Kelo V. City Of New London Case Study
EMINENT DOMAIN; SUPREME COURT DECISIONS; ECONOMIC DEVELOPMENT; CONSTITUTIONAL LAW;
July 26, 2005
KELO V. CITY OF NEW LONDON
By: John Rappa, Principal Analyst
You asked for an analysis of the U. S. Supreme Court's decision in Kelo v. City of New London 125 S. Ct. 2655 (June 23, 2005).
In Kelo v. City of New London the U.S. Supreme Court ruled that New London could take privately owned properties for private development under its economic revitalization plan. Since the plan served a public purpose, it satisfied the U.S. Constitution's public use requirement, which bans government from taking land for public use without just compensation. Relying on prior decisions, the Court interpreted public use as being the equivalent of “public purpose.”
The decision upheld the Connecticut Supreme Court's 2004 Kelo decision (268 Conn. 1), which found that New London's actions did not violate either the Connecticut or the United States constitutional bans against taking property for public uses without just compensation (Ct Const. Art I, § 11; U.S. Const. Amend V). Attachment 1 is an OLR report analyzing that opinion (2004-R-0394).
The case arose after New London began to implement a development plan to revitalize its economy. Adopted in 2000, the plan sought to develop a 90-acre area on the Thames River near Fort Trumbull State Park and Pfizer's global research facility, which was slated to open in 2001. The area comprises the closed U.S. Naval Undersea Warfare Center, the regional water pollution control authority, and residential and commercial properties situated on 115 privately owned parcels.
The Court noted that New London was economically distressed and decided to redevelop this area as a way to attract and accommodate new businesses linked to the Pfizer facility, create leisure and recreational opportunities, and attract more businesses and people to the city. Consequently, it prepared and adopted a plan under a state statute that allowed municipalities to acquire, improve, and transfer property for new development (CGS § 8-186 et seq.). That statute specifies how municipalities must implement these tasks and explicitly authorizes them to acquire property through negotiation or eminent domain.
The plan proposed to develop the area for different uses, but did not intend for all of them to be opened to the public. The uses included a marina, river walk, conference hotel, new housing, a small cluster of shops and restaurants, research and development office space, and unspecified “support” as well as the proposed U.S. Coast Guard Museum.
New London designated the nonprofit New London Development Corporation (NLDC) to prepare and implement the plan, including acquiring the properties slated for redevelopment. NLDC successfully acquired 110 parcels, but had to initiate condemnation proceedings to acquire the other 15 by eminent domain. Four of the disputed parcels were located on the site of the proposed research and development offices and 11 on the property designated for unspecified use to support the proposed marina or the adjacent state park.
The owners of the 15 parcels challenged the takings in state court, claiming that NLDC violated the Connecticut and United States constitutional bans against taking property for public uses without just compensation. After a seven-day bench trial, the Superior Court upheld some of the takings and overturned the others, which led both parties to appeal to the Connecticut Supreme Court. That court upheld all of the takings on the grounds that they were reasonably necessary to achieve the plan's economic revitalization goals. The dissenting justices agreed that the plan served a valid public purpose, but found the takings unconstitutional because the city failed to show how they would achieve those goals.
The owners subsequently appealed to the U.S. Supreme Court, claiming that the takings violated the Fifth Amendment's Takings Clause.
According to the majority, the case turned on whether New London's plan satisfied the “public use” requirement or whether it was simply a way to confer a private benefit on a particular party.
The Fifth Amendment's Takings Clause provides, in part, “nor shall private property be taken for public use without just compensation.” This provision applies to states as well as the federal government (Chicago B&QR v. Chicago, 166 US 226 (1987)). The courts have interpreted the clause to ban government from taking property that belongs to party A only to transfer it to party B, even if the government justly compensated party A (Kelo, at 2661).
By a five to four margin, the Court upheld the Connecticut Supreme Court's ruling that New London's plan served a valid public purpose and that the takings thus satisfied the Fifth Amendment's public use requirement. It held that the city carefully prepared the plan and did not adopt it as a way to benefit specific individuals. Justice Kennedy joined in the majority opinion and wrote a separate concurrence. Justice O'Connor, joined by Chief Justice Rehnquist and justices Scalia and Thomas, wrote the dissenting opinion. Justice Thomas also wrote a separate dissent.
