The city of New London authorized the New London Development Corporation to seize land belonging to Susette Kelo and her neighbors and turn it over to a private developer. That private developer intended to provide a luxury hotel, high-end residences and office space for Pfizer employees, clients and contractors. The city justified its actions by arguing that the condominiums would generate more tax revenue than a working-class neighborhood. Susette argued that the Public Use Clause of the Fifth Amendment prohibits the use of eminent domain to transfer property from one private party to another simply to raise tax revenue.
The U.S. Supreme Court upheld the use of eminent domain for private economic development. Justice Stevens stated that, since the close of the 19th century, the Court had “embraced the broader and more natural interpretation of public use as ‘public purpose’” and emphasized the “longstanding policy of deference to legislative judgments in this field.” The Court, relying on precedent that allowed legislatures and administrative agencies to adopt loose definitions of “public purpose,” found that “public purpose” could be defined broadly enough to encompass an intention to benefit the city by providing higher tax revenues and more jobs.
Susette Kelo’s neighborhood was razed, but no redevelopment has occurred. As a result, nearly 100 acres of land remain vacant where there once stood a working-class neighborhood. As Justice O’Connor noted in her dissent, the result of Kelo is that “(t)he specter of condemnation hangs over all property.” In the wake of Kelo’s green light, local governments around the country pressed forward with more than 117 projects involving the use of eminent domain for private development in just one year. Many property owners who were determined to fight for their homes and businesses were discouraged from doing so, believing that the Constitution would not help them. While the public outrage against Kelo drove many states to introduce legislation to curb eminent domain abuse, the Supreme Court must overrule Kelo in order to secure lasting protection for property rights in the coming years.