‘Second-Guess’ Eminent Domain? Yes!

High court appears all too willing to let governments abuse property rights

Homeowners looking for protection against government land grabs didn’t get a clear signal from the U.S. Supreme Court yesterday.

New London, Conn., is trying to bulldoze a healthy, longstanding neighborhood to make way for luxury condos, apartments, a ritzy hotel and high-end office space. The Dery family has lived in the neighborhood since 1895, but that doesn’t matter to city officials.

Attorneys for the Derys and the other homeowners in the Kelo v. City of New London case asked the Supreme Court to draw a “bright line” that would ensure that property owners would be safe from attempts by money-hungry cities to take their homes and hand the land over to private developers.

Justice Antonin Scalia was sympathetic. “What this lady wants is not money,” Scalia said, referring to Susette Kelo, a nurse fighting to keep her house against New London. “It’s her home.”

For other justices, the practical realities of urban decline seemed to weigh more heavily than property rights. “The critical fact, on the city’s side at least, is that this was a depressed community and they wanted to build it up and get more jobs,” Justice Ruth Bader Ginsburg said.

It seems clear that the Supreme Court will not overturn the overlying precedent here: The idea that cities can use eminent domain for economic development purposes seems safe, even when another private party benefits substantially. At one point, Justice Sandra Day O’Connor asked if homeowners wanted the court to “second-guess” the power of eminent domain. In eminent domain cases, courts have routinely taken a hands-off approach to local decisions unless they can find some break in rules, procedures or due process.

As the courts have become less and less willing to scrutinize government decisions, the targets of eminent domain have expanded from the poor to middle-income homeowners to small businesses. Now, as this case shows, even stable historic neighborhoods can fall victim to political expediency as cities grapple with practical challenges like urban revitalization.

With eminent domain seemingly safe, the question appears to be whether the court will put any limits at all on a city’s discretion to grab land when it issues a decision this summer.

Cities want discretion. Lots of it. When pressed, attorneys for New London admitted that they wanted freedom to use eminent domain so broadly that they could even replace a low-budget hotel like Motel 6 with a high-dollar hotel like the Ritz Carlton if they wanted to, simply because it would create more tax revenue for the city.

Attorneys for the Institute for Justice, the public interest law firm representing the homeowners, argued that, at a minimum, the Supreme Court should consider two limits on eminent domain.

The institute asked the court to require that the benefits from economic development projects be reasonably certain and that the project be intended for the foreseeable future. It doesn’t seem like a lot to ask: Essentially, they are asking that cities be required to have standards in place that ensure a reasonable chance of success before they throw longtime residents and businesses off their property (even if they are compensated).

Some limits are badly needed. Cities and local governments threatened property owners or actually used eminent domain in 10,282 cases from 1998 to 2002 alone.

There will always be someone who can generate more tax revenue than you can with your property. “Every home or church could be replaced by a Costco, a shopping mall or private building that would produce more tax dollars,” said Scott Bullock, a lawyer representing the homeowners.

The Supreme Court may not want to overturn its previous rulings, but it needs to protect the homeowners here. If a city is allowed to take property just because it can make more money by giving it to someone else, the deed to your home or land won’t be worth the paper it’s printed on. New London’s attorneys showed what a slippery slope this is when they admitted they’d condemn a Motel 6 and give the land to the Ritz Carlton if they could. When property rights are meaningless, the government can and will go after you, Motel 6 and anybody else that stands between it and more revenue.