Cities may now seize homes and businesses and hand them over to private developers to raise tax revenue. That’s what the Supreme Court decided yesterday in Kelo v. New London, a 5-4 ruling that strips Connecticut homeowner Susette Kelo and several others of their homes and land. By siding with New London, the court drastically expands traditional eminent-domain powers beyond highways and fighting urban blight. This is a resounding defeat for ordinary landowners and a threat to property rights. Homeowners now own their homes only if the government wants them to.
From the start, Kelo v. New London was “Robin Hood” in reverse, pitting a constellation of business and government interests including the unelected New London Development Corporation, drug giant Pfizer, private developers and the seven-member city council against a handful of residents in New London’s Fort Trumbull neighborhood. Fort Trumbull, modest but unblighted, is where the old U.S. Naval Undersea Warfare Center stands. City officials sought to lure Pfizer there to build a $300 million research facility with the understanding that the surrounding parcels of land could be developed into an upscale complex of residences along with a marina, hotel and conference center. When Miss Kelo and others refused to sell, the case went to the courts. A year ago it landed in the Connecticut Supreme Court, which sided with New London in a 4-3 ruling.
The novel element in this case is New London’s rationale, which avoids traditional public-use and blight-reduction arguments and relies on a naked revenue-and-jobs-enhancement logic. The city argues that because Pfizer can pay more taxes, and because it can provide more jobs, it will make better use of the Ft. Trumbull properties than the ordinary people who currently own them.
This stands the Fifth Amendment’s takings clause on its head. Interpretations of that clause (“Nor shall private property be taken for public use without just compensation”) have varied, but it’s a novelty for the Supreme Court to condone the government’s forcible transfer of private property from a party that hasn’t broken the law to another private party so that city coffers can be filled with additional revenue. This is a far cry from railroad and highway building — traditionally seen as legitimate reasons for use of eminent-domain powers.
Justice Sandra Day O’Connor put it well in her dissent: “Any property may now be taken for the benefit of another private party.” The founders cannot have intended this, she wrote in apparent frustration, quoting James Madison: “[T]hat alone is a just government which impartially secures to every man, whatever is his own.” Justice Clarence Thomas agreed. “No compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted by uprooting them from their homes,” he wrote.
The dissenters were careful to point out that wealthy developers are now likely to exploit the precedent at the expense of the poor and those without political influence. “Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities,” Justice Thomas wrote. “Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.”
Most disturbingly, the majority was comfortable with New London’s argument. “The city has carefully formulated an economic development [plan] that it believes will provide appreciable benefits to the community, including — but not limited to — new jobs and increased tax revenue,” Justice John Paul Stevens wrote in the majority opinion joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer.
This decision will prompt glee among developers, lobbyists and big-government enthusiasts. A wave of property seizures may well take place in its wake. Cities may now take land from ordinary people and hand it to preferred customers to build shopping malls, hotels or other richly taxable properties. The only thing cities will have to do to justify their actions will be to argue that revenues and tonier neighborhoods will result. So much for property rights.