Precedent for Broad Interpretation of “Public Use”
In upholding New London's plan, the Court noted that it long ago rejected the narrow interpretation of “public use.” Under that interpretation, a taking was constitutional if the public could literally use the condemned property. Instead, the Court opted for a broader interpretation under which a taking is constitutional if it serves a public purpose, such as eliminating slum and blight. The Court also noted that historically it had deferred to the legislature's judgment as to what constituted a public purpose.
The Court relied on three cases to support its holding. In Berman v. Parker (348 U.S. 26 (1954)), the Court upheld Congress' plan to redevelop a blighted Washington D.C. neighborhood by acquiring and transferring property to private developers. A property owner sued the city when it condemned his store, arguing that it was not blighted and that redeveloping a neighborhood was not a valid public purpose for taking the store by eminent domain. The court deferred to the government's determination that the area needed to be planned as a whole and saw nothing in the Constitution that prevented redevelopment programs from treating several properties as a whole (Kelo, at 2663).
In Hawaii Housing Authority v. Midkiff (467 US 229 (1984)), the Court upheld a law permitting Hawaii to take and transfer leased land to its lessees. Again it deferred to the legislature's determination that this policy served a valid public purpose: eliminating a land oligopoly. The fact that the state immediately transferred the land to private individuals did not diminish the takings' public purpose. Consequently, the law's constitutionality depended on its purpose (i.e., eliminating the oligopoly), not the means to achieve it (i.e., transferring the property to private individuals) (Kelo, at 2665).
Lastly, in Ruckelshaus v. Monsanto Co. (467 US 986 (1984)), the Court upheld a law allowing a federal agency to evaluate new pesticide applications based on trade secrets and other data submitted by prior applicants as long as the latter received just compensation. In doing so, it deferred to Congress' determination that the law served a public purpose, fostering competition in the pesticide industry (Kelo, at 2665).
Economic Development Constitutes a Public Purpose
In Kelo, the Court applied its prior holdings and concluded that taking land by eminent domain for economic development in this situation served a valid public purpose. It noted that promoting economic development is a traditional and long accepted governmental function and there is no way to distinguish economic development from other recognized public purposes. For this reason, the Court rejected the premise that all economic development takings were unconstitutional (Kelo, at 2666).
It also concluded that the fact that economic development takings benefit private parties and produce incidental public benefits does not render them unconstitutional. In support of this conclusion, the Court observed that public policies and programs often benefit private interests, and sometimes, these interests do a better job at serving a public purpose than a government agency (e.g., a business that creates new jobs after receiving a low-interest government loan to build a facility) (Kelo, at 2667)
The Court also rejected the petitioners' alternative argument that the constitutionality of economic development takings should turn on whether there is a reasonable certainty that the takings will benefit the public. This test would require the courts to second-guess the legislature about the likelihood that the benefits would actually accrue and stop or slow down the development process while waiting for a court decision (Kelo, at 2668).
While economic development takings satisfy the Takings Clause's public use requirement, the majority indicated that nothing prevents the states from restricting or prohibiting the use of eminent domain powers for this purpose (Kelo, at 2669).
Kennedy's Concurring Opinion
In Justice Kennedy's view, courts must examine economic development takings more closely than other takings to see if they favor a private party rather than provide a public benefit. Courts can do this without assuming that the government acted unreasonably or only to benefit that party, he added. Kennedy was satisfied that the trial court in this case reached its decision after closely examining the takings and rejecting the contention that the city was acting only to benefit specific private interests (Kelo, at 2670).
Writing the primary dissent, Justice O'Connor argued that economic development takings violated the Takings Clause's public use requirement, which she interpreted literally. She rejected the majority's view that the constitution permits the transfer of private property to private developers so long as the public obtains some incidental benefit. And she asserted that it was for the courts, not the legislative bodies to determine if the use of eminent domain was constitutional.
