Can Eminent Domain Be Used Just to Stop You From Building On Your Land?

Happy Tuesday and welcome to another edition of Rent Free. This week’s stories include:

• Despite concerted state and local efforts to legalize accessory dwelling units (ADUs), a new study finds that most detached ADUs in San Jose, California, are still being built without permits.
• A new report details the California Coastal Commission’s efforts to block new housing.
• Sen. J.D. Vance (R–Ohio) has a plan for making housing affordable: deport more people.

But first, our lead story about a family-owned hardware store challenging the government’s ability to seize their land just to stop development.

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Can the Government Steal Your Land Just to Stop You From Building on It?

Zoning puts plenty of roadblocks in the way of homebuilders and business owners trying to make productive use of their land. Still, there are at least some checks on local governments’ zoning powers.

Spot zoning, where a rezoning affects just one property, is illegal. Protections for “non-conforming” (grandfathered) uses also limits local governments’ ability to shut down currently legal businesses by changing the zoning code.

But a recent court ruling out of New York state might give NIMBY local governments a new, unbeatable power to stop development they don’t like: eminent domain.

The Brinkmanns’ Would-Be Store

Since 2016, brothers Ben and Hank Brinkmann have been trying to get the permits necessary to turn a commercially zoned vacant lot in the Long Island community of Southold, New York, into the next location of their family-owned hardware store.

The town government of Southold has fought them every step of the way, with the town supervisor at one point vowing, “I will never allow anything to be built on that property.”

To prevent the Brinkmanns’ code-compliant project from moving forward, Southold has pulled out all the stops—requiring multiple studies of the project, imposing a building moratorium in a small area covering the site (while granting exceptions to that moratorium to adjacent property owners), and eventually, trying to seize the land to turn it into a “passive use park.”

In 2021, the Brinkmanns sued in federal court to stop that seizure, arguing the plans for creating this “passive use park” (meaning a park the town wouldn’t spend any money improving) were a pretext for stopping their store. Therefore, the seizure failed the U.S. Constitution’s requirement that land taken by eminent domain be for “public use.”

“It’s pretty obvious that there’s a pretextual taking when the asserted public use doesn’t appear until after years of the private party trying to get permits to do their thing,” says Jefferey Redfern, an attorney with the Institute for Justice (I.J.), a public interest law firm representing the Brinkmanns.

Federal Courts Acquiesce

Where similar cases have been litigated at the state level, courts have struck down such pretextual takings, says Redfern. A federal court that heard the Brinkmanns case doesn’t challenge the town’s pretextual motives for a park either.

“The [Brinkmanns’] complaint alleges facts sufficient to support a finding that the decision to create the park was a pretext for defeating the Brinkmanns’ commercial use,” wrote the majority in an opinion for the U.S. Court of Appeals for the 2nd Circuit in March 2024.

In that opinion, the appeals court also described the town’s various efforts to interfere with the sale of the lot in question and even mentioned a county government finding that Southold’s building moratorium wasn’t based on any supportive evidence.

Nevertheless, a 2-1 majority of the 2nd Circuit dismissed the case. While the town’s seizure of the land might be motivated by a desire to stop development, that would only be a problem if the seizure were intended to benefit a private party.

A pretextual, unimproved “passive use park” still counted as a public use, reasoned the 2nd Circuit majority, writing that “courts do not need to search the motives of public officials who prefer a public park to an eyesore in the form of a large hardware store with the prospect of 80 vehicles at a time parked and circling.”

So, this past week, the Brinkmanns petitioned the U.S. Supreme Court to hear the case.

Redfern argues that if the 2nd Circuit’s opinion is allowed to stand, local governments could effectively stop any use of private property they don’t like.

“If these pretextual cases are okay, then basically it turns into plenary authority over all property,” he tells Reason. “Under this regime, any small-town mayor can veto any use and any owner that he wants.”

While local governments would still have to buy the land, the ability to conduct pretextual takings would be a power threat local governments could employ to scare off sponsors of unwanted projects, Redfern says.

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California Legalized ADUs. So Why Are So Many Still Being Built Without Permits?

Since 2016, the California Legislature has passed a slew of bills requiring local governments to allow ADUs on effectively all residential land, and clamping down on impact fees, parking requirements, and other red tape that can make them infeasible to build.

The documented result is an explosion in ADU construction.