Supreme Court May Limit Land Seizure for Private Development

Date: 30 Sep 2004 | posted in: Retail | 0 Facebooktwitterredditmail

The U.S. Supreme Court has agreed to hear a case early next year that could set new limits on the ability of cities to condemn and take property for private redevelopment projects.

There have been many cases in recent years where local governments have seized homes and small businesses to make way for chain retail development. In downtown Port Chester, New York, for example, bulldozers are currently leveling a 27-acre site that once housed numerous small businesses. The property was taken by the town and transferred to a developer who plans to build a Stop & Shop superstore, several chain restaurants, and a movie theater.

Critics contend that eminent domain—the power of governments to seize private property for public use, provided that the owner receive market value—should only be used for truly public uses, such as the construction of schools, roads, and other necessary infrastructure.

Those were in fact the limits of eminent domain until 1954, when the Supreme Court opened the way for a broader interpretation of what constitutes a justifiable public purpose. In that case, the court upheld the razing of a Washington D.C. neighborhood as part of a slum clearance and redevelopment project. The court ruled that redeveloping blighted neighborhoods was a legitimate public purpose.

Over the years, cities have further stretched the boundaries of what constitutes a reasonable use of eminent domain. To make way for expensive homes, hotels, or shopping centers, cities have sometimes labeled neighborhoods “blighted”—even though their tidy, typically working class, homes and businesses would hardly meet any objective standard of decay.

Cities have also expanded the definition of public purpose to include projects that have nothing to do with clearing blight, but are simply about increasing the local tax base. Whether this is legitimate is a core issue in the case before the Supreme Court, which was brought by several home owners who had their property condemned by the city of New London, Connecticut, for a hotel, office, and retail complex. The city says the seizure was justified, because the community desperately needs new jobs and economic development.

Those who favor a broad interpretation of the power of eminent domain contend that local governments need to be able to force redevelopment that benefits the community as a whole. Washington D.C. Mayor Anthony Williams believes limiting municipal authority to seize land will expand private property rights at the expense of the common good. In an interview with The Bond Buyer, he described eminent domain as “the exercise of the public realm for good productive purposes against selfish, private, parochial interests.”

But those who believe that the reach of eminent domain should be curtailed argue that it is in fact powerful private interests who most benefit, while the rights of ordinary people are trampled. Gideon Kanner, professor emeritus at Loyola Law School, describes the current situation as “an unwholesome alliance” between cities and a new crop of “robber barons” who are using condemnation to acquire large tracts of land cheaply from unwilling sellers. It “encourages oligopolistic trends,” he says, by enriching global retail chains.

Several suits challenging the use of eminent domain for private redevelopment have been filed in recent years. So far, lower courts have split on the issue, but there is some indication that the legal terrain may be shifting in favor of tighter standards.

Earlier this year, the Michigan Supreme Court overturned its own precedent-setting 1981 decision that allowed the city of Detroit to condemn an entire neighborhood for a General Motors factory—a move that set-off a wave of condemnations nationwide as cities seized land for economic development.

In July, the court voted unanimously to reverse the decision, concluding, “Poletown’s ‘economic benefit’ rationale would validate practically any exercise of the power of eminent domain on behalf of a private entity. After all, if one’s ownership of private property is forever subject to the government’s determination that another private property would put one’s land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, ‘mega-store,’ or the like.”

The Supreme Court is scheduled to hear arguments in the New London case early next year.

Public Power, Private Gain — a report on eminent domain abuse published by the Institute for Justice, a libertarian public interest law firm.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.