Eminenr Domain

Kelo

Eminent Domain: Was the Kelo Decision Fair?

In 1954 the Supreme Court ruled in Berman v. Parker that government's power of eminent domain could be used to seize property to tear down "blighted" areas. Unfortunately, according to Fund (2005), this effort was widely perceived as "Negro removal," as many cities tore down stable neighborhoods to make room for more lucrative developments.

In 2005, the Supreme Court added salt to the wounds of those who felt slighted by the Berman decision when it decided 5-4 to allow the government to take private property that isn't "blighted" if it can be justified in the name of economic development. This decision, made in the Kelo v. New London case, caused a great deal of controversy in the United States.

Is the Kelo decision a fair one? Many have vehemently opposed it, saying that it enables cities to take private property from one party and transfer it to another even if the property or neighborhood is not blighted. However, others believe that this decision is similar to prior decisions made over the years. This paper aims to determine what the impact of the decision is and whom it impacts most.

The Kelo Decision

According to the Fifth Amendment to the United States Constitution, just compensation must be paid when the power of eminent domain is used, and requires that the property be taken for "public use (Fund, 2005)." To be exact, the Fifth Amendment to the United States Constitution states that "private property [shall not] be taken for public use, without just compensation."

These requirements are often referred to as the takings clause. The U.S. Supreme Court has giventhe public use requirement an expansive interpretation and has allowed takings of private property for reconveyance to other private parties, or in some cases by private parties directly, on the theory that the new owners will use the land to generate greater tax revenues.

Throughout U.S. history, the definition of public use has expanded to include economic redevelopment projects that use eminent domain seizures to enable new commercial development or redevelopment that will benefit the community as a whole (Fund, 2005). The Supreme Court's decision in Kelo v. City of New London, 125 S. Ct. 2655 (2005) is one example of this. This case was highly controversial and widely publicized, making eminent domain a hot topic for American citizens.

In the case, private homeowners had refused to sell their properties to the city of New London, Connecticut, for destruction to allow a hotel, shopping and housing complex to be built by a private developer (Urbigkit, 2006). The U.S. Supreme Court ruled 5-4 that the city had the right to seize the property against the homeowner's will, even though the area was not "blighted."

The homeowners contended that this taking would violate the "public use" restriction in the Fifth Amendment's Takings Clause, but the Court ruled that the taking of the property was an allowable "public use" because "promoting economic development is a traditional and long accepted governmental function (Urbigkit, 2006)."

Reactions to the Decision

The Kelo case, a case questioning whether the government's eminent domain power could be used to help private parties take private homes, land, and businesses for private commercial development (McEowen, 2005) is a controversial one. The court approved the exercise of the power on behalf of a private party -- a decision largely criticized by individuals, politicians and organizations across the country.

While critics have every right to push Congress to enact legislation that will "protect" the property rights that they believe the Kelo decision took away, it is important to understand what exactly the Kelo decision did and did not do.

As a result of this case, the public largely criticized political leaders, saying that the Kelo case favors the rich at the expense of the poor (Fund, 2005). In addition, many argue that the developments often offer little benefit to the communities they promise to improve. Since the case, numerous states have implemented state legislation that restricts the state's own power of eminent domain. The Supreme Courts of Illinois, Michigan, Ohio and Georgia do not allow such takings under their state constitutions.

The majority of courts have held the fair market value of the condemned property to satisfy the "just compensation" requirement put forth by the Constitution (Fund, 2005). However, this determination is a judicial question, and it is usually determined in a trial by jury, on the basis of the parties' appraisal testimony. Some states (Connecticut, New York and Rhode Island) do not use juries. There, judges make condemnation awards. Many people argue that this violates personal property rights.

The Kelo decision is not the first to authorize the use of eminent domain solely for economic development (McEowen, 2005). For many years, the Court has allowed the use of eminent domain to facilitate agriculture and mining because of their importance to the states in question. In addition, the Court has supported the condemnation of trade secrets in order to promote economic competition in pesticide markets. However, eminent domain was not exercised in these cases because of some "precondemnation use" that inflicted "affirmative harm."

According to Justice Stevens, the author of the Kelo majority opinion:"[p]romoting economic development is a traditional and long accepted function of government" - surely an irrefutable proposition - and that there was "no principled way" of distinguishing what the petitioners characterized as economic development "from the other public purposes that we have recognized (McEowen, 2005)." Thus, Kelo does not expand the government's power to take property when some "harm" to society does not exist. The Court has authorized these types of takings for many years.

