Eminent domain – also called condemnation – is a power enshrined in the U.S. Constitution and the constitution of all 50 states. It allows governments to take private property for “public use” with – according to the Fifth Amendment to the Constitution – just compensation. Eminent domain was originally constrained to projects like roads, bridges, and other public works, but this power has gradually expanded over time.

On June 23, the U.S. Supreme Court handed down a controversial decision. Kelo vs. City of New London broadened the powers of local governments, granting them the right to seize homes, small businesses, churches, and other property, and replace them with anything that brings in higher tax revenues. While the U.S. Constitution clearly stipulates condemnation of private property for strictly “public use,” last summer’s high-court ruling defines any benefit to the public as “public use.” In a 5-4 decision, the Supreme Court granted local governments the power of eminent domain to force homeowners and small businesses off of their land so that their properties can be handed over to higher-tax-generating shopping malls and office complexes.

The implications are astounding. Citing the dangers in her dissenting opinion, Justice Sandra Day O’Connor wrote, "The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carleton, any home with a shopping mall, or any farm with a factory.” Just think – if you live in a community that is financially strapped, the local government has a new option. It can seize your property, hand it over to private developers who will replace it with a new development, generating a larger tax base, and thus more tax revenue.

Loopholes in Texas law?
But in an August special session of the 79th Texas Legislature, lawmakers unanimously approved SB 7, which the Texas Association of REALTORS® supported, guaranteeing private-property owners state-level protection from eminent domain for private profit. Texas was the third state to pass a law prohibiting local governments from using the power of eminent domain to increase tax revenues. Gov. Perry signed the bill last month. But just how far does it go?

The new Texas law says "a government or private entity may not take private property through the use of eminent domain if the taking... is for economic development purposes.” But the bill also has some built-in loopholes, including the privately developed Trans Texas Corridor and Dallas Cowboys stadium in Arlington.

Another more broad exemption allows condemnation to be used for economic development if it's a "secondary purpose resulting from municipal community development or municipal urban renewal activities to eliminate an existing affirmative harm on society from slum or blighted areas." While difficult to decipher, this refers to redevelopment of communities considered blighted by local governments’ standards. This loophole could be an unintentional signal to developers to revamp impoverished communities across the state, forcing thousands of families from their homes.

While some believe Texas’ new law does not go far enough to protect private-property owners, its passage is a step in the right direction. To ensure long-term protection of private-property rights, an amendment will need to be made to the Texas Constitution, and legislators from both parties are pushing for a permanent fix.

Going federal
Federal lawmakers have also moved to restrict the Supreme Court’s ruling. Texas Sen. John Cornyn and Wisconsin Rep. James Sensenbrenner Jr. introduced legislation in Congress that would prohibit federal funding for projects involving aggressive seizures of private property for purely economic purposes. On Nov. 3, the U.S. House overwhelmingly approved a bill, 376-38, that would bar federal money from state and local governments that abuse eminent domain powers, namely forcing private-property owners out and allowing commercial interests in.

If approved as written, the House bill would bar federal economic development funds for two years to any state or local government who justified private-property seizures with eminent domain. In addition, the bill restricts the federal government from using its eminent domain authority to take privately owned properties for the purpose of turning them over to retail, industrial, or residential developers. Texas Rep. Henry Bonilla is a chief sponsor of this bill.

Fighting back
The widespread and nearly unanimous public outrage to the Supreme Court’s ruling this past June prompted lawmakers in Texas to take action. Our country was founded on the principle of the right to own and use private property, and homeownership is the backbone of our economy. Here in Texas, the homestead is a sacred thing. Texas lawmakers reaffirmed that with the emergency legislation they passed in August. In the future, they could take additional steps to constitutionally protect Texans’ private-property rights, if federal legislation doesn’t go far enough.