An Appropriate Ending for the Kelo Case

You may remember the infamous Kelo decision in which the Supreme Court ruled that municipalities could take your home and hand it over to a developer if by doing so the city could make more tax money. That decision created tremendous outrage and spurred laws against such behavior all over the country.

The land in the Kelo case was supposed to go to Pfizer to create a research and development site. The houses have long since been torn down and now empty lots sit in their place.

And what about the R&D plant that was going to be built there?

The private homes New London, Conn., took through eminent domain from Suzette Kelo and others, are torn down now, but Pfizer has just announced that it closing up shop at the research facility that led to the condemnation.

Leading drugmakers Pfizer and Wyeth have merged, and as a result, are trimming some jobs. That includes axing the 1,400 jobs at their sparkling new research & development facility in New London.

To lure those jobs to New London a decade ago, the local government promised to demolish the older residential neighborhood adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost, as five justices said this redvelopment met the constitutional hurdle of "public use."

Ms. Kelo and many others lost their home, but the land is still undeveloped. Now Pfizer is abandoning the city altogether.

I'm sorry for the people who lost their homes, and if there was any justice at all, the city would be required to rebuild them and return the land to the original homeowners.

Kelo Decision an Epic Fail

In 2005 many of us were outraged when the Supreme Court ruled that cities could take property belonging to homeowners and turn it over to developers in order to increase their tax revenue. It was known as the Kelo decision. Property along a waterfront area in New London, CT was seized, including private homes, and given to developers who were supposed to revitalize the area and bring new tax money to the greedy city.

So, how is that working out so far?

Weeds, glass, bricks, pieces of pipe and shingle splinters have replaced the knot of aging homes at the site of the nation's most notorious eminent domain project.

There are a few signs of life: Feral cats glare at visitors from a miniature jungle of Queen Anne's lace, thistle and goldenrod. Gulls swoop between the lot's towering trees and the adjacent sewage treatment plant.

But what of the promised building boom that was supposed to come wrapped and ribboned with up to 3,169 new jobs and $1.2 million a year in tax revenues? They are noticeably missing.

Proponents of the ambitious plan blame the sour economy. Opponents call it a "poetic justice."

"They are getting what they deserve. They are going to get nothing," said Susette Kelo, the lead plaintiff in the landmark property rights case. "I don't think this is what the United States Supreme Court justices had in mind when they made this decision."

Kelo's iconic pink home sat for more than a century on that currently empty lot, just steps away from Connecticut's quaint but economically distressed Long Island Sound waterfront. Shortly after she moved in, in 1997, her house became ground zero in the nation's best-known land rights catfight.

New London officials decided they needed Kelo's land and the surrounding 90 acres for a multimillion-dollar private development that included residential, hotel conference, research and development space and a new state park that would compliment a new $350 million Pfizer pharmaceutical research facility.

Kelo and six other homeowners fought for years, all the way to the U.S. Supreme Court. In 2005, justices voted 5-4 against them, giving cities across the country the right to use eminent domain to take property for private development.

The decision was sharply criticized and created grassroots backlash. Forty states quickly passed new, protective rules and regulations, according to the National Conference of State Legislatures. Some protesters even tried to turn the tables on now-retired Justice David Souter, trying unsuccessfully in 2006 to take his New Hampshire home by eminent domain to build an inn.

In New London the city's prized economic development plan has fallen apart as the economy crumbled.

In some ways Kelo was a success because it spurred movements all over the country to ban the type of behavior the city leaders in New London exhibited. Thanks to Kelo there are probably millions of homeowners who are now safe from this type of government taking.

Sotomayor Worse for Business Than Souter

Iain Murray has some thoughts on the potential impact of Justice Sotomayor on American business:

Sotomayor is just as liberal as Souter on social issues like affirmative action and abortion, but far more liberal even than Souter on economic issues, such as punitive damages, preemption, and employment law. The Supreme Court, including Justice Souter, unanimously reversed her decision in the Dabit case, where she allowed lawsuits that were preempted by a federal law (SLUSA).

Business will likely lose billions of dollars over time as a result of her replacing Souter. That probably won’t bother Obama, given that “Obama has regretted that the Supreme Court ‘didn’t break free’ from legal constraints to bring about ‘redistribution of wealth.’”

Judge Sotomayor has managed to take already liberal, redistributionist areas of the law and push them even further down the road in the direction of redistributing wealth to constituencies favored by government offficials. The Supreme Court ruled in the Kelo case that governments can take private property and give it to developers as part of a general redevelopment plan that they rationally believe will benefit the public good (My colleague Hans Bader argued at the time that that violated basic axioms of constitutional construction, and rendered the Constitution’s “public use” clause redundant).