O'Connor read Berman and Midkiff, as cases where the court had upheld the takings not for economic development but for eliminating harm: blight in Berman and land oligopoly in Midkiff. In upholding the Kelo takings, the Court should not have deferred to the city's decisions; doing so rendered the Takings Clause meaningless and consequently removed any effective check on the eminent domain power (Kelo, at 2674).
Writing a separate dissent, Justice Thomas argued that the Fifth Amendment allows government to take property only if the government intends to own the property or literally allow the public to use it. He urged the Court to reconsider its holdings based on the Takings Clause's historical meaning. In doing so, he contrasted the way the founders used “public use” and “public welfare” to convey different meanings. Over time, the courts strayed from the literal meaning of public use to one that was closer to public welfare. Like O'Connor, Thomas concluded that the Kelo Court rendered the Takings Clause meaningless by substituting “public purpose” for the Constitution's “public use” language (Kelo, at 2679).
|Kelo v. New London|
|Argued February 22, 2005|
Decided June 23, 2005
|Full case name||Susette Kelo, et al. v. City of New London, Connecticut, et al.|
|Citations||545 U.S.469 (more) |
125 S. Ct. 2655; 162 L. Ed. 2d 439; 2005 U.S. LEXIS 5011; 60 ERC (BNA) 1769; 18 Fla. L. Weekly Fed. S 437
|Prior history||Judgment for defendants as regarding certain plaintiffs, judgment for remaining plaintiffs, Kelo v. City of New London, 2002 Conn. Super. LEXIS 789 (Conn. Super. Ct. Mar. 13, 2002); affirmed and reversed in part, remanded, 843 A.2d 500 (Conn. 2004); cert. granted, 542 U.S. 965 (2004)|
|Procedural history||Writ of Certiorari to the Supreme Court of Connecticut|
|Subsequent history||Rehearing denied, 126 S. Ct. 24 (2005)|
|The governmental taking of property from one private owner to give to another in furtherance of economic development constitutes a permissible "public use" under the Fifth Amendment. Supreme Court of Connecticut decision affirmed.|
|Majority||Stevens, joined by Kennedy, Souter, Ginsburg, Breyer|
|Dissent||O'Connor, joined by Rehnquist, Scalia, Thomas|
|U.S. Const. amend. V|
Kelo v. City of New London, 545U.S. 469 (2005) was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another private owner to further economic development. In a 5–4 decision, the Court held that the general benefits a community enjoyed from economic growth qualified private redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.
The case arose in the context of condemnation by the city of New London, Connecticut, of privately owned real property, so that it could be used as part of a “comprehensive redevelopment plan.” However, the private developer was unable to obtain financing and abandoned the redevelopment project, leaving the land as an undeveloped empty lot.
This case was appealed to the Supreme Court of the United States from a decision by the Supreme Court of Connecticut in favor of the City of New London. The owners, including lead plaintiff Susette Kelo, sued the city in Connecticut courts, arguing that the city had misused its eminent domain power. The power of eminent domain is limited by the Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment. The Takings Clause reads: "...nor shall private property be taken for public use, without just compensation.” Under the Due Process Clause of the Fourteenth Amendment, this limitation also applies to the actions of state and local governments. The plaintiffs argued that economic development, the stated purpose of the taking and subsequent transfer of land to the New London Development Corporation, did not qualify as a public use under the Fifth Amendment.
The Connecticut Supreme Court heard arguments on December 2, 2002. The state court issued its decision (268 Conn. 1, SC16742) on March 9, 2004, siding with the city in a 4–3 decision, with the majority opinion authored by Justice Flemming L. Norcott, Jr., joined by Justices David M. Borden, Richard N. Palmer and Christine Vertefeuille. Justice Peter T. Zarella wrote the dissent, joined by Chief Justice William J. Sullivan and Justice Joette Katz.
