Quote of the Day - No one is going to expropriate your property.
New London, Connecticut condemned a private home on private property and gave it to a commercial developer to build a commercial hotel and retail development, as part of the city's attempt to stem the tide of blighted property within its borders. After a series of challenges, the United States Supreme Court approved the condemnation in Kelo v. New London.
Now, New Orleans, Louisiana is attempting to do something similar, but after the state adopted a series of "Kelo amendments" to its Constitution to prevent what at least a majority of Louisianians saw as abuse of the government's power of eminent domain, called "expropriation" in the French-based Napoleonic Code Louisiana uses for its style of government (no matter what it's called, expropriation still requires just compensation, despite what Wikipedia incorrectly says). Those three amendments, named Amendments 4, 5 and 6 limit the state's condemnation power.
The first reduces the level of compensation paid for taking private property for hurricane protection projects, but carves out an exception for buildings in a president-declared emergency area, allowing higher compensation for the three years following. Amendment 5 prohibits the taking of private property "for the predominant use" by another private person or business. The final Amendment 5 - the one relevant to this discussion - forces the government to either hold the property in public trust for 30 years or offer seized property back to the original owner or his heirs before trying to sell it on the open market.
With that backdrop, let's get to the facts. Joseph Burgess Jr. and his wife Kittoria Johnson apparently owned two vacant lots on Clouet Street in New Orleans, within the area devastated by Hurricane Katrina. Mr. Burgess is dead, but his wife is alive. Their son stands to inheirit the properties. The New Orleans Redevelopment Authority earlier demolished what was left of the homes on the property for public safety reasons, not an issue today. The problem now arises from Amendment 6.
The two properties have outstanding tax liens of some $37,500 (more than their fair market value) that have remained unpaid for years, three health violations and ten citations for high grass, all in violation of city ordinances. The NOLA Redevelopment Authority moved to expropriate the land, wipe out the tax leins, cure the violations and citations and then it transferred the property to Habitat for Humanity. The NOLARA did not offer the property to either Mrs. Johnson or their son, arguing that to do so was not required where the condemnation was based on blight and in any event, futile since they have not paid the taxes or cured the code enforcement problems.
This case is the first challenge to the Amendments, and there are some 1,500 other properties in the city awaiting similar treatment.
The New Orleans Civil Court appointed an attorney for Mr. Burgess the third, but the record is not clear whether Mrs. Johnson has a property interest or was represented by an attorney. In any event, the Redevelopment Agency was represented by counsel, and the two attorneys argued the pros and cons of the situation. The Redevelopment Agency attorneys argued that Louisiana lawmakers never intended for the latter amendment to apply to blight takings. They claimed it would be an "absurd" proposition to offer the property back to owners who let the property fester.
Judge Madeleine Landrieu sided with the Redevelopment Agency. Local law professors disagree over whether the judge was right, but one thing is certain: the law won't be settled until the Louisana Supreme Court steps in to clarify the law, which will likely take several years.
In the meantime, one legislator is introducing another Amendment to get to the point first. Senator Edwin Murray, D-New Orleans, seeks to change Amendment 5 so it would not require the right of first refusal to the prior owner in blighted situations. The orginal amendment's drafter, Peppi Bruneau, a former legislator, said the Amendment already deals with that issue and should not stand in the way of blight remediation. He simply tried to prevent Kelo-style takings. "This was for economic development, not for blighted property or anything," Bruneau said. "That was not the purpose at all. It really just dealt with government taking property and flipping it to someone else who wanted to do business there."
Either way, the legislators and voters or the courts will have to weigh in and resolve the inevitable appeal from the good judge's decision. Meanwhile, recovery in New Orleans gets one more roadblock.