By Larry Jones
November 1, 2004

Last September the United States Supreme Court agreed to review a ruling handed down by the Connecticut Supreme Court in Kelo v. City of New London, a case involving the city's use of eminent domain in securing private property for economic development. Federal, state and local governments derive eminent domain power from the "Takings" clause of the Fifth Amendment of the U.S. Constitution, which allows governments to take ownership of personal property for "public use" as long as property owners are provided just compensation. The key issue in this case is whether or not the "public use" provision of the Takings clause authorizes a city to use eminent domain power to promote a significant economic development plan which calls for development by a private developer, and for the creation of new jobs, increased revenues and the revitalization of an economic distressed city.

In the Kelo case, the city of New London, responding to decades of economic and demographic decline, authorized the New London Development Corporation in 1998 to prepare a development plan for a 90-acre plot of land along the Thames River. After considering six plans from private developers, NLDC selected a plan calling for a waterfront hotel and conference center, marinas for recreational and commercial boats, a public walkway along the river, 80 new residential properties, a site for a new U.S. Coast Guard Museum, 230,000 square feet of office space with parking and retail space, and park support areas including parking and retail services. When fully implemented, the plan is expected to create hundreds of construction jobs, up to 2000 jobs in developed facilities, and between $680,000 and $1.25 million in property tax revenue.

After the plan was adopted, most property owners in the area voluntarily sold their property to make way for the new development. However, seven property owners including Susette T. Kelo declined to sell their property and forced the city to use eminent domain to take control of the property. Three of the seven property owners owned four properties in the redevelopment area and the other four owned eleven homes. In December of 2000 the seven owners filed an action in state trial court to stop the city from taking their property, claiming that the city's use of eminent domain as contemplated by the plan violated the federal and state constitutions as well as other state and city laws.

The trail court ruled in favor of the 4 property owners with 11 homes but in favor of the city with regard to the 3 property owners with 4 properties. However on appeal, the state Supreme Court by a 4-3 decision reversed the trial court's ruling in favor of the city and NLDC. In the view of the four-justice majority, economic development projects created and implemented in accordance with the state's statute (that authorizes municipalities to exercise eminent domain for municipal development projects) that have the public economic benefits of creating new jobs, increasing tax and other revenues, and contributing to urban revitalization, "satisfy the public use clause of the state and federal constitutions."

In their appeal to the U.S. Supreme Court, the property owners argue that the Connecticut Supreme Court erred in that under its decision "any condemnation of private property for a private business passes constitutional muster...so long as the government claims that the purpose of the condemnation is to improve the city's tax base and to increase employment."

On September 28, the Court agreed to hear the case. Briefs are due December 17 and it is likely the Court will hear arguments in late winter or early spring.