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For the last four years, New London, Conn., has been trying to flatten a historic neighborhood near the Thames River in the interest of “economic development.” Just 15 homes remain. New London’s plan was to replace the Fort Trumbull waterfront neighborhood with a high-end hotel, an office building, upscale condos, and some other unidentified uses, all of which would complement a new nearby Pfizer research facility. The city claimed that the project would put more money in its coffers and create jobs. So wielding its power of eminent domain, New London attempted to clear the way for private developers. When residents resisted, the head of a private development corporation dismissed their complaints: “Anything that’s working in our great nation is working because somebody left skin on the sidewalk.” Since then, the developer has decided that there’s no real market for the hotel or the office building, but the city presses on. On the first day of its new term, the U.S. Supreme Court granted certiorari in Kelo v. City of New London to consider this all-too-common municipal practice. The case squarely presents the issue of whether the government can take by eminent domain the property of one private party and give it to another private party merely because the activities of the new owner would bring more jobs and higher tax revenues to the government. With the words, “Nor shall private property be taken for public use without just compensation,” the Fifth Amendment limits the power of eminent domain in two ways: Property can be taken only with the payment of “just compensation” and only for “public use.” Everyone agrees that public use covers highways, sewers, and railroads. The problem begins when the government defines public use as any economic development that might provide some public benefit, however tangential to its true private purpose. There is virtually no limit to the economic development rationale for invoking eminent domain. The government can nearly always envision a more profitable use for any parcel of land. Businesses inevitably generate more jobs than private homes, and big companies pay higher taxes than small companies. If the Supreme Court sides with New London, no owner of private property will ever really be secure. CLEARING THE WAY Kelo v. New London is the Supreme Court’s first eminent domain case dealing with private development in a half-century. Fifty years ago, the Court issued Berman v. Parker, a radical decision that was to change the face of American cities. The Berman Court said that condemning blighted areas so that they could be redeveloped served a “public purpose,” and that was sufficient to invoke eminent domain to take a building from a private owner and transfer it to a private developer. State supreme courts followed suit, universally upholding the condemnation of slums and blighted areas for the purpose of “urban renewal.” And cities found a whole new source of revenue and bargaining power. There’s no denying that the area slated for redevelopment in Berman was in terrible shape. More than half of the buildings in the Southwest Washington, D.C., neighborhood were beyond repair. Most lacked plumbing. The residents suffered from high rates of crime, syphilis, and infant mortality. The neighborhood probably could have been condemned as a nuisance or hazardous to the public health. And, indeed, the rationale of similar cases has been that removal of blight is itself a public purpose. Thus, once the blight is removed, the public purpose is accomplished, and, legally speaking, it doesn’t matter whether the land is then developed by a public or a new private owner. Nonetheless, until Berman, courts had allowed condemnations under eminent domain only for such indisputably public uses as public roads and schools. They also permitted the use of eminent domain to clear space for public utilities and transportation systems that were owned by private parties but were available “as of right” to the public. Thus, eminent domain came to be used first for grain mills and then, later, for railroads and telephone wires. But where private individuals wished to develop land for their own residential, commercial, or industrial purposes, they still had to buy the land from its owners, who still had the right to refuse to sell. After Berman, however, the incentives shifted markedly. Developers liked this use of eminent domain. If they could convince cities to use the power on their behalf, they could acquire any land they wanted, not just the land other people were willing to sell. The taking of other people’s property would be just another factor � along with tax breaks, subsidies, and permits � that they negotiated with local governments. But developers still needed to find a way to obtain prime real estate. Blighted neighborhoods are not the most profitable places for upscale commercial and residential development. Thus was borne the economic development rationale for eminent domain. Cities argued that the benefits to be achieved from greater tax revenues and more jobs was a constitutionally legitimate reason to wrest away people’s homes and businesses. The first case to reach a state supreme court was Poletown Neighborhood Council v. City of Detroit. WHAT’S GOOD FOR GM . . . In 1981, the Michigan Supreme Court agreed that a Detroit neighborhood known as Poletown could be taken by eminent domain to make way for a proposed General Motors plant. A thriving, stable, racially integrated community, Poletown housed more than 3,000 residents, 600 businesses, churches, and a hospital. Detroit did not claim that the area was blighted, just that the city needed more economic development. GM and the city promised that the new plant would bring jobs and prosperity. The Michigan Supreme Court agreed that Detroit was in dire need of an economic boost, and that such a “public benefit” met the constitutional requirement for