Kelo v. City of New London

Kelo v. City of New London, 545 U.S. 469 (2005), was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another private owner to further economic development. In a 5–4 decision, the Court held that the general benefits a community enjoyed from economic growth qualified private redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.
The case arose in the context of condemnation by the city of New London, Connecticut, of privately owned real property, so that it could be used as part of a "comprehensive redevelopment plan." After the Court's decision, the city allowed a private developer to proceed with its plans; however, the developer was unable to obtain financing and abandoned the project, and the contested land remained an undeveloped empty lot in 2021.
Background.
This case was appealed to the Supreme Court of the United States from a decision by the Supreme Court of Connecticut in favor of the City of New London. The owners, including lead plaintiff Susette Kelo of 8 East Street, sued the city in Connecticut courts, arguing that the city had misused its eminent domain power. The power of eminent domain is limited by the Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment. The Takings Clause reads, ". . . nor shall private property be taken for public use, without just compensation." Under the Due Process Clause of the Fourteenth Amendment, this limitation also applies to the actions of state and local governments. The plaintiffs argued that economic development, the stated purpose of the taking and subsequent transfer of land to the New London Development Corporation, did not qualify as a public use under the Fifth Amendment.
The Connecticut Supreme Court heard arguments on December 2, 2002. The state court issued its decision (268 Conn. 1, SC16742) on March 9, 2004, siding with the city in a 4–3 decision, with the majority opinion authored by Justice Flemming L. Norcott, Jr., joined by Justices David M. Borden, Richard N. Palmer and Christine Vertefeuille. Justice Peter T. Zarella wrote the dissent, joined by Chief Justice William J. Sullivan and Justice Joette Katz.
The State Supreme Court held that the use of eminent domain for economic development did not violate the public use clauses of the state and federal constitutions. The court held that if a legislative body has found that an economic project will create new jobs, increase tax and other city revenues, and revitalize a depressed urban area (even if that area is not blighted), then the project serves a public purpose, which qualifies as a public use. The court also ruled that the government’s delegation of its eminent domain power to a private entity was constitutional under the Connecticut Constitution.
The United States Supreme Court granted certiorari to consider questions raised in "Berman v. Parker," and later in "Hawaii Housing Authority v. Midkiff", . Namely, whether a "public purpose" constitutes a "public use" for purposes of the Fifth Amendment's Taking Clause: "nor shall private property be taken for public use, without just compensation." Specifically, does the Fifth Amendment, applicable to the states through the Due Process Clause of the Fourteenth Amendment (see main article: Incorporation of the Bill of Rights), protect landowners from takings for economic development, rather than, as in "Berman," for the elimination of slums and blight?
"Kelo" was the first major eminent domain case heard at the Supreme Court since 1984. In that time, states and municipalities had slowly extended their use of eminent domain, frequently to include economic development purposes. In the "Kelo" case, Connecticut had a statute allowing eminent domain for "economic development" even in the absence of blight. There was also an additional twist in that the development corporation was ostensibly a private entity; thus the plaintiffs argued that it was not constitutional for the government to take private property from one individual or corporation and give it to another, if the government was simply doing so because the repossession would put the property to a use that would generate higher tax revenue.
"Kelo" became the focus of vigorous discussion and attracted numerous supporters on both sides. Some 40 "amicus curiae" briefs were filed in the case, 25 on behalf of the petitioners. Susette Kelo's supporters ranged from the libertarian Institute for Justice (the lead attorneys on the case) to the NAACP, AARP, the Southern Christian Leadership Conference and South Jersey Legal Services. The latter groups signed an amicus brief arguing that eminent domain has often been used against politically weak communities with high concentrations of minorities and elderly.
The case was argued on February 22, 2005. Oral arguments were presented on behalf of the petitioners (plaintiffs) by Scott G. Bullock of the Institute for Justice in Washington D.C. and on behalf of the respondents (defendants) by Wesley W. Horton of Horton, Shields & Knox in Hartford, CT. The case was heard by only seven members of the court with Associate Justice Sandra Day O'Connor presiding, as Chief Justice William Rehnquist was recuperating from medical treatment at home and Associate Justice John Paul Stevens was delayed on his return to Washington from Florida; both absent Justices read the briefs and oral argument transcripts and participated in the case decision.
During the case, Justice Antonin Scalia, asked whether a ruling in favor of the city would destroy "the distinction between private use and public use." He also asked if private use, which provided merely incidental benefits to the state, was "not enough to justify use of the condemnation power."
Opinion of the Court.
Majority and concurring.
On June 23, 2005, the Supreme Court, in a 5–4 decision, ruled in favor of the City of New London. Justice Stevens wrote the majority opinion, joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer. Justice Kennedy wrote a concurring opinion setting out a more detailed standard for judicial review of economic development takings than that found in Stevens's majority opinion. In so doing, Justice Kennedy contributed to the Court's trend of turning minimum scrutiny—the idea that government policy need only bear a rational relation to a legitimate government purpose—into a fact-based test.
