Ten years ago today, the U.S. Supreme Court issued a 5-4 decision upholding the City of New London, Connecticut’s “right” to condemn Connecticut homeowners’ properties, transfer them to a state-created entity called the New London Development Corporation, which would then transfer those properties to a private developer of a planned mixed-use redevelopment project aimed at supporting an adjacent Pfizer research facility. (Land of the free, right?) At issue was the interpretation of the Fifth Amendment’s Takings Clause “public use” standard.
The Court relied primarily on three previous cases involving the “public use” standard:
Berman v. Parker (1954)—This case upheld the right of municipalities to declare entire areas blighted, even if the parcel in question isn’t blighted. It also accepted Washington, D.C.’s argument that the area condemnation was necessary to prevent future blight. An all-around terrible decision.
Hawaii Housing Authority v. Midkiff (1984)—This case involved the redistribution of land titles in Hawaii. When the state moved to seize the properties, 49 percent of land in Hawaii was controlled by government and 47 percent was controlled by 72 private owners. The Court failed to recognize the central problem with land distribution in Hawaii at the time: almost half of the property was controlled by government, which created massive real estate market distortions—in addition to Hawaii’s odd economic history. While Justice Sandra Day O’Connor wrote the majority opinion in Midkiff, she also wrote a scathing dissent in Kelo, where she regretted her broad language in the Midkiff ruling that opened the door for a terrible opinion like Kelo.
Ruckelshaus v. Monsanto Co. (1984)—This case involved chemical industry trade secrets. While it was solely about intellectual property, the Court argued that this case was relevant because it dealt with public use in a purely economic context. The enormous distinctions between intellectual property and real property were lost on the majority in Kelo.
The result was the majority definitively watering down “public use” to a weak “public purpose” standard, leaving us with a “public purpose” standard that can be satisfied in the following situation: the government condemns your house in order to transfer it to a private developer, where the government expects the property will be put to higher use under the planned redevelopment and thus increase its tax base.
Think that couldn’t happen in the U.S.? Well, it did and was supported by the majority of the Supreme Court in Kelo.
As I noted on the fifth anniversary of the Kelo decision, not only did the redevelopment fail to go as planned, Pfizer closed its research facility in 2009 and the land where the Kelo petitioners’ homes once stood is now occupied only by waist-high weeds, feral cats, and perhaps today some leftover trash from when it was used as a dump in the aftermath of Hurricane Irene.
For more on why eminent domain is a poor tool to promote economic redevelopment, see the first white paper I did for CEI back in 2010 in the lead-up to Kelo’s five-year anniversary, “This Land Ain’t your Land; this Land Is my Land: A Primer on Eminent Domain, Redevelopment, and Entrepreneurship.”