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Is My Home a Developer's Castle?

By Marianna Brown Bettman · July 13th, 2005 · Legally Speaking
Developers support conservative politicians and favor conservative judges, right? So what happened in Kelo vs. City of New London, the June 23 U.S. Supreme Court case determining the constitutionality of taking property for economic development? The "liberals" favored the developers and the "conservatives" favored the little guys. Go figure.

"Conservative" judges defer to legislative bodies and stick to interpreting the law, not making it. "Liberal" judges are more comfortable in the role of policy makers and less deferential to legislators. So in Kelo vs. City of New London, who wrote this? "The disposition of this case therefore turns on the question whether the city's development plan serves a 'public purpose.' Without exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field."

Justice John Paul Stevens, arguably the court's most liberal justice, wrote that. He authored the majority opinion in the case. Go figure.

If you haven't gotten the point by now, labeling judges can be tricky, and this eminent domain case is a good example.

The takings clause of the Fifth Amendment to the U.S. Constitution says that private property shall not be taken for public use without just compensation. There are two parts to this clause. A person whose land is taken must be compensated, but the land can only be taken for a public use. The Kelo case deals with this latter issue.

The city of New London, Conn., like many cities, was in economic decline. According to the court's decision, New London's unemployment rate was double that of the state and its population had shrunk to its lowest since 1920. So, as in many cities, a private, nonprofit redevelopment corporation was formed to help the city come up with a plan for economic development.

The development corporation came up with a comprehensive, integrated plan that included a conference hotel, marinas, restaurants, a pedestrian walkway, a U.S. Coast Guard museum, a large Pfizer research and development facility and some new housing. The plan focused on 90 acres in an area known as Fort Trumball.

The city authorized the development corporation to acquire the property for the project. The corporation successfully bought up most of the property from willing sellers, but in a familiar song to cities and developers, there were also some holdouts.

Condemnation proceedings were begun to take these properties and were challenged by the hold-outs as an unconstitutional use of the power of eminent domain. The Connecticut Supreme Court ultimately upheld the takings.

The issue for the U.S. Supreme Court was whether economic development is a public use, required before a taking is constitutional under the Fifth Amendment. In a sharply split 5-4 decision, the court held that it was.

The government can take property for a public use. What it can't do, however, is use its power of eminent domain to take one person's private property and then turn around and give it to another private person just for that person's private gain. The difference of opinion in this case involves the fundamental question of what constitutes a public use. There are some clearly obvious answers, such as highways, schools and hospitals. As society has changed, "public use" has come to mean "use for a public purpose" rather than "use by the general public."

Consistent with that evolving definition, in the 1950s the Court upheld the use of condemnation for urban renewal. But the property owners in New London did not live in a slum. They just happened to live in an area the city wanted for economic development.

Writing for the majority finding economic development to be a public use, Stevens made several points. The courts won't second-guess city government on the justification for the development plan or the property needed to carry out the plan. So if there is a battleground over a redevelopment project, it is in city council, not in the court.

"The necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate," Stevens wrote.

Economic development is a public use, just as urban renewal was found to be. It is inevitable that the government's pursuit of a public purpose is going to benefit some private parties.

Justice Anthony Kennedy was sufficiently concerned about this latter point that he wrote a separate concurrence. His vote was necessary to have a majority in this case. He wrote, "The court should strike down a taking that, by a clear showing, is intended to favor a particular party, with only incidental or pre-textual public benefits." But he found no such circumstances in the New London takings, which were "in the context of a comprehensive development plan meant to address a serious city-wide depression."

Justice Sandra Day O'Connor wrote the lead dissent, joined by the chief justice and Justices Antonin Scalia and Clarence Thomas. In finding economic-development takings to be unconstitutional, she raised some very provocative points. She worried that under this ruling, any private property can now be taken and given to another private owner who will just do something "better" with it. In her words, "Nothing is to prevent the state from replacing any Motel 6 with a Ritz Carleton, any home with a shopping mall, or any farm with a factory."

What is the conclusion on the takings from the so-called conservative wing?

"Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random," O'Connor wrote. "The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more."

No wonder Justice O'Connor has been hard to label!

For those who abhor the majority position, there is an interesting suggestion from the majority itself. States can provide greater limitations on the taking of property than the federal constitution provides, either through their own constitutions or state law. Kentucky and Michigan have already done this.

Under the Ohio Constitution, private property may be taken "for the public welfare." The Ohio Supreme Court has interpreted "for the public welfare" as meaning "for public use." In 1953, a year before the U.S. Supreme Court reached the same conclusion, the Ohio Supreme Court held that the taking of property for purposes of urban renewal -- in the old West End of Cincinnati -- was constitutional, as a proper public use.

If a half-century later Ohio's high court wants to give its own constitutional clause a stricter interpretation in the case of a taking for economic development, it may get the chance if it chooses to hear the merits of the takings case from Norwood. Stay tuned.

Marianna Brown Bettman, a former Ohio appeals court judge, teaches at the University of Cincinnati College of Law.


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