One of the testiest exchanges in last night's Republican presidential debate came when Jeb Bush accused Donald Trump of trying to take the home of an elderly woman to make room for a limousine parking lot in Atlantic City.
Trump denied that he'd taken the property, but he defended the use of the legal power known as eminent domain to take property. "Eminent domain is an absolute necessity for a country," he said. "Without it, you wouldn't have roads, you wouldn't have hospitals, you wouldn't have anything."
Bush is right about this. Trump really did try to take an elderly woman's home in the 1990s to make more room to park limousines next door to his casino in Atlantic City — though the woman ultimately won in court. And while it's sometimes necessary for government to take private property for a road or post office, the abuse of eminent domain for purely private purposes was — and still is — a serious problem.
When the government uses eminent domain to take property, the US Constitution requires that it be for "public use." Traditionally, this was interpreted to mean a government-run facility, or at least a regulated public utility like a railroad. However, since the 1950s, the courts have allowed takings if they serve a "public purpose" — and they have given local governments a lot of discretion to decide what constitutes a public purpose.
As a result, it has become routine for cities to take private property from one private party and give it to another. This often leads to local government taking the homes of working-class people to make room for big-box stores, corporate headquarters, or luxury condos.
Trump's battle with Atlantic City resident Vera Coking in the 1990s is the ultimate example of this kind of Robin-Hood-in-reverse development scheme. Coking had lived in her home since the 1960s, and had turned down another developer's $1 million offer for her house in the 1980s.
In the mid-1990s, Trump tried to persuade her to sell her home to make room for a parking lot for the Trump Plaza Hotel and Casino, which was located next door. When she refused, Trump got Atlantic City's Casino Reinvestment Development Authority to threaten to take the property using eminent domain. If she'd accepted the offer, she would have gotten $250,000 — a quarter of the price she was offered a decade earlier.
Instead, she turned to a libertarian law firm called the Institute for Justice, which fought the city in court. Ultimately, the courts sided with Coking, ruling that the vagueness of the city's plans made it impossible for the courts to determine if the taking would serve a public purpose.
But not everyone in Coking's situation has been so lucky. A few years after Coking's victory, the city of New London, Connecticut, sought to demolish a working-class neighborhood to make room for a new Pfizer research facility. One of the property owners, Susette Kelo, fought the taking all the way to the Supreme Court, where a 5-4 majority ruled for the city in 2005.
Beyond the basic unfairness of taking ordinary peoples' homes for the benefit of the rich and powerful, there are a couple of specific problems with the use of eminent domain for private use. While the law requires property owners to get "just compensation," cities are often able to pay property owners much less than the actual market value for their properties. Many property owners simply can't afford to challenge compensation amounts in court.
Second, while developers like Donald Trump benefit greatly from the use of eminent domain for private projects, the benefits to the general public are less clear. In New London, for example, Pfizer decided to leave the city in 2009, just four years after the Supreme Court's ruling. The ultimate result: A working-class residential neighborhood was transformed into an empty field, reducing New London's already meager tax base.
Donald Trump is right that eminent domain is often necessary for public projects like parks, bridges, or schools. But for purely private projects, it would be better to require wealthy developers to purchase land at market rates.