doomsday no way: economic trends and post-kelo eminent domain reform

8/7/2019 Doomsday No Way: Economic Trends and Post-Kelo Eminent Domain Reform

1/19

JANUARY 2008

Institute for Justice

Dick M. Carpenter II, Ph.D.

& John K. Ross

OOMSDAY?Economic Trends & Post-Kelo Eminent Domain Reformno way


2/19

OOMSDAYno way Economic Trends & Post-Kelo Eminent Domain Reorm

JANUARY 2008

Institute or Justice


& John K. Ross


3/19

executivesummary

1


4/19

When the U.S. Supreme

Court upheld eminent

domain or private de-

velopment in the 2005

Kelo case, the public

reacted with shock and outrage, lead-

ing to a nationwide movement to reorm

state laws and curb the abuse o eminent

domain or private gain. By the end o

2007, 42 states had passed some type o

eminent domain reorm.

Throughout the public backlash to the

Kelo ruling, those who avor eminent

domain or private development predict-

edand continue to predictdire con-

sequences rom reorm or state and local

economies: ewer jobs, less development

and lower tax revenues.

This report tests those doom-and-gloom

predictions. We examined economic in-

dicators closely tied to reorm opponents

orecastsconstruction jobs, building

permits and property tax revenues

beore and ater reorm across all states

and between states grouped by strength

o reorm.

Results indicate:

* There appear to be no negative economic con-

sequences rom eminent domain reorm. State

trends in all three key economic indicators were

essentially the same ater reorm as beore.

* More importantly, even states with the stron-

gest reorms saw no ill economic eect com-

pared to states that ailed to enact reorm.

Trends in all three key economic indicators re-

mained similar across all states, regardless o

the strength o reorm.

The data show that reality bears no resem-

blance to gloomy orecasts o economic

doomsday. In act, large-scale economic

development can and does occur with-

out eminent domain. Policymakers in

states that passed no or nominal reorm

need not worry about a trade-o be-

tween economic growth and protecting

the property rights o home and business

ownersthey can go hand-in-hand.

With no ill economic eectsand with

the substantial benets strong reorm

provides the rightul owners o property

and society as a wholelegislators na-tionwide should be encouraged to reorm

their states eminent domain laws to curb

its use or private development.

[ ]


5/19

It

is called the Kelo backlash.1 On

June 23, 2005, when the U.S.

Supreme Court upheld the use

o eminent domain to take pri-

vate property or private economic devel-

opment, widespread outrage generated

unprecedented and sustained support

to correct the laws and public policies

that led to the kind o abuse in the Kelo

case.2 Public indignation was evident in

a July 2005 American Survey that showed

68 percent o registered voters avor leg-

islative limits on eminent domain.3 And

public support or reorm cut across de-

mographic and partisan groups. Sixty-

two percent o Democrats, 74 percent o

independents and 70 percent o Republi-

cans supported such limits. Commenta-

tors called it a horrible Supreme Court

decision,4 and labeled June 2005 a dark

month or those who prize liberty.5

The Kelo backlash also enjoyed bipartisan

support among politicians. Missouri Gov.

Matt Blunt, a Republican, minced no words:

This is a terrible ruling that undermines

the balance that ought to exist between

private property owners and the needs

o the public.6

U.S. Rep. James Sensen-brenner (R-Wis.) said, It is a decision that

will have proound impact in terms o

the relationship o the owners o private

property with their government in this

country or years to come, unless we take

immediate action to limit or even reverse

those consequences.7 Prominent Demo-

crat and U.S. Representative rom Caliornia

Maxine Waters called Kelo-style takings

the most un-American thing that can be

done,8 and Democratic U.S. Representative

rom Michigan, John Conyers, spoke on the

House oor: What I am saying is that the

concept o...using private takings or pri-

vate use should not be allowed....[T]hat is

wrong. That is a misuse. That is an abuse.9

The backlash did not stop at rhetoric.

Throughout the country, politicians o

both parties immediately began propos-

ing legislation to limit the kind o seizure

the Courts decision validated.10 Within

one month o Kelo, 21 states introduced

legislation to curtail eminent domain or

private development;11 two weeks later the

number had grown to 24;12 and by August

2005, lawmakers in 28 states had intro-

duced more than 70 bills.13 Congressional

lawmakers, too, introduced legislation to

address the issue. In November 2005, the

House o Representatives voted 376 to 38

to deny states and localities ederal eco-

nomic development grants or two years i

they allow condemnations o private prop-

erty or private redevelopment.14

By the end o 2007, 42 states had passed

some sort o eminent domain reorm de-

signed to stop or at least curb the Kelo-

style abuse.15

Some o those bills pro-duced stronger reorms than others, but as

o November 2007, 21 states had adopted

substantive eminent domain reorm.16

Florida, or example, adopted a strong re-

orm that requires local governments to

wait 10 years beore transerring land tak-

en by eminent domain rom one owner

to anothereectively eliminating con-

demnations or private development.

Wisconsin is an example o a moderate

reorm. Legislation there prohibits the

government rom designating large areas

as blighted based on the condition o a

small number o properties within those

areas. It prohibits condemnation o non-

blighted properties or private develop-

ment and also provides some increased

protection or residential properties by

adding new actors to the legal denition

o blight.

