The government (federal, state, or local) has always had the power to take private property through the process known as “eminent domain.” While governmental condemnation of privately owned real estate and the buildings, businesses, and homes built on it has never been a favorite of the average landowner, at least the concept behind it made sense.

Eminent domain (at least until yesterday) has always meant that the government may condemn privately owned real estate by showing that the property was going to be put to a “public use.” The affected owners would be given a fair market value for their property and then move out.

Public use of the condemned land had always been understood to mean things like highways, bridges, tunnels, dams, railway lines, train yards, public works projects, wider local roads, and the like.

It was never thought to include waterfront luxury condominium projects, shopping malls, corporate headquarters, sports stadiums, and exclusively private for-profit projects with no governmental connection except for a general promise to either boost economic growth, permit more profitable use of the land, or provide employment to private-sector workers.

Eminent domain could never have been envisioned to mean taking away a three-generation family-owned hardware store, a “mom and pop” furniture store, a 75-year old restaurant, and a row of private homes to build an IKEA mega store and parking lot or condemning an entire neighborhood in order to allow a pharmaceutical company to build a corporate headquarters; or could it?

Then came urban decay, local budget deficits, economically depressed neighborhoods, hardcore unemployment, and various and sundry socio-economic problems associated with everything from the closing down or relocation of dominant employers (like steel mills, automobile assembly plants, and textile mills) to the loss of a professional sports franchise.

The need for jobs, redevelopment of significant areas of vacant commercial and residential property, and the replenishment of local treasuries led politicians as well as enterprising real estate developers and Fortune 500 companies to consider a whole new approach to eminent domain.

Why not simply condemn private property that isn’t producing new jobs, extraordinary tax revenue, or an aesthetically pleasing view, force the occupants out for bargain-basement prices, bulldoze homes and businesses with lifetimes of memories, and then put the land into other private hands which just happen to be filled with the cash or promises of economic revitalization
the city or town desperately needs?

As long as you’re going that far, why not just take peoples’ homes and businesses even if the property they’re on isn’t blighted and the success of the new, but oh so attractive, project is not guaranteed?

This is precisely what is happening around the country in a number of states. As a result, the soon-to-be-displaced middle-class home and business owners mounted legal challenges to what they viewed as overreaching on the part of local government and pandering to the rich and powerful.

Although several cases are pending, one from New London, Connecticut was the first to be selected for review by the Supreme Court.  That case involves seven homeowners who refuse to sell their 15 combined lots to the New London to make way for a riverfront hotel, health club, and offices as part of a local revitalization project.

In a bitterly divided 5-4 decision, the Supreme Court majority decided that the rather innovative use of the eminent domain concept had really been there all along. The three other Justices accounted for in the majority opinion by Justice Stevens were Justices Souter, Ginsburg, and Breyer.

In that opinion, Justice Stevens wrote that: “There is no basis for exempting economic development from our traditionally broad understanding of public purpose.”  This is because; “Promoting economic development is a traditional and long accepted function of government.”

Although Justice Kennedy provided the deciding fifth vote by agreeing in the result reached by Stevens, Souter, Ginsburg, and Breyer, he filed a separate concurring opinion that warned the taking of private property primarily to favor private entities “with only incidental or pretextual public benefits” is not authorized under the Constitution.

The main dissenting opinion was written by Justice O’Connor who saw this as a dark day indeed for the property rights of the average American citizen. The other dissenting Justices were Scalia, Thomas, and Chief Justice Rehnquist.

Justice O’Connor stated that: “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.” She also wrote that: “The specter of condemnation hangs over all property.” As a result; “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.”

While local government officials in the municipalities involved feel vindicated by the decision, the affected residents and business owners are collectively outraged and distraught. Many legal analysts are likewise shocked by the reach of the majority ruling.

Currently, eight states prohibit the use of eminent domain for purely economic development purposes except to eliminate blight. The remainder is divided between states that permit this type of taking and those that have yet to weigh in on the issue. Yesterday’s surprising decision is sure to prompt many states to reconsider their position on the matter.    

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