After Heather Stewart left her Dallas home in 1991, it was vacant, boarded up, and without utilities for about a decade. Only the occasional vagrant used it for lodging.
The house was repeatedly found in violation of the city code by enforcement officials before the Dallas Urban Rehabilitation Standards Board declared the building an “urban nuisance” and the city demolished it in 2002.
Since the house was declared a nuisance, the city offered Stewart no compensation. However, the Texas Supreme Court’s recent decision affirming that the city wrongly classified her property means that Dallas will have to pay her for her loss.
The big news in property rights protection this year was supposed to be that the Texas Legislature finally got around to comprehensive reform in response to the U.S. Supreme Court’s 2005 Kelo decision. In Kelo, the Court decided that governments could take private property for just about any “public purpose” at all, notwithstanding the U.S. Constitution’s Takings Clause requirement that property be taken only for a “public use.”
The Legislature did adopt several important reforms. It banned the taking of property for other than a public use. Owners will also now have a better chance at receiving adequate compensation for taken property. And Texas has started – though not finished – the process of allowing owners to repurchase their property if it is not used for the public use for which it was taken.
Despite these reforms, the Texas Supreme Court’s 5-4 decision for Stewart could be the year’s most important private property rights development.
After her house was demolished, Stewart claimed that Dallas unconstitutionally took her house because it was not a public nuisance. While a district court sided with the city in part of the case, a jury sided with her in another and awarded her $75,707.67 for the destruction of her house. This was the case before the Supreme Court.
In its filings with the Court, Dallas claimed that its nuisance finding should preclude all but a cursory “substantial evidence” review by the courts. If a court is actually allowed to judge the facts for itself, said the city, “[t]his not only results in the re-litigating of an issue already decided, but it threatens municipalities’ efforts to alleviate urban blight.”
This is not the first time the cities have used urban blight to restrict private property rights. In the Legislature’s initial response to Kelo in 2005, cities lobbied for a blight exception in the ban on takings for economic development that survives to this day.
More than that, cities use blight-related findings of public nuisance to demolish properties without having to take or pay for them. Houston did this recently with some condominiums, and this is what Dallas tried to do in this case.
But rather than leave such an important decision to a local government, the Court’s majority declared, “The protection of property rights, central to the functioning of our society, should not – indeed, cannot – be charged to the same people who seek to take those rights away. … [W]e believe that unelected municipal agencies cannot be effective bulwarks against constitutional violations…”
This is certainly the case in Texas.
Dallas is putting unfashionable businesses out of business along Ross Avenue from downtown Dallas to Lakewood. El Paso was prepared to use urban blight to take downtown businesses before the 2009 economic downturn and a Texas constitutional amendment stopped it. And Freeport tried for years to take the property of a fishing business and give it to its neighbor for a private marina in the name of economic development.
Texas courts have given extreme deference to the decisions of cities, but this should not be the case. Despite the protestations of cities and the Court’s minority, property owners, not the government, should be the ones whose rights are carefully protected.
That the Court has now adopted this view could be a major turning point in Texas property rights jurisprudence. At the very least, the Legislature should use this as a running start for improving property rights protections in 2013.
Bill Peacock is the Vice President of Research and the Director for the Center for Economic Freedom with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.