Critics have dismissed the Kelo backlash

as hysteria, overblown and paranoid.17

U.S. Rep. Earl Blumenauer (D-Ore.) opined,

We dont have a national crisis here,

while U.S. Representative Mel Watt (D-N.C.)

said o the House bill approved in Novem-

ber 2005: This bill is an overreaction.18

Others predicted dire consequences or

state and local economies as a result o

eminent domain reorm. Former Riviera

Beach, Fla., Mayor Michael Brown, while

embroiled in a ght to condemn modest

beachront homes or conversion into lux-

ury condos and a yacht marina, intoned,

[I] we dont use this power, cities will

die.19

Gerald Romski, counsel and chieproject executive o Arverne by the Sea,

a 117-acre redevelopment project in New

York, said eminent domain reorm would

spell the end o economic development

in the state o New York.20 Madison, Wis.,

Mayor Dave Cieslewicz called eminent

domain reorm senseless legislation that

responds to a nonproblem. It has a nega-

tive impact or economic development

all over the state o Wisconsin.21

introduction

3


6/19

Others made more specic predictions,

such as lost jobs and tax revenue.22

Speaking beore Congress on behal o

the National League o Cities, Eddie Per-

ez, mayor o Hartord, Conn., discussed

redevelopment in his city:

These projects are pillars in our e-

orts to revitalize the city. These

projects have created thousands o

construction and permanent jobs.

They have attracted new business,

increased home values, and sparked

millions o dollars in new private

investment ranging rom rst time

homebuyers to large nancial ser-

vices companies.23

According to Perez, such projects would

not have been possible without the city

having eminent domain available as a de-

velopment tool.

Also speaking on behal o the National

League o Cities to a congressional com-

mittee, Bart Peterson, then mayor o In-

dianapolis, argued:

...the availability o eminent domainhas probably led to more job cre-

ation and home ownership opportu-

nities than any other economic de-

velopment tool. I that tool vanish-

es, the redevelopment experienced

in many communities in recent

years would literally come to a com-

plete halt. Absent redevelopment,

I believe that we would have ewer

people becoming homeowners,

which means ewer participants in

what the Bush Administration calls

an ownership society.24

Similarly, the New York Metro Chapter o

the American Planning Association wrote

in a policy statement, We ear that leg-

islative overreactions to Kelo may pre-

clude the implementation o a number o

benecial projects that could create jobs,

housing opportunities, and economic

growth.25

And, in 2006 Iowa Gov. Tom Vilsack ve-

toed an eminent domain reorm bill (HF

2351), citing concerns about sacricing

job growth and other negative eects:

I am convinced that Iowas economy,

which we have all worked so hard to

nurture and develop over the last

eight years, will be negatively im-

pacted should HF 2351 become law

and place us at a competitive disad-

vantage with other states.26

Yet, as is too oten the case, such pro-

nouncements and policy decisions ap-

pear largely devoid o empirical support.Although some anecdotal evidence dis-

cusses delays to individual projects as

a result o the Kelo backlash,27 ew have

substantiated the dramatic predictions

o deleterious economic consequences

rom eminent domain reorm. Given the

stakes or property owners and economic

health, it is vital to know i the evidence

backs the doom-and-gloom predictions.


7/19

To

nd out, we examined eco-

nomic indicators beore

and ater eminent domain

reorm across all states,

as well as between states grouped by

the strength o reorm. Table 1 lists the

states in each group: no reorm, nominal

or moderate reorm, and substantive re-

orm. These categories ollow an earlier

report produced by the Castle Coalition

and the Institute or Justice describing

and rating state reorms.28

For each state we looked at construc-

tion jobs, building permits and property

tax revenues, variables that align closely

with predictions by eminent domain re-

orm opponents who claim that eminent

domain is necessary to boost private de-

velopment, jobs and taxes. In addition,

i eminent domain reorm halts or slows

development, it will likely impact these

variables rst and most conclusively. In

short, i reorm harms economic health,

trends in construction jobs, building per-

mits and property tax revenues should

turn negative ater reorm legislation be-

comes eective. And states with stronger

or moderate reorm should see negative

trends compared to states with no re-

orm.

For each indicator, we controlled or ac-

tors other than eminent domain reorm

that might explain dierences in trends.

For example, changes in the number o

construction jobs might reect the over-

all employment picture in a state rather

than reorm. We used data on the over-

all labor orce to control or the employ-

ment picture in each state, the number

o sales o existing houses to control or

the broader housing market, and total tax

revenues (minus property tax revenues)

to control or the overall tax revenue cli-

mate in each state.

Construction jobs and overall labor data

were reported monthly and the remain-

ing variables were collected quarterly.

Data spanned 2004 to either May or the

rst quarter o 2007. All data were sea-

sonally adjusted and transormed to miti-

gate statistical eects that could muddy

the results. Data were analyzed using

Hierarchical Linear Modeling (HLM),29 a

sophisticated analysis method that al-

lowed us to examine trends in data, in-

terruptions in those trends (such as leg-

islative change) and dierences in trends

based on group characteristics.30 See the

appendices or more details about the

methods.

measuringeconomic effects

Table 1

States Grouped by Strength o Eminent Domain Reorm

Reorm Type States

No Reorm Arkansas, Connecticut,* Hawaii, Kansas,* Maryland,* Massachusetts, Mississippi,Montana,* Nevada,* New Jersey, New Mexico,* New York, Ohio,* Oklahoma, Rhode

Island, South Carolina,* Virginia,* Washington,* Wyoming*

Substantive Reorm Alabama, Arizona, Florida, Georgia, Indiana, Iowa, Louisiana, Michigan, Oregon,

Minnesota, New Hampshire, North Dakota, Pennsylvania, South Dakota, Utah

* These states have adopted some orm o eminent domain reorm that went into eect ater the last available

data included in this study. S ee Appendix A or more details.

