Let’s say you return home one day and find a letter from the county government informing you that your land is being taken over to make room for construction of a new public high school. Well, there’s not much you can do about it except negotiate the best possible price for your property. Among other things the Fifth Amendment says “nor shall private property be taken for public use, without just compensation.” This phrase enabled what has become known as “eminent domain” or the right of the state to take private property for public use. But what if the letter you received came from a private entity rather than a government entity, and what if your property was being seized not to build a “public use” facility like a school, hospital, or road but rather to allow a private developer to build a shopping mall, an office complex, or a football stadium that would bring in greater tax revenue and create jobs in the community while enriching the private entrepreneur? Well, that’s what has been happening in eminent domain cases and there have been a few interesting developments in recent weeks that bear watching.

Remember the Kelo case? Kelo was decided by the Supreme Court in 2005 and created a major stir in legal circles and state legislatures around the country. In 1998 pharmaceutical giant Pfizer agreed to build a new research facility in the waterfront area of New London, CT employing over 1000 people in an underdeveloped, but hardly rundown, part of town. As part of the deal Pfizer got a substantial tax savings (they would pay tax on only 20% of the assessed value for 10 years) and a guarantee that a nearby area would be made available for further expansion and major commercial, residential, and public use development. New London set up a development corporation for the purpose of creating and implementing a development plan for 90 acres including the Pfizer research facility. Among the properties condemned was a home belonging to Susette Kelo who promptly sued calling the taking unconstitutional. At issue was whether the taking of private property for the development of land for private economic purposes met the definition of “public use.” The Supreme Court, in a 5-4 decision, ruled that extending the meaning of public use to include public purpose or benefit was appropriate and that economic development meant to increase tax revenues, create jobs, and improve the local economy met the rationale of public use.

What’s happened since then? Here’s a photograph of the property where Susette Kelo’s house once stood. Properties were razed but in the face of the national economic downturn no construction was begun on the promised waterfront development. And last month Pfizer announced that it would be closing the research facility and moving most of the 1400 jobs to its research park in Groton, CT. New London is left with a large vacant lot, a 750,000 square foot building, and a loss of 1400 jobs. In his SC dissent Clarence Thomas called the development plan “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation.” Quite prescient! And very sad for the people of New London.

In fact, the Court didn’t break new ground with the Kelo decision but merely reaffirmed past interpretations of eminent domain. To me the decision was an unfair one on behalf of wealthy, powerful interests at the expense of average, and typically poorer, citizens. I fully expected the 5-4 decision to be the pro-business conservative bloc of justices in support versus the liberal justices favoring the displaced homeowners. So I was especially surprised to see it exactly the opposite way. The rationale from the liberal justices (and supported by the NY Times, Washington Post, etc) was that cities need to be able to exercise judgment in economic development and be granted considerable latitude in doing so. New London’s plans were significant and broad encompassing an increased tax base, job creation, and improved land use and the Court found that plan to be within reason and consistent with historical interpretations of the Fifth Amendment. I thought it left anybody and everybody vulnerable to powerful economic interests. It seemed to me that anyone with a fat wallet could approach the town fathers and say “I will pay you double the taxes you currently get on properties x,y, and z if you kick out the current owners and sell to me.” Every piece of property became available to wealthy interests. That apparently was how the conservative justices interpreted it as well and I agreed with the dissenters.

The result of the decision was that many states scrambled to shore up their eminent domain policies to prevent just such a result. Congress passed a law signed by President Bush limiting federal eminent domain takings to well-defined public uses. Forty-three states now have similarly restrictive eminent domain laws, most passed since the Kelo decision. But not New York. And now two cases are working through the courts that bear watching in the future. One involves Columbia University’s attempt to expand by getting NYC to impose eminent domain on landowners who refuse to sell, and the second involves a huge development plan on the Brooklyn waterfront area called Atlantic Yards including residential towers, commercial properties, and a new arena for the hapless New Jersey Nets (currently 2-20) with similar resistance from local residents. Recent rulings against Columbia and for the Atlantic Yards development (those seem consistent with the Kelo conditions) are certain to work into higher courts and possibly the SC. Stay tuned.

Tags: Atlantic Yards, Clarence Thomas, Columbia University, Eminent domain, Fifth Amendment, Kelo, New London, Pfizer, Supreme Court

This entry was posted on Friday, December 11th, 2009 at 3:29 pm and is filed under News/Politics. You can follow any responses to this entry through the RSS 2.0 feed.