by John Slagter.
On Thursday, June 23, 2005, the United States Supreme Court decided the case of Kelo v. City of New London. In a 5-4 decision, the majority of the Court (consisting of Justices Stevens, Kennedy, Souter, Ginsberg and Breyer) held that local governments may seize an individual’s home or business for private economic development. The Kelo case has been hailed as one of the most important eminent domain cases to reach the Supreme Court.
Increasingly, municipalities are using the power of eminent domain to acquire property for redevelopment projects with private developers. Although the taking of private property is authorized under the United States Constitution, governmental entities may only do so if it is for a “public use.” As cities become active participants in economic revitalization efforts, the nature of the debate between private rights and public needs is evolving, along with the definition of “public use.”
The central issue before the U.S. Supreme Court in Kelo was whether a city's condemnation of non-blighted, private property for the purpose of developing private residential and office space is a valid "public use." Justice Stevens, writing for the majority, noted that the Court has defined the concept of “public purpose” broadly, reflecting a “longstanding policy of deference to legislative judgments in this field.”
The majority specifically rejected the idea of employing a bright-line rule that economic development does not qualify as a public use. Rather, the Court noted that promoting economic development is a traditional and long accepted function of government. Moreover, the Court noted that there is no principled way of distinguishing economic development from the other public purposes that the Court has recognized in the past.
However, municipalities exercising the power of eminent domain for economic development purposes should still be cautious. First, the Court approved the City of New London’s actions on the basis that it was supported by a carefully considered, comprehensive development plan that was not adopted to benefit a particular class of identifiable individuals. Second, the Court noted that nothing in the decision was meant to preclude a State from placing more stringent controls on the exercise of eminent domain. Whether States will enact such controls remains to be seen.