5

Alaska, Caliornia, Colorado, Delaware, Idaho, Illinois, Kentucky, Maine, Missouri,

Nebraska, North Carolina, Tennessee, Texas, Vermont, West Virginia, Wisconsin

Nominal or Moderate Reorm


8/19

results: doomsday?no way

Contrary to the doom-and-gloom pre-

dictions o reorm opponents, the data

reveal no signicant changes in trends

in construction jobs, building permits

and property tax revenues as a result

o eminent domain reorm. And there

is no dierence in trends based on the

strength o reorm. States with strong

and moderate reorm did just as well as

states with no reorm.

To see this, we rst established a baseline

o the trends in our three variables, look-

ing at how they change over time apart

rom eminent domain reorm or any oth-

er actor. As Table 2 shows, construction

jobs, building permits and property taxes

grew across all 50 states rom 2004 to ear-

ly 2007, although the growth was small

and only the growth in building permits

was statistically signiicant. The slope

coecients are a measure o growth, and

p-values show whether those coecients

are statistically signiicant. In each o

the tables below, slope coecients are

reported only to three decimal places;

coecients o only zero have numbers

greater than zero at some place beyond

the third decimal place. P-values less

than 0.05 indicate statistical signicance,

or condence that the dierence ound is

real and not due to chance. For example,

none o the dierences in Table 3 are

statistically signicant, so we cannot be

condent that the dierences in trends

(tiny in any event) are real. This means

that the trends very likely did not change

due to eminent domain reorm. For ull

results, including coecients, standard

errors and random eects, or variance

components, see Appendix B.

With a baseline o very small positive

trends in all three indicators, we exam-

ined whether these trends changed a-

ter eminent domain reorm. As Table 3

shows, they did not. The reorm slope

coeicients measure how much the

trend or each variable changed ater re-

orm. Each is quite small, only the change

in building permits is negative, but barely

so, and none is statistically signicant.

The key nding, then, is that state trends

in construction employment, building

permits and property taxes were essen-

tially the same ater eminent domain as

beore. Thus, despite grave predictions o

opponents, there appear to be no nega-

tive economic consequences rom emi-

nent domain reorm.

To see whether the strength o reorm

made any dierence, we compared states

that passed strong reorm and those that

passed moderate reorm to those that

passed none. As Table 4 shows, there

was little dierence in construction job,

building permit and property tax trends

between states that passed strong or

moderate reorm and those that passed

none. The slope coecients show the

dierence in trends or each economic

indicator between two groups o states:

between moderate reorm and no re-

orm, and between strong reorm and no

reorm.

All o these coecients are tiny, and only

those or construction jobs are negative,

but barely so at -0.000. None o the coe-

cients is statistically signicant, urther

indicating there is little or no real di-

erence between reorm states, strong

or moderate, and states with no reorm.

Simply put, states that adopted strong

reorm or moderate reorm saw no dier-

ence in construction job, building permit

or property tax trends compared to states

that ailed to enact eminent domain re-

orm. Reormeven strong reorm

had no ill economic eect.

Table 2Baseline Economic Trends Show Small

Positive Growth

Changes in Construction Jobs, Building

Permits and Property Taxes, 2004 to 2007

Indicators Slope Coecient p

Construction .000 .151

Building Permits .001 .018

Property Tax .000 .919

Table 3Eminent Domain Reorm Has No Eect on

Economic Trends

Changes in Construction Jobs, Building

Permits and Property Taxes, Beore and

Ater Reorm, 2004 to 2007


Construction .000 .212

Building Permits - .007 .077

Property Tax .000 .959

Table 4Strength o Eminent Domain Reorm Has

No Eect on Economic Trends

Dierences in Construction Job, Build-

ing Permit and Property Tax Trends by

Strength o Reorm, 2004 to 2007


Construction

Moderate vs. No Reorm -.000 .147

Strong vs. No Reorm -.000 .975

Building Permits

Moderate vs. No Reorm .000 .755

Strong vs. No Reorm .002 .074

Property Tax

Moderate vs. No Reorm .000 .757

Strong vs. No Reorm .000 .463

[ ]


9/19

Graph 1Similar Construction Job Trends, Regardless o Reorm Strength

Construction Jobs Over Time, 2004-2007

Note: These do not represent the actual number o

jobs. Data were transormed into logarithms (logs)

to mitigate statistical eects that could muddy the

results.

7

Graphs o each indicator over time

clearly show these results. Each graph

includes three lines corresponding to

states grouped by strength o reorm.

Although the degree o peaks and val-

leys oten diers, the lines tend to move

up and down at basically the same time.

More important, there is no sharp diver-

gence in the direction o the lines. I the

predictions o eminent domain reorm

opponents were true, the moderate lines

and especially the strong reorm lines

would decrease as compared to no re-

orm. Yet, that was clearly not the case.

