Proposal 4 of 2006, which will appear on the November ballot, is a proposed state constitutional amendment that would alter state law regarding eminent domain, the legal theory that permits the government to take private property for public use if the government pays just compensation. Specifically, the proposed amendment would do the following:
require that a property owner receive at least 125 percent of the market value of his or her principal residence whenever that residence is taken through eminent domain;
explicitly prohibit in the state constitution the use of eminent domain for either economic development or the increase of government tax revenue;
codify a recent Supreme Court decision, incorporate in the state constitution three narrow categories of takings whereby the government can use eminent domain to acquire property and convey that property to another private owner (such takings are primarily related to transportation and communications infrastructure);
shift to the government the burden of proof that a taking is for a public use, raising the standard to a "preponderance of the evidence" in most cases and to "clear and convincing evidence" in takings intended to address "blight";
require that each property being taken to address blight be blighted, thereby preventing the taking of unblighted properties that happen to be located near a blighted property; and
maintain current statutory rights that property owners possess in eminent domain proceedings.
At the nation’s founding, it was difficult to imagine any permissible use of eminent domain that would transfer property from one private owner to another. Since then, some private-party eminent domain transfers, particularly those related to point-to-point infrastructure, have become accepted.
A controversy has emerged, however, over the amount of deference the courts should afford to public officials’ determinations that a taking that transfers property between two or more private owners is for a public use. One strain of federal and state cases, characterized by the U.S. Supreme Court’s 2005 Kelo v. New London ruling,* accords almost total deference to this legislative determination. An opposing strain, characterized by the Michigan Supreme Court’s 2004 Wayne County v. Hathcock decision, requires a meaningful judicial review of the need for the taking to determine if the taking is constitutional.
The Hathcock strain is the more reasonable view, especially since it recognizes that the taking entity is often a self-interested party that might neglect the individual rights of those who are less powerful politically. There is some evidence that those who are not as influential can be victimized by government takings that transfer ownership of property between private parties.
Proposal 4 would directly enshrine the Hathcock decision in Michigan’s Constitution. The proposal would also offer additional protections consistent with the Hathcock strain of jurisprudence, including clarifying the burdens of proof in a taking and placing them on the government, requiring compensation of at least 125 percent of market value in any taking of an owner’s home and prohibiting future reductions in an owner’s statutory rights in an eminent domain proceeding. Perhaps most importantly, the proposal would set reasonable limits on blight takings, a potential source of abuse of the government’s eminent domain power.
* Sources for the findings cited in the executive summary are provided in endnotes to the main text of this Policy Brief.