taking private property. As a result of Poletown, the proverbial floodgates opened. Even though it was only one decision from a single state supreme court, Poletown gave reassurance throughout the country that courts would present no obstacle. And it warned those whose property would be condemned that it probably wasn’t worth fighting. Three years later, the U.S. Supreme Court’s decision in Hawaii Housing Authority v. Midkiff (1984) further reinforced the impression that judges had abdicated any role in enforcing constitutional limits on eminent domain. Midkiff arose out of Hawaii’s transformation from an independent monarchy to a state. For decades, the vast acreage once owned by the sovereign had been held by a limited number of trusts, which leased the land to homeowners. Concerned about this concentration of ownership, the Hawaii Legislature in the late 1960s enacted a program to start transferring the underlying land to the people who resided on it. In many ways, Midkiff required no expansion of the eminent domain power; it was rather an exercise of a state’s role in suppressing oligopolies. Moreover, the ownership by trusts of land previously held by the sovereign is not the ordinary concept of private property in the United States. Nonetheless, the Midkiff Court’s broad holding for the government suggested that courts should give almost absolute deference to the government’s decision to condemn. Several states passed legislation specifically authorizing condemnations for purposes of economic or commercial development. For years, no further legal challenges reached the appellate courts. The majority of states continued to condemn only blighted areas, but the definition of “blight” changed markedly. At first, cities moved from taking areas that were hazardous and beyond repair to areas seriously dilapidated but seemingly salvageable. Over time, local governments started to find blight in areas that merely required cosmetic repairs and more industrious use of lawn mowers. Blight used to mean a serious lack of indoor plumbing; it became a lack of parking or central air conditioning. In short, matters got completely out of hand. TAKING A NEW VIEW Finally, some courts began to notice. After years of rubber-stamping, they began to find that attempts to use eminent domain for private development were illegal. Interestingly, courts reach this conclusion on a wide variety of procedural, statutory, and constitutional claims. In 2002, the Illinois Supreme Court held in Southwestern Illinois Development Authority v. National City Environmental L.L.C. that a regional development authority could not take land for racetrack parking in the name of economic growth. In 2003, the South Carolina Supreme Court nixed a condemnation for a major waterfront development project in Georgia Department of Transportation v. Jasper County, finding that it lacked a public use. (The land in South Carolina was owned by the Georgia agency.) The same year, an Arizona appeals court in Bailey v. Myers prevented the city of Mesa from taking a family-owned brake shop to transfer it to a larger hardware store. Earlier this year, in Arvada Urban Renewal Authority v. Columbine Professional Plaza Association, the Colorado Supreme Court rejected the condemnation of part of a private lake for a Wal-Mart store on statutory grounds, finding that the area had already been redeveloped and the agency did not have continuing jurisdiction. But most tellingly, the Michigan Supreme Court stepped back into the debate in Wayne County v. Hathcock. Wayne County argued that, under Poletown, the use of eminent domain to clear a large area near an airport for future economic development was perfectly legal. But on July 30, 2004, a unanimous court overruled Poletown, calling its prior decision “erroneous” and a “radical departure” from constitutional precedent. Many observers had predicted when the Michigan court accepted the case for review that it would, in some way, cut back on the use of eminent domain that profits private parties. But the unanimous decision, crossing ideological lines, highlighted a dramatic shift in judicial opinion since the 1980s. The Michigan court noted that all businesses produce some public benefit, but said that this resulting benefit cannot itself justify condemnation if the constitutional restrictions on eminent domain have any meaning at all. Despite this shifting tide, other state supreme courts � including Connecticut this year in the New London case and Kansas last year in General Building Contractors v. Board of Shawnee County Commissioners � still find that an anticipated increase in local tax revenues suffices to satisfy constitutional requirements for exercising eminent domain. At this point, the state high courts that have considered the issue are almost evenly divided: Connecticut, Kansas, Maryland, Minnesota, New York, and North Dakota all hold that economic development is a public use, while Arkansas, Florida, Illinois, Kentucky, Maine, Michigan, Montana, South Carolina, and Washington say it is not. Other states have not directly ruled on the question. Between 1998 and 2002, more than 10,000 properties were either taken or threatened with being taken by eminent domain and turned over to private parties. Local opposition has also grown exponentially as the use of eminent domain for private development has become more common and as it has spread to more desirable neighborhoods. Now the U.S. Supreme Court should take a hard look at this abuse of eminent domain and breathe some meaning back into the Constitution’s requirement that private property can be taken for a public use only. Dana Berliner is a senior attorney at the D.C.-based Institute for Justice, which represents owners in Kelo v. New London , represented the brake-shop owner in Bailey v. Myers , and filed amicus briefs in the Illinois and Wayne County, Mich., cases mentioned here.

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