Kelo v. New London:  What happened?  State legislative responses

  ---- by Stephen Matthews[1]

 

 

The Case Decision

The U.S. Supreme Court ruled on June 23, 2005 in Kelo v. New London[2] that the “public use” language of the 5th Amendment of the U.S. Constitution allows local governments with the power of eminent domain to compel private landowners to sell their land for projects which promote economic development.  This was sufficient “public benefit” to justify the use of the government’s power of eminent domain to take private land for public use if just compensation is paid.

 

In New London a nonprofit corporation was created to help the city plan for economic development of a 90-acre tract generally characterized as having a high vacancy rate for its nonresidential buildings and with fewer than half the residential properties in average or better condition.  The plan’s stated goals were to “create a development that would complement the facility that Pfizer was planning to build, create jobs, increase tax and other revenues, encourage public access to and use of the city’s waterfront, and eventually to build momentum for the revitalization of the rest of the city, including the downtown area.”[3]

 

Voluntary sales to the city-sponsored nonprofit development corporation outnumbered those opposed to selling (100 of the 115 properties in the 90-acre tract).  Seven landowners owning 15 properties filed suit claiming the use of eminent domain for the plan’s stated purposes violated the state and federal constitutions (5th Amendment “takings” language).

 

The Connecticut state court decisions favored the use of eminent domain, finding sufficient “public use” in the project’s goals of creating new jobs, increasing tax and other revenues, and contributing to urban revitalization.

 

On appeal to the U.S. Supreme Court, the state court decisions were affirmed.  The Supreme Court stated it has a long-standing policy of deference to legislative judgments as to what constitutes a public purpose.  Connecticut has a statute authorizing the use of eminent domain to promote economic development.[4]

 

The decision was on a 5-4 vote, clearly indicating substantial differences among the Supreme Court justices.  If a similar case were to come before the changing court membership, would they overturn the Kelo v New London decision?

 

Why the Controversy?

Prior U.S. Supreme Court “public use” cases (they aren’t numerous) focused on a local government’s attempt to eliminate “blight” (for examples, slums).  This was the first time that the legal issue was narrowly focused on whether “economic development” was alone enough to constitute “public use” under the Fifth Amendment.  The court quickly added that the city’s delegation to a nonprofit corporation the power of eminent domain valid so long as the private entity served as the authorized agent of the government.

 

 

Missouri’s Own “Kelo” Shopping-Mall Development Controvery

In Missouri the Sunset Hills suburb of St. Louis illustrates a similar controversy, with the city using eminent domain to force houseowners to sell in order to turn the tract over to a private developer (shopping-mall developer).[5]

 

Post-Kelo State Eminent Domain Legislation

Twelve states aren’t waiting to find out, preferring instead to propose statutes that would restrict when local governments can use eminent domain by clarifying just what is and is not considered a “public use” (or “public benefit”) under their state constitutions.  In the 2006 legislative session, expect Kelo-inspired legislation in most states, as well as in the federal Congress. 

 

Indeed, the Kelo v. New London opinion specifically leaves open the door to state legislative efforts to define public use.  “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.  Indeed, many States already impose ‘public use’ requirements that are stricter than the federal baseline.  Some of these requirements have been established as a matter of state constitutional law,

while others are expressed in state eminent domain statutes that carefully limit the grounds upon which takings may be exercised.”[6]

 

What’s Happening in Missouri Post-Kelo?

Missouri Governor Matt Blunt in June 2005 created by Executive Order the Missouri Task Force on Eminent Domain specifically to develop a definition of “public use” and criteria to be applied by state and local governments when condemnation is being proposed.[7]  Already the preliminary report (October 1) of this task force is available online,[8] with the final recommendations expected December 31, 2005.

 

Observations: 

  1. Cities are very reluctant to use their power of eminent domain, preferring instead to cultivate public support through open discussions about plans and to seek voluntary property sales.
  2. In the typical “blighted area” city project, the great majority of landowners (and tenants) voluntarily negotiate sales amounts with the city (or its agent).
  3. Property owners generally receive “higher” payouts from city projects than if they had sold to another private individual.
  4. Reluctant sellers to a city project raise more questions about the process and lack of communication as they do about being forced to accept just compensation for their land.
  5. Relocation costs should be paid to displaced landowners.
  6. City-sponsored redevelopment of “blighted areas” is one thing, projects solely for “economic development” are another category and should be scrutinized more closely, by state statutorily prescribed criteria and process.

 

 

[1] Professor of Agricultural Law, Division of Applied Social Sciences, College of Agriculture, Food & Natural Resources, University of Missouri-Columbia.  http://ssu.agri.missouri.edu/faculty/smatthews/

[2] Susette Kelo, et al. v City of New London, Connecticut, et al., 125 S.Ct. 2655 (June 23, 2005)

[3] New London Development Corporation Vision/Plan/Discussion, by Peggy Cosgrove.  http://www.clairegaudiani.com/Writings/documents/NLDC_Case_Study.pdf

[4] Chapter 132, Connecticut Statutes.  http://www.cga.ct.gov/2005/pub/Chap132.htm

[5] “Missouri Condemnation No Longer So Imminent:  Supreme Court Ruling Ignites Political Backlash,” T.R. Reid, Washington Post,  September 6, 2005, page A02.

[6] Kelo v. New London (see footnote #1 above)

[7] Governor Matt Blunt creates by Executive Order the Missouri Task Force on Eminent Domain in June 2005.  http://www.mo.gov/mo/eminentdomain/index.htm

[8] Preliminary Report (September 30, 2005) of the Missouri Task Force on Eminent Domain available at http://www.mo.gov/mo/eminentdomain/prelimrpt.pdf  (46 pages)