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PRI's Environmental News Magazine

Added Property Value: Government Takings vs Givings

Air Date: Week of March 31, 1995

When government takes private property, it is required to compensate land owners. Some lawmakers say the government should also pay land owners when regulations reduce property values by restricting development. But one land use attorney says that means the government, and taxpayers, are paying twice. Host Steve Curwood talks with Edward Thompson, who says the government’s actions give private property much of its value to begin with by building roads and running sewer lines.

Transcript

CURWOOD: The cost of protection is key to many environmental controversies. One issue that's before many legislators in the Congress these days is the debate over so-called takings. The Fifth Amendment to the Constitution clearly prohibits the government from taking private property without just compensation. And many argue that environmental regulations that limit the use of property amount to takings. The US House of Representatives has already passed a bill that would make the government pay when laws or regulations reduce the value of property, and the Senate is considering a similar measure. But little so far has been said about government actions which give value of private property. Edward Thompson is the Director of Public Policy for the American Farmland Trust. He says the debate over property rights has been entirely one-sided.

THOMPSON: For every taking that is being claimed in this debate, there is what you might call a giving. Something that increases private property values. There are many, many ways that government does this. First are direct appropriations, such as money spent on roads and sewer lines and so forth that make land developable that otherwise wouldn't be. A very good example of that is the lot out on the South Carolina island that was the subject of a recent Supreme Court case.

CURWOOD: Mr. Lucas's lot there.

THOMPSON: That's right. Had it not been for the public investment in the bridge and the roads and the sewers and the flood insurance and the beachfront protection measures, that property would have been a worthless strip of shifting sand rather than a prime building lot. But there are many other examples as well. I mean, there are tax preferences that are granted to real estate development. There are entitlement programs, such as farm subsidies, that are capitalized in the property values greatly increasing it. There are land management policies. Out west, land next to national parks, for example, carries a very high premium price. And even regulations themselves. If you look at the principal form of land use regulation in this country, zoning, it has a much greater impact in maintaining an increase in property values than it does in reducing them.

CURWOOD: So this is a giving that you think should be considered when the government does a taking.

THOMPSON: I think it's only fair, both to the property owners and to the public, that we have both eyes open when we're taking a look at how government affects land values. Because otherwise, the public is being asked to pay twice for these takings: once when it adds value to private property, and again when compensation is demanded when regulations attempt to limit uses that are harmful to the environment. If there is a real unfairness here to many of the landowners who are complaining the loudest, it's not that they're being asked to shoulder a disproportionate amount of the cost. It's that government is giving them very mixed signals.

CURWOOD: Now, what do you think we should do here? Are you suggesting that these sorts of givings, road development, subsidies, the mortgage deduction " should they be eliminated or should they just be taken into account when setting policy and trying to settle disputes?

THOMPSON: I think the first thing we need to do is have an audit of how government affects private property values both positively and negatively. As a result of that audit, we may find that there are indeed some givings that need to be eliminated, because they're completely counterproductive to protecting the resources. There may be others that we want to continue. We have to stop subsidizing land uses we do not want to occur. That is prohibitively expensive to begin with. It puts landowners in this unenviable position of being whipsawed, and it's " it's not going to get us where we want to go.

CURWOOD: Let's say you were a member of the US Senate. What sorts of amendments would you offer to the House version of the Property Rights Bill to get at the giving side of the issue?

THOMPSON: In the first amendment I'd offer would be one that backs out from the property value any incremental value attributable to government subsidies. Take, for example, good, productive farmland out in the corn belt. Let's say it goes for $1,200 an acre on the open market. But if it has what is called a corn base, which is a thing that entitles the landowner to receive Federal income support payments for the crop, that same land will go from $1,500 to $1,800 an acre. I would back those values out so the public is not paying twice. The second thing I would do, let's say it's a wetland regulation and there's a 10-acre wetland there, I would say that the only compensation that you should receive is the annual loss of the profit from the crop that could be grown on that 10-acre wetland. That is in fact the only loss that the landowner suffers until they go to sell the propert y. And at that point you could compensate them for the full value lost. I think that there's a real chance that we could actually afford to protect wetlands in that way. Whereas if we go the way that the bill is now structured, I think it's quite clear there's no way we can afford it and that the bill really becomes a rollback of environmental protection rather than a sincere effort to try to reconcile environmental protection with the protection of property rights.

CURWOOD: Well thank you very much for taking this time with us. Edward Thompson is a land use attorney and Director of Public Policy for the American Farmland Trust. He joined us on the line from Washington. Thank you, sir.

THOMPSON: Thank you.

 

 

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