The State Supreme Court held that the use of eminent domain for economic development did not violate the public use clauses of the state and federal constitutions. The court held that if a legislative body has found that an economic project will create new jobs, increase tax and other city revenues, and revitalize a depressed urban area (even if that area is not blighted), then the project serves a public purpose, which qualifies as a public use. The court also ruled that the government’s delegation of its eminent domain power to a private entity was constitutional under the Connecticut Constitution. The United States Supreme Court granted certiorari to consider questions raised in Berman v. Parker,348U.S.26 (1954) and later in Hawaii Housing Authority v. Midkiff, 467U.S.229 (1984). Namely, whether a "public purpose" constitutes a "public use" for purposes of the Fifth Amendment's Taking Clause: "nor shall private property be taken for public use, without just compensation." Specifically, does the Fifth Amendment, applicable to the states through the Due Process Clause of the Fourteenth Amendment (see main article: Incorporation of the Bill of Rights), protect landowners from takings for economic development, rather than, as in Berman, for the elimination of slums and blight?
Kelo was the first major eminent domain case heard at the Supreme Court since 1984. In that time, states and municipalities had slowly extended their use of eminent domain, frequently to include economic development purposes. In the Kelo case, Connecticut had a statute allowing eminent domain for “economic development” even in the absence of blight. There was also an additional twist in that the development corporation was ostensibly a private entity; thus the plaintiffs argued that it was not constitutional for the government to take private property from one individual or corporation and give it to another, if the government was simply doing so because the repossession would put the property to a use that would generate higher tax revenue.
Kelo became the focus of vigorous discussion and attracted numerous supporters on both sides. Some 40 amicus curiae briefs were filed in the case, 25 on behalf of the petitioners. Susette Kelo's supporters ranged from the libertarianInstitute for Justice (the lead attorneys on the case) to the NAACP, AARP, the late Martin Luther King's Southern Christian Leadership Conference and South Jersey Legal Services. The latter groups signed an amicus brief arguing that eminent domain has often been used against politically weak communities with high concentrations of minorities and elderly. The case was argued on February 22, 2005. The case was heard by only seven members of the court with Associate Justice Sandra Day O'Connor presiding, as Chief JusticeWilliam Rehnquist was recuperating from medical treatment at home and Associate Justice John Paul Stevens was delayed on his return to Washington from Florida; both absent Justices read the briefs and oral argument transcripts and participated in the case decision.
During arguments, several of the Justices asked questions that forecast their ultimate positions on the case. Justice Antonin Scalia, for example, suggested that a ruling in favor of the city would destroy "the distinction between private use and public use," asserting that a private use which provided merely incidental benefits to the state was "not enough to justify use of the condemnation power."
Opinion of the Court
Majority and concurring
On June 23, 2005, the Supreme Court, in a 5–4 decision, ruled in favor of the City of New London. Justice Stevens wrote the majority opinion, joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer. Justice Kennedy wrote a concurring opinion setting out a more detailed standard for judicial review of economic development takings than that found in Stevens's majority opinion. In so doing, Justice Kennedy contributed to the Court's trend of turning minimum scrutiny—the idea that government policy need only bear a rational relation to a legitimate government purpose—into a fact-based test.
In Romer v. Evans, 517 U.S. 620, 633 (1996), the Court said that the government purpose must be "independent and legitimate." And in United States v. Virginia, 518 U.S. 515, 533 (1996), the Court said the government purpose "must be genuine, not hypothesized or invented post hoc in response to litigation." Thus, the Court made it clear that, in the scrutiny regime established in West Coast Hotel v. Parrish, 300 U.S. 379 (1937), government purpose is a question of fact for the trier of fact.
Kennedy fleshed out this doctrine in his Kelo concurring opinion; he sets out a program of civil discovery in the context of a challenge to an assertion of government purpose. However, he does not explicitly limit these criteria to eminent domain, nor to minimum scrutiny, suggesting that they may be generalized to all health and welfare regulation in the scrutiny regime. He wrote:
A court confronted with a plausible accusation of impermissible favoritism to private parties should [conduct]... a careful and extensive inquiry into 'whether, in fact, the development plan [chronology]
[1.] is of primary benefit to... the developer... and private businesses which may eventually locate in the plan area...
[2.] and in that regard, only of incidental benefit to the city...'"
Kennedy is also interested in facts of the chronology which show, with respect to government,
[3.] awareness of... depressed economic condition and evidence corroborating the validity of this concern...
