Eminent Domain

In Kelo v. City of New London, the Supreme Court ruled that it is constitutional for the city government to seize 15 working-class homes from their owners and turn the land over to private companies for the construction of upscale housing, shops, restaurants, and an office for the pharmaceutical giant Pfizer.1 In effect, the court ruled that anyone’s home could be condemned if a local government decides to transfer the property to another owner in order to promote economic development. Justice Sandra Day O’Connor, who was among the dissenters in the 5-4 decision, called the ruling “pretty scary.”2

The end of the Fifth Amendment is called the “takings clause.” It says “…nor may private property be taken for public use without just compensation.” In dispute is the meaning of the words “public use.” The phrase clearly includes takings for government-owned facilities like roads, schools and military bases—but what about privately-owned facilities?

No one doubts that the government should step in when a property becomes a public nuisance and the owner fails to make necessary repairs. When a municipality condemns such a property, it is usually razed and sold to another private owner. American courts also settled nearly 200 years ago that governments can use eminent domain to transfer land to railroads, public utilities, and other privately-owned businesses if their services are clearly needed by the general public.3

Some local governments have taken private homes, not because they are blighted or the land is needed for public facilities, but because they stand in the way of an upscale housing development or big box store. In the worst cases, the developers decide which houses to take, and local governments go along in the name of economic development. Seizure of land for private development is often just one part of a subsidy package that may also include property tax abatements, sales tax exemptions, income tax credits and low-interest loans.4

In 1980, General Motors proposed that it would build a new plant in Detroit employing 6,000 workers if the city provided 500 contiguous acres accessible by highway and rail. City leaders selected the Poletown neighborhood, a working class area that was half Polish American and half African American. The city condemned 1,500 homes, two schools, a hospital and 16 churches. Ultimately, the area was cleared and the land—worth about $300 million—was sold to GM for $8 million. Detroit also granted GM a 12-year, 50 percent tax abatement for the new plant. In exchange for uprooting 3,400 people from their homes, the city got a plant that employed only 3,000 at its peak. The 1981 Michigan Supreme Court ruling that approved the Poletown taking was very similar to Kelo v. City of New London. In 2004, however, the Michigan court reversed Poletown Neighborhood Council v. City of Detroit, finding that the state constitution’s “public use” clause required a demonstration of clear public necessity or blight.5

The NAACP, AARP, the Southern Christian Leadership Conference, and other groups filed an amici curiae brief in the U.S. Supreme Court seeking to rein in inappropriate uses of eminent domain. Their brief describes how “well-cared-for properties owned by minority and elderly residents have repeatedly been taken so that private enterprises could construct superstores, casinos, hotels and office parks.”6 These groups are singled out for condemnations in part because they are less likely or less able to defend themselves in court.

A Quinnipiac University poll found that 88 percent of Connecticut voters oppose the use of eminent domain to take private property for economic development projects.7 Ninety-three percent of New Hampshire residents oppose the seizure of private land for economic development, according to a University of New Hampshire poll.8

By 2004, at least 12 states (AR, FL, ID, IL, KY, ME, MA, MT, NH, SC, WA, WV) had some restrictions on the power of eminent domain. Five states (AL, DE, NV, TX, UT) enacted permanent limits on eminent domain in 2005, and at least eight other states (GA, ID, IN, KY, SD, UT, WV, WI) enacted eminent domain restrictions in 2006.

In 2005, legislatures in California and Ohio approved moratoriums on eminent domain to study the extent of the problem and design the best remedy for abuse. A moratorium is a cautious approach which recognizes that there is no one-size-fits-all solution.