The Beloit School Board’s decision to pursue private property via eminent domain may be a political issue, but first and foremost it’s a legal matter.
The district has approved using eminent domain in its effort to acquire land for a new intermediate school along Milwaukee Road. So how does that work?
The concept of eminent domain has been around since England owned the colonies, and its definition has always been broad.
“The general notion of eminent domain is fundamentally viewed as an inherent attribute to a sovereign government,” said Thomas Mitchell, property law professor at the University of Wisconsin Law School.
Mitchell said eminent domain has been viewed as a vital government power in order to seize land that is blighted and develop property to build highways or railroads.
Eminent domain also protects the government from spending too much on land it needs to develop for public use.
“In one example, if the government wanted to build a new highway and needs 100 pieces of property, but didn’t have the power of eminent domain, they could get 99 landowners to sell, but if one didn’t, then the project would fail,” Mitchell said.
Alternatively, the one property owner could realize they have the advantage and charge a value for the land that was much higher than it is worth.
“It was generally believed that all governments need this particular tool and power,” he said.
The U.S. Constitution permits the government to take land only for public use and must pay the owner “just compensation.” However, public use has been broadly defined, and history has shown some owners don’t often get fair market value, Mitchell said.
A key U.S. Supreme Court ruling in Kelo v. City of New London, 2004, allowed a city in Connecticut to seize land using eminent domain and sell it to private developers. The court said that taking land for private development qualified as public use under the Constitution.
Some viewed this case as a landmark in expanding eminent domain. Mitchell said even the early Supreme Court loosely defined what “public use” meant, however.
“The Supreme Court had made it clear that public use doesn’t equal use by the public,” he said. “Public use essentially means a benefit to the public.”
Another case permitted the Hawaiian government to seize land from owners who were deemed to own a monopoly and redistribute to the tenants of the land.
“The Supreme Court made it clear in a number of decisions that the government can take someone’s property and transfer it to another private entity as long as the government could justify that there was some benefit to the public,” Mitchell said.
In Wisconsin, the state recently passed a law that prohibits governments from taking large neighborhoods because a few of the properties are blighted. According to the website CastleCoalition.org, an organization that attempts to protect against eminent domain, the state received a C+ when it came to the limits on government.
While Mitchell is not involved with the Beloit case, the situation does mirror a case involving the University of Wisconsin and two brothers who owned a bar near the campus.
In 2009, the university wanted to expand its music school and attempted to purchase the Brothers Bar & Grill for $2.1 million. When the owners refused, the university used eminent domain to take the land.
The brothers sued and claimed the land was actually worth $3.1 million. The lawsuit was eventually dismissed and the owners accepted the $2.1 million.
Mitchell said the power of eminent domain lies with each state and they can delegate that power to universities and schools.
He said schools that have been granted the power of eminent domain, and wish to build for educational purposes, rarely lose when it comes to court decisions.
“Generally speaking, in most states, the standards that the government has to meet (for eminent domain) the courts are incredibly deferential to the government,” Mitchell said. “It’s incredibly difficult to prove that the government taking property is not for public use.”
The real conflict comes with settling on “just compensation,” which has been defined as fair market value. However, Mitchell said that lower property values are generally paid less than fair market compared to wealthy owners.
“Despite the legal requirements, the government wants to protect its spending and resources,” he said. “In many cases you’re dealing with property owners who have no idea what the fair market value of their property is and get low-balled.”
Mitchell said governments may undervalue property by 5 to 10 percent. Property owners that don’t have the resources to go to court often accept that price in order to avoid the high legal fees.
On the flip side, with wealthy owners, it’s the government doing the cost-benefit analysis, and governments tend to overprice the land in order to avoid paying the legal fees in court. Either way, the governments usually succeed in taking over the land, Mitchell said.
“Based on cases I know, I can’t think of a single case where a university or school system that was vested and delegated the power of eminent domain has not been able to prevail on the claim that their desire to use eminent domain wasn’t successful,” he said.