Many critics argue that Kelo authorizes condemnations where the only justification is a change in the way the property is used. For example, a stable neighborhood might be destroyed if a profitable development will generate higher tax revenues. This is actually an incorrect reading of the case. According to McEowen (2005): "While that possibility was raised at oral argument, the Court did not have to decide whether an isolated taking to produce a marginal increase in jobs or tax revenues satisfies the Constitution's "public use" requirement. The New London Redevelopment Project at issue in the case was designed to do more than simply achieve an "upgrade" in the use of one tract of land. Indeed, the project was also designed to generate a number of traditional "public uses," including a renovated marina, a pedestrian riverwalk, the site for a new U.S. Coast Guard museum (including public parking for the museum), an adjacent state park, as well as retail facilities."

Many critics also claim that the Kelo decision weakens the standard of review for determining whether a specific taking is for a public use (McEowen, 2005). The Court's 1984 decision in Hawaii Housing Authority v. Midkiff holds that the applicable standard of review is the same minimum rationality test the Court uses in reviewing substantive due process and equal protection challenges to economic regulation.

That standard did not change with the Kelo decision (McEowen, 2005). The Court recognized that condemnations must be carefully reviewed when they result in a private retransfer of property, or are not part of a major redevelopment plan. This protects property from being taken under the pretext of a public purpose, when the actual purpose is to benefit a private party. The Court suggested that, in the future, it would implement a higher standard of review in public use cases. Before the Kelo decision, the courts were simply required to ask whether the use of eminent domain was "rationally related to a conceivable purpose." After the Kelo decision, courts are required to examine whether the assumed public purpose is a "mere pretext" to justify a transfer driven by "impermissible favoritism to private parties." Thus, Kelo can be seen as somewhat of a victory for property rights advocates.

According to Fund (2005), Rep. John Conyers, the ranking Democrat on the House Judiciary Committee, said he felt "shocked" to be joining with conservatives in backing a bill to prevent federal funds from being used to make improvements on any lands seized for private development. He stated that NAACP, Operation PUSH and the Leadership Conference on Civil Rights all feel that "this court opinion makes it too easy for private property to be taken and [this is a practice] that has been used historically to target the poor, people of color and the elderly." The measure blocking federal funds passed the House. A companion resolution condemning the Kelo decision was also approved.

Many Democrats who previously dismissed conservative fears about activist judges are now taking their side when it comes to eminent domain. "In a way this ruling is about civil rights because it interferes with your right to own and keep your property," says Wilhelmina Leigh, a research analyst with the Joint Center for Political and Economic Studies in Washington (Fund, 2005). "It means you have to hope and trust in the goodness of other human beings that if you buy real estate that you will be allowed to keep it." The public outcry against the Kelo decision confirms that citizens simply do not trust the government when it comes to their personal property.

Definitions and Meanings

Justice Sandra Day O'Connor strongly opposed the majority decision (Urbigkit, 2006). She wrote, "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. 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. The Founders cannot have intended this perverse result."

In its majority opinion, the court stated (Urbigkit, 2006): "The city has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including - but by no means limited to - new jobs and increased tax revenue. As with other exercises in urban planning and development, the city is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts."

The court recognized that while there is nothing to stop a city from taking property from one person and giving it to another for the sole reason that the second person will put the property to a more lucrative use and pay more taxes, "Such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case." The court noted that such an unusual exercise of government power "would cause suspicion that a private purpose existed," such a hypothetical case "can be confronted if and when they arise."

The court concluded (Urbigkit, 2006): "In affirming the city's authority to take petitioners' properties, we do not minimize the hardship that condemnations may entail, notwithstanding the payment of just compensation. We emphasize that nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power. Indeed, many states already impose "public use" requirements that are stricter than the federal baseline. Some of these requirements have been established as a matter of state constitutional law, while others are expressed in state eminent domain statutes that carefully limit the grounds upon which takings may be exercised."

Justice Sandra Day O'Connor cautioned in her Kelo dissent that "all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded (Fund, 2005)." She said that the decision's effect is to "wash out any distinction between private and public use of property -- and thereby effectively to delete the words 'for public use' from the Takings Clause of the Fifth Amendment."

However, O'Connor's dissent did not recognize that Supreme Court's gradual elimination of property rights began many years ago (Fund, 2005). There was the 1954 Berman decision, which stated that private property could be taken through eminent domain only for public uses. The court, however, defined the words "public use" to mean "public purpose," which would be determined by local officials.

When it comes to the definition of "blight," there have been numerous problems over the years (Fund, 2005). For example, many government agencies started tearing down working- and middle-class neighborhoods whenever private interests promised more lucrative uses of the properties in these neighborhoods. Justice Clarence Thomas summed up the problem in his dissent in Kelo: "Of all the families displaced by urban renewal from 1949 through 1963, 63% of those whose race was known were nonwhite, and of these families, 56% of nonwhites and 38% of whites had incomes low enough to qualify for public housing, which, however, was seldom available to them."

Thomas called the court's decision "far-reaching, and dangerous."