August 2004

Eminent Domain Without Limits? IJ Asks U.S. Supreme Court to Decide

By Dana Berliner

On July 19, 2004, the Institute for Justice petitioned the U.S. Supreme Court to hear one of the most important property rights cases in the past 50 years.

Kelo v. New London puts the issue to the U.S. Supreme Court in the clearest possible terms: Does the U.S. Constitution allow the government to take property from one private party in order to give it to another private party because the new owner might produce more profit and more taxes for the City from the land?

The rights of all home and business owners hang in the balance.

For the past three and a half years, the Institute for Justice has represented seven property owners in the Fort Trumbull neighborhood of New London, Conn. The City of New London and the New London Development Corporation (NLDC)—a private corporation—have been trying to take the Fort Trumbull homes and businesses for an office building and something else (they don’t know what) to complement a nearby Pfizer facility.

We mostly succeeded in the trial court. Judge Thomas Corradino of the Connecticut Superior Court held (in a 200+ page opinion) that 11 out of 15 properties could not be condemned, because the City and NLDC didn’t know what they were going to do with the land. The judge couldn’t say the condemnations were necessary for the project, as no one knew what the project would be. However, he allowed the condemnation of four homes for the office building. Both sides appealed to the Connecticut Supreme Court.

IJ and the homeowners’ argument was simple—the Constitution forbids condemnations for the purpose of private development. The constitutions of both the United States and Connecticut state that the government may use eminent domain only for “public use.” While the U.S. Supreme Court has held that cities may take land in order to remove “slums” or “blight,” and then transfer the property to private parties to develop it in a non-blighted way, it has never held that property can be condemned for the sole purpose of private development. That’s the difference between removing a health hazard or public nuisance, on the one hand, and taking property from one person to give it to somebody else, on the other. We argued that the condemnations were unconstitutional.

New London’s argument was also a simple one—the city needs more tax revenue. The people who are living there now aren’t wealthy. If the city gets rid of them and replaces them with an expensive hotel, richer residents and an office building, the city will have more tax dollars. Because the Fort Trumbull neighborhood has a prime location on the waterfront, a developer can make a good profit off it, and that profit will bring more money to the city.

According to the Connecticut Supreme Court, which issued its sharply divided 4-3 opinion in March of this year, the single fact that your City is strapped for cash justifies condemning your home. As long as the city has an idea of a project that promises to produce more taxes and employ more people than your home, it satisfies the Constitution. Taking your home is for the good of the city.

The Connecticut Supreme Court’s reasoning effectively reads the Constitution’s protections out of existence. Whose land wouldn’t produce more taxes if it were an office building instead of a home? Allowing condemnation for “economic development” just allows cities and developers to pick whatever land they want, without regard to the people who live or work there.

The use of eminent domain for the creation of tax revenue is the broadest and most dangerous expansion of eminent domain yet realized. It is also a new phenomenon. Usually governments try to at least claim that the area is a “slum” or “blighted,” but Connecticut has dispensed with that pretense and admits outright that if another business could make a profit on your land, the government can take it.

The time is ripe for the U.S. Supreme Court to once again review the constitutional limits on one of the most serious powers a government has at its disposal. The High Court has not considered an eminent domain case dealing with private development since Berman v. Parker was decided 50 years ago, and it allowed the clearance of an area so blighted that most buildings lacked plumbing. For the last 50 years, without further guidance, it’s been up to states to set their own rules.

Not surprisingly, the states have reached conflicting conclusions. Some states, like Connecticut, New York and Kansas, allow condemnations for “economic development.” Other states, like Washington, South Carolina and Maine, do not.

The abuse of eminent domain is a growing, nationwide problem. It’s time for the U.S. Supreme Court to accept review and tell local bureaucrats that the Constitution still means what it says: eminent domain is only for public use.

Dana Berliner is an IJ senior attorney.