Property Rights Initiative in Washington State

Property Rights groups in Washington State appear to have managed to gather enough signatures to get an initiative put on the ballot in the fall that would, if approved by voters, require compensation for government regulation that results in any decline in property value. Faced with a successful claim, the regulating body will have the option of paying compensation or releasing the landowner from the applicable regulation. The text of the initiative (I-933) is here. I-933 largely mimics Oregon’s famous Measure 37, which was recently upheld against constitutional challenge by the Oregon Supreme Court. Measure 37 has been, by most accounts, a disaster for Oregon land use planning. To date, over 1000 claims have been filed, seeking over $3 billion in damages. Of claims resolved as of October 2005, 90% have resulted in waivers of regulation. Only 10% have been denied. No compensation has been paid.

What’s wrong with these sorts of laws? Plenty.

First, they are based on the wrongheaded and frankly antisocial premise that we should not be expected to bear any burden in our use and enjoyment of property, no matter how trivial. The simple fact is that we all enjoy the benefits of life in society, and life in society entails obligations, including the occasional regulatory burden. These laws reinforce the bizarre notion that we should be able to reap all the benefits of life in community but never be asked to suffer even the least inconvenience. Now, the Washington law has some interesting wrinkles that make this assertion a little more complicated and that, if narrowly interepreted by the courts, might make the impact of the law far less dramatic than Measure 37. For example, I-933 defines a regulation that damages property values as one that “prohibit[s] or restrict[s] the use of private property to obtain benefit to the public the cost of which in all fairness and justice should be borne by the public as a whole.” Property students will recognize this as one of the Supreme Court’s favorite formlulations for a regulatory taking. Accordingly, on a narrow reading of this initiative, it merely requires what the Constitution already mandates and therefore accomplishes, exactly, nothing. But the law goes on to provide specific examples of the sorts of things that might (or should? or would? or do?) qualify under this definition (e.g., prohibition on the replacement or maintenance of a beach wall). Because many of the items on that list would not normally be considered regulatory takings, if the list is read to provide examples of regulations that (per se) satisfy the more general formula, then the law will constitute a dramatic expansion of takings law in Washington State.

Second, these laws are plainly unbalanced in their approach to the consequences of state action, since they do not require property owners to compensate the state for actions by the state that enhance their property values (UPDATE: in a way not shared with other taxpaying property owners). In this, they faithfully reflect the selfishness of their underlying assumptions. The property owner is permitted to freely reap a unique benefit when the state, for example, opens up a freeway exit next to his commercial property, but he cannot be asked to bear an equivalent (or even much smaller) burden without receiving compensation.

Third, while they are often portrayed as the result of broad grassroots outrage at over-regulation, these laws are often the consequence of narrower interest group politics. In this case, I-933 was put on the ballot with the help of paid signature-collectors. Funding came from a variety of property-rights interest groups, including $200,000 from an out-of-state property rights organization. According to the Seattle Times, “Initiative campaigns with the resources to employ paid signature-gatherers almost always qualify” for the ballot.

Fourth, the laws are often downright hypocritical, favoring property rights only for those of whose land uses they approve. Both the Oregon and Washington measures, for example, specifically exclude the regulation of adult businesses (through zoning law) from their ambit. Apparently, their libertarian individualism only goes so far.

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13 Responses

  1. Chris says:

    Why should the costs of government be the burden only of an individual property owner as opposed to the collective wealth of the state? How is it bizarre that individuals should be protected against the power of the state?

    Your second point makes no sense either. Why should a property owner pay for unintended benefits when the government action has benefits that are not related to the gain?

  2. Anon Y. Mouse says:


    You use a lot of scare words in this post — hypocritical, wrongheaded, unbalanced, selfish, etc. — but in the end, your analysis seems relatively light on reasoning.

    On the first argument, what you dismiss as “antisocial,” others will see as properly individualist; on the second, what you dismiss as one-sided, others will see as two-sided (in that they already paid for the benefit through their taxes, right?); on the third, many legal developments are the outcomes of “interest group politics,” so it’s hard to say why that matters; and on the fourth argument, what you dismiss as “hypocritical” others would say is just reasonably balanced.

    I realize that you may have very good unstated reasons for your characterizations, and in the end I think I probably agree with your instinct that the proposal is a bad idea. But I would to hear more of a developed argument to be more confident. Thank you.

  3. Eduardo Penalver says:

    Anon — I’m not sure I understand your objection to my characterization of the law as unbalanced. Perhaps my language wasn’t clear (though I think my example was), but I’m not talking about benefits broadly spread out over all taxpayers, but rather narrowly concentrated benefits that go well beyond the share of taxes a property owner paid for the government project. For a more lengthy discussion of this problem, see Avi Bell and Gideon Parchomovsky’s article, Givings, in the Yale L.J. I fail to see how you can object to my description as unbalanced a law that requires the state to compensate for unevenly distributed costs of regulation but does not allow it to charge property owners for unevenly distributed benefits.

