The U.S. Supreme Court's June ruling in the case of Kelo v. City of New London, Connecticut, has sparked considerable controversy around the country over local governments' use of the power of eminent domain for economic development purposes. On one side of the debate are local leaders and redevelopment agencies, which maintain that the power of eminent domain is a seldom used but important and effective economic development tool. On the other side are private property advocacy groups, which argue that the Supreme Court's decision allows governments to threaten the rights of property owners across the country. This article examines the many state and federal legislative proposals aimed at limiting the power granted local governments by the Supreme Court in the Kelo case.
THE CASE AND THE RULING
The City of New London approved a development plan that was "projected to create in excess of 1,000 jobs, to increase tax and other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas." The city's development agent purchased property from willing sellers and sought to use the power of eminent domain to acquire the remainder of the property from unwilling owners in exchange for just compensation. The city maintained that the revitalization of an economically distressed area was a valid reason under the "public use" provision of the Fifth Amendment to condemn private property. A group of New London home owners believed otherwise, and filed a lawsuit against the city claiming that the taking of their properties violated the public use requirement in the Fifth Amendment.
The Supreme Court ruled 5-4 in favor of New London. As Justice John Paul Stevens wrote for the Court's majority, "those who govern the city were not confronted with the need to remove blight in the Fort Trumbull area, but their determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The city has carefully formulated an economic plan that it believes will provide appreciable benefits to the community, including--but by no means limited to--new jobs and increased tax revenue." While stating that the Fifth Amendment to the Constitution has always prohibited a taking whose sole purpose is to transfer one person's private property to another person without conferring a public benefit, the Supreme Court found that New London's economic development plan unquestionably serves a public purpose under the public use requirement.
The Supreme Court did nothing to expand the use of eminent domain. ]n fact, Justice Stevens wrote, "We emphasize that nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power." Many states are doing just that.
Fueled by the notion that the Kelo decision allows local governments to interfere with the property rights of homeowners by taking one person's ]and and giving it to another, a number of state legislatures had introduced legislation by summer's end that would specifically limit the use of eminent domain to benefit private development. For example, Alabama adopted a law preventing state and local governments from using their power of eminent domain to take private property for retail, commercial, industrial, or residential purposes. In signing the legislation, Alabama Gov. Bob Riley said, "Alabamians can rest assured that their homes, farms, businesses, and other private property are safe from being seized by government for a shopping center, or a factory, an office building or new residential development."
In New Jersey, legislation has been introduced to prohibit the use of eminent domain for economic development purposes, including the construction of non-public office buildings, shopping centers, and new residential properties. Texas adopted legislation that prohibits the use of eminent domain to confer a private benefit on a private party for economic development purposes, although the legislation allows for certain exceptions. …