If a city seizes private property to build a highway or stadium, we call it eminent domain and chalk it up to development. But what is it called when a city hands the property over to commercial developers as a way of raising tax revenues, and thinks that’s a “public purpose”?
The question isn’t theoretical. Depending on how the Supreme Court decides the eminent-domain case it heard last week, cities across the country could be freed to transfer land to preferred customers on a regular basis. The case in question, Kelo v. City of New London, asks the court to say whether it’s constitutional for New London, Conn., to seize homes in Fort Trumbull, an unblighted but modest middle-class neighborhood, and hand the land over to developers to build a marina, a hotel, a conference center and upscale residences. New London didn’t reason from the usual urban blight or public-use rationales. It said it wanted to give the land to other private parties it thought would use it better than the current owners. That rankled many, especially since developers managed not to bulldoze the Italian Dramatic Club, a watering hole favored by local pols, and since the city apparently all but promised the development to drug giant Pfizer as a precondition for building a $300 million research facility near the old U.S. Naval Undersea Warfare Center.
In a ruling last march, Connecticut’s Supreme Court ruled by a 4-3 vote in favor of the city. To judge by the state’s badly-flawed municipal-development code, it was right to do so: Connecticut law doesn’t require cities to abide by a public-use rationale to seize land, and it lets cities give the property to whomever they choose. Clearly lawmakers need to fix those provisions. But that’s a matter for the legislature and for voters, not for the courts.
The Supreme Court, on the other hand, is to determine whether the Fifth Amendment’s takings clause — “Nor shall private property be taken for public use without just compensation” — allows a city to do what New London did.
The Claremont Institute, the Cato Institute and over a dozen noted property law professors are saying no, it doesn’t. Claremont says the original meaning of “public use” confirms that the public — not some private group deemed by the city to be desirable — must use the seized property. It argues that New London wrongly seized the property for a private use, and urges the court to interpret the takings clause as allowing seizure only in cases where traditional government functions are at stake. Indeed, commercial developers aren’t “common carriers” the way utilities or railroads are. Cato argues much the same, but argues further that even the oft-used rationale of urban blight fails the test of legitimate public use. All the worse, in Cato’s view, is New London’s move to displace residents it thinks aren’t upscale enough.
As a policy matter, only bad things could result from a decision to uphold this ruling. New London has gone far beyond what city or regional planners asked for in previous decades when they took land to build railroads and highways. In effect New London wants to usurp property rights, purporting to know better than private citizens how to use private lands. Intentionally or not, that’s what the New London Development Corporation, the unelected body which pushed the deal in the first place, and the seven-member city council which acquiesced, are doing. Only two members of the current council, Robert Pero and Margaret Mary Curtin, were members when the deal was made in the late 1990s. Claire Gaudiani, the self-described “idealist” who headed the NLDC at the time, has moved on to write a book on philanthropy, of all things. (She who taketh away also giveth, or at least advises the generous who do.)
Clearly, New London has overstepped the boundaries of eminent domain. We hope the Supreme Court recognizes that fact and uses the case to signal how much is too much. If it doesn’t, it will be up to Connecticut voters and politicians to make their municipal-development rules better respect property rights.
By Douglas Holtz-Eakin
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