[4.] the substantial commitment of public funds... before most of the private beneficiaries were known...
[5.] evidence that [government] reviewed a variety of development plans...
[6.] [government] chose a private developer from a group of applicants rather than picking out a particular transferee beforehand and...
[7.] other private beneficiaries of the project [were]... unknown [to government] because the... space proposed to be built [had] not yet been rented...
Kelo v. City of New London did not establish entirely new law concerning eminent domain. Although the decision was controversial, it was not the first time “public use” had been interpreted by the Supreme Court as “public purpose”. In the majority opinion, Justice Stevens wrote the "Court long ago rejected any literal requirement that condemned property be put into use for the general public" (545 U.S. 469). Thus precedent played an important role in the 5–4 decision of the Supreme Court. The Fifth Amendment was interpreted the same way as in Midkiff (467 U.S. 229) and other earlier eminent domain cases.
The principal dissent was issued on 25 June 2005 by Justice O'Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas. The dissenting opinion suggested that the use of this taking power in a reverse Robin Hood fashion— take from the poor, give to the rich— would become the norm, not the exception:
Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.
O'Connor argued that the decision eliminates "any distinction between private and public use of property — and thereby effectively delete[s] the words 'for public use' from the Takings Clause of the Fifth Amendment." 125 S.Ct. 2655, 2671.
Thomas also issued a separate originalist dissent, in which he argued that the precedents the court's decision relied upon were flawed. He accuses the majority of replacing the Fifth Amendment's "Public Use" clause with a very different "public purpose" test:
This deferential shift in phraseology enables the Court to hold, against all common sense, that 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, is for a 'public use.'
Thomas additionally observed:
Something has gone seriously awry with this Court's interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not.
545 U.S. 469, 518 (2005)
Thomas also made use of the argument presented in the NAACP/AARP/SCLC/SJLS amicus brief on behalf of three low-income residents' groups fighting redevelopment in New Jersey, noting:
Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.
Following the decision, many of the plaintiffs expressed an intent to find other means by which they could continue contesting the seizure of their homes. Soon after the decision, city officials announced plans to charge the residents of the homes for back rent for the five years since condemnation procedures began. The city contended that the residents have been on city property for those five years and owe tens of thousands of dollars of rent. In June 2006, Governor M. Jodi Rell intervened with New London city officials, proposing the homeowners involved in the suit be deeded property in the Fort Trumbull neighborhood so they may retain their homes. A group of New London residents formed a local political party, One New London, to combat the takings.
The controversy was eventually settled when the city paid substantial additional compensation to the homeowners and agreed to move Kelo’s home to a new location. The land was never deeded back to the original homeowners, most of whom have left New London for nearby communities. Three years after the Supreme Court case was decided, the Kelo house was dedicated after being relocated to 36 Franklin Street, a site close to downtown New London. Susette Kelo, however, has moved to a different part of Connecticut.
In spite of repeated efforts, the redeveloper (who stood to get a 91-acre (370,000 m2) waterfront tract of land for $1 per year) was unable to obtain financing, and the redevelopment project was abandoned. As of the beginning of 2010, the original Kelo property was a vacant lot, generating no tax revenue for the city. In the aftermath of 2011's Hurricane Irene, the now-closed New London redevelopment area was turned into a dump for storm debris such as tree branches and other vegetation.
Pfizer, whose employees were supposed to be the clientele of the Fort Trumbull redevelopment project, completed its merger with Wyeth, resulting in a consolidation of research facilities of the two companies. Pfizer chose to retain the Groton campus on the east side of the Thames River, closing its New London facility in late 2010 with a loss of over 1000 jobs. That coincided with the expiration of tax breaks on the New London site that would have increased Pfizer's property tax bill by almost 400 percent.
After the Pfizer announcement, the San Francisco Chronicle, on Nov 2009, in its lead editorial called the Kelo decision infamous:
The well-laid plans of redevelopers, however, did not pan out. The land where Susette Kelo's little pink house once stood remains undeveloped. The proposed hotel-retail-condo "urban village" has not been built. And earlier this month, Pfizer Inc. announced that it is closing the $350 million research center in New London that was the anchor for the New London redevelopment plan, and will be relocating some 1,500 jobs.