O the three graphs, property tax data

show less consistency in patterns

among the reorm groups. However,

the lines still do not show patterns that

conorm to the predictions o eminent

domain reorm opponents. Namely,

the trend lines or reorm groups do not

show a consistent decrease compared

to the states without reorm. Instead,

the trend generally moves upward

except or peaks and valleys that indi-

cate normal variation over timeas a

line drawn through the center o the

peaks and valleys shows.


10/19

Graph 3Similar Property Tax Trends, Regardless o Reorm Strength

Property Taxes Over Time, 2004-2007

Note: These do not represent the actual number o

permits. Data were transormed into logarithms (logs)

to mitigate statistical eects that could muddy the

results.

Note: These do not represent the actual tax values.

Data were transormed into logarithms (logs) to miti-

gate statistical eects that could muddy the results.

Graph 2

Similar Building Permit Trends, Regardless o Reorm Strength

Building Permits Over Time, 2004-2007


11/19

conclusion: economicviabilitythroughproperty rights

9

W

riting or the majority in

the Kelo decision, Justice

Stevens concluded: We

emphasize that nothing

in our opinion precludes any State rom

placing urther restrictions on its exer-

cise o the takings power.31 Riding the

wave o the Kelo backlash, legislators in

42 states did just that, to varying degrees.

Andalthough some politicians, bureau-

crats and developers continue to pre-

dict economic doomsday, the results in

this report show reality bears no resem-

blance to the gloomy orecasts.

One potential shortcoming o these re-

sults is the relatively short time period

measured ater reorm passed. Perhaps

negative economic consequences o

eminent domain reorm have not yet ap-

peared. However, the number o post-

reorm months these data cover is not

inconsequential. Fourteen states that ad-

opted moderate or nominal reorm had

at least six months worth o post-reorm

data, and six states had at least a ull years

worth. O states with strong reorm, 14

had at least six months o data, and ve

states had at least 12 months. With thesenumbers, we would expect to see at least

early signs o economic harm i eminent

domain reormers predictions were true,

but that is not the case. According to

these early results, restoring the protec-

tions o individuals property rights to the

Founders original intent does not threat-

en economic viability.

In act, some contend quite the oppo-

site. Curt Pringle, mayor o Anaheim,

Cali., described how his city pursued a

large initiative without eminent domain

in Development Without Eminent Domain:

Foundation o Freedom Inspires Urban

Growth. Unlike an earlier ailed attempt

in which a previous administration used

eminent domain, Anaheims current proj-

ect is thriving. As Pringle explained:

All o this development occurred

without the city putting any pres-

sure on any landowners to sell their

property. The development o pri-

vate properties has been completely

at the discretion o the individual

property owners. Not only did the

city not use the ormal power o emi-

nent domain to take property, there

was no subtle use o the power local

governments possess to make busi-

ness and property ownership di-

cult. Anaheim put the policies andregulations in place that we thought

would help bring new activity to the

area, streamlined permitting pro-

cesses and requirements, and have

then excitedly watched as the pri-

vate sector responded.32

This private sector response led to a

quadrupling o property values, billions

o dollars o private sector investment,

an increased demand or more intense

high-end oce space, 7,000 homes and

a variety o restaurants and retail space.

There is no doubt that the absence or

removal o a threat o condemnation

encourages economic development,

chiefy because property owners and de-

velopers eel secure in their investment,

Pringle wrote.33

Moreover, invoking eminent domain or

private development oten ails to live up

to the hype. Despite the bright picture

painted by some o the redevelopment

o Baltimores Inner Harbor,34 the citys ac-

complishments through eminent domain

have been decidedly more modest.

Forty years have passed since ocials

authorized eminent domain or the Inner

Harbor and orced more than 700 viable

businesses outover considerable pub-

lic opposition. Yet, to this day, the project

is not sel-sustaining, with millions in taxbreaks still going to avored developers.35

Baltimore ocials also authorized emi-

nent domain in many other neighbor-


12/19

hoods, like Park Heights (which is itsel

a collection o 12 neighborhoods) and

Poppleton, decades ago, and have nei-

ther economic development nor blight

remediation to show or it.36 Residents

did succeed in ghting o proposals that

called or razing huge swaths o Mount

Vernon, Federal Hill and Fells Point,

which are now among the citys most vi-

tal neighborhoods, replete with smaller-

scale developments and restored historic

properties.37

In another example, West Palm Beach

county ocials in 1987 sought to turn 385

acres o properties with homes into a pri-

vate gol coursein a county with more

than 170 existing gol courses. When

three amilies reused to sell, county o-

cials in 1999 approved eminent domain

to take the properties. The last residents

let in 2002 as the project languished and

was eventually abandoned in 2005.38

Contrast these with cities like Lakewood,

Ohio, and Scottsdale, Ariz. Both were

embroiled in eminent domain disputes

involving the condemnation o private

property or private economic develop-ment. But when Lakewood, in 2003, re-

scinded a blight designation on a large

neighborhood, more than $224 million

in economic development projects and

improvements resulted.39 Likewise, ater

Scottsdale lited its second redevelop-

ment designation, the city reported $2 bil-

lion in private investment in short order. 40

For elected ocials torn between pro-

tecting the property rights o home and

business owners and stimulating a solid

economic uture or their constituents,

this report and the experience o cities

like Anaheim show both can be done.

Moreover, or leaders in states that have

passed no or nominal reorm and look

warily at the potential negative eects

o restricting eminent domain to a clear

public use, these results should give hope.

