Commentary — July 2005

Kelo v. City of New London

By Lora A. Lucero, AICP

The 2004-2005 term added some excitement to the lives of land use attorneys and planners. In addition to jettisoning the "substantially advances" test from takings jurisprudence (see Dwight Merriam's July 2005 commentary discussing Lingle v. Chevron No. 04-163), the Justices clarified that a property owner doesn't get two bites of the apple, in both state and federal courts, when bringing his takings claim (San Remo Hotel v. City of San Francisco No. 04-340); and Section 1983 damages and attorneys fees are not available to someone challenging a zoning decision pursuant to the Telecommunications Act (City of Rancho Palos Verdes No. 03-1601). Each were 9-0 decisions.

The unanimity was gone on June 23, 2005, when the Court announced the Kelo decision. In a 5-4 opinion, Justice Stevens declared that economic development is a valid public use for the purpose of condemnation. (Kelo v. City of New London No. 04-108) The fallout in the days and weeks that followed was astonishing, particularly given the fact that the decision was not a radical departure from more than 50 years of precedent.

Justice O'Connor's dissent has received more air time and ink than Justice Stevens's opinion for the majority. The headlines have included "Justices Affirm Property Seizures,"¹ "Supreme Court Rules Cities May Seize Homes,"² "High court Oks personal property seizures,"³ "Seizing land for private use OK'd; Court backs city vs. homeowners,"⁴ and "High Court Backs Seizure of Land for Development."⁵

Did the Supreme Court emasculate the Fifth Amendment? Based on much of the coverage in the popular media, one might get that impression, and citizens are wondering if any protections for private property remain. Apparently, even Justice Souter's New Hampshire farmhouse may be targeted for condemnation if the letter sent by a California resident to the town officials in Weare, New Hampshire, is something more than just a publicity stunt. Dubbing the project the "Lost Liberty Hotel," the letter was posted on conservative radio show host Rush Limbaugh's website.⁶

U.S. Senator John Cornyn (R-Tex.) introduced legislation four days after the Kelo decision was announced, entitled The Protection of Homes, Small Businesses, and Private Property Act of 2005. The act would not allow eminent domain to be used to solely further private economic development. It would apply to all exercises of eminent domain power by the federal government, and all exercises of eminent domain power by state and local government through the use of federal funds.

To balance the rhetoric, some facts are in order.⁷ Connecticut law authorizes condemnation for economic development purposes. Since the closure of the Naval Undersea Warfare Center in 1996, the city of New London has lost more than 1,500 jobs. By 1998, the city's unemployment rate was nearly double that of the state. The state designated the community a "distressed municipality" and committed more than $15 million to reversing the loss.

A private nonprofit development agency was enlisted to assist the city in planning for the revitalization of the Fort Trumbull area. In February 1998, a pharmaceutical company announced it would build a $300 million research facility adjacent to Fort Trumbull. Hoping the facility would be a catalyst for further revitalization, neighborhood meetings were held and economic development plans were prepared. The state reviewed and approved the plans which called for a waterfront conference hotel, restaurants and shopping, and marinas with a pedestrian riverwalk. On one parcel, 90,000 square feet of research and development office space was planned to complement the pharmaceutical research facility. Negotiations with the majority of property owners were successful, but nine owners refused to sell and condemnation proceedings were initiated.

John Baker, an attorney with the firm of Greene Espel PLLP in Minneapolis, provided a more dispassionate response to Kelo critics on an ABA land use listserv following the decision. Baker writes:

Kelo presented a collision between conservative jurisprudence and conservative political outcomes. If conservative jurisprudence is to be intellectually honest, it must prevail in a collision of that kind. On this issue, the pillars of conservative jurisprudence — textualism, originalism, and federalism — all failed to support the property owners' position. Textualism failed because the reference to "public use" in the Fifth Amendment is not phrased as a requirement.

Originalism failed because there is no meaningful historical evidence that the framers intended the takings clause to restrict when government may pay just compensation to acquire property by eminent domain. As National Review contributing editor Jonathon Adler wrote, "While the Fifth Amendment clearly requires compensation for takings of any sort, there is little evidence the Founders sought to limit the purposes for which eminent domain could be used." The treatment of the "public use" phrase in the Fifth Amendment as a separate requirement really began in earnest with New York's highest court in 1837. In the era of Lochner, the notion flourished, and appropriately faded in the mid-20th Century, along with the other relics of economic judicial activism. And contrary to the rhetoric of those seeking to incite backlash, Kelo did nothing to expand the powers of government; it simply confirmed the continued vitality of rules that have been firmly in place for more than 50 years. Finally, federalism failed to support the property owners' position, because federal judges are in no better position than elected officials to decide whether a particular purpose is sufficiently beneficial to the public to be considered a "public" use.

