CASE OF EMINENT DOMAIN RESONATES YEAR AFTER SUPREME DECISION

By Diane M. Grassi

On June 23, 2005 the United States Supreme Court handed down its controversial 5-4 decision on Kelo v. City of New London, CT., concerning the issue of eminent domain. The court’s ruling not only impacted the City of New London, CT and seven property owners contesting the 2004 decision of the Supreme Court of Connecticut, it sent a chill across local communities and states throughout the U.S. And although the takings of private land belonging to homeowners and small businesses under the guise of eminent domain have been argued repeatedly and primarily over the past half century, the U.S. Supreme Court’s 2005 decision came closest to heightening the blurring of legitimate use of such takings for public use.

Scott Bullock, a senior attorney at the Institute for Justice, a libertarian Washington D.C. based advocacy organization, tried the case before the U.S. Supreme Court in February 2005, representing seven families collectively owning 15 properties in the city of New London, CT, with a population of 25,000. In question was whether the 5th Amendment of the U.S. Constitution provides for the taking of privately owned homes strictly for economic development. The court, however, merely stated that it was leaving it up to the states, their legislatures and local municipalities to decide what constitutes eminent domain. But too, the states have the right to restrict eminent domain seizures.

Disconcerting was that the decision of the court went beyond prior precedent by virtually allowing the taking of well-maintained homes or small businesses by real estate developers and local governments seeking to create more tax-based revenue and the possibility of more jobs. The court therefore redefined the meaning of “public purpose” as well as “blight” which were previously used as barometers for targeting properties for urban revitalization.

Essentially, the ambiguity of the Supreme Court’s decision has created the impression of a lower threshold in order to establish a taking. It has therefore led to 22 states to pass laws since June 2005 in order to clarify land takings. Yet some states’ laws remain inexplicit concerning the term “blight” and it thus serves as a loophole. Very few laws are straightforward, such as in the state of Florida, which expressly states that “the preservation or enhancement of the tax base is not public use.”

The high court concluded that blight was not necessary for condemnation in order to create economic development for public purpose, thus leaving such up to local governments and politicians and corporations. And as such, the court’s decision has also led to an increase in takings activity since June 2005. Many proposed developments were put on hold until the high court’s decision and more than 30 nationwide have since been reactivated and given the green light.

The Kelo case, named after Susette Kelo, one of the seven homeowners who held out to fight to keep her home, started in 1998. Pfizer, Inc., the world’s largest research-pharmaceutical company bought some land in New London and built a corporate park in the Fort Trumbull neighborhood. Due to a decline in industrial jobs which supported the U.S. Navy which has since pared down its operations there, 50% of the tax base as well as its population have eroded over the years. So New London and Pfizer worked out a deal for Pfizer to expand its facilities.

In the name of economic development, New London chose to raze the land of 15 homes and small businesses in the Fort Trumbull neighborhood in order to build a 200-room waterfront hotel, convention center, 80 condominiums and some retail space to be utilized primarily by Pfizer, its researchers and employees. A Coast Guard Museum was also promised by New London. The prospect of 2,000 jobs, however, for a facility which relies on recruiting employees from all over the world has since dwindled and the museum will not generate any tax revenue.

And since the decision by the U.S. Supreme Court, the New London City Council moved in September 2005 to evict the remaining seven property owners giving them 90 days to do so. Along with the eviction notices they were billed for $600.00 a month for rent plus taxes retroactive to 2000.The reasoning was that since the city won its case, the homeowners were living on city property as the condemnation procedures began in 2000. Connecticut Governor, Jodi Rell interceded, asking the City Council for a moratorium on eviction proceedings granted by the New London Development Corp. appointed by the City Council to evict the property owners. The Governor had hoped during that time to allow the state legislature a chance to review the court case.

On June 5, 2006, however, the New London City Council got tired of waiting on the state and voted 5-2 to take over the remaining two properties belonging to Susette Kelo and Michael Cristafaro, along with their families. They had gotten five of the seven holdouts to settle. The city was on record as only offering the fair market value of their homes for the year 2000. However, real estate in 2006, especially waterfront property, has greatly appreciated since 2000. The city supposedly forgave the back-rent and taxes for the five other holdouts but did not appreciate the fair market value or their properties to that of 2006.

Since Ms. Kelo’s property was never near the proposed development and since there was only one other house being contested, Governor Rell suggested that the Cristafaro home be moved to the same parcel of land proximate to Kelo’s home. Then the deeds could be returned to them and the city would have right of first refusal should they decide to sell in the future. But the City Council not only refused the Governor’s suggestion but reportedly resented her interference.

Attorney Scott Bullock said, “The residents still had a few possible responses to the city’s vote and hope to appeal to the state to reconsider whether state money should be spent on the development at all. Kelo and Cristaforo will also challenge any back taxes, rent or fees. The evictions presently are set for the end of August 2006 at which time both parties will also consider civil disobedience to protect their homes.

In writing the dissenting opinion of the U.S. Supreme Court decision, Justice Sandra Day O’Connor stipulated that “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. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.”

If Susette Kelo should not prevail, she will owe over $60,000.00 to the City of New London for back-rent alone. The registered nurse will have to leave New London homeless, without any equity in her home nor the funds she put out for its remodeling. Certainly, this could not have been what the court had in mind. Certainly, eminent domain abuse must be revisited as the result of this case’s outcome. According to Susette Kelo, “This really isn’t about me anymore. It’s about every American across the country.”

Copyright 2006 Diane M. Grassi
contact: dgrassi@cox.net