PJ Media

'Very Little Protection' for Property Owners in Decade Since Kelo Ruling

WASHINGTON – A public interest lawyer whose firm represented homeowners in a controversial case regarding eminent domain 10 years ago told lawmakers that the U.S. Supreme Court has left private property owners with “very little protection” if a city wants to take their residences for developmental purposes.

Dan Alban, an attorney for the Institute for Justice, a firm that represents people whose rights, the outfit determines, are being violated by the government, appeared before the Senate Subcommittee on the Constitution to say what he characterized as the “infamous” Kelo v. City of New London case can be used to “transfer perfectly fine private property to a private developer based simply on the mere promise of increased tax revenue.”

The court, Alban said, determined that it is “acceptable to use the power of eminent domain when there is a mere possibility that something else could make more money than the homes or small businesses that currently occupy the land.”

In her dissent in Kelo, Alban noted, Justice Sandra Day O’Connor wrote, “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 center, or any farm with a factory.”

“Eminent domain sounds like an abstract issue but it affects real people,” Alban told the panel. “Real people lose the homes they love and watch as they are replaced with luxury condominiums. Real people lose the businesses they count on to put food on the table and watch as they are replaced with shopping malls. And all this happens because local governments prefer the taxes generated by condos and malls to modest homes and small businesses.”

Federal law currently allows expending federal funds to support condemnations for the benefit of private developers. By doing so, Alban said, the government “encourages this abuse.”

“Using eminent domain so that another richer, better-connected person may live or work on the land you used to own tells Americans that their hopes, dreams and hard work do not matter as much as money and political influence,” Alban said. “The use of eminent domain for private development has no place in a country built on traditions of independence, hard work and the protection of property rights.”

The Kelo case arose as a result of an effort by the city of New London, Conn., to condemn privately owned property so it could be used as part of a “comprehensive redevelopment plan.” Property owners, including Susette Kelo, sued the city, maintaining that New London had misused its eminent domain power.

Ultimately, in a 5-4 decision, the Supreme Court held that the power of eminent domain is not limited by the Takings Clause of the Fifth Amendment or the Due Process clause of the 14th Amendment.

The ruling proved to be very unpopular. As result, 47 states have changed their eminent domain laws to provide landowners with additional protections. Prior to Kelo, only eight states specifically prohibited the use of eminent domain for economic development purposes except to combat blight.

David Dana, a professor at the Northwestern University School of Law, told the subcommittee that the impact of Kelo at the state level has been “broad and varying.” States have enacted many different kinds of reforms “reflecting their own particular situations in a vivid display of federalism in action.”

“The majority opinion in Kelo called upon the states to devise eminent domain restrictions suited to their own individual needs and there is good reason to believe they have done just that,” Dana said. “With the exception of Florida and Mississippi, no state has purported to ban the use of eminent domain for economic redevelopment altogether. In all, however, 47 states according to one recent count have restricted the use of eminent domain in some way since Kelo.

Some states, Dana said, have imposed substantive and/or procedural limitations on the use of eminent domain for economic development where non-blighted properties are at issue. Some states have tightened the definition of and requirements for finding blight as a prerequisite for the use of eminent domain and some have added procedural protections for property owners seeking just compensation.

Dana noted that some critics of Kelo have argued that eminent domain for the purpose of urban or suburban redevelopment can have negative impacts on poor, low-income, often heavily minority communities.

“But while there are instances where eminent domain has had a negative impact on low-income communities, there are also notable cases where the use of eminent domain has clearly helped revitalize cities with large low-income populations who rely on city funding for essential services,” Dana said.

Eminent domain can be “a necessary tool for urban redevelopment,” Dana said, noting that bans on its use for urban redevelopment have not been adopted generally.

“One of the reasons states have not banned the use of eminent domain for redevelopment is that, without the tool of eminent domain, holdouts can defeat efforts to assemble fragmented land holdings into a parcel of a suitable size for redevelopment,” Dana said. “It is in heavily urbanized, long-developed areas — big, old cities, long-settled inner ring suburbs — that land holdings are the most fragmented and in which the threat of holdouts creates the greatest obstacle to redevelopment. And it is these areas that are most in need of tax revenue and jobs to meet the needs of low-income resident.”

Regardless, Sen. John Cornyn (R-Texas), the subcommittee chairman, made it clear that he is not a fan of the Kelo decision, arguing that “the potential for abuse is obvious.”

“When the government is empowered to decide the most valuable use of personal property and redistribute it, no one’s property is truly their own,” Cornyn said.

Senate Democratic Whip Dick Durbin, of Illinois, noted what he considered the irony in Republican opposition to the broad use of eminent domain, stressing that TransCanada Corp, the Calgary-based energy company that wants to build the Keystone XL pipeline, which carries overwhelming GOP support, wants to use eminent domain to acquire the property “over the objection of landowners.”

Sen. Bob Menendez (D-N.J.) offered an amendment to a pipeline bill earlier this year that would prohibit foreign-based companies from seizing property under eminent domain. It was defeated. Sen. Rand Paul, of Kentucky, was the only Republican to support the amendment.