The Kelo cert petition was an effort to accomplish revolutionary legal change, and it darned near succeeded. I think the activists with Institute for Justice knew exactly what they were doing when they took a case involving sound planning all the way to the Supreme Court. Had the Supreme Court found "public use" lacking in that situation, cities could not have easily distinguished the decision as one involving "an extreme set of facts not present here.⁸

The American Planning Association filed an amicus curiae brief supporting the City of New London, authored by Tom Merrill at Columbia University and John Echeverria at Georgetown Environmental Law & Policy Institute. The National Congress for Community Economic Development⁹ joined us. We urged the Court to stay the course, retain the broad interpretation of "public use" that includes economic development and the Court's deferential standard of review in such cases. APA also echoed what many amici¹⁰ pointed out to the Court — that condemnation abuses occur and perhaps the measure of just compensation needs to be reconsidered.

Eminent domain is concededly an unsettling power, and is subject to misuse or overuse if not properly constrained. But eminent domain is disruptive for all who experience it, not just those who might be able to persuade a reviewing court that a particular condemnation is not "public" enough. The dangers of eminent domain should be addressed by assuring that it remains a second-best alternative to market exchange as a means of acquiring resources, by encouraging careful planning and public participation in decisions to invoke eminent domain, and by building on current legislative requirements that mandate additional compensation beyond the constitutional minimum for persons who experience uncompensated subjective losses and consequential damages.¹¹

APA's amicus brief stood apart from the others in advocating the importance of integrating eminent domain into land use planning.

Another source of protection for all property owners is to assure, to the extent possible, that eminent domain is exercised only in conjunction with a process of land use planning that includes broad public participation and a careful consideration of alternatives to eminent domain. Integrating the decision to use eminent domain into a sound planning process has a number of desirable consequences. Such a process can help minimize the use of eminent domain, by identifying alternatives to proposed development projects, such as relocating or re-sizing projects, or perhaps forgoing them altogether. It can also reduce public concerns about the use of eminent domain, by providing a forum in which the reasons for opposition can be considered, offering explanations for the proposed course of action and possible alternatives, and perhaps instilling a greater degree of understanding on the part of both the proponents and opponents of the proposed project.¹²

Justice Stevens and the majority focused on the important role of planning in the redevelopment process. The City of New London's program of economic rejuvenation was entitled to the Court's deference, Justice Stevens wrote, because the "City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including ... new jobs and increased tax revenue. ... Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan."¹³ Someone counted more than 30 references to "plan," "planning," and "planner" in the majority's opinion.

Justice Kennedy provided the critical fifth vote. He wrote in concurrence:

The determination that a rational-basis standard of review is appropriate does not, however, alter the fact that transfers intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause." Further in his opinion, he continued "This taking occurred in the context of a comprehensive development plan meant to address a serious city-wide depression, and the projected economic benefits of the project cannot be characterized as de minimus. The identity of most of the private beneficiaries were unknown at the time the city formulated its plans. The city complied with elaborate procedural requirements that facilitate review of the record and inquiry into the city's purposes. In sum, while there may be categories of cases in which the transfers are so suspicious, or the procedures employed so prone to abuse, or the purported benefits are so trivial or implausible, that courts should presume an impermissible private purpose, no such circumstances are present in this case.¹⁴

Contrary to the opinion of many of Kelo's supporters, the decision might be viewed as a "win" for all sides because the debate is not over. It now moves into the halls of Congress and the state legislatures. Our democratically elected officials will have a voice in shaping the next generation of eminent domain codes.

Notes

1. Washington Post, June 24, 2005.

2. Chicago Tribune, June 24, 2005.

3. CNN.com, June 23, 2005.

4. USA Today, June 24, 2005.

5. The Boston Globe, June 24, 2005.

6. www.rushlimbaugh.com/home/today.guest.html

7. The facts are taken from Justice Stevens's majority opinion.

8. Landuse@mail.abanet.org

9. www.ncced.org. Founded in 1970, The National Congress for Community Economic Development is the trade association for community development corporations (CDCs) and the community economic development (CED) industry.

10. There were 25 amicus curiae briefs filed in support of Petitioner Kelo and 12 amicus curiae briefs filed in support of Respondent City of New London.

11. Amicus Curiae Brief of the American Planning Association, Kelo v. City of New London, p. 3

12. Id. at pp. 25-26

13. Opinion of Justice Stevens for the majority. Kelo v. City of New London, June 23, 2005, 545 U.S. __ (2005).

14. Concurring opinion of Justice Kennedy. Kelo v. City of New London, June 23, 2005, 545 U.S. __ (2005).