I get email from folks who complain that real estate and politics do not mix, and thus it's inappropriate to write about political matters for a real estate news service. If such a perspective were true, then we would surely not have debates about zoning, wet lands, property taxes, property rights, a national energy policy (if any), federal anti-trust claims against brokers, furnace taxes and the "taking" clause of the Fifth Amendment.

And so -- to paraphrase Ronald Reagan -- here we go again.

For more than two centuries government has had the right to seize your home under the "taking" clause of the Fifth Amendment. However, the Fifth Amendment allows government to acquire private property only for "public use" and not "without just compensation."

In just a few words the Fifth Amendment creates a right to private property. This is radically different than the usual notion which prevails in many countries even today. In a lot of places the government owns everything and you occupy a given property only at the sufferance of whoever is in power this week.

The two magic phrases here are "public use" and "just compensation." Government can take your property under the concept of "eminent domain" to build a road or public school, but not for the private benefit of someone else. If government does take your property, it must pay fair market value for your holdings, something you can fight in court.

The "taking" clause of the Fifth Amendment -- centuries ahead of its time -- was essentially tossed aside by the Supreme Court this summer with the decision, Kelo et al v. City of New London.

Under Kelo, the Court says government can now take your home under a new definition of "public purpose." While building a road is clearly a public purpose, Kelo is about something else: The right to take your property for the benefit of other private parties. For instance, if a developer can acquire your property to build a shopping mall, that would increase the local tax base. Increasing the tax base is effectively a "public purpose" under Kelo -- and also a way that allows Smith to personally benefit from property which used to be owned by Jones.

The result of the Kelo decision has been a massive effort at the state and federal level to revise eminent domain rules to limit the damage from the decision. With overwhelming bi-partisan support (376-38), the U.S. House of Representatives has passed the Property Rights Protection Act of 2005 (H.R. 4128). This measure effectively says that federal development funds will be withheld for two years from any state or local government that acquires property for private development under Kelo. Given that state and local governments rely extensively on federal funds, the House action seeks to undercut the Kelo decision.

Language similar to the House bill will soon come before the Senate. When it does, it will fly through the legislative process and with fanfare the President will sign.

Why such a reaction in Washington?

Recent polls show that the public is dissatisfied with both of the major political parties. Challenging the extremism represented by the Kelo decision gives politicians an opportunity to identify with the sensible center and the moderate middle at a time when political change is plainly in the wind. It's just one more case where real estate and politics cross paths.

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