Eminent Domain, Just Compensation, and Kelo v. New London

Introduction to Eminent Domain

Eminent domain is one of the most controversial, yet necessary, issues that communities and courts face today. Variance, access, and public projects for the good of the whole must at times take precedence over private property rights. Yet the property rights losses that can occur through the exercise of eminent domain can literally bankrupt individuals, families, and businesses — through loss of property value, loss of property usage, or outright loss of the property itself.

To complicate matters further, each community entity, as well as the federal government, can assert the right of eminent domain for public access or public works, creating situations involving differing eminent domain laws and compensation standards — or a lack thereof. Eminent domain regulations enforced for environmental or public green-space uses are also difficult for some property owners to accept, though they are generally clearer than other instances of eminent domain regulation.

Another contentious issue faced by many communities is the right of a community to apply eminent domain regulations to individuals or businesses for the purpose of building private institutions likely to be used by large numbers of the public — such as sports arenas and other large private/public complexes, shopping centers, or apartment complexes that may generate tax revenue but lack a clear "public use" component.

The Kelo Decision and State Legislative Responses

Eminent domain legislation and rulings reached the Supreme Court in 2005 and changed, to some degree, the manner in which eminent domain had been utilized. Larry Morandi describes the Supreme Court ruling as follows:

"State legislatures have been responding to the U.S. Supreme Court decision that was delivered on June 23, 2005, in Kelo v. New London (04-108). In this case, the court determined that the 'public use' provision of the takings clause of the 5th Amendment to the U.S. Constitution permits eminent domain for economic development purposes that provide a 'public benefit' pursuant to a Connecticut statute." (Morandi 9)

Many people believed that in this case the commonwealth had gone too far, as the compensation offered was not considered equitable to the value of the land taken. Yet the Supreme Court determined that there was nothing in the Commonwealth's constitution that excluded the actions taken by the state. The Court did, however, advise states that, though nothing was done incorrectly in this case under the federal constitution, individual states retained the right to further restrict eminent domain legislation in order to better protect property owners from unfair seizure. This sparked a sweeping set of state legislative debates and new legislation during the terms coinciding with the ruling, a process likely to continue for years to come.

The debate, as it played out in many legislative bodies, was notable. Most states chose to restrict eminent domain rights only to a certain degree. Some states chose to retain the right to apply eminent domain to private property — even occupied private property — for economic development purposes, while others chose to ban such uses entirely or restrict them to cases where property is considered blighted. (Morandi 9)

Constitutional Foundations of Eminent Domain

The Constitution of the United States addresses eminent domain, yet within it also lies the allowance for states to determine the exact manner in which such constitutional rights are carried out. Adalberto Aguirre and Frances Vu detail the constitutional foundation of eminent domain as follows:

"The framers of the U.S. Constitution considered the pursuit of life, liberty, and happiness to be fundamental rights nested in the ownership of property, especially homeownership... As a result, the framers of the Constitution regarded property as the foundation for freedom. Underscoring the importance of property, James Madison observed that, 'as a man is said to have a right to his property, he may be equally said to have a property in his rights' (Cato Institute, 2005: 226). The Fifth Amendment to the Constitution enhanced the importance of property by protecting an individual's right to, and ownership of, property: 'No person shall be... deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.'" (Aguirre and Vu 101)

One would assume that the value of property would be preserved when the state, municipality, or federal government enforces an eminent domain regulation — if not at retail value, then at least at the tax-assessed value. Yet this is not always the case, and it is particularly unlikely when property is considered blighted or condemnable. According to Brett Talley of the Harvard Law Review, "there are two constitutional requirements for the exercise of eminent domain: that the use be public, and that the owner receive just compensation. These restrictions were intended to deter the legislature from applying this 'despotic power' with undue frequency." (Talley 759)

Conclusion: Restoring the Deterrent Effect

The reality of Justice Black's statement in Armstrong v. United States is that municipalities, states, and even the federal government need to pay much closer attention to due compensation. They must be willing and able to pay property value that includes both tangible and applicable intangible variances, where those variances are supported by evidence. The public should bear this burden as a consequence of the purported good to be accomplished with the acquired land.

If the public is given this responsibility and understands that it will pay more dearly for the use of eminent domain, citizens are more likely to scrutinize the poor deals that often befall individual owners, and to restore the deterrent function that constitutional takings law was designed to provide. In so doing, the public may become more conscious of the need to make more informed decisions about the rights of the individual — regardless of the desires of the political entity attempting to acquire land at rates that are unfair to property owners, the very people the Constitution was designed to protect.

Works Cited

Aguirre, Adalberto, and Frances Vu. "Eminent Domain and City Redevelopment in California: An Overview and Case Study." Social Justice 33.3 (2006): 101.

Bell, Abraham, and Gideon Parchomovsky. "Taking Compensation Private." Stanford Law Review 59.4 (2007): 871.

Margolis, Bruce S. "Getting Started in Eminent Domain Valuations; CPAs Are Well Qualified to Perform Services in This Expanding Field." Journal of Accountancy 170.6 (1990): 63.

Morandi, Larry. "Eminent Domain Legislation by State." Public Management Dec. 2005: 9.

Talley, Brett. "Restraining Eminent Domain through Just Compensation: Kelo v. City of New London." Harvard Journal of Law & Public Policy 29.2 (2006): 759.