Despite the Chicken Little predictions,

the economic sky is not alling as a result

o eminent domain reorm. Even some

who hailed the Kelo ruling recognized

the hyperbole o ocials like Vilsack, Pe-

terson and others. Tim Lay, a lawyer or

the anti-eminent domain reorm National

League o Cities, noted that despite the

Kelo backlash, redevelopment across the

nation would not grind to a halt: Local

voter opposition may lead city council

members to be more hesitant to approve

certain condemnation projects than theymight previously have been, but thats

OK...its nothing more than the democrat-

ic process at work.41

As Anaheim and other cities demonstrate,

signicant economic activity is possible

and perhaps more protable to private

actors and the public alike through vol-

untary transactions and the protection o

private property rights. As Pringle con-

cluded:

The desire to create new jobs and

more economic activity should not

come at the expense o private prop-

erty rights o city residents and busi-

ness owners. Instead o using gov-

ernment powers to grab peoples

land, local and state government

ocials across the United States

should nd creative ways to encour-

age new enterprises by working with

the homeowners and businesses al-

ready located in their community.42

1

Anaheims A-Town area was developed and now thrives

without the use o eminent domain.


13/19

Data or this study came large-

ly rom public or reely avail-

able sources. Construction

employment and over-

all labor data were accessed rom the

Economagic website (www.economagic.

com), a comprehensive site o ree, easily

available economic time-series data use-

ul or economic research, in particular

economic orecasting. The site includes

more than 100,000 time series, drawn

rom government sources such as the

Census Bureau and the Bureau o Labor

Statistics. Data are reported at various

levels, including cities, counties, states

and nationally.

Building permit data were gathered

rom the State o the Cities Data Sys-

tem (http://socds.huduser.org/permits/

index.html) available through the U.S.

Department o Housing and Urban De-

velopment. These data represented

all building permits, rom single amily

housing to multi-amily units (such as

apartment buildings and condos). Exist-

ing home sales were accessed rom the

National Association o Realtors (http://

www.realtor.org/research.ns/pages/eh-

spage). Each month, the Association re-

leases statistics on sales and prices o ex-

isting single-amily homes, condos and

co-ops or the nation, regions and each

state. Finally, tax data were gathered

rom the U.S. Census Bureaus quarterlysummary o state and local government

tax revenues (http://www.census.gov/

govs/www/qtax.html).

All data were seasonally adjusted. In ad-

dition, because o the temporal nature

o the data, adjustments or autocorre-

lation were necessary. This is a condi-

tion where members o a time series o

observations, such as monthly employ-

ment gures, are correlated with values

at an earlier time interval. Let unad-

dressed, this makes it dicult to distin-

guish whether dierences in the data

were due to a particular cause or due to

trends resulting rom autocorrelation. A

standard correction, and one used here,

is to transorm the data through single

dierencing (subtracting a data point

rom its predecessor). Finally, data were

transormed into logarithms prior to

analyses, also a common procedure to

achieve normality or symmetry in the

data.43

Eminent Domain Reorm Legislation

Central to the reports analyses is the pas-

sage o eminent domain reorm legisla-

tion, both conceptually and temporally.

Using prior work describing and rating

the states based on the strength o the

eminent domain reorm adopted,44 the

states were assigned to three categories:

strong, moderate and no reorm. We

also collected the eective dates o all

the relevant reorm legislation to com-

pare the economic outlook o states be-

ore and ater reorm.

In so doing, we had to alter the catego-

ries o some because the eective dates

occurred ater the latest available data.

For example, in the original report rank-

ing the states, Kansas was reported tohave substantive reorm. However, be-

cause the legislations eective date was

July 1, 2007, and the latest economic

data available as o this writing was May

2007, Kansas was labeled no reorm or

the analyses. This was also the case with

10 other states (Connecticut, Maryland,

Montana, Nevada, New Mexico, Ohio,

South Carolina, Virginia, Washington

and Wyoming).

Data

appendixa:methods

11


14/19

Separate HLM analyses were com-

pleted or each o the indicators

(construction, permits and tax

data). The models used in these

analyses were two-level: Level 1 being

time and Level 2 being state, using restrict-

ed maximum likelihood. Level 1 included

the monthly construction or quarterly per-

mits and property tax data. In addition,

because we used a discontinuity model to

measure the adoption o eminent domain

reorm, Level 1 also included a time o

adoption variable. This was coded with a

0 prior to adoption (or a 0 throughout in

states with no adoption) and then began

a continuous count rom 1 upward begin-

ning when the eminent domain reorm

legislation was in eect. Thereore, the

Level 1 model is:

Yti=0i+1i(Months or Quarters)+ 2i( Time o Reorm

Adoption)+eti

where Yti is construction employment,

building permits or property taxes o state

iat time t; 0i (intercept) is the initial con-

struction employment, building permits

or property tax status o state i at time t;

1i is the growth slope o state i; 2i is the

growth slope ater adoption o reorm in

state i; and eti is the time-specic error

o state i at time t. Note that the results

presented above do not include Level 2

predictors when Time o Reorm Adop-

tion was included in Level 1 (see Table 3).

However, we did analyze such a model,

and the results did not dier substantivelyrom those we presented. In the interest

o parsimonious presentation we omitted

those results.

