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Awful Eight #3: Your Home is the Government’s Castle

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kelo-v-city-of-new-london-ctBackground

New London, Connecticut had once been a booming whaling town by virtue of its deepwater port, but by the turn of the 21st Century it had long seen better days. Whaling peaked in the 19th Century and declined steadily until the last whaling ship sailed in 1909. New London rebounded briefly as a textile center but the Great Depression crushed that renaissance. After World War II, I-95 construction split the city in two. In another post-war demographic trend many residents moved to the suburbs in nearby Waterford. Strip malls followed them and the tax base eroded. The downtown area devolved into a collage of tattoo shops and taverns and bail bondsmen.

Beginning in the 1970’s the town embarked on a number of initiatives to shore up its corroding balance sheet. These invariably involved the use of state or federal funds to seize land and redevelop it. Several blocks of Victorians were razed to make way for a federal housing project. (It soon became a crime-infested slum.) Another group of Victorians were demolished for an industrial park. (The project failed.) Still more Victorians were seized to make way for a seawall.

In the early 1990’s the town set its sights on Fort Trumbull, a 90-acre tract geographically separated from the rest of the town by a peninsula and psychologically separated via railroad tracks. Fort Trumbull was home to long-time residents like Wilhemina Dery, who had been born into her home in 1918. There were solid neighborhood businesses: a bakery, a market, a deli, a grinder shop and restaurant, a body shop, a church.

In its heyday Fort Trumbull was home to over 150 families but by the late 1990’s that number had dwindled to around 75. The lone economic bright spot, the Naval Undersea Warfare Center, closed in 1996. Though never wealthy, Fort Trumbull was not blighted. Like the rest of New London it was struggling.

Which brings us to 1997 and Susette Kelo’s little pink house.

That year Kelo bought a Victorian cottage in Fort Trumbull.  She loved the view of the water and the modest home was something she could afford on her paramedic’s salary.  A year later a real estate agent knocked on her door with an offer to purchase it on behalf of an unnamed buyer.

“It’s not for sale,” Kelo said. She had spent the past year fixing it up, even painting it salmon pink, her favorite color.

The agent said her home was going to be seized by eminent domain and advised her to give up because “the government always wins these things.”

The day before Thanksgiving 2000 a Sherriff tacked a notice on her front door. Her home had been condemned by the New London Development Corporation (NLDC).

You read that correctly- her home was seized via eminent domain by a quasi- private company. As it turns out, the town of New London was enamored with a real estate development proposal by Pfizer. The pharmaceutical giant was building a major research facility nearby and wanted a “world class redevelopment” that would appeal to the kind of professionals they hoped to attract.  Pfizer envisioned an upscale, mixed-use development including a posh hotel, a condo complex, health club and high end shops.  Kelo’s neighborhood- and her little pink house- stood in the way.

So New London granted its awesome powers of eminent domain to the New London Development Corporation, who summarily did Pfizer’s bidding.

Kelo could not have been surprised by the NLDC’s action. She was one of seven holdouts and the NLDC had already engaged in strong-arm tactics against her neighbors: they employed real estate agents to harass elderly Fort Trumbull owners on the telephone; they tried to extract “rent” on the theory that the NLDC already had title to their properties; and they immediately bulldozed the homes of everyone who sold, isolating the holdouts physically and psychologically.

When Kelo and a handful of neighbors refused to move and sought redress in the courts, the Institute for Justice, a DC-based firm, agreed to take up her case.  On appeal the Connecticut State Supreme Court ruled in favor of the town in a 4-3 decision. The case headed to the Supreme Court in 2005.

The Case- Kelo vs City of New London, 2005

At issue was the Fifth Amendment’s “takings” clause which states “private property (shall not) be taken for public use without just compensation.” Typically a “public use” includes schools, roads or bridges- i.e. public facilities that the public would use.  But town officials argued that “public use” included economic development, job creation and the resulting increased tax revenues.  In other words, since the project served the town’s purpose, it constituted a public use regardless of the fact that all the development was private.

Justice John Paul Stevens’ majority opinion relied heavily on two cases. Berman v Parker (1954) made the legal leap that private property could be seized for a public purpose. Berman owned a successful department store in a blighted section of Washington DC. The store was slated to be razed as part of a larger redevelopment plan. Though the store itself was not blighted, the government was justified in seizing it so a blighted area could be redeveloped into a “well-balanced” community.

Midkiff v Hawaii Housing Authority (1984) allowed the government to seize properties overwhelmingly concentrated in a few land oligarchs in Oahu and redistribute them to the broader public. The Court deemed this was a public purpose and, based on Berman, acceptable under the Takings Clause. Both appellants received “just compensation.”

Stevens then started his analysis: “The Court long ago rejected any literal argument that condemned property be put to use for the general public.”

Of course, this raises the obvious question: if the Framers intended the Takings Clause to be valid for a “public purpose”, why did they write “public use”?

In her dissent Justice Sandra Day O’Connor hit this point almost sarcastically: “When interpreting the Constitution, we begin with the unremarkable presumption that every word in the document has independent meaning… that no word was unnecessarily used, or needlessly added.”

In a separate dissent, Justice Clarence Thomas simply stated the obvious: “the principles this Court should employ to dispose of this case are found in the Public Use Clause itself….”

Ignoring this, Stevens embarked on a tortured rationalization: Economic development is a long-accepted purpose of government. Economic development efforts are varied in nature, from takings that facilitated agriculture and mining to redeveloping blighted areas to restoring normally functioning land markets. Once the public purpose has been agreed upon the details are left to legislatures; it is not for the courts to decide.