    As for your interest group politics point — we’re probably in agreement here. I don’t have any general objection to interest group politics. My point was more to rebut the common characterization of these property rights initiatives as reflecting some broadly shared feeling of resentment by property owners.

    Finally, if the ideology underlying these laws is that people have a general right to do what they want with their property short of creating a nuisance (which I take to be one of the basic premises of property rights libertarianism), then how is it not hypocritical to exempt those uses of property deemed by some of the law’s supporters to be immoral (though presumably not a nuisance, or the exemption would not be necessary)? I would have thought that a law that protects MY right to do what I want with my property but that makes an exception for YOUR property uses that morally offend ME is almost a textbook case of hypocrisy.

  4. PK says:

    Prof. Penalver,

    Can’t the assymmetry you talk about, namely certain property owners getting special benefits from government spending such as increased traffic due to a new highway, be cured by using special taxing districts when such windfalls occur?

  5. Eduardo Penalver says:

    PK — Yes. Since I don’t share the underlying individualist assumptions, I don’t agree with the wisdom of such laws, in either direction, but at least a scheme that coupled the compensation requirement with an attempt to recoup the positive externalities of government action would be a balanced one. That said, it would have to be part of the same law that imposed the compensation requirement (or an amendment of this law), otherwise, the special tax district, which would likely have SOME impact on property values, would itself fall within the scope of the compensation law. In any event, these compensation laws never include a requirement that owners compensate the state for freely distributed unique benefits.

  6. PK says:

    Prof. Penalver,

    I think you’ve misread the proposed Washington law. Section 2(b) defines a compensable government action as one that “prohibits or restricts the use of private property” and the specific examples that section gives all fit within that description, i.e., regulations on land use itself, not regulations that do not limit land use directly but may have an effect on value such as increased property taxes. Therefore, a special taxing district could be created without it being part of the same law that imposed the compensation requirement. Nevertheless, there’s still the question of whether the state will actually act to recoup the benefits, but it does weaken your argument that these laws necessarily create asymmetrical benefits to landowners.

  7. Eduardo Penalver says:

    PK — My comment was not directed towards the Washington law specifically, but towards this general type of compensation requirement. (I quoted the same language to which you point in my main post, and it is my basis for suggesting that this law, if interpreted narrowly, is less problematic than Measure 37.) The Oregon law, for example, is broader and applies to all land use regulation, without the narrower definitional language in the Washington law.

    That said, you raise an interesting point, which is whether a narrowly targeted property tax provision (like a special district) could count as a “regulation” of property under any plausible understanding of that term. I think it might. If it can’t, then the law has a huge loop hole that would allow policy-makers to accomplish their land use planning regulatory goals through the use of narrowly targeted taxes and impact fees (for example, huge “development taxes” designed to make it unattractive to build outside of urban growth boundaries). I’m inclined to think that’s a good thing, and I hope the Oregon government tries it, but I doubt the sponsors of these sorts of laws would agree. For more on this fluidity between regulation and taxation, see my article, Regulatory Taxings, in the Columbia Law Review. I suspect that drawing the line between taxes that seek to recoup benefits and taxes that serve regulatory purposes will be a difficult one to draw. Many will do both. But, in the end, I think your point is well taken, and I am probably overstating the difficulty of drawing lines in this area. Policy makers or courts might exclude from the definition those narrowly applicable taxes designed solely (or mostly) to recoup unevenly spread benefits. Of course, all of this line-drawing will get terribly expensive, which is part of the problem with laws, like I-933 and Measure 37, that don’t impose thresholds for applicability (e.g., 10% or 20% or 50% declines in value).

    But I’m not sure how any of this weakens my point that THIS provision is unbalanced by requiring compensation without mandating recoupment of benefits. The fact is, these recoupment devices, while currently used to some extent, are certainly nowhere near as comprehensively employed as this provision would be. Your answer may be that the existence of provisions like this will spur states to broaden their reliance on special tax districts. I have not seen any evidence that that’s happened in Oregon, and my inclination is to think that the substantial political barriers to new property taxation will keep that from happening in the future. So the unbalanced nature of the law will likely persist.

  8. Professor,

    You characterize the burden on property owners as “trivial” and a mere “inconvenience.” But if that’s the case, what’s the big deal? All the proposed law does is require the state to compensate the property owner for actual damages if it wants to regulate. If the actual damages are “trivial,” then why can’t the state compensate the property owner this “trivial” amount of money?

    It seems to me that you’re trying to have it both ways. How can it be a “disaster” to require compensation if the burdens are so slight — are mere “inconveniences”? On the other hand, if the costs really are large, then aren’t you being unfair in characterizing the property owners are “antisocial” because they don’t think they ought to uniquely bear these costs?

  9. Arie says:

    Prof. Penalver,

    I agree that I-933 is a bad idea that will have a lot of unintended consequences, but be careful with comments that suggest that rural landowners feel they should “not be expected to bear any burden in our use and enjoyment of property, no matter how trivial.”

    In King County Council members for the the urban 90% control the process for making regulations through CAOs and DDES regs and have instituted a “pay-as-you-go” budget for DDES that means all the protections are paid for by rural property owners. This is environmentalism for free.

