Reacting To Kelo
States react to the U.S. Supreme Court’s Kelo decision by restricting eminent domain.
Matthew J. Kiefer and Jessica Tucker-Mohl

Kiefer

State Legislative Responses

In the majority opinion in Kelo, Justice Stevens emphasized that “nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power.”  In response to that invitation, state legislatures across the country went to work.  Since Kelo, legislatures in 47 states have drafted eminent domain legislation; such legislation has been adopted in 23 states.  Proposed state constitutional amendments will be subject to voter approval in November in six states (three of which have already adopted eminent domain legislation). 

Eighteen of those 23 states have flatly prohibited eminent domain for economic development.  Other statutory provisions, in order of restrictiveness, include:  1) defining “public use” to exclude increasing a city’s tax base or generating employment, 2) requiring that the target area be “blighted” and defining “blight” more strictly, 3) awarding greater than fair market value compensation where the property serves as a principal residence, and 4) making procedural changes such as increased public participation and greater notice.  (Multiple provisions are often combined within one state’s legislation.) 

Most state legislation exempts areas designated for development under tax-increment financing or other existing state economic development programs, as well as basic public infrastructure needs like roads and utilities. Local ordinances may afford even greater protection to property owners; for instance, Bedford, Texas, enacted an ordinance prohibiting any use of eminent domain to promote economic development for a private enterprise. 

Conservative organizations, including the Institute for Justice, the property-rights organization that represented the homeowners in Kelo, see a stricter blight definition as crucial to preventing what they have termed “eminent domain abuse” and seek to limit eminent domain to properties that present threats to public health and safety.  These organizations also push for a “parcel-by-parcel” blight designation, rather than a designation attaching to a larger grouping or a neighborhood.

State Court Response

The long-term significance of Kelo will also play out in state courts, which can interpret their own constitutions more strictly than the U.S. Supreme Court interpreted the federal constitution in Kelo.  The Ohio Supreme Court recently decided that a proposed taking for economic development violated Ohio’s constitution, which requires that takings be for “public use.”  That case, City of Norwood v. Horney, was the first legal challenge to eminent domain for economic development following Kelo.  (The Michigan and Arizona supreme courts had already invalidated takings for economic development before Kelo.)  Other cases are pending in several lower state courts.

Congressional Response

As the reaction to Kelo reached a crescendo last fall, the U.S. House of Representatives passed HR 4128, “The Private Property Rights Protection Act of 2005,” which prohibits any “state or political subdivision from exercising its power of eminent domain for economic development if that state or political subdivision receives federal economic development funds during the fiscal year.”  Economic development is defined as “taking private property and conveying or leasing it to a private entity for commercial enterprise carried on for profit or to increase tax revenue, the tax base, employment, or general economic health.”  The legislation also prohibits the federal government from exercising its power of eminent domain for economic development (although the federal government rarely engages in eminent domain).  The legislation directs the Government Accountability Office (GAO) to issue a report on the use of eminent domain for economic development. Commentators believe that the Senate is unlikely to act until the GAO report is issued, probably this fall.

Reasons for Backlash

The City of New London’s plans for the Fort Trumbull neighborhood were not unique.  The groundswell of reaction to Kelo, nurtured by the Institute for Justice and other property rights organizations, feeds off the rising use of eminent domain for economic development by municipalities. This is caused by a shift from manufacturing to service-based economies in many cities, particularly in the Northeast and Rust Belt states.  Many cities are also in financial distress due to rising pension costs, infrastructure needs, and reductions in state aid.  In addition to publicly owned convention centers and stadiums, cities seek hotels, office parks and retail malls to boost the local economy and provide jobs and property tax revenue; eminent domain is often necessary to assemble the large sites necessary to attract developers and users. 

Although solid evidence of the increased use of eminent domain for economic development is hard to come by, the reaction to its validation in Kelo is unmistakable.  Opinion polls conducted immediately following the decision revealed that the public disagreed strongly with it.  In one survey in August 2005, 89 percent of individuals surveyed were against condemnations for private economic development.  The response of elected officials quickly followed suit, accepting Justice Stevens’ undisguised encouragement for states to enact legislation. 

Property rights activists have skillfully fanned the flames of reaction, seizing on the sanctity of the home; their message that “no one’s home is safe” appeared to be directed squarely at the middle class.

The devastation unleashed by Hurricanes Katrina and Rita also put eminent domain in the spotlight, as many asked whether eminent domain would be required to rebuild the city of New Orleans. Concerns were raised that at-risk populations such as minorities and the elderly would be disproportionately likely to suffer as their neighborhoods were targeted for redevelopment.

Postscript From New London

Following the Supreme Court decision, the Fort Trumbull project sat idle for many months, stalled over contract disputes, a moratorium on the use of eminent domain for economic development imposed by the governor, and the governor’s attempts to intervene in the settlement negotiations between the New London Development Corporation and the remaining holdout homeowners.  The last of the holdout homeowners, including Susette Kelo, settled with the city in late June 2006.  Her pink Victorian cottage will soon be moved elsewhere in New London, and the redevelopment project will at last get underway.  While this may bring closure to the redevelopment of Fort Trumbull, the debate over the use of eminent domain for economic development, pitting the economic health of cities against the rights of property owners, is likely to continue for some time.

Matthew Kiefer is a land use attorney at Goulston & Storrs in Boston. Jessica Tucker-Mohl, a third-year student at Harvard Law School,was a summer associate at Goulston & Storrs in 2006.