Supreme Court OKs Expansion of Takings Power

Published August 1, 2005

The U.S. Supreme Court gave a major victory to urban planners, large property owners, and government in the Kelo v. New London decision announced June 23. The major losers are those who treasure private property rights and the respect for those rights set forth in the U.S. Constitution and those with the least political power to protect themselves.

Economic Motives Sufficient

The decision says that where a government has a “carefully considered development plan” that is intended to lead to economic development, enhancing the tax base and creating jobs, it has the right to use the condemnation power contained in the U.S. Constitution to seize private land and transfer title of it to private developers. The government must pay “just compensation” to those whose land is seized.

The 5-4 decision was written by Justice Stevens and joined by Justices Breyer, Ginsburg, Souter, and Kennedy. Dissenting in strongly worded opinions were Justices O’Connor and Thomas, whose opinions were joined by Justice Scalia and Chief Justice Rehnquist.

Town Coveted Property

The case grew out of a plan by New London, Connecticut to develop its downtown with a Pfizer facility, marina, hotel, and residential units and shops. In the development’s way were middle-income homeowners, including some whose families had owned their individual properties for well over 100 years.

Many of the property owners agreed to sell their homes “voluntarily” (with the threat of condemnation not so subtly being raised). Others said they liked their homes and weren’t interested in selling them.

The town government proceeded with condemnation against the holdouts, based on the argument that it was in the “public interest” to develop the waterfront area. It would enhance the economic revitalization of New London by raising the tax base, creating jobs, and making the area more aesthetically pleasing, they said.

Neither the homes nor the neighborhood were blighted or dangerous. The city and its urban planners simply decided they would prefer other owners and economic activities on the waterfront of New London.

Public Purpose Was Essential

At the core of the case was the proper scope of the condemnation power provided for in the U.S. Constitution, which explicitly limits the taking of private property for “public use.” The simple term “public use” would, to most of us and to those who wrote the U.S. Constitution, mean a use that is generally open to the public. Examples are the building of roads and highways, the creation of a public park or municipal swimming pool, or the building of common carrier lines (such as airports or cross-country railroads).

In Kelo, however, the Court replaced that term with “public purpose,” following a line of cases developed in the 1950s and 1960s dealing with urban renewal and slum clearance by large U.S. cities. In those cases the Court decided condemnation was permissible if the government condemning properties didn’t itself hold title and become a developer, but instead transferred ownership to private parties to help achieve the elimination of blight and dangerous health conditions.

A key element, however, was that such projects had to further a public policy consistent with the traditional power of government: protecting the health of the public.

‘Public Use’ Definition Expanded

In Kelo, the Court expanded the “public use” and “public purpose” definitions to encompass anything with potential economic development benefits, so long as the development plan is “carefully considered.” The majority felt it necessary in a modern society to read the “public use” provision that way because government should be interested in economic development.

The Court said it will give “great deference” to the local government in determining what constitutes economic development and how big any redevelopment area should be.

The Court further said a condemnation would not be allowed if it were simply the taking of one person’s property to give to another, without general economic development being enhanced and not as part of a broader plan of redevelopment.

In essence, then, the Constitution’s takings protection now extends only to government taking one person’s property and giving it to another for no reason other than raw favoritism. Justice Kennedy tried to soften that interpretation, writing in a concurring opinion that any economic development finding used to justify such favoritism must be more than a pretext or incidental.

Few Protections Remain

City planners now have a green light from the federal courts to plan what they want where they want it, without feeling hindered by the private property rights of people who might own land they wish to redevelop. Whether for the sake of a Wal-Mart, office building, or luxury condominiums, the federal government does not preclude any such redevelopment so long as it can be claimed the redevelopment will enhance the tax base or create jobs.

Attorney Maureen Martin, a senior fellow of The Heartland Institute, notes, “the ‘carefully considered’ test can probably be passed by creating the right record of hearings and a nice brochure with color photos.

“Virtually all of the economic development tools now being used will work,” Martin said, “and new tools will certainly be developed. Current state statutes that require a finding of ‘blight’ as a condition for condemnation may well be amended to do away with that inconvenient requirement.”

Observed Martin, “The danger, as pointed out by Justice O’Connor in her dissenting opinion, is that there is virtually no limit to the takings power established by the majority: ‘For who among us can say she already makes the most productive or attractive possible use of her property? The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.'”

States Can Decide

Jonathan Adler, associate professor of law at Case Western Reserve University, offered a different perspective. “While the decision will make for terrible policy, it is probably good law,” Adler said. “There is not much basis in the constitutional text or court precedent for imposing a rigid, judicially enforced limitation on the purposes for which state and local governments use eminent domain.

“If homeowners are to be protected from eminent domain abuse, that protection should come from state courts or through the political process,” Adler said.

The majority opinion noted nothing prevents state legislatures from adopting laws restricting the use of eminent domain by state and local governments. The Kelo decision thus illustrates the vital role state legislatures and local officials have in protecting property rights.

Attorney Paul Fisher ([email protected]) is a member of the board of directors of The Heartland Institute and head of the real estate law department at McGuire Woods LLC in Chicago.

For more information …

The full text of the majority and dissenting opinions in Kelo is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to, click on the PolicyBot™ button, and request documents #17418 (majority), #17419 (O’Connor dissent), and #17420 (Thomas dissent).