    Let’s share the cost and find a balanced cooperative approach! This type of hypocrisy is hard to stomach even for those of us who are anti I-933. If you new the facts on the ground in King County I don’t think you’d jump to such conclusions about rural property owners.

  10. Eduardo Penalver says:

    Arie–Sorry if I left the misimpression that my comments were focused in some way at rural landowners or that I did not think rural landowners sometimes have legitimate gripes. (Note, I doubt that a law like I-933 could garner more than 50% of the vote without substantial votes outside of rural areas.) I am (vaguely) aware of the dynamic between rural and urban King County (I grew up in Puyallup), particularly since the emergence of Washington’s statewide land use law a few years back, but I think a law like I-933 is not the right solution, for the reasons I’ve given in this and other posts. Personally, I think TDRs are among the best ways to help spread the cost of regulation from rural to urban areas, but cures like Measure 37 (and, to a more limited extent, I-933) are worse than the disease.

  11. Susan Hobbs says:

    What a thoughtful and articulate commentary. It’s an honor to be taking part.

    I believe I-933 has shot across the bow of many important considerations, yet it has missed the mark by virtue of the door it opens for abuse.

    My husband and I are stewards to 719 acres of forest and farmland in a river valley in NE Washington State. We believe it is our duty to care for the land, and when restrictions encumber it, to swallow (sometimes hard) the impact. Our forest is certified sustainable, we exceed what is asked/required of us by government & environmental policy, and are proud to do so.

    But we recognize that not all landowners are of the same mind in these things. Further, those who would purchase farm and forestlands, and develop those parcels into (X,Y,Z) for financial gain, are anxiously waiting in the wings, perhaps even salivating at what doors I-933 opens for their ambitions.

    Yes, some sort of measure/initiative is needed to make the legislature consider the ramifications before passage of bills that further burden private landowners.

    But this is not that measure.

  12. J Miller says:

    I-933’s “fairness” only goes so far: Taking away property rights of adult entertainment is GOOD government. But I-933 also says these restrictions must apply equally to all property in an agency’s jurisdiction. I-933 requires a choice of everywhere or nowhere.

    But a jurisdiction cannot legally prohibit all adult entertainment outright in Washington — they must have a place, however proscribed. So a city or county under I-933 must allow adult businesses everywhere with exactly the same limits on their operation.

  13. curtis holyk says:

    Measures such as I-933 wouldn’t be necessary if government hadn’t already way overstepped its bounds. In fact measures such as these are a direct reaction to governmental abuse as it pertains to property ownership. Ownership which we (I guess wrongly presumed) thought was protected by both our state and federal constitutions. Washington State Constitution Article 1 Statement 1 says that governmental powers are derived by the consent of the governed, and are established to protect and maintain individual rights. Not collective rights. When our government acquired land such as Washington and Oregon it did so in a manner which was consistent with the constitution. It kept land that it thought prudent to keep for itself “public land” and sold the rest to private citizens “private property”. Now it seems to want that land back. To do this constitutionally it could do so through eminent domain or condemnation processes. These processes allow the government to take land back at a cost to all without putting the burden on or violating the rights of the property owner whose lands are in the government sights. If we had these safeguards in place what went wrong? Answer: special interest politics. The way it used to work, and still should, if you were a person who believed in environmental causes real or imagined you would put your money where your mouth is and buy as much land as you could. As the owner of such you can protect it any way you want. Now what you do is throw your money into a group (Sierra Club) which either files lawsuits against those who don’t do what they like or they get politicians elected who will do their dirty work for them. (They like to call it “clean” work). The quandary for the politician then becomes ‘how do I sidestep the constitutional rights of property owners while keeping my special interest buddy happy’? Their answer: the Land Management Act; the Clean Water Act; the Shoreline Management Act; and the adoption of the New International Residential Codes. All of these ‘acts’ allow the government to take back private lands with no expense attached. Private land owners get stuck with the bill. This also serves the politicians quite well while also proving what our founding fathers knew to be true and fought hard against, that is that when given too much power governments will invariably act in their own self interest. You see all of these ‘acts’ allow government agents to keep their environmentalist friends happy without having to spend money buying private land as before, so they can use those dollars to fund their own salaries, fringe benefits, and retirement accounts. They get the best of both worlds. Now all they have to do is fight off a backlash from the public. Backlash such as I-933. How do they do this? They use government payroll professors to tell us that revoking these acts would be a huge environmental disaster. Really! What disaster prompted the need for these changes? They never show any. The Shoreline Management Act for instance not only affects shorelines but also anyone who owns property within 200 feet of a creek, river, or stream. If the government thought these property owners were in such dereliction of private stewardship duty why was no effort even made to contact them to remedy the so called problem? No attempt was made because no problem existed. So now all property owners lose 200 feet of their frontage because a politician needed a “make believe” problem to solve. Measures like I-933 are needed to keep self serving government entities in check. A better solution would be to go back to the constitution and eliminate all the aforementioned ‘acts’.