Determining Who Ultimately Owns Your Home

The fate of property rights hangs in the balance

Who owns your home?

a. You own it free and clear;
b. The bank;
c. A landlord;
d. Donald Trump.

If you answered anything other than Donald Trump, a case that the Supreme Court will rule on this spring or summer should have you worried. If the court sides with earlier decisions, local politicians may try to steal your property and hand it to Trump or some other real estate developer because they can generate more tax revenue than your home. It sounds crazy, but it’s much more possible than you’d think.

Wilhelmina Dery still lives in the New London, Conn., home that she was born in back in 1918. Her son lives next door. Their family has lived in the neighborhood since 1895. And the government is trying to take their homes. Yesterday, the Supreme Court heard oral argument in Kelo v. City of New London pitting middle-income homeowners, including the Derys, against politicians and powerful land developers.

In 2000, the city of New London condemned the Dery’s neighborhood to make way for new office space, a hotel and luxury apartment complex. New London isn’t even trying to justify its actions on the traditional criteria of “urban blight” – the idea that a neighborhood has so badly deteriorated that only the government can clean it up and revitalize it using public subsidies.

The city is openly razing the neighborhood simply because officials believe the government will reap great financial rewards by destroying the homes and replacing them with commercial uses to complement the nearby Pfizer, Inc. research facility. A stable, moderately priced neighborhood of historic homes owned by longtime city residents just isn’t good enough when a city is eyeing new revenue streams.

The plight of New London’s homeowners is increasingly common throughout the country. More than 20 years ago, the Michigan Supreme Court upheld the infamous Poletown decision. In that case, the city of Detroit bulldozed an entire neighborhood to make way for a General Motors plant. At the time, the Michigan court (which reversed itself in 2004) said that economic development was a sufficient “public purpose” to allow the city to force residents from their homes.

This is a far cry from eminent domain’s original intent. The Founding Fathers inserted the power into the Fifth Amendment of the Constitution in an attempt to restrain government, not give it more power. They recognized that rare cases would arise when the government might have to seize private property (while compensating land owners) to build roads, canals and other basic infrastructure. A lone landowner holding out might prevent the major project from being completed. So, they restricted the power to projects that were a necessary “public use.”

State and federal courts have steadily weakened this restriction, giving the government broader and broader powers to take homes, businesses and land. The Institute for Justice, a public interest law firm, found that cities and local governments threatened property owners or actually used eminent domain in 10,282 cases between 1998 and 2002 alone. In each of these cases, another private business or individual would benefit substantially.

While glitzy headquarters and corporate facilities make great copy for tourist and marketing brochures, the long-term stability of a city depends on its ability to protect and nurture neighborhoods. Cities are built on neighborhood foundations. If the Supreme Court rules in favor of the homeowners, perhaps city officials will start to focus more on nurturing the long-term foundation of their cities than on the short-term bottom line of an expanded tax base. If the court sides with the city of New London, property rights will have little practical meaning in America’s cities, and our homes may be the next target.