Monday, July 04, 2005

The Potential Power of Kelo vs. New London

The issues involving eminent domain have consistently placed government and public planners versus private property holders over what kind of power the government has and should have in acquiring land for redevelopment, public infrastructure, and parks/open space. In the constitution, the 5th Amendment reads in part "[N]or shall private property be taken for public use, without just compensation.” Throughout most of America’s history this meant large public works projects such as utilities for the Tennessee Valley Authority or the US interstate highway system. In 1954, the Supreme Court ruled in Berman vs. Parker private projects meet the definition if they have a “public purpose” which in this decision meant urban renewal. This last month, the Supreme Court ruled in Kelo vs. New London that “public use” includes the acquisition of property for economic development. In the case, 5 households refused to sell their property to the city of New London, Connecticut The ruling extends government power to not only use eminent domain in acquiring property for roads, parks, and urban renewal but for any project that could bring in more revenue such as a hotel, apartment building, or industrial plant. How and how often local and state governments will act in obtaining property for redevelopment using this decision is a mystery for now but likely citizens and property lawyers will continue to battle municipalities for their home and land. A number of specific issues revolving around this ruling and eminent domain in general need to be addressed.

1. Full Compensation of Property Owners
If municipal governments are going to take property for public uses or especially for economic development, owners deserve more than appraised value of their property. The summation of the costs and stresses of moving, finding or building a new home and existential value warrant property owners high compensation for their property. In my opinion, 125 to 150% of the appraisal value should be the least the government can do to accommodate its displaced citizens.

2. Government’s Free-Reign on Transfer of Property
The ruling essentially allows government to be able to transfer property from one owner to another no matter who these 2 owners are. Judge O’Connor spoke in dissention, "the specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory." Should there be limits and constraints on what types of transfers between land uses and densities can occur? The open ended ruling the court gives does not prohibit specific government transfers so in essence the state could take your house and let someone else build a bigger house on your lot. Not a retail store, apartment building or industrial plant but simply a bigger house that would provide more tax revenue to the government. There needs to be limits to the transferring of property.

3. Will the Government Use the Ruling for Good?
Historically when developers have tried to redevelop certain urban areas, acquiring properties has been a very difficult task. Often homeowners will hold out for purely selfish interest and will not see benefit of denser residential structures, new office buildings, or other large real estate projects. Individuals thus can inhibit progress by holding land that is needed for the city to function and expand intelligently. In these cases, municipal governments will now be able to use the power of Kelo vs. New London in order to obtain land to densify and redevelop specific urban areas. With the ruling, there is also the possibility for corruption and greed within the government. For instance, certain powerful individuals may be able to manipulate and use the government to obtain land for their own personal benefit and agenda.

These and a number of other issues will be addressed in future court decisions. Time will tell whether this ruling will stand and how municipalities and states will use the ruling.


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