The U.S. and Arizona constitutions require government to compensate property owners whenever it seizes their land. However, government often passes laws and regulations that depress property values or completely prevent the use of private property, essentially taking the property without explicitly taking title to it. In these instances, loopholes in judicial interpretation of the constitution often allow government to escape having to compensate property owners. These "regulatory takings" became so severe in Oregon that, in 2004, voters overwhelmingly approved a law called Measure 37, which required the government to pay people whenever it conscripted their land for public purposes, even if it did not seize the title outright. This law followed an earlier attempt, called Measure 7, which, despite overwhelming popular approval, was deemed unconstitutional in 2002 by the Oregon Supreme Court. But in February 2006, the court upheld Measure 37, leading many defenders of private property rights to hope that similar reform might be possible to protect home and business owners in other states.
In this report, Timothy Sandefur, author of the forthcoming book Cornerstone of Liberty: Property Rights in 21st Century America (Cato Institute), examines whether a regulatory takings law could be enacted in Arizona. Arizona courts, like courts across the nation, have neglected the importance of compensating property owners when the government prohibits them from using their land. Although the state judiciary has acknowledged that owners may be due compensation, it has required compensation only in those instances that "[destroy the] economic value" of a piece of property "or all but a bare residue of its value."1
There are several legal and political obstacles on the road to restoring protection of property rights. But in the end, this is an issue of basic fairness: government should pay people for the things it takes from them--whether it takes them outright or in the form of a land use limitation.