But Judge Sotomayor went well beyond that, to hold that property owners have no legal redress even in the face of what legal commentators have called extortion, in Didden v. City of Port Chester. In that case, a developer told a property owner to either give him $800,000 or half his property, or he would seize it by having the Village of Port Chester condemn it. When the property owner refused, the developer promptly had the town condemn it and transfer it to him. Judge Sotomayor and two of her colleagues upheld this seizure against a constitutional challenge in an unpublished opinion. George Mason University law professor Ilya Somin called this case an example of judicially sanctioned extortion.

Judge Sotomayor has also sided with environmental extremists against businesses, trying to stop the EPA from considering cost-benefit analysis in permitting decisions, another decision that the Supreme Court overturned. See Steve Milloy's Green Hell blog for the full story.

In short, Judge Sotomayor will be much more liberal than Justice Souter when it comes to cases involving business.

I still don't think she can be stopped, but all of this needs to be publicized to the greatest extent possible. It not only reveals who Sotomayor is, but reveals who Obama is as well.

Kelo Update

You probably remember the famed Kelo case in which the Supreme Court ruled that local municipalities could take your home and given it to a local developer just because his plan would generate more tax revenue. The Kelo case drew widespread attention and outrage, and many states now have passed laws preventing this kind of abuse.

So, whatever happened to the home that was the subject of the case?

As you know, Susette’s little pink house and the homes of her neighbors were seized through eminent domain in a landgrab sanctioned by the U.S. Supreme Court. New London promised to put a glitzy new private development project on the land, but now, nearly four years after the ruling and $78 million in taxpayer money spent, literally nothing has been built on the land; it remains vacant, the neighborhood bulldozed.

That whole case was criminal. If there was any justice the developer and the city would be required to rebuild that neighborhood and give it to the former residents.

Cities May Destroy Your Home to Build a Mall

The Supreme Court really blew it today in a decision that's going to have long-lasting negative effects on our citizens. The Court ruled that cities may take private property, such as your home, and turn around and give that property to a developer to build something that will generate more tax revenue.

A divided Supreme Court ruled Thursday that local governments may seize people's homes and businesses against their will for private development in a decision anxiously awaited in communities where economic growth often is at war with individual property rights.

The 5-4 ruling represented a defeat for some Connecticut residents whose homes are slated for destruction to make room for an office complex. They argued that cities have no right to take their land except for projects with a clear public use, such as roads or schools, or to revitalize blighted areas.

As a result, cities now have wide power to bulldoze residences for projects such as shopping malls and hotel complexes in order to generate tax revenue.

Justice Sandra Day O'Connor, who has been a key swing vote on many cases before the court, issued a stinging dissent. She argued that cities should not have unlimited authority to uproot families, even if they are provided compensation, simply to accommodate wealthy developers.

Connecticut residents involved in the lawsuit expressed dismay and pledged to keep fighting.

"It's a little shocking to believe you can lose your home in this country," said resident Bill Von Winkle, who said he would refuse to leave his home, even if bulldozers showed up. "I won't be going anywhere. Not my house. This is definitely not the last word."

Scott Bullock, an attorney for the Institute for Justice representing the families, added: "A narrow majority of the court simply got the law wrong today and our Constitution and country will suffer as a result."

I agree with Mr. Bullock. Cities have long had the power to seize private property for public works projects such as schools and roads (under the legal theory of eminent domain), but up until now they have not had the ability to seize property just because they'd rather put something else there that generates more revenue.

We had a case here in Orange County where the city tried to take a church's property in order to give it to Costco. The church eventually won that case at the lower levels, but given this new precedent, every church (which don't generate sales or income taxes) is in trouble if their city decides that the land the church sits on would be better used for retail or commercial space. And what's to stop cities from taking whole swathes of homes to allow development of a mall? Thanks to the Supreme Court, nothing.

This opens the door to a whole range of abuses. What if you're a city leader in an town that has a neighborhood of low income or economically depressed residents? Such neighborhoods often generate more crime and other problems, so instead of aggressively policing the area and cleaning up the problems, you just hand the keys to the neighborhood to a commercial developer and throw the poor folks out.

Someone who has lived in their home for 30 or 40 years and is on a fixed income is not going to be able to buy another home at today's prices, no matter how much compensation you give them. Even if they could take the payoff from the government and turn around and pay cash for something else, they would lose their Prop. 13 protections (in California) and would have to pay property tax rates many times what they paid before. This is the kind of stuff that riots are made of.

This is a bad, bad day for private property rights in America, and yet another reason why we've got to get conservative judges on the Supreme Court.

UPDATE: Rick Brady of Stones Cry Out, who incidentally is a land use and environmental planner by trade, points me to his interesting post on this court decision and the possible fallout in California. Nothing good is going to come out of this decision for private property owners.

UPDATE2: Glenn Reynolds makes some good points in his article at glennreynolds.com.