The Chronicle editorial quoted from The New York Times:
"They stole our home for economic development," ousted homeowner Michael Cristofaro told the New York Times. "It was all for Pfizer, and now they get up and walk away."
The final cost to the city and state for the purchase and bulldozing of the formerly privately held property was $78 million. The promised 3,169 new jobs and $1.2 million a year in tax revenues had not materialized. As of 2014 the area remains an empty lot.
Public reaction to the decision was highly unfavorable. Much of the public viewed the outcome as a gross violation of property rights and as a misinterpretation of the Fifth Amendment, the consequence of which would be to benefit large corporations at the expense of individual homeowners and local communities. Some in the legal profession construed the public's outrage as being directed not at the interpretation of legal principles involved in the case, but at the broad moral principles of the general outcome. Federal appeals court judge Richard Posner wrote that the political response to Kelo is "evidence of [the decision's] pragmatic soundness." Judicial action would be unnecessary, Posner suggested, because the political process could take care of the problem."
Opposition to the ruling was widespread, coming from groups such as AARP, the NAACP, the Libertarian Party and the Institute for Justice. Many owners of family farms also disapproved of the ruling, as they saw it as an avenue by which cities could seize their land for private developments. The American Conservative Union condemned the decision.
As a result, many states changed their eminent domain laws. Prior to the Kelo decision, only seven states specifically prohibited the use of eminent domain for economic development except to eliminate blight. Since the decision, forty-four states have amended their eminent domain laws, although some of these changes are cosmetic. The New York Times editorial board agreed with the ruling, calling it "a welcome vindication of cities' ability to act in the public interest." The Washington Post's editorial board also agreed with the ruling, writing, "... the court's decision was correct... New London's plan, whatever its flaws, is intended to help develop a city that has been in economic decline for many years." The Kelo fiasco eventually cost the taxpayers tens of millions of dollars, with nothing to show for it. The "carefully vetted" municipal plans that formed the basis for the Supreme Court's decision proved to be illusory. Eventually, the City of New London extended an apology to Susette Kelo and her neighbors, and so did one of the Connecticut Supreme Court Justices who voted for the city.
On June 23, 2006, the first anniversary of the original decision, PresidentGeorge W. Bush issued an executive order instructing the federal government to restrict the use of eminent domain
...for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.
However, since eminent domain is most often exercised by local and state governments, the presidential order may thus have little overall effect.
On June 27, 2005, SenatorJohn Cornyn (R-TX) introduced legislation, the "Protection of Homes, Small Businesses and Private Property Act of 2005" (S.B. 1313), to limit the use of eminent domain for economic development. The operative language
- prohibits the federal government from exercising eminent domain power if the only justifying "public use" is economic development; and
- imposes the same limit on state and local government exercise of eminent domain power "through the use of Federal funds."
Similar bills have subsequently been put forth in the House of Representatives by Congressman Dennis Rehberg (R-MT), Tom DeLay (R-TX), and John Conyers (D-MI) with James Sensenbrenner (R-WI). As some small-scale eminent domain condemnations (including notably those in the Kelo case) can be local in both decision and funding, it is unclear how much of an effect the bill would have if it passed into law. This bill has been reintroduced several times.
In 2008, land use Professor Daniel R. Mandelker argued that the public backlash against Kelo is rooted in the historical deficiencies of urban renewal legislation. In particular, the article cited the failure to incorporate land use planning and a precise definition of blight in urban renewal legislation as problematic. In 2009, Professor Edward J. Lopez of San Jose State University studied passed laws and found that states with more economic freedom, greater value of new housing construction, and less racial and income inequality were more likely to have enacted stronger restrictions sooner.
Severe criticism of the Kelo decision came from Professor Gideon Kanner of the Loyola Law School, Los Angeles.
