In a 5-4 vote, the U.S. Supreme Court on Thursday, June 23, 2005, upheld the rights of local governments to condemn private property for economic development.
The battle between the City of New London, Connecticut, and a handful of homeowners in the city has been ongoing for years. In 2000, the city approved a development plan that was projected to create more than 1,000 jobs, increase tax and other revenues, and revitalize the economically distressed city, including its downtown and waterfront areas. The city assembled much of the land necessary for the project by purchasing land from private parties. The remainder of the land was acquired through the city’s power of eminent domain. The "Takings Clause" of the Fifth Amendment to the U.S. Constitution prohibits the government from taking private property for "public use” without just compensation. The issue before the Court was whether the city’s proposed disposition of the property qualified as a “public use.”
The Court held that the City’s use of eminent domain was proper. Writing for the majority, Justice Stevens reasoned that "promoting economic development is a traditional and long accepted function of government.” The opinion gives deference to cities, noting that local officials are in a better position than federal judges to decide what is best for a community.
But the impact of the Court’s decision is not so easy to quantify. Not all states share the same laws governing the use of eminent domain. For example, while some states permit the use of eminent domain for private economic development, other states expressly prohibit such use.
A more detailed analysis is forthcoming; including a discussion of how, if at all, the Kelo decision will affect redevelopment in Wisconsin.