In the nal model (in which the non-signi-

icant Time o Reorm Adoption variable is

dropped) or the intercept term and the 1i

slope, the Level 2 models are

0=00+01(Group 1)+02(Group 2)+03(Covariate)+r0

1=10+11(Group 1)+12(Group 2)+13(Covariate)+r1

where 00 and 10 represent intercepts, 01,

02, 03, 11, 12 and 13 represent slopes,

and r0 and r1 represent error terms; Group

1 and Group 2 represent dummy vari-

ables or type o reorm legislation (Group

1=moderate or nominal reorm, Group

2=substantive reorm), and Covariate

represents the respective covariate or

each dependent measurelabor orce or

construction employment, housing sales

or building permits and overall taxes or

property taxes.

Complete Results Tables

Tables 2 through 4 above included only inormation

relevant to specifc results reported in the results

section. The ull tables, including intercepts and

standard errors, are reported here.

appendixb:hierarchical linearmodels

Analyses

This appendix is or those with a working knowledge o HLM.

Table 2

Full Results

Fixed Eects Coecient (SE) p

ConstructionIntercept 4.69 (.001) .000

Slope .000 (.000) . 151

Building Permits

Intercept 3.68 (.003) .000

Slope .001 (.000) .018

Property Tax

Intercept 8.99 (.003) .000

Slope .000 (.000) .919

Table 3

Full Results

Fixed Eects Coecient (SE) pConstruction

Intercept 4.69 (.001) .000

Trend Slope .000 (.000) .268

Reorm Slope .000 (.002) .212

Building Permits

Intercept 3.68 (.003) .000

Trend Slope .002 (.000) .002

Reorm Slope -.007 (.004) .077

Property Tax

Intercept 8.99 (.003) .000

Trend Slope .000 (.000) .870

Reorm Slope .000 (.002) .959

Table 4

Full Results

Fixed Eects Coecient (SE) p

Construction

Intercept 3.81 (.066) .000

Moderate Reorm .002 (.002) .265

Strong Reorm -.000 (.002) .986

Labor Force .176 (.013) .00 0

Trend Slope Moderate Reorm -.000 (.000) .147

Strong Reorm -.000 (.000) .975

Labor Force -.004 (.000) .000

Building Permits

Intercept 1.95 (.414) .000

Moderate Reorm -.002 (.008) .770

Strong Reorm -.012 (.008) .137

Housing Sales .351 (.083) .000

Trend Slope


Strong Reorm .002 (.001) .074

Housing Sales -.059 (.013) .000

Property TaxIntercept 10.55 (.900) .000

Moderate Reorm -.003 (.008) .660

Strong Reorm -.006 (.008) .407

Overall Taxes -.159 (.092) .094

Trend Slope


Strong Reorm .000 (.001) .463

Overall Taxes .018 (.013) .170

1


15/19

Variance Components

Table B1 includes the variance compo-

nents rom the analyses reported above.

As indicated, the variance components

across the analyses or the dierent indi-

cators were quite small. In act, examining

dierences in variance in the slopes across

models (dierences in intercepts are not

o particular interest in this study) yielded

no dierences ater the addition o Level

2 predictors. Yet, as the variance com-

ponents or Table 4 indicate, signicant

variability remains in the slopes or both

construction employment and building

permits.

It is important to note that the analyses

herein were not used or model building.

Rather, we sought to test specic predic-

tions o elected ocials about eminent

domain reorm using indicators identi-

ed in or very closely aligned with those

predictions. Thereore, the act that a sig-

nicant amount o variance remains to be

explained is expected.

Finally, examining the within versus be-

tween variance or each indicator or each

model showed the smallest percentage

o the total variance was consistently

represented by within state variability.

The greatest percentage o total variance

accounted or by within state variability

reached 48 percent or construction em-

ployment in Table 3 and hovered at zero

percent or near zero percent on several

occasions.

13

Table B1

Variance Components or Tables 2, 3, and 4

Random Eects Variance Chi-square (df) p

Variance Components or Table 2Construction

Intercept .00016 42 2. 47 (4 9) .000

Slope .00000 202 .60 (49 ) .000

Sigma Squared .00023

Total Variance .00039

Building Permits

Intercept .00036 75 .6 1 (4 8) .007

Slope .00001 129 .93 (48 ) .000



Property Tax

Intercept .00000 21 .1 0 (2 1) .500

Slope .00000 14. 79 (21 ) .500Sigma Squared .00155


Variance Components or Table 3

Construction

Intercept .00022 25 1. 49 (3 0) .000

Trend Slope .00000 81 .9 5 (3 0) .000

Reorm Slope .00000 71.34 (30) .000



Building Permits

Intercept .00015 56 .1 8 (2 9) .002

Trend Slope .00001 94 .2 4 (2 9) .000

Reorm Slope .00043 124.16 (29)Sigma Squared .00136


Property Tax

Intercept .00000 6. 96 (2 1) .500

Trend Slope .00000 2. 01 (2 1) .500

Reorm Slope .00000 24.89 (21) .252



Variance Components or Table 4

Construction

Intercept .00002 85 .9 0 (4 6) .001

Slope .00000 74 .1 1 (4 6) .006

Sigma Squared .00023 Total Variance .00025

Building Permits

Intercept .00018 46 .6 0 (4 5) .406

Slope .00001 86. 55 (45 ) .000



Property Tax

Intercept .00000 16 .4 8 (3 3) .500

Slope .00000 11. 56 (33 ) .500




16/19

1 Andres, G. J. (2005, August 29). The

Kelo backlash; Americans want lim-

its on eminent domain. Washington

Times, p. A21.