Prior to Kelo, eight states specifically prohibited the use of eminent domain for economic development except to eliminate blight: Arkansas, Florida, Kansas, Kentucky, Maine, New Hampshire, South Carolina and Washington. As of June 2012[update], 42 states had enacted some type of reform legislation in response to the Kelo decision. Of those states, 22 enacted laws that severely inhibited the takings allowed by the Kelo decision, while the rest enacted laws that place some limits on the power of municipalities to invoke eminent domain for economic development. The remaining eight states have not passed laws to limit the power of eminent domain for economic development.
Proposition 207, the Private Property Rights Protection Act, passed in 2006.
Under pre-existing California law, takings (for conveyance to a private party, as opposed to a public use that may incidentally benefit private parties) were already illegal.
Proposition 90, which attempted to exploit the unpopularity of Kelo for a different objective, failed in the November 2006 election. The initiative also included language requiring that government pay financial compensation to any property owners who could successfully argue that regulation caused them significant economic loss. Subsequently, Proposition 99 passed in the June 2008 election. It amends the state constitution to prohibit (subject to some exceptions):
state and local governments from using eminent domain to acquire an owner-occupied residence [if the owner has occupied the residence for at least one year], as defined, for conveyance to a private person or business entity.
In 2012, California abolished its redevelopment agencies.
Florida passed a 2006 ballot measure amending the Florida Constitution to restrict use of eminent domain. The amendment says in part:
Private property taken by eminent domain [...] may not be conveyed to a natural person or private entity except as provided by general law passed by a three-fifths vote of the membership of each house of the Legislature.
— Fla. Const. art. X, § 6(c)
The Iowa Legislature passed a 2006 bill restricting the use of eminent domain for economic development. Gov. Tom Vilsack (D) vetoed the bill, prompting the first special session of the Iowa Legislature in more than 40 years. The veto was overridden by votes of 90–8 in the Iowa House and 41–8 in the Iowa Senate.
In response to the Kelo decision, the Kansas Legislature enacted K.S.A. 26-501a and K.S.A. 26-501b and amended K.S.A. 26-501.
K.S.A. 26-501a. Eminent domain; limited to public use; transfer to private entity prohibited; exception. On and after July 1, 2007: (a) Private property shall not be taken by eminent domain except for public use and private property shall not be taken without just compensation. (b) The taking of private property by eminent domain for the purpose of selling, leasing or otherwise transferring such property to any private entity is prohibited except as provided in K.S.A. 2009 Supp. 26–501b, and amendments thereto. (c) This section shall be part of and supplemental to the eminent domain procedure act. History: L. 2006, ch. 192, § 1; May 25.
K.S.A. 26-501b. Eminent domain; transfer to private entity authorized, when. On and after July 1, 2007, the taking of private property by eminent domain for the purpose of selling, leasing, or otherwise transferring such property to any private entity is authorized if the taking is: (a) By the Kansas department of transportation or a municipality and the property is deemed excess real property that was taken lawfully and incidental to the acquisition of right-of-way for a public road, bridge or public improvement project including, but not limited to a public building, park, recreation facility, water supply project, wastewater and waste disposal project, storm water project and flood control and drainage project; (b) by any public utility, as defined in K.S.A. 66-104, and amendments thereto, gas gathering service, as defined in K.S.A. 55-1,101, and amendments thereto, pipe-line companies, railroads and all persons and associations of persons, whether incorporated or not, operating such agencies for public use in the conveyance of persons or property within this state, but only to the extent such property is used for the operation of facilities necessary for the provision of services; (c) by any municipality when the private property owner has acquiesced in writing to the taking; (d) by any municipality for the purpose of acquiring property which has defective or unusual conditions of title including, but not limited to, clouded or defective title or unknown ownership interests in the property; (e) by any municipality for the purpose of acquiring property which is unsafe for occupation by humans under the building codes of the jurisdiction where the structure is situated; (f) expressly authorized by the legislature on or after July 1, 2007, by enactment of law that identifies the specific tract or tracts to be taken. If the legislature authorizes eminent domain for private economic development purposes, the legislature shall consider requiring compensation of at least 200% of fair market value to property owners. (g) This section shall be part of and supplemental to the eminent domain procedure act. History: L. 2006, ch. 192, § 2; May 25.
Michigan passed a restriction on the use of eminent domain in November 2006, Proposition 4, 80% to 20%. The text of the ballot initiative was as follows:
A proposed constitutional amendment to prohibit government from taking private property by eminent domain for certain private purposes
The proposed constitutional amendment would:
- Prohibit government from taking private property for transfer to another private individual or business for purposes of economic development or increasing tax revenue.
- Provide that if an individual's principal residence is taken by government for public use, the individual must be paid at least 125% of property’s fair market value.
- Require government that takes a private property to demonstrate that the taking is for a public use; if taken to eliminate blight, require a higher standard of proof to demonstrate that the taking of that property is for a public use.
- Preserve existing rights of property owners.
The state restricts eminent domain to public use. Minnesota Statute 117.025 Subd. 11(b) (passed in 2006) clearly states: "The public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose."
On 8 November 2011, Mississippi Initiative #31 restricting eminent domain, was approved by voters 73%-27%. The text of Initiative # 31 is as follows:
No property acquired by the exercise of the power of eminent domain under the laws of the State of Mississippi shall, for a period of ten years after its acquisition, be transferred or any interest therein transferred to any person, non-governmental entity, public-private partnership, corporation, or other business entity with the following exceptions:
(1) The above provisions shall not apply to drainage and levee facilities and usage, roads and bridges for public conveyance, flood control projects with a levee component, seawalls, dams, toll roads, public airports, public ports, public harbors, public wayports, common carriers or facilities for public utilities and other entities used in the generation, transmission, storage or distribution of telephone, telecommunication, gas, carbon dioxide, electricity, water, sewer, natural gas, liquid hydrocarbons or other utility products.
(2) The above provisions shall not apply where the use of eminent domain (a) removes a public nuisance; (b) removes a structure that is beyond repair or unfit for human habitation or use; (c) is used to acquire abandoned property; or (d) eliminates a direct threat to public health or safety caused by the property in its current condition.
On 25 November 2008 a voter-approved amendment to the Nevada constitution, colloquially titled the People’s Initiative to Stop the Taking of Our Land, or PISTOL, was put into effect following its review by the Nevada State Supreme Court. Among other provisions, the amendment included the following text:
Public use shall not include the direct or indirect transfer of any interest in property taken in an eminent domain proceeding from one private party to another private party. In all eminent domain actions, the government shall have the burden to prove public use.
The amendment also modifies the definition of "fair market value"—used to determine the monetary compensation a property owner receives—to represent the highest value the property would be sold for on the open market, and returns seized property to the original property owner "if the property is not used within five years for the original purpose stated by the government."
In New Hampshire, various libertarian activists, in response to the decision, sought to use eminent domain to seize Justice David Souter's farmhouse in Weare, New Hampshire and build a hotel (the "Lost Liberty Hotel") on the site. The proposal was not supported by the town's five-member board of selectmen, and Weare voters rejected the activists' attempt to place a proposal on the local ballot to seize Souter's farm.
In 2006, the New Hampshire Legislature proposed an amendment to the state constitution providing that "no part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property." The amendment was overwhelmingly approved by New Hampshire voters in the November 2006 elections. Some New Hampshire commentators suggested that the state had gone too far in restricting the exercise of eminent domain in the Kelo backlash.
An attempted use of eminent domain was brought before the Ohio Supreme Court in City of Norwood v. Horney. In July 2006, the Supreme Court of Ohio unanimously held in favor of the property owners, finding the seizure would violate the Constitution of Ohio.
On 29 March 2006 Gov. Jim Doyle signed into law 2005 Wisconsin Act 233, which prohibits condemnation of nonblighted property for transfer to a private entity. Nonblighted property is defined by a list of conditions that may make the property a detriment to the "public health, safety, or welfare." Two days earlier the governor signed into law 2005 Wisconsin Act 208, which creates procedures designed to protect property owners including public notice and public hearing requirements.
The Wisconsin law has been criticized as one having little or no real protection for property owners because it provides protection against property condemnation for economic development but does allow property condemnation under a broadly defined description of blighted.
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