Kelo v. New London – Much Ado About Nothing – For Now

The Court first summarized the facts and procedural history of the Kelo case. The Court noted that New London, Connecticut had experienced decades of economic decline. The State had declared New London a "distressed municipality." The City's population was at its lowest point since 1920. Moreover, in 1996 the Federal Government had closed the Naval Undersea Warfare Center in New London, which had employed over 1,500 people. Indeed, New London's unemployment rate was double that of the rest of the State. Both State and local officials had targeted New London for redevelopment, and to that end had formed the New London Redevelopment Corp.

In 1998, Pfizer Corporation announced that it would locate its global research facility in the Fort Trumbull section of New London. The NLDC sought to take advantage of Pfizer's move to the Fort Trumbull area to revitalize not just the Fort Trumbull Section itself, but to "jump start" economic development throughout the entire City. To this end, after extensive reviews and hearings by several levels of government, the NLDC adopted a comprehensive seven parcel and phase redevelopment plan for the Fort Trumbull Section. The NLDC planned to acquire a fee interest in all the properties in the area and then to lease the properties, under 99 year leases, for a $1.00 a year, to private developers for redevelopment. The Fort Trumbull Redevelopment Area consisted of 115 privately owned properties.

Most of the property owners in the area voluntarily sold their properties to the NLDC. However, several property owners, who became the plaintiffs in the Kelo case, refused to sell at any price. Connecticut, like many States, had comprehensive redevelopment statutes, which, among other things, permitted the local government to take properties by eminent domain in furtherance of a comprehensive redevelopment plan. Utilizing these statutes, the NLDC condemned the plaintiffs' properties. The plaintiffs challenged the constitutionality of this condemnation through the Connecticut Court system and finally to the United States Supreme Court.

The United States Supreme Court noted that it was clear that a governmental agency cannot take one private party's property for the sole purpose of transferring that property to another private party, even if the government pays the first private party just compensation. The Court then noted that it was equally clear, however, that the State can take property from one private party and transfer it to another private party if future "public use" is the purpose of the taking. The Court went on to explain that "public use" under no longer means the actual use of the taken property by the public at large. Rather "public use" now means "public purpose."

The Court noted that its decision in the Kelo case thus turned on the question of whether the NLDC's Redevelopment Plan served a public purpose. The Court then stated that it had always defined the concept of public purpose broadly and had given great deference to the judgment of the legislature as to what a public purpose is. The Court noted that the City of New London had carefully formulated a comprehensive plan that it believed would bring appreciable benefits to the City, including, but by no means limited to, new jobs and increased tax revenues. The Court also noted that the City had used a Connecticut statute that expressly permits eminent domain to promote economic development. Accordingly, the Court held that, under its deferential and limited standard of review of a governmental agency's determination of what a public purpose was, the takings in the Kelo case were constitutional.

The Court expressly rejected the use of a bright line rule that would have held that economic development does not qualify as a public use. The Court also flatly rejected an increased burden of proof for takings in furtherance of economic development.

The Court did state that the individual states, through either judicial interpretation of their respective state constitutions or through legislative enactments, were free to adopt a more restrictive standard for economic development takings or to prohibit takings in furtherance of economic development all together.

In conclusion, the Court's decision in Kelo has not changed anything. As before, if you do redevelopment in States like New Jersey and Connecticut, the eminent domain power is freely available, barring obvious abuse or the failure to follow procedural safeguards, and it is much less available in States like Michigan, where its Supreme Court has interpreted its State Constitution in the restrictive manner that United States Supreme Court alluded to in Kelo. One final point of concern, given the narrow 5 to 4 vote in this case, the coming changes in the make up of the Court could result in a different decision in the future.

Kevin J. Moore is a partner in the Land Use and Redevelopment Department of Sills Cummis Epstein & Gross PC