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Where's the Revolution?


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Susette Kelo still misses the home she was forced to leave in 2007. It was a small, pink clapboard house (above) located in a working-class neighborhood of New London, Conn., at the edge of the Thames River just before it spills into Long Island Sound. The house wasn’t luxurious, but Kelo was happy after moving there in 1997. “It was a real neighborhood back then,” she says. “We watched out for each other.”

New London city officials, however, had other plans for the Fort Trumbull neighborhood where Kelo lived. After the federal government closed the Naval Undersea Warfare Center in 1996, taking some 1,500 jobs with it, the city was on a downward slide with rising unemployment and falling population. Those concerns gave rise to a plan to redevelop the Fort Trumbull area just south of the city center by replacing the single-family homes and small businesses there with high-end riverfront condominiums, restaurants, offices and a resort hotel.

In January 2000, the New London City Council authorized the private, nonprofit New London Development Corp. to purchase 90 acres in the Fort Trumbull peninsula. The council also empowered the corporation to acquire land by eminent domain if any property owners refused to sell.

Most owners did sell their properties to the corporation, but Kelo and a handful of others held out—one of them had been born in her house in 1918 and lived there ever since. They battled in state and fed­eral courts for five years, challenging the town’s right to condemn their properties.

The property owners took their fight all the way to the U.S. Supreme Court. In the end, a sharply divided court ruled against them. By a 5-4 vote in Kelo v. City of New London, the jus­tices ruled in 2005 that the city’s actions did not violate the takings clause of the Fifth Amendment. The majority opinion emphasized that the court has consistently interpreted the “public use” requirement in the takings clause to broadly encompass “public purposes” such as redevelopment plans, even if they call for transferring ownership from one private party to another.

“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,” wrote Justice John Paul Stevens in his majority opinion. Because that plan “unquestionably serves a public purpose, the takings challenged here satisfy the public-use requirement of the Fifth Amendment,” Stevens concluded.

The ruling set off a firestorm of indignation across the country. The notion that government may take one person’s property and give it to someone else in the name of economic redevelopment struck many as drastically out of line with American principles of private ownership. Organizations and politicians across the ideological spectrum excoriated the Supreme Court’s decision. In one national survey, 81 percent of the respondents disagreed with the decision.

Kelo opened up the nation’s eyes to abuses that were going on all over the country: taking private property for purely economic purposes and transferring it to other private entities so they could essentially make a profit off somebody else’s land,” says Darius W. Dynkowski, a partner at Ackerman Ackerman & Dynkowski, a firm in Bloomfield Hills, Mich., that represents private property owners in eminent domain cases. He also chairs the Condemnation Committee in the ABA Section of Real Property, Trust and Estate Law.

A legal upheaval followed the political upheaval. Or did it?

ACTION APLENTY

Without question, both legislatures and courts have been busy addressing the issue. In the nearly four years since the Supreme Court’s ruling in Kelo, 43 states have enacted statutes or constitutional amendments restricting the use of eminent domain. Meanwhile, at least five state supreme courts have issued rulings that significantly impede government power to take private property. At the federal level, both Congress and the executive branch acted to limit Kelo-type takings.

But there are dramatically conflicting views about whether these actions are going to change much about how governments at the local, state and federal levels use their eminent domain powers to advance redevelopment plans.

Some experts say the reaction to Kelo has largely stopped the eminent domain bulldozer in its tracks.

“It’s an enormous change,” says Dana Berliner, a senior attorney in the Washington, D.C., office of the Institute for Justice, a libertarian public-interest law firm that represented Kelo and her neighbors in their Supreme Court case. “I’ve heard academics say that the changes aren’t that big, but from our position on the ground that’s not true. Before any of this began, we were getting complaints about eminent domain abuse from around the entire country. Now the complaints are coming from pockets of states that don’t have good legislation or supreme court rulings. It’s been a major reduction.”

Berliner credits this shift to post-Kelo laws and rulings. “Most states, either through legislation or judicial decision, have largely moved away from using eminent domain for private economic development,” she says.

But other experts aren’t sure just how much the sound and fury following Kelo really signifies.

“Most states have enacted some kind of legislation, but most of it doesn’t do very much,” says Steven J. Eagle, a professor at George Mason University School of Law in Arlington, Va., who chairs the Condemnation Law Committee in the ABA Section of State and Local Government Law. “With very few exceptions, most of the statutes aren’t in states where this [economic taking] was done anyway.”

Susan K. Spurgeon, vice-chair of the ABA real estate section’s Condemnation Committee, says, “Kelo did not significantly change the law.” The decision “relied on years of federal precedents going back to Berman v. Parker,” a takings case that the Supreme Court decided in 1954, says Spurgeon, a shareholder at Pennington, Moore, Wilkinson, Bell & Dunbar in Tampa, Fla.

In Berman, the justices ruled 9-0 that Washington, D.C., officials acted within their powers when they condemned a department store in a blighted area that was slated for redevelopment—even though the store’s owner maintained that it was a viable, going concern.

In his opinion, Justice William O. Douglas articulated an expansive view of eminent domain powers.

“The concept of the public welfare is broad and exclusive,” Douglas wrote. “The values it represents are spiritual as well as physical, aesthetic as well as monetary.” And, he concluded, the goal of the redevelopment plan—to create a “better balanced, more attractive community”—met the test for a valid public use.

Moreover, wrote Douglas, “we cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects.”

The majority opinion in Kelo was consistent with the Supreme Court’s expansive interpretations of public pur­pose in Berman and more recent cases. “Without exception, our cases have defined that concept broadly, reflecting our long-standing policy of deference to legislative judgments in this field,” wrote Justice Stevens for the court.

A SETTLING FOUNDATION

Nevertheless, some experts maintain that Kelo actually signaled a subtle shift in the Supreme Court’s thinking about eminent domain powers. The first sign they point to is the slim 5-4 vote in Kelo compared to the 9-0 landslide in Berman. And they have interpreted even Stevens’ majority opinion as somewhat tepid in its affirmation of New London’s use of eminent domain powers.

“Justice Stevens, writing for the court’s liberal wing, spoke only of stare decisis and federalism,” Eagle says. “Even then, he tempered the opinion with the observation that states could adopt stricter standards.”

Specifically, Stevens wrote that “nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power.” Further, he noted, “as the submissions of the parties and their amici make clear, the necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate.”

Meanwhile, Justice Sandra Day O’Connor’s dissenting opinion—joined by Chief Justice William H. Rehnquist, and Justices Antonin Scalia and Clarence Thomas—argued that the majority had taken the power of government to condemn private property for public use too far.

“Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process,” O’Connor wrote. The effect of that reasoning “is to wash out any distinction between private and public use of property—and thereby effectively to delete the words ‘for public use’ from the takings clause of the Fifth Amendment.”

It became quickly evident that the public, elected officials and even some other courts did not want Kelo to be the final word on how government should wield its eminent domain powers. Legislators came under tremendous political pressure to rein in those powers.

The legislature in Arkansas did not change its law on eminent domain after Kelo. Neither did lawmakers in Hawaii, Massachusetts, Mississippi, New Jersey, New York or Oklahoma. But the remaining 43 states did.

KERFUFFLE OVER FED FUNDS

So did the federal government. in november 2005, Congress enacted the Bond Amendment as part of a larger bill. The amendment forbids recipients of federal transportation or housing grants to use that money to “support” the use of eminent domain powers to advance “economic development that primarily benefits private entities.”

But the measure is largely cosmetic, says Ilya Somin, a law professor at George Mason University, because it does not apply to mass transit or highway projects, or projects aimed at eliminating blight. As a result, hardly any projects receiving transportation or housing grants are actually subject to the prohibitions. And even in those cases, proving that a development project primar­ily benefits private entities is difficult.

On June 23, 2006, President George W. Bush marked the first anniversary of the Kelo decision by signing, with much fanfare, an executive order that barred the federal government from engaging in Kelo-type takings. The order had some public relations effect for the administration, but there was little actual substantive impact, if only because federal agencies rarely invoke eminent domain powers in conjunction with economic development projects. Those actions ordinarily take place at the state and local government levels. And like the legislation passed by Congress, the exemptions contained in the order leave the federal government free to engage in any condemnations it might want to pursue, Somin says.

Most of the restrictions on eminent domain powers that state legislatures passed during the post-Kelo furor also lack teeth, concludes Somin in an article scheduled for the June issue of the Minnesota Law Review.

The primary reason why so many of these laws are ineffective—Somin puts 23 of them in that category—is that they still allow state and local governments to use eminent domain to condemn private property to facilitate development in blighted areas.

“In many states, the definition of blight is so open-ended that almost any parcel can be considered blighted,” says Eagle, Somin’s colleague at George Mason.

In his analysis, Somin determined that 20 states have adopted laws imposing some form of effective restrictions on Kelo-type takings. These laws generally narrow the definition of blight, thus preventing officials from easily evading the ban on takings for economic development.

But even some of these measures fail to go as far as might have been expected given the political backlash against Kelo, suggests Somin. Legislation adopted in Minnesota and Pennsylvania, for instance, exempts local governments in the largest metropolitan areas—where most eminent domain actions occur—from applying strict new restrictions for the next several years. And some of the tough restrictions on economic development takings were adopted in states like Alabama, Georgia and South Dakota, where that kind of government action is rare.

The most sweeping post-Kelo limits on eminent domain powers were adopted in New Mexico and Florida, a state with an extensive history of government takings to further economic development.

Those laws get their bite, according to Somin, from the fact that they abolish both Kelo-type takings and condemnations to reduce blight. In doing so, Florida and New Mexico joined Utah, which already had those limits in place, as the only states so restrictive.

Others come close. Nevada and both Dakotas have prohibited condemnations that would transfer ownership of property from one private party to another. Kansas borrowed from both approaches, adopting a near-ban on private-to-private takings while signifi­cantly narrowing its definition of blight.

Dana Berliner
Photo by Ron Aira

THE BLIGHT STUFF

Supreme courts in at least five states have joined the backlash against Kelo. In 2006, the high courts in Ohio (City of Norwood v. Horney) and Oklahoma (Muskogee County v. Lowery) explicitly rejected Kelo’s reasoning and held that economic development is not a public use under their state constitutions.

New Jersey’s Supreme Court was a bit more circumspect in Gallenthin Realty Development Inc. v. Borough of Paulsboro, a 2007 decision. Even before Kelo, New Jer­sey law did not authorize condemnation for economic development, but did allow it to remediate blight. In Gallenthin Realty, the high court narrowed the definition of blight, holding that it must involve an actual threat to public health or safety.

The Missouri Supreme Court reached a similar result when it decided Centene Plaza Redevelopment Corp. v. Mint Properties in 2007. After Kelo, the Missouri legislature banned economic development takings while continuing to allow them to remediate blight. Under the law, portions of a city are blighted if they are “economic and social liabilities.” The court held that this standard was not met if an area was only an economic liability. Then the court defined social liability narrowly, as a current threat to the public health, safety and welfare. (The decision did not address another Missouri statute that allows local governments to condemn properties in areas designated as blighted on the basis of economic or social liability.)

A 2007 ruling by Maryland’s highest court did not restrict a state law that permits condemnations for economic development or blight remediation, but it did limit the use of “quick-take” condemnations—where property is turned over immediately with compensation determined later. In Mayor and City Council of Baltimore v. Valsamaki, the Maryland Court of Appeals ruled that a government entity must prove why it needs to take immediate possession of a property before it can impose a quick-take condemnation.

Even with the flurry of actions by legislatures and courts, eminent domain powers may be restricted more by public opinion than by law.

In that sense, Kelo seemed to wake a sleeping giant. While the Supreme Court was following long-standing precedent rather than carving out new government powers when it decided the case, Kelo caught the public’s attention—and triggered its anger—in a way that previous decisions on eminent domain did not. Even though the decision upheld government condemnation powers, the close vote of the justices seemed to reflect rising public fears that the cherished right of private property ownership was subject to growing incursions by government with little to show in return.

Berman licensed massive ‘urban renewal’ and blight condemnations that ended up displacing hundreds of thousands of people,” says Somin. “At the time, most jurists and others thought that this was acceptable. Since then, serious doubts have arisen about whether we forcibly displaced huge numbers of people for little or no gain.”

The public’s hostility to Kelo led many government officials to reconsider how they use their powers.

“Municipalities are doing this less than they used to because opposition to eminent domain has become much more frequent and well-organized,” says Berliner of the Institute for Justice. “A lot of the proposals get hit with overwhelming public opposition, so cities find a way to do without eminent domain, which is what they should have been doing all along.”

COOLING-OFF PERIOD

Public outrage doesn’t last forever, however, and as it fades, government bodies may once again start to flex their condemnation muscles. “Some local officials were intimidated by the public backlash to Kelo, but that won’t last,” says Timothy Sandefur, an attorney at the national litigation center of the Pacific Legal Foundation in Sacramento, Calif., which represents property owners in eminent domain cases.

Efforts to accomplish that are continuing. “It’s not a legislative issue for every single state, like it was after Kelo,” Berliner says, “but most state legislatures are continuing to look at this.”

There also is likely to be more litigation on the issue, especially as state courts are asked to interpret laws adopted in response to Kelo. Moreover, suggests Somin, “maybe the Supreme Court will eventually revisit Kelo, since it was a closely contested, 5-4 case.”

It is possible, however, that the movement against eminent domain has peaked.

In Utah—a state that had adopted strict limits on condemnations of private property before Kelo—the legislature had second thoughts and in 2007 passed a law that once again allows municipalities to condemn properties under plans to restore blighted neighborhoods.

In November, California voters approved Proposition 99, which prohibits government entities in the state from taking a single-family residence and then transferring it to another private owner. But voters rejected a sweeping ban on all economic development takings that was put forward by the Howard Jarvis Taxpayer Association.

The main proponent of Proposition 99 was the League of California Cities. “We felt that if we didn’t address this issue, someone else would put forward a proposition that would go far beyond limiting Kelo-like takings,” says Patrick Whitnell, the league’s general counsel.

Susette Kelo now lives in a house in Groton, Conn., directly across the river from where her beloved pink cottage used to be. That house is long gone, moved by her supporters to a spot near downtown New London. As for the city’s ambitious development, it hasn’t materialized. The private developer couldn’t put together financing, so the project is in limbo and the land is vacant.

For Kelo, it’s not a pretty sight. “I’m never going to forget about it,” she says. “It stares me in the face every day.”


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