Decision
The court's decision looked to Berman v. Parker, in which eminent domain power was used to redevelop slum areas and for the possible sale or lease of the condemned lands for private interest. The United States Congress had the power to determine what was for the public good over the judiciary. The decision equated police power with the eminent domain of the sovereign's public use requirement.
In an 8-0 decision, the court voted that the Hawaiian act was constitutional. Hawaii's act to regulate the oligopoly was seen as a classic exercise of the State's police powers, and a comprehensive and rational approach to identifying and correcting market failure and satisfied the public use doctrine. Land did not have to be put into actual public use in order to use eminent domain. It is the taking's purpose, and not its mechanics that were important. Here, eminent domain was used to provide an overall market benefit to the wider populace.
The decision suggested that a judicial deference to the legislature was involved. If the legislature determines there are substantial reasons for the exercise of the taking power, courts must defer to the legislature's determination that the taking will serve a public use.
The decision held that the takings to correct concentrated property ownership was a legitimate public purpose.
However, the aftermath of the Midkiff decision failed to achieve the stated purpose of the redistribution legislation which was incapable of creating new housing because it only transferred title from the land lessor to the lessee-homeowners who already occupied existing homes on the subject property. As soon as the former lessees acquired fee simple titles to their homes, those became attractive to Japanese investors and speculators who paid outlandish prices for those homes (largely located in the upscale Kahala and Hawaii Kai neighborhoods), causing a ripple effect throughout the island. Home prices on Oahu, far from falling as intended by the legislature, surged upward and more than doubled within six years.
Read more about this topic: Hawaii Housing Authority V. Midkiff
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