2 Ashby, B. (2005, December). Kelo

consequences. Industrial Heating 72,

8; Whitman, D. A. (2006). Eminent

domain reorm in Missouri: A legisla-

tive memoir. Missouri Law Review, 71,

721-766.

3 Andres, 2005.

4 Steigerwald, B. (2005, October 23).

Trumping a Supreme mistake. Pitts-

burgh Tribune Review, npn.

5 Twight, C. (2006). Limited govern-

ment: Ave atque vale. Independent

Review 10(4), 485-510.

6 Collison, K. (2005, September 20).

Eminent domain controversy. Kansas

City Star, npn.

7 Congressional Record. (2005). Ex-

pressing the grave disapproval o the

House regarding majority opinion o

Supreme Court in Kelo v. City o New

London (Vol. 151, pp. H5577-H5585).

Washington, DC: Government Print-

ing Oce.

8 Hurt, C. (2005, July 1). Congress assails

domain ruling. Washington Times, p.

A1.

9 Congressional Record. (2005). Pri-

vate Property Rights Protection Act

o 2005 (pp. H9569-H9604). Washing-

ton, DC: Government Printing Oce.

10 Reid, T. R. (2005, September 6). Mis-

souri condemnation no longer so im-

minent; Supreme Court ruling ignites

political backlash. Washington Post,

p. A2.

11 Shefer-Wood, A. C. (2006). Where

do we go rom here? States revise

eminent domain legislation in re-

sponse to Kelo. Temple Law Review

79(2), 617-647.

12 Vadum, M. (2005, August 8). Eminent

disapproval; Kelo ruling sparks urry

o state, ederal bills. Bond Buyer,353, 1.

13 Baldas, T. (2005, August 8). Call it the

post-Kelo wave. New Jersey Law Jour-

nal, npn.

14 Vadum, M. (2005, November 4). Emi-

nent domain: House approves con-

demnation penalties bill. Bond Buyer,

354, 4.

15 Castle Coalition. (2007b). Legislative

center. Retrieved August 19, 2007,

rom http://www.castlecoalition.org/

legislation/index.html.

16 Castle Coalition. (2007a). 50 state

report card: Tracking eminent domain

reorm since Kelo. Arlington, VA: Insti-

tute or Justice.

17 Vadum, 2005, August 8.

18 Vadum, 2005, November 4.

19 Price, J. H. (2005, October 3). Flori-

da city considers eminent domain.

Washington Times, p. A1.

20 Kriss, E. (2006, April 4). Salina busi-

nesses take ght to Albany. Post-

Standard, p. A6.

21 Mosiman, D. (2006, June 21). Land-

mark Gate project is abandoned; De-

veloper cites costs under new state

law. Wisconsin State Journal, p. A1.

This was in response to news that a

developer, who was relying on emi-

nent domain in a project, was pulling

out o a project ater eminent domain

reorm. Three months later the devel-

oper decided to build a similar proj-

ect across the street without eminent

domain.

22 Ruda, R. (2005). Amicus brie: Su-

sette Kelo v. City o New London and

New London Development Corpora-

tion (pp. 29). Hartord, CT: Supreme

Court o the State o Connecticut.

23 Perez, E. A. (2006). Should Congress

pass legislation to prevent abuse o

eminent domainconNational

League o Cities. Congressional Di-

gest, 85(1), 25-31.

24 Peterson, B. (2005). Written testimo-

ny o the Honorable Bart Peterson,

Mayor, Indianapolis, Indiana on be-

hal o the National League o Cities

beore the House Judiciary Subcom-

mittee on the Constitution on over-

sight o the Kelo decision and po-

tential congressional responses. Re-

trieved August 17, 2007, rom http://

www.nlc.org/ASSETS/9A7D25B3D4C

E493A871FA1C5FB93D010/prpeter-

sontestemdomain.pd.

25 American Planning Association New

York Metro Chapter. (n. d.). Policy

position on the use o eminent do-

main or economic development. Re-

trieved August 17, 2007, rom http://

www.nyplanning.org/eminentdo-mainpolicy.pd.

26 U.S. States News. (2006, June 2). Gov.

Vilsack vetoes restrictive eminent do-

main provisions, npn.

27 Reid, 2005.

28 Castle Coalition, 2007a.

29 Raudenbush, S., Bryk, A., & Congdon,

endnotes

1


17/19

R. (2007). HLM or windows (Version

6.04). Lincolnwood, IL: SSI Scientic

Sotware International.

30 HLM also accounts or the nested or

hierarchical nature o such data. Nest-

ed, or hierarchical data are those en-

capsulated within other higher level

data. A classic example o nested data

is students nested within classrooms

nested within schools (a three-level

model). One o the primary underly-

ing assumptions in such data is that

units (or example, individuals) nested

within hierarchies may be more simi-

lar to one another than i they were

placed into various settings using

random sampling techniques. There-

ore, the researcher cannot be certain

that dierences between groups are

due to a specic cause o interest as

opposed to the nest within which

they reside or common eatures the

individuals share that placed them

in the nest. Using the example o

students within classrooms within

schools, a researcher may be inter-

ested in the eect o a new reading

program on student academic per-

ormance among 10 dierent schools.

