From the start of this country there has never been any question regarding the right of the government to take property -- the "takings" clause of the Fifth Amendment plainly says that government can acquire private property for public use, but not "without just compensation."

For better than 200 years the debate regarding eminent domain has largely been about assuring that the takings process is fair and that compensation to private property holders was indeed just. But last year, the Supreme Court -- by a 5-to-4 decision -- changed the rules of the game. Under Kelo et al v. City of New London, the Court ruled that in addition to the traditional "public use" test -- the right of government to acquire property for a road or public building -- government could also acquire your home for a "public purpose" such as increasing tax revenues.

What happened in New London was that 15 homes were acquired through public domain and then re-sold to a private developer. The takings were justified, said the Supreme Court, because when combined, re-zoned, re-developed the local tax base would be enlarged.

Kelo potentially means that government can take any home in the search for higher tax revenues and sell it to a developer. When re-developed, the property will produce more taxes while the original owner -- someone who held the property under old zoning restrictions -- will not get the benefit of better zoning available to the new owners. In effect, the political system can be used to award vast profits to new owners while taking them from old ones.

It's difficult to find a real estate issue which is more inflammatory or a Supreme Court decision which is more provocative. The result, according to the National Conference of State Legislatures, is that 30 states since the Kelo decision have passed legislation which limits the right of eminent domain. Specifically, NCSL says the laws can be broken down into five categories:

• "Restricting the use of eminent domain for economic development, enhancing tax revenue or transferring private property to another private entity (or primarily for those purposes)."

• "Defining what constitutes public use."

• "Establishing additional criteria for designating blighted areas subject to eminent domain."

• "Strengthening public notice, public hearing and landowner negotiation criteria, and requiring local government approval before condemning property."

• "Placing a moratorium on the use of eminent domain for a specified time period and establishing a task force to study the issue and report findings to the legislature."

None of the laws and constitutional amendments passed in response to Kelo seem especially reactionary or revolutionary. Rather there has been an effort to return to pre-Kelo standards.

But there is something else underway which needs to be understood. Under the anti-Kelo banner there has also been an effort to tighten the concept of eminent domain to a point where government would be virtually unable to take any property for any purpose.

The idea behind "regulatory takings" initiatives in several states (California, Idaho and Washington) has been to force the government to pay compensation when changes to land use regulations reduce the economic value of property. The effect of such rules would be to end all zoning standards because any change in zoning would impact local property values and no government could afford the compensation claims.

As an example under the regulatory takings concept, if government revised the zoning of some property I own such that I could no longer build a gas station on the front lawn, I would be entitled to compensation because the potential income from that station would no longer be available to me -- whether anyone wanted to put up a station or not. How much? Potentially lots and lots of money. Since my neighbors are also likely to be entitled to compensation, broad zoning efforts or major construction projects would be dead.

Oregon is now the only state which requires compensation for "regulatory takings." According to the National Center for Policy Analysis Project, since 2004 -- when the Oregon legislation was passed -- there have been 2,400 regulatory takings claims against the state and those claims exceed $5.6 billion.

There's a distinction to be made between opposing Kelo because it goes too far and supporting absolutist legislation that limits the ability of government to act in the best interest of the public.

I want a government that can build roads and bring me water and electricity. I don't want a government that can take my house without a whole bunch of hurdles or the assurance of full and fair compensation. I certainly do not want a government that can take my home merely to increase the tax base -- that's a back door tax increase and a selective one at that. Nor do I want a government that can take my home so someone else can profit, perhaps a political contributor.

The voters in nine states passed initiatives this month to limit Kelo. Voters in California, Idaho and Washington rejected "regulatory takings" extremism, evidence that critical thinking is not dead.

For more articles by Peter G. Miller, please press here.

Published: November 21, 2006

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .