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Whatever It Takes

Feb 25, 2005, 01:14 pm CST

Susette Kelo has a cute little house with a great view. A registered nurse, Kelo bought a pink Victorian with her husband, Tim, in the Fort Trumbull area of New London, Conn., in 1997. Their porch overlooks the Thames River, and, on a clear day, they can see across the Long Island Sound to Montauk Point.

But for the past five years, Kelo and her neighbors have been fighting to keep their homes. New London was designated a distressed municipality after its last major employer, the U.S. Naval Undersea Warfare Center, closed in 1996. The city council, desperate for an economic revival, launched a redevelopment plan for Fort Trumbull that called for clearing the area and building a waterfront hotel, new office park, rows of urban-style townhouses and a retail complex.

All that stood in the way were the Kelos and their stubborn neighbors.

On Feb. 22, the U.S. Supreme Court takes up their case, Kelo v. City of New London, No. 04-108, to decide whether to rein in the power of cities to seize private property to make way for business development.

“Kelo could be a blockbuster,” says Gideon Kanner, professor emeritus at the Loyola Law School in Los Angeles and a longtime advocate for property rights. Until now, city planners have had a nearly unchecked power “to come in and take property by force, and then turn it over to developers,” he says.

Kelo says she decided to fight when she read that the city planned to build houses on the street where hers sits.

“What galls me is the developer is taking my land so someone else can live here,” she says. “If the taking of our property were for a bridge, road or firehouse, I would be prepared to sell without a fight. But the government should not be able to force me to sell my home for just any purpose. This is for private profit–not public use.”

Parsing ‘Public Use’

The case calls on the court to revisit a 51-year precedent on eminent domain, Berman v. Parker, 348 U.S. 26. In the landmark 1954 decision, the high court said city officials had broad authority to raze “blighted areas.”

The case arose in 1950 when District of Columbia officials moved to clear an area south of the Capitol that many considered slums. However, department store owner Sam Berman sued to block the condemnation, citing the Fifth Amendment clause that says private property shall not “be taken for public use without just compensation.”

But in a short, unanimous opinion, Justice William O. Douglas dismissed the store owner’s public use argument. He said city officials were free to condemn property through eminent domain so long as “that power is being exercised for a public purpose.” The ruling cleared the way for urban renewal projects in the 1960s and ’70s. In 1981, the Michigan courts affirmed the power of Detroit city officials to condemn and bulldoze the Poletown neighborhood to clear the area for a General Motors auto plant. Poletown Neighborhood Council v. Detroit, 304 N.W.2d 455.

Throughout the 1990s, big-box retailers such as Costco, Target and Home Depot came to many cities and small towns with the help of city officials and their power to clear land for development.

But a backlash has been brewing. In July, the Michigan Supreme Court overturned Poletown and blocked the seizure of small businesses surrounding a county airport. “Poletown was the case that law students always learned as standing for the proposition that ‘public use’ meant ‘any public benefit,’ ” says Mary Massaron Ross, the Detroit lawyer who won the ruling that overturned it. County of Wayne v. Hathcock, 684 N.W.2d 765.

In Kelo, the libertarian Institute for Justice represents the Fort Trumbull homeowners and urges the court to restore the term “public use” to its original meaning. Land for a road or a public building can be seized because it will be for the use of the public, it argues. “If jobs and taxes can be a justification for taking someone’s home or business, then no property in America is safe,” says Dana Berliner, a senior attorney for the Washington, D.C.-based institute. “Anyone’s home can create more jobs if it is replaced by a business, and any small business can generate greater taxes if replaced by a bigger one. Private economic development is not a public use.”

But lawyers for New London say their city faces a blighted future unless it attracts new business. They urge the justices to stick with precedents that defer to city planners and state legislators when they seek to replace blight with economic development.

Daniel Krisch, an attorney for New London, says it would “have a devastating effect on a lot of cities” if a few property owners could veto an urban redevelopment project. “We don’t question the sincerity of these property owners, but they are a small group of holdouts,” says Krisch of Hartford, Conn. Most homeowners in the neighborhood agreed to give up their homes and to accept compensation, he says. “Economic revitalization is in the public interest,” he adds.

Of Property and Profits

On the same day of the argument in the New London case, the court will hear a second property rights case that also has attracted wide attention. It tests whether a rent control law can be struck down as an unconstitutional taking of private property. And, as with Kelo, the key issue in Lingle v. Chevron, No. 04-163, is whether judges must defer to legislators in matters of economic regulation.

Hawaii has had some of the nation’s highest gasoline prices, and the islands are served by only two refiners. In hopes of maintaining a network of independent service stations, the Hawaii legislature put limits in 1997 on the rents that the two major oil companies may charge their service station dealers.

Chevron–one of the major refiners–sued, contending the rent control measure amounted to a taking of its private property. And, to the surprise of many, the oil company won in the 9th U.S. Circuit Court of Appeals at San Francisco. In a 2-1 decision, the appeals court said the law was unconstitutional because it failed to “substantially advance” the state’s goal of lowering retail gasoline prices.

That aggressive form of analysis spurred the National Conference of State Legislatures, the National League of Cities, and the attorneys general of 19 states to join Hawaii Gov. Linda Lingle in urging the Supreme Court to reverse. They point out that until now, a taking meant the government has either seized property or deprived its owner of all use of it. Rent control limits the owner’s profits, but it does not take his property, they say.

Hawaii is represented by Washington, D.C., attorney Seth Waxman, the Clinton administration’s solicitor general. The Bush administration’s acting solicitor general, Paul Clement, is joining him in arguing that the 9th Circuit’s approach harks back to the Lochner era of the early 1900s. Judges should not be in the business of “second-guessing the economic policy choices” of cities, states and the federal government, Waxman said in his brief to the court.

In late March, a third takings case will come before the high court, but only after a decade of false starts in the state and federal courts of California. San Remo Hotel v. San Francisco, No. 04-340, asks whether a property owner has a right to have his federal takings claim squarely decided in federal court.

Brothers Tom and Robert Field, owners of the 62-room hotel, are challenging a $567,000 fee the city imposed on them for renting too many rooms to tourists. Since 1979, the city’s supervisors have tried to preserve rental units for homeless and low-income people, and they restricted building owners from converting rooms to tourist use.

When the Fields sued in federal court, they were told to go to the state courts and first seek compensation. When they lost there and tried again in federal court, their case was thrown out because their claims had already been litigated in state court.

San Francisco lawyer Paul Utrecht, who represents the hotel owners, says he is hoping the Supreme Court will see the matter differently. “Under this rule, you can never have your federal constitutional claim decided in federal court,” he says.

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