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Recently, the U.S. Supreme Court, in a 5 to 4 decision, ruled in favor of New London, Connecticut (the Kelo decision) seizing property from private citizens and turning it over to other private citizens. New London's objective was to increase tax revenues to revitalize a distressed city.
There are only a few states in the nation where using eminent domain for private development is prohibited by law. South Carolina is not among them.
Can the concept of condemnation for increasing property taxes be applied here?
NorthMyrtleBeachONLINE turned to S.C. State Rep. Tracy Edge and North Myrtle Beach Mayor, Marilyn Hatley, to find the answer. Edge has a Masters in Business, is an experienced legislature and certified to teach continuing education in land use and property rights. Marilyn Hatley has served on the City Council for five years, is currently serving her second term as Mayor and is the Chairman of the Horry County League of Cities.
The Bill of Rights in the U.S. Constitution reads, "No person shall â€¦ be deprived of . . . property, without due process of law; nor shall private property be taken for public use, without just compensation."
Edge said, "The wording of the Bill of Rights introduces problems.
"The first, the definition of â€˜due process of law' is not defined in federal statutes but in state laws and sometimes local ordinances. Some states, like S.C., have vague wordings, inviting wide interpretations.
"Another problem is the phrase â€˜public use.' Historically, the definition was narrowly limited to roads, hospitals and military bases. As mass transit evolved, the definition progressed to include the transfer of private property to private parties who make the property available for public use . . . such as a railroad, a public electrical, telephone or cable utility.
"Over time, many courts have let the phrase advance to mean â€˜public purpose,' focusing around private property seizures in â€˜blighted' areas where these areas were injurious to the public health, safety, morals and welfare. The courts rationalized that eliminating the existing use was necessary to remedy the public harm.
"The Supreme Court, in its 5 to 4 ruling, accepted the â€˜public purpose' interpretation to allow â€˜economic development' as a public use . . . enlarging the range of properties that might be seized.
"Interestingly, the Supreme Court decision, in a postscript, suggests property owners should turn to the States to limit economic development takings."
What is the Legislature doing about this issue?
Edge said, "There are over 60 provisions in South Carolina's laws that define the circumstances where eminent domain may be used and even include â€˜those engaged in the improvement of health.'
"There is nothing in our laws that currently prohibit a Kelo-type interpretationâ€" the potential abuse is great.
"Our laws currently establish the right of any municipality, housing or redevelopment authority to undertake and carry out slum clearance and redevelopment in areas predominately slum or blighted.
"Disturbing is the numerous authorities that have been created and empowered with private property seizure power to achieve aims. Combined with the fact that courts have many times deferred to local entities the right to define what constitutes a slum or blighted area gives me great concern.
"On January 25, 2006, the House introduced a bill that would severely limit most non-governmental authorities' ability to use condemnation procedures without oversight.
"Additionally, the bill strengthens what constitutes blight and slums. Today, almost anything could fall under those definitions â€¦ a home's appearance, overcrowded apartment buildings, and even vacant land. The new bill requires a finding of injury to the public.
"Just compensation is also addressed and the bar has been raised - the only significant area where the House and Senate differ. The Senate bill is silent on just compensation.
Concluding, Edge said, "The action is on a fast track. I expect passage within two months."
Mayor Marilyn Hatley said, "Our community's economic health depends upon people feeling secure in their property rights so they will see that investing in homes and businesses will not be at the risk of governments' whims.
"Last year's decision by the Supreme Court shook this faith and we must work to restore our community's confidence. Neither has it been this Council's will nor past Councils' to employ eminent domain to increase property tax revenue.
"To insure that private property seizure to increase tax revenue never happens, State laws must be changed. We are working with our local state delegation, the Municipal Association and the League of Cities to alter current statutes to prevent that from ever happening."
"H.4502, introduced by Rep. Edge, addresses these concerns; however, the bill goes too far; complicating clearing up eminent domain rules. The bill includes an unrelated provision that addresses compensation if a land use law reduces the fair market value of property. Our State must not introduce complications that will slow this issue getting to the voters for ratification.
"For many reasons, I support the specific wording in S.1031 that is targeted and rejects any consideration of economic development as a rationale for exercising eminent domain. It is a limited bill that would prevent Kelo from happening in South Carolina.
"Conversely, H.4502 restricts the community's ability to influence the direction of growth. The unrelated provision would inhibit the community accomplishing the greater goals of our citizens that are important in a resort area â€" such as preserving view corridors and maintaining buffers between resort, commercial and residential areas.
For the perspective of the realtor community, Sue Burgess, owner of Aladdin Realty weighed in.
Burgess said, "The taking of private property for public use for roads, hospitals, etc. is not a local problem. But takings must provide compensation to the property owners based upon the current fair market value of the property at the time of seizure. I also believe that property value be established by appraisers familiar with property in S. C.
"Additionally, there must be safe guards in our laws specifically stating the condition and methods by which such takings are justified.
"North Myrtle Beach is fortunate, as private enterprise and economic growth have removed weathered, blighted areas for the most part without governmental takings," she finished.
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