” was a “standardless standard.”30 It provided a litany of conditions for what qualified as “deteriorating” but offered little guidance in application. In fact, the court stated, all the standards used in Norwood to meet the “deteriorating” qualification exist in virtually every urban American neighborhood.31 “Rather than affording fair notice to the property owner,” the court found, “the Norwood Code merely recites a host of subjective factors that invite ad hoc and selective enforcement.”32

The court further held that the term “deteriorating area” cannot be used as a standard for a taking because it “inherently incorporates speculation as to the future condition of the property,” rather than focusing on the condition of the property at the time of the taking.33 To uphold such a speculative standard, the court said, would be permitting the derogation of a cherished and venerable individual right based on nothing more than “a plank of hypothesis flung across an abyss of uncertainty.”34

The court also struck down the section of the Ohio statute that effectively prohibits the issuance of stays or injunctions during appellate review of eminent domain actions.35 The Ohio Supreme Court recognized the General Assembly’s interest in favoring a scheme in which eminent domain matters would receive expedited attention in the courts. However, the court found that the statute’s blanket proscription on stays or injunctions against the taking and using of appropriated property pending appellate review was an “unconstitutional encroachment on the judiciary’s constitutional and inherent authority in violation of the separation-of-powers doctrine.”36

The court concluded that although it is “imperative that appellate courts review these cases as expeditiously” as possible, “we doubt the courts’ ability, absent the authority to issue a stay, to move more quickly than a bulldozer.”37

Conclusion

In framing the issue in Norwood v. Horney, the Ohio Supreme Court noted that it “must balance two competing interests of great import in American democracy: the individual’s right to the possession and security of property, and the sovereign’s power to take private property away from the individual for the benefit of the community.”38

The Supreme Court in Kelo v. New London favored the sovereign’s power to take private property for the community’s benefit, when it held that economic benefit alone was a “public use” under the Constitution. But, the Kelo Court recognized that state constitutions may provide additional protection to property owners in these matters by limiting the use of appropriation.39

Last year, following the Kelo decision, the Ohio General Assembly created a task force to study the use and application of eminent domain in Ohio and imposed “a moratorium” on economic takings for transfer to private entities until further legislative remedies could be considered.40

In Norwood v. Horney, the Ohio Supreme Court gave the General Assembly and local governments a roadmap as to what constitutes “public use” under the Ohio Constitution, and made clear that economic development alone is not enough. Recognizing that vague or imprecise definitions can lead to abuse of the eminent domain power, the court held that a “fundamental determination” must be made before permitting the appropriation of property for redevelopment. According to the court, the property, “because of its existing state of disrepair or dangerousness,” must pose “a threat to the public’s health, safety, or general welfare,” in order to be taken for redevelopment. The court specifically found that government does not have the authority to appropriate private property based on the “mere belief, supposition or speculation that the property may pose such a threat in the future.”41

By clearly and narrowly defining the constitutional standards for “public use,” the Ohio Supreme Court has circumscribed the eminent domain power and strengthened claims based on private property rights in Ohio.

*David J. Owsiany is a policy analyst with the Reason Foundation and the senior fellow in legal studies with the Buckeye Institute for Public Policy Solutions.

 

Endnotes

 

1 125 S.Ct. 2655 (2005).

2 See The State of Eminent Domain Law, State Court Docket Watch (The Federalist Society, State Courts Project: Washington, D.C.) March 2005 at 1.

3 __Ohio St.3d __, 2006–Ohio–3799 (hereinafter Norwood).

4 Id. at ¶ 17.

5 Id. at ¶ 20.

6 Id. at ¶ 21.

7 Id. at ¶ 22.

8 Id. at ¶ 23.

9 Id. at ¶ 26.

10 Id. at ¶ 30.

11 Id. at ¶ 31.

12 Id. at ¶ 34 (citation omitted).

13 Id. at ¶ 37 (citation omitted).

14 Id. at ¶ 39.

15 Id. at ¶ 40.

16 Id.

17 Id. at ¶ 45.

18 Id. at ¶ 48.

19 Id. at ¶ 51.

20 Id. at ¶ 59.

21 Ohio Const. art. I, § 19.

22 Norwood, at ¶ 69 (quoting Wayne County v. Hathcock, 471 Mich. 445, 480 (2004)).

23 Id. at ¶ 79 (quoting Beach-Courchesne v. Diamond Bar, 80 Cal.App.4th 388, 407 (2000)).

24 Id. at ¶ 81.

25 Id. at ¶ 82 (quoting Ashton v. Kentucky, 384 U.S. 195, 200 (1966)).

26 Id. at ¶ 83 (quoting Grayned v. Rockford, 408 U.S. 104, 108- 109 (1972)).

27 Id. at ¶ 88.

28 Id. at ¶ 93.

29 Id. at ¶ 99.

30 Id. at ¶ 98.

31 Id. at ¶ 93.

32 Id. at ¶ 98.

33 Id. at ¶ 104.

34 Id. at ¶ 103 (quoting Edith Wharton, The Descent of Man, 35 Scribner’s 313, 321 (Mar. 1904), reprinted in 1 The Selected Short Stories Of Edith Wharton 49, 62 (1991)).

35 Ohio Rev. Code, § 163.19

36 Norwood, at ¶ 125.

37 Id. at ¶ 133.

38 Id. at ¶ 1.

39 Supra note 1, (“[N]othing in our opinion precludes any state from placing further restrictions on its exercise of takings power.”).

40 Am. Sub. S.B. 167, 126th Gen. Assem. (Ohio 2005).

41 Norwood, at ¶ 103.

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