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NTU Supports S. 1313, the Protection of Homes, Small Businesses, and Private Property Act of 2005

July 1, 2005

The Honorable John Cornyn
United States Senate
517 Hart Senate Office Building
Washington, DC 20510

Dear Senator Cornyn:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to offer our strong support for your legislation, the Protection of Homes, Small Businesses, and Private Property Act of 2005 (S. 1313). Simply put, taxpayers and property owners alike are deeply troubled by the recent Supreme Court ruling in Kelo v. New London that allows governments at all levels to take private property under the assumption -- right or wrong -- that another private interest could generate greater tax revenue.

Obviously, such a precedent is dangerous and inconsistent with the Founders' intent according to the Fifth Amendment of the United States Constitution that: "Nor shall private property be taken for public use without just compensation." The Founders never envisioned a scenario in which government's power of eminent domain would be abused to transfer property from one private interest to another.

The implications of this court decision are grave indeed for property owners, but all taxpayers should be wary as well. Although government officials often claim that "redevelopment" schemes will generate additional tax revenue for their particular jurisdiction, the fiscal promises often go unfulfilled and taxpayers are the ones left with the bill.

In a 2004 Issue brief written for NTU entitled Eminent Domain Abuse: If They Can't Tax It, They'll Just Take It, I cite the recent case of DaimlerChrysler's plant in Toledo. As part of a $300 million subsidy package (that included $28.8 million loaned to the city by the federal Housing and Urban Development agency), city officials acquired nearly 160 acres of residential and commercial property -- including 83 homes -- for immediate transfer to DaimlerChrysler. The company planned to use the land to expand and modernize its Jeep manufacturing facilities. Although Toledo had hoped to repay its loan through increased tax revenue from the expected 4,900-person DaimlerChrysler workforce, the new plant that Jeep built was fully automated, assembling cars by robot without much human participation. In total, the new plant employs less than half the number of workers (2,100) promised.

Your proposed legislation is a good first step toward preventing the most egregious cases of eminent domain abuse. The Act would declare Congress's view that the power of eminent domain should be exercised only "for public use," as guaranteed by the Fifth Amendment, and that this power to seize homes, small businesses, and other private property should be reserved only for true public uses. Most importantly, the power of eminent domain should not be used simply to further private economic development.

The Act would apply this standard to two areas of government action which are clearly within Congress's authority to regulate: (1) all exercises of eminent domain power by the federal government, and (2) all exercises of eminent domain power by state and local government through the use of federal funds.

Although it is likely that cities and states will continue or even accelerate their rampage against property rights after the Supreme Court's ruling, your legislation would at least ensure that the federal government is not in the business of eminent domain abuse and that it does not subsidize abuse perpetrated by state and local governments. We look forward to working closely with you to pass the Protection of Homes, Small Businesses, and Private Property Act of 2005.


Paul J. Gessing
Director of Government Affairs