Hawaii Housing Authority v. Midkiff

SCOTUS- 1984

Facts

• HI legislature discovered that most of the privately-owned land was owned by 72 private landowners.
• On Oahu, 72.5% of fee simples were owned by 22 landowners.

• State concluded that this imbalance was skewing the State's residential fee simple market, inflating land prices, and injuring the public tranquility and welfare.

• Land Reform Act of 1967 created a mechanism for condemning residential tracts and transferring ownership of the condemned fee simple to existing lessees.

• Funds to satisfy the condemnation awards have been supplied entirely by lessees.

• HHA made a finding that the acquisition of Midkiff's land would effectuate the public purposes of the act.

• Rather than comply with the HHA finding, Midkiff filed suit.

Procedural History

• District Court declared the compulsory arbitration and compensation formulae provisions of the Act unconstitutional. But, found that the Act's goals were within the bounds of the state police power and that the means the legislature had chosen to serve those goals were not arbitrary, capricious, or selected in bad faith.

• Ninth Circuit reversed, and determined that the Act could not pass the requisite judicial scrutiny of the Takings Clause.  Said this transfer was unlike those of takings previously held to constitute "public uses" by this Court.

• SCOTUS reversed, act Constitutional.

Issues

• Does the Takings Clause prohibit a state from taking, with just compensation, title in real property from lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the state?

Holding/Rule

• The Takings Clause does not prohibit a state from taking, with just compensation, title in real property from lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the state.

• Where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court will not hold a compensated taking to be proscribed by the Public Use Clause.

Reasoning

• In Berman v. Parker, the Court held constitutional the DC Redevelopment Act.
•  This provided for the comprehensive use of eminent domain power to redevelop slum areas and for the possible sale or lease of the condemned lands to private interests.
• Court said that the power of eminent domain is merely the means to an end.  As long as the object is a public purpose, eminent domain can be used.

• It is for Congress to determine what the public use is and what qualifies as a public use.
• Court has some review power, but the courts' role is extremely narrow here.
• Deference to the legislature's "public use" determination is required "until it is shown to involve an impossibility."
• Court will not substitute its judgment for the legislatures as to what constitutes a public use "unless the use be palpably without reasonable foundation."

• Where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court will not hold a compensated taking to be proscribed by the Public Use Clause.
• Under this framework, the Act in this case is constitutional.
• The land oligopoly has created artificial deterrents to the normal functioning of the State's residential land market and forced thousands of individual homeowners to lease, rather than buy, the land underneath their homes.
• Regulating oligopolies is a classic exercise of a State's police powers.

• The Act's approach to correcting the problem is not irrational.
• There is obviously an economic malfunction here that Hawaii is trying to fix.
• The fact that the property is transferred to private beneficiaries doesn't mean it has a purely private purpose.
• The HI legislature enacted the Act not to benefit a particular class of individuals but to attract certain perceived evils of concentrated property ownership in HI. This is a legitimate public purpose.
• The use of eminent domain power to do this is not irrational.

Dissent

•  None.

Notes

• None.