Ater the program is implemented,

the researcher will examine dierenc-

es on a test between those students

who received the program and those

who did not. But because those stu-

dents come rom dierent classrooms

(with dierent teachers) and dierentschools (with dierent priorities and

environments), and were not placed

in classrooms and schools randomly,

the researcher cannot be sure that the

dierences in reading perormance

resulted rom the program or rom

the classroom or school eects. In the

case o longitudinal data, time is con-

sidered nested within a unit o analy-

sis, such as an individual. Thereore,

carrying the running example a step

urther, i student academic growth

were measured six times throughout

a school year, time (growth) would be

nested within students nested within

classrooms nested within schools.

Applied to the data in this report,

time (growth or decline o construc-

tion employment, building permits

and property tax revenue) is nested

within states (a two-level model).

31 Stevens, J. P. (2005). Susette Kelo et

al. v. City o New London et al.; Opin-

ion o the Court. Washington, DC:

United States Supreme Court.

32 Pringle, C. (2007). Development with-

out eminent domain: Foundation o

reedom inspires urban growth. Arling-

ton, VA: Institute or Justice. Retrieved

December 13, 2007, rom www.castle-

coalition.org/publications/Perspec-

tives-Pringle/index.html.

33 Pringle, 2007.

34 Boulard, G. (2006, January). Eminent

domainFor the greater good? State

Legislatures Magazine, 32(1), 29-31.

35 Mayor and City Council o Baltimore.

(2005). Susette Kelo et al. v. City o

New London et al.; Amicus Curiae.

Washington, DC: United States Su-

preme Court; Fritze, J., & Rosen, J.

(2007, June 2). Tax break meant to

keep Legg Mason; City council toweigh $33 million subsidy or Harbor

East project. Baltimore Sun, p. A1.

36 Landers, C. (2006, September 27).

Questioning authority: Park Heights

residents worry yet another revital-

ization plan will do little, i anything,

to help community. Baltimore City

Paper. Retrieved December 10, 2007,

rom http://www.citypaper.com/

news/story.asp?id=12691; Siegel,

E. (2004, November 25). Second

chance or revival; Plan: The city tells

residentssome o whom are skep-

ticalabout its ideas or revitalizing

Park Heights. Baltimore Sun, p. B2;

Vitts, E. A. (2005, May). Picking Pop-

pleton: A sweeping urban renewal

plan strives to remake West Balti-

more. The Urbanite. Retrieved De-

cember 10, 2007 rom http://www.

urbanitebaltimore.com/sub.cm?iss

ueID=27&sectionID=4&articleID=24

7; City o Baltimore. (2004, Decem-

ber). Poppleton urban renewal plan.

Retrieved December 10, 2007, rom

http://www.ci.baltimore.md.us/

government/planning/images/URP-

Poppleton.pd.

37 Hopkins, J. (2006, May). A plan or

preservation. The Urbanite. Retrieved

December 10, 2007, rom http://www.

urbanitemagazine.com/sub.cm?issu

eID=35&sectionID=4&articleID=376.

38 Castle Coalition, 2006.

39 Scott, M. (2003, March 3). Blight label

is removed in Lakewood. Plain Dealer,

p. B1.

40 Newton, C. (2005, October 4). Scotts-

dale plans to end redevelopment

designation. Arizona Republic, p. 4B.

41 Vadum, 2005, August 8.

42 Pringle, 2007.

43 Garson, G. D. (n. d.). Statnotes: Topics

in Multivariate Analysis. Retrieved De-

cember 14, 2007, rom http://www2.

chass.ncsu.edu/garson/pa765/stat-

note.htm; Stevens, J. P. (2002). Applied

multivariate statistics or the social sci-

ences. Mahwah, NJ: Erlbaum.

44 Castle Coalition, 2007a.

15


18/19


Director o Strategic Research

Dr. Carpenter serves as the director o stra-

tegic research or the Institute or Justice.

He works with IJ sta and attorneys to de-

ne, implement and manage social science

research related to the Institutes mission.

As an experienced researcher, Carpenter

has presented and published on a variety o

topics ranging rom educational policy to

the dynamics o presidential elections. His

work has appeared in academic journals,

such as theJournal of Special Education, The

Forum, Education and Urban Societyand the

Journal of School Choice, and practitioner

publications, such as Phi Delta Kappan and

the American School Board Journal. More-

over, the results o his research are used

by state education ofcials in account-

ability reporting and have been quoted in

newspapers such as the Chronicle of Higher

Education, Education Week and the Rocky

Mountain News.

Beore working with IJ, Carpenter worked

as a high school teacher, elementary school

principal, public policy analyst and proes-

sor at the University o Colorado, ColoradoSprings. He holds a Ph.D. rom the Univer-

sity o Colorado.

John K. Ross

Research Associate

As part o IJs strategic research team, Ross

plays a critical role producing in-house so-

cial science research on issues central to

the Institutes mission. Credits at IJ include

work on Opening the Floodgates: Emi-

nent Domain Abuse in the Post-Kelo World,

Designing Cartels: How Industry Insiders

Cut Out Competition, and Victimizing the

Vulnerable: The Demographics o Eminent

Domain Abuse.

Ross graduated magna cum laude rom

Towson Universitys Honors College in

2005. An international studies major, he

has published on US-EU economic relations

in the Towson Journal of International Af-

fairs. As an intern at the Cato Institute, he

worked on welare policy analysis.

abottatos


19/19

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doomsday no way: economic trends and post-kelo eminent domain reform

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