Stephens presented a classic case of judicial deference- the idea that the Court should defer to the legislature unless rights or constitutionality were violated.

He stipulated the Kelo properties in question were not blighted, and that taking for a private company’s benefit was not an acceptable application of the law. But these two points, he asserted, were not the issue. Rather, the disposition of the case turned on the question of whether the New London’s development plan served a “public purpose.”

Stevens argued it did for several reasons. New London had been recognized by Connecticut as a “depressed municipality”; the takings in question were part of a larger economic redevelopment plan like Berman; the plan’s objective was not to explicitly benefit Pfizer but rather the town due to the resulting jobs and tax revenues; the plan enumerated a number of other benefits, including aesthetic ones; and the plan had been created using a careful, deliberative process.

(To my uneducated legal mind, it seems Stevens’ concern was entirely for the town and not the individual liberties of the plaintiffs. But I digress.)

O’Connor countered the situation in Kelo was markedly different than Berman or Midkiff. In the latter two the taking itself directly achieved a public benefit.  In Berman Congress had concluded the present neighborhood was “injurious to the public health, safety, morals, and welfare.”   In Midkiff, land ownership was so concentrated it resulted in “inflating land prices and injuring the public tranquility and welfare.” Therefore, it did not matter that the properties were turned over to private use, or that a private company benefited. The takings themselves redressed harm to the public. Kelo did not.

In an application of judicial restraint (at the expense of Separation of Powers) Stephens essentially concluded the government can take whatever land they want so long as the legislature decides it is legal. In other words, Due Process has been served by the very fact that the government decided to take the property in the first place.

O’Connor obliterated this circular argument: “An external, judicial check on how the public use requirement is interpreted, however limited, is necessary if this constraint on government power is to retain any meaning.” Indeed Stevens viewed the Takings Clause as a grant of government power, not the prohibition it was meant to be.

Unfortunately a majority on the Court agreed with Stevens. In a 5-4 decision, with the conservative justices dissenting, Stevens concluded that economic development is a legitimate public use even if it does not eliminate public harm. A public purpose is now the same as a public use. Period.

Implications

In Kelo we see a steady erosion of the original intent of the Constitution. Before Berman eminent domain could only be exercised on projects the public could use (i.e. roads, bridges, schools, etc). After Berman eminent domain could be used for economic development, but only if the condemned area was blighted. Midkiff expanded the Takings Clause for government purposes besides economic development. And Kelo eliminated the “blighted” requirement, instead leaving the definition of “public purpose” up to the legislatures.

O’Connor said the decision eliminated any distinction between public and private, and therefore eliminates “public use” from the Takings Clause.  The government, she wrote, can now pass an act (she refused to call it a law) “that can take from A and give it to B…. all property can be taken so long as it may be upgraded.”

So if your town board decides your house isn’t generating enough tax revenue they can take your home (by paying you what they think it’s worth) and sell it to a private company who promises to remit more taxes.  If increasing tax revenues is government policy, your home may be forfeit. Your home is the government’s castle.

Aftermath

The decision was instantly reviled. In reaction 44 states have passed laws that, to varying degrees, protect property owners from eminent domain abuses. But I have to wonder- if another town abuses eminent domain and a property owner contests it, wouldn’t the Court rely on Kelo and rule against the property owner?  After Kelo, state laws on the topic are a Court defeat waiting to happen.

Exhibit A: just a year after Kelo New York City Mayor Bloomberg announced a mega-development in Brooklyn. The Atlantic Yards project proposed bulldozing 22 acres around Prospect Heights, an area where real estate values are exploding. The redevelopment includes 16 high-rise buildings and would be financed by a $2 billion taxpayer contribution. The project stalled following the real estate collapse of 2008, but during the past few years properties have been seized piecemeal and it continues to move forward. In September 2014 a Brooklyn Supreme Court judge approved the condemnation of seven more properties in a procedure one lawyer called “a cozy little condemnation.” In 2008 the Supreme Court refused to hear an appeal of the federal eminent domain case.

Since the Kelo decision every state Supreme Court that has been presented with a choice to adopt Kelo has instead repudiated it.  In 2011 Stevens said he made a significant “embarrassing to admit” error in his analysis of precedent. (He defends his decision on other grounds, however.) And as recently as February 2014 Justice Antonin Scalia, one of the dissenters, predicted Kelo “will not survive.” Let us hope it is short-lived.

As far as the players in this drama, Wilhelmina Dery died in March 2006 before her home was demolished, having lived her entire life in the house where she was born.

And Ms Kelo?

She was forced to move and settled across the river in Groton. As public sentiment turned against the town she was able to work out an agreement  to have her pink house disassembled and then re-assembled in a downtown historical district as a monument to her struggle. It looks the same, with the only difference being a plaque above the front door proclaiming it “The Kelo House”.  It is still her favorite shade of pink. All of her neighbor’s homes were demolished. Kelo received nearly half a million dollars in compensation.

In 2011 the author of a book on the Kelo case gave the keynote address at a dinner honoring the Connecticut Supreme Court. Susette Kelo was in the audience. After the dinner Connecticut Supreme Court Justice Richard Palmer, who voted with the majority in favor of the town, came up to Kelo and offered a heartfelt apology; had he known the implications and effects of his ruling, he said, he would have voted differently. Tears streaming down her cheeks, Kelo managed to whisper “thank you.” Later she said it was the first time in twelve years anyone had issued an apology.

Pfizer never built their planned mega-development. Today the neighborhood remains barren, with weeds growing waist-high.  Pfizer left New London completely when the tax credits on their research facility expired in 2009.

Up next: Government by Organized Money

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