In 2005 the Supreme Court voted 5-4 to uphold a Connecticut Supreme Court ruling that the city of New London and a nonprofit quasi-public entity that the city had set up, New London Development Corporation (NLDC), were entitled to seize by eminent domain, homes and businesses from their property owners in the name of economic development that would generate new jobs and increased tax revenue.The ruling said the City and the NLDC were entitled to condemn, seize and then bulldoze people’s homes for the sole purpose to have something else built on the land that would produce higher property taxes. Office buildings, luxury condos, five-star hotel, spacious conference center, a “river walk” to a brand-new marina, and high-end retail stores were part of an elaborate “economic development” plan the NLDC had launched in 1997.
The Constitution’s Fifth Amendment bars governments from taking private property unless the taking is for a “public use.” Historically courts had interpreted “public use” as a road, a bridge, a public school, or some other government structure. But in Kelo the Court majority ruled “economic development” that would involve using eminent domain to transfer the property of one private owner to a different but more economically ambitious private ownerqualified as a public use.
The nationwide outrage that followed the Kelo decision was across the political spectrum. More than 40 state legislatures passed laws that banned or restricted the use of eminent domain for the purpose of economic rejuvenation, especially when it meant displacing homeowners. Seven states amended their constitutions to ban the use of eminent domain for economic development, and some state courts explicitly rejected the Kelo ruling as precedent for interpreting those states’ own taking laws.
The Kelo decision inspired political mass confusion. Democratic National Committee Chairman Howard Dean declared in 2005 that the Kelo ruling had been all the fault of President George W. Bush. “The president and his right-wing Supreme Court think it is ‘okay’ to have the government take your house if they feel like putting a hotel where your house is,” Dean announced at a college rally.
In fact, the Supreme Court’s conservative bloc—the late Chief Justice William Rehnquist, the now-retired Justice Sandra Day O’Connor, and Justices Antonin Scalia and Clarence Thomas,none of whom was a Bush appointee, had dissented from the majority opinion. The High Court’s liberal faction of Stephen Breyer, Ruth Bader Ginsburg, and David Souter along with swing-voter Anthony Kennedy formed the narrow majority. O’Connor’s dissenting opinion was particularly scathing. “Today the Court abandons the Fifth Amendment’s long-held basic limitation on government power,” she wrote. “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded, i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process.”
Kelo evolved from a 1954 decision, Berman v. Parker where the Court ruled unanimously, in an opinion written by William O. Douglas, perhaps the most liberal justice ever to sit on the Supreme Court, to uphold the power of a redevelopment agency created by Congress to seize and demolish almost the entire Southwest quadrant of Washington, D.C., on the ground that it was a “blighted area” and “blighted areas . . . tend to produce slums.” Blight removal was a “public use,” according to Douglas. From there it was only a short step to economic development as a public use.
Eminent domain in the name of economic development ought to be dead, but it is in fact alive and well. In 2006, a year after Kelo, New York City mayor Michael Bloomberg unveiled the Atlantic Yards Project, a massive mixed commercial/residential/recreational use project, including 16 high-rise buildings, for 22 acres in Brooklyn’s Prospect Heights. The city used eminent domain to demolish well-maintained condominiums over the protests of their residents. Thanks to the real estate collapse, ground was not broken until 2012, and large portions of the project may never be built. In California, a ballot initiative and a pending bill in the state senate would broaden the definition of “blight” for eminent domain purposes and revive in altered form the state’s local redevelopment agencies, which used to receive up to 12 percent of state tax revenues until California governor Jerry Brown abolished them in 2011. The redevelopment agencies were notorious for their failure to generate actual economic improvement.The Berman and Kelo rulings affirmed a particular kind of liberal vision: that large-scale and intricate government plans trump individuals’ property rights.