Montana ballot initiative I-154, which protects property rights and requires compensation for “regulatory takings,” is in judicial limbo. It arose from the blowback from the U.S. Supreme Court’s 2005 Kelo decision allowing cities to seize private property and turn it over to private developers. This strong reaction to Kelo should alert “progressives” to the importance of secure property rights. These rights are essential to any planning, and the reaction shows us what happens when people believe their rights are in jeopardy.

Environmentalists, community activists, and politicians sometimes believe it’s cheaper to achieve their goals by regulation rather than purchase. It often isn’t. They sometimes assert that community rights trump individual rights. Not always. Their mistake is to believe that society can be managed to produce the “right” outcomes, rather than designing institutions that foster individual and social well-being

Critics of I-154 cry foul when out-of-state special interests orchestrate a campaign to take advantage of the Kelo reaction. However, the same folks solicit out-of-state funds when promoting their pet agendas, e.g., banning big-box stores and raising the minimum wage. When a society employs politics to allocate wealth and opportunities, hardball follows.

In addition to prohibiting Kelo-style takings, I-154 requires compensation for “regulatory takings,” i.e., rules that “diminish value or [cause] economic loss to private property subject to the government regulation.” If governments can’t or won’t pay the landowner for the lost value, then they must waive the regulation.

Oregon voters approved a similar piece of legislation, Measure 37, to help people like Camille Hukari. Her family has been farming pears in the Hood River Valley for decades. She wanted to sell a six-acre parcel for a home site, but could not before Measure 37 had passed. The sale will net her about $350,000. The gross income from farming the same piece of ground is about $7,200 a year.

I-154 includes exemptions for public health and safety, building codes, and recognized nuisances. Hence it won’t result in “hog farms next to schools.” The law is not retroactive, so existing land-use and environmental regulations remain in force. At question are regulations not yet in place, e.g., Gallatin County’s zoning plans. Those concerned with growth management are right to question I-154’s impact in this arena.

Is there a principled case for I-154? Sure. Here it is. Private landowners should not bear the burden for providing public goods, e.g., open space, affordable housing, or the aesthetics of pear orchards. If these are benefits the community desires, shouldn’t we compensate individuals for providing them?

Fortunately, we have many organizations (e.g., the GVLT and Habitat for Humanity) that voluntarily mobilize resources to advance the public good. They negotiate conservation easements, lobby for passage of open space bonds, and actually build affordable homes. Public funding requires citizens to discuss and evaluate the trade-offs and opportunity costs of their preferences.

Is there a principled case against I-154? Absolutely. Here it is. The primary duty of government is to protect people and their property from harm. When harms occur, we expect the government to exercise its police power to ensure damages are paid and the offending actions are enjoined. This includes harms from placing factories next to homes as well as from robbery and vandalism.

Our legal history demonstrates how sensible land-use regulations grow from the desire to protect and enhance property values. This notion reflects our founding ideals that we may exercise our individual rights so long as they do not infringe on the rights of others.

Here are some hypothetical questions for those holding an absolute view that when regulations change the value of the land, compensation is due:

Suppose the federal government embargoed selling wheat to China. Would Montana farmers be entitled to compensation for the decline in the value of their wheat fields?

Alternatively, if a planning board decision increases the value of a parcel of land from $10,000 to $100,000, should the landowner be required to write a check to the local government for $90,000?

Dealing responsibly with our rapid growth raises unavoidable questions about protecting public goods and respecting the rights of private property owners. I-154 focused our attention on this conflict. The recent court decision will probably not be the final word.