The state legislature adjourned last week having abandoned a threat to seize the hit TV show “House of Cards” through the use of eminent domain, with negotiations over the extent of tax subsidies to the show still hanging in part. I’ve got an update at Cato, with specific attention to the use of eminent domain to confiscate moveable and intangible assets, as opposed to land; in earlier episodes, Maryland has gone after the Baltimore Colts football team (which escaped) and the Preakness horse race (which agreed to stay).
Kind of like Venezuela with Old Bay seasoning: “Responding to a threat that the “House of Cards” television series may leave Maryland if it doesn’t get more tax credits, the House of Delegates adopted budget language Thursday requiring the state to seize the production company’s property if it stops filming in the state. … Del. William Frick, a Montgomery County Democrat, proposed the provision, which orders the state to use the right of eminent domain to buy or condemn the property of any company that has claimed $10 million or more credits against the state income tax. The provision would appear to apply only to the Netflix series, which has gotten the bulk of the state credits.” [Baltimore Sun, Washington Post, earlier citing David Boaz]
The Supreme Court, 8-1 with Sotomayor dissenting, agrees with a Cato Institute brief (earlier) and disagrees with the government: the feds can’t conjure away landowners’ rights as part of the “rails-to-trails” program. Trevor Burrus explains.
So will the federal government pay just compensation? The Supreme Court may decide that question in the pending case of Brandt v. U.S., in which the Cato Institute has filed an amicus brief. [Ilya Shapiro, Cato]
Inspired in part by the work of Cornell law professor Robert Hockett, the city of Richmond, Calif. is planning to 1) use eminent domain to seize private mortgages for considerably less than their actual worth; 2) cut a deal with existing residents of the homes to install FHA mortgages in place of the seized mortgages; 3) use the windfall surplus — derived by paying the private mortgage holders less than the actual value of their forcibly seized holdings — to subsidize the local residents, thus buying their political favor, as well as leaving a goodly sum to pay off the private outfit called Mortgage Resolution Partners that’s pushing the scheme (written up sympathetically in a recent New York Times account).
What could go wrong, aside from to the spirit of the Constitution and the rule of law? Gideon Kanner points out that even California eminent domain law still requires the payment of “fair market value, not some bargain basement figure pulled out of thin air”:
…we believe that not even California courts will stand still for that. Why not? Because under our law, if the condemnor tries to lowball too much, and makes an unreasonable pre-trial offer, it may have to pay the condemnees’ attorneys’ and appraiser’s fees, plus other litigation expenses, on top of the “just compensation” required by the constitutions. And, of course, any diminution in value brought about by the the market’s reaction to the imminence of the condemnation, cannot be considered in determining fair market value. The property has to be valued as if unaffected by the condemnor’s plans or by any preliminary steps taken toward the condemnation. Cal. Code Civ. Proc. Sec. 1263.330.
For other reasons the scheme may prove much more expensive to the city of Richmond and its taxpayers, see Ilya Somin [more, yet more] Other commentary: Matt Welch, Richard Epstein. Earlier here, here, etc.
New Jersey’s highest court ruled that a Harvey Cedars couple do not have to be compensated for the loss of an ocean view, as distinct from the loss of actual land, after the government condemned a strip of their beachfront for a dune restoration project. Relevant factor: the dune restoration is believed to have saved the couple’s home when Hurricane Sandy hit, and that benefit could properly be offset from the taking. [MaryAnn Spoto, Star-Ledger; earlier; edited/corrected to reflect comment]
More from reader TD in comments: “The reporter absolutely got it wrong. The court agreed the loss of a view could be a taking, but that it needed to be offset by the benefit incurred because the dune would presumably prevent future flooding. The lower courts had not allowed for the offset.”
My Cato colleague Roger Pilon explains the significance of the Supreme Court’s ruling yesterday in Arkansas Game & Fish Commission v. United States, in which the federal government flooded a property owner’s land but resisted demands for compensation on the grounds that the “taking” of property was temporary, since the flooding would subside. Earlier here.
If the town’s dune project saved their house but also spoiled their view, are the oceanfront owners owed compensation? [Asbury Park Press]