Last November, Texans ratified a constitutional amendment that will help prevent their property from being taken via eminent domain for economic development purposes. While this was certainly a victory for property rights, economic development takings remain a major concern in Texas.
The new tactic of choice: use re-zoning and other city ordinances to deprive property owners of the use of their property.
One only has to drive down Ross Avenue from downtown Dallas to Lakewood to see it. In 2005, the City Plan Commission authorized rezoning of the area to “allow the property to be developed with more commercial and retail uses more appropriate leading to the central business district.” The practical effect of this update was to eliminate many of the businesses operating on Ross Avenue and allow high-end condominiums to take their place.
Many of the old repair shops have shuttered as a result of the council vote to re-zone Ross Avenue, but at least one business remains: Woodard Paint and Body. Allen Woodard was not willing to simply close the doors to his family’s shop, which has been in business since 1920.
To address this, a Dallas City Council member recently submitted a request to the City Plan Commission for an exception to keep Woodard in business. The plan includes asking Woodard to create a new facade to “fit in” to the new neighborhood. Even with the promise, the exception has not yet been assigned to a City Planner, nor has it been placed on the City Plan Commission’s agenda.
Assuming Woodard does comply with the demands in order to stay on Ross Avenue, the fact remains that many more businesses were not offered a deal. Most of these aesthetically challenged businesses were re-zoned into extinction to lure luxury condominiums into the area.
And Dallas’ comprehensive planning does not end at Ross Avenue. Its Trinity River project will likely have similar consequences.
El Paso also seems headed down this path. The city recently applied for a $3 million federal grant to rewrite the City’s comprehensive plan in order to “project recommended land uses into the development paths identified by the Growth Plan to ensure quality of development and compatibility of uses.” This “compatibility of uses” should concern many downtown property owners.
El Paso’s “downtown revitalization plan” requires amassing large tracts of land – currently filled with houses and businesses – to attract developers and retailers into the area. The municipality had declared much of the area “blighted,” which until the constitutional amendment would have allowed the property to be taken by eminent domain.
In the wake of eminent domain reform, updating the comprehensive plan will allow El Paso to re-zone the downtown area and force existing businesses to move or close. This will make room for the businesses favored by the plan, as in Dallas.
Texas courts grant cities wide latitude in rezoning land, regardless of the impact on property owners. In City of University Park v. Benners, the Texas Supreme Court noted that “property owners do not acquire a constitutionally protected vested right in property uses.” As a result, re-zoning and other city ordinances that restrict use and diminish the value of a property are a legitimate “exercise of police power” as long as they “accomplish a legitimate goal” and are “reasonable.”
In other words, cities can force a business to close or prohibit an activity through zoning without it being considered a taking.The Private Real Property Rights Preservation Act was passed by the Texas Legislature in 1995 to address these types of regulatory takings. However, the Act does not apply to cities, so a private property owner whose land has been rezoned has little recourse.
Taking someone’s business or real property because it isn’t aesthetically pleasing, politically favored, or provide enough tax revenue is wrong – whether accomplished through eminent domain or regulation. The protections of the Private Real Property Rights Preservation Act should be extended so that property owners have protection against municipal actions.
Ryan Brannan is an economic freedom policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.