In "Romer v. Evans", 517 U.S. 620, 633 (1996), the Court said that the government purpose must be "independent and legitimate." And in "United States v. Virginia", 518 U.S. 515, 533 (1996), the Court said the government purpose "must be genuine, not hypothesized or invented post hoc in response to litigation." Thus, the Court made it clear that, in the scrutiny regime established in "West Coast Hotel v. Parrish", 300 U.S. 379 (1937), government purpose is a question of fact for the trier of fact.
Kennedy fleshed out this doctrine in his "Kelo" concurring opinion; he sets out a program of civil discovery in the context of a challenge to an assertion of government purpose. However, he does not explicitly limit these criteria to eminent domain, nor to minimum scrutiny, suggesting that they may be generalized to all health and welfare regulation in the scrutiny regime. He wrote:
A court confronted with a plausible accusation of impermissible favoritism to private parties should [conduct]... a careful and extensive inquiry into 'whether, in fact, the development plan [chronology]
[1.] is of primary benefit to... the developer... and private businesses which "may" eventually locate in the plan area...
[2.] and in that regard, only of incidental benefit to the city...'"
Kennedy is also interested in facts of the chronology which show, with respect to government,
[3.] awareness of... depressed economic condition and evidence corroborating the validity of this concern...
[4.] the substantial commitment of public funds... before most of the private beneficiaries were known...
[5.] evidence that [government] reviewed a variety of development plans...
[6.] [government] chose a private developer from a group of applicants rather than picking out a particular transferee beforehand and...
[7.] other private beneficiaries of the project [were]... unknown [to government] because the... space proposed to be built [had] not yet been rented...
"Kelo v. City of New London" did not establish entirely new law concerning eminent domain. Although the decision was controversial, it was not the first time "public use" had been interpreted by the Supreme Court as "public purpose." In the majority opinion, Justice Stevens wrote the "Court long ago rejected any literal requirement that condemned property be put into use for the general public" (545 U.S. 469). Thus precedent played an important role in the 5–4 decision of the Supreme Court. The Fifth Amendment was interpreted the same way as in "Midkiff" (467 U.S. 229) and other earlier eminent domain cases.
Dissenting opinions.
The principal dissent was issued on June 25, 2005 by Justice O'Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas. The dissenting opinion suggested that the use of this taking power in a reverse Robin Hood fashion—take from the poor, give to the rich—would become the norm, not the exception:
O'Connor argued that the decision eliminates "any distinction between private and public use of property—and thereby effectively delete[s] the words 'for public use' from the Takings Clause of the Fifth Amendment."
Thomas also issued a separate originalist dissent, in which he argued that the precedents the court's decision relied upon were flawed. He accuses the majority of replacing the Fifth Amendment's "Public Use" clause with a very different "public purpose" test:
Thomas additionally observed:
Thomas also made use of the argument presented in the NAACP/AARP/SCLC/SJLS amicus brief on behalf of three low-income residents' groups fighting redevelopment in New Jersey, noting: 
Subsequent developments.
Following the decision, many of the plaintiffs expressed an intent to find other means by which they could continue contesting the seizure of their homes. Soon after the decision, city officials announced plans to charge the residents of the homes for back rent for the five years since condemnation procedures began. The city contended that the residents have been on city property for those five years and owe tens of thousands of dollars of rent. In June 2006, Governor M. Jodi Rell intervened with New London city officials, proposing the homeowners involved in the suit be deeded property in the Fort Trumbull neighborhood so they may retain their homes. A group of New London residents formed a local political party, One New London, to combat the takings.
The controversy was eventually settled when the city paid substantial additional compensation to the homeowners and agreed to move Kelo's home to a new location. The land was never deeded back to the original homeowners, most of whom have left New London for nearby communities. Three years after the Supreme Court case was decided, the Kelo house was dedicated after being relocated to 36 Franklin Street, a site close to downtown New London. Susette Kelo, however, has moved to a different part of Connecticut.
In spite of repeated efforts, the redeveloper (who stood to get a waterfront tract of land for $1 per year) was unable to obtain financing, and the redevelopment project was abandoned. As of the beginning of 2010, the original Kelo property was a vacant lot, generating no tax revenue for the city. In the aftermath of 2011's Hurricane Irene, the now-closed New London redevelopment area was turned into a dump for storm debris such as tree branches and other vegetation.
Pfizer, whose employees were supposed to be the clientele of the Fort Trumbull redevelopment project, completed its merger with Wyeth, resulting in a consolidation of research facilities of the two companies. Pfizer chose to retain the Groton campus on the east side of the Thames River, closing its New London facility in late 2010 with a loss of over 1,000 jobs. That coincided with the expiration of tax breaks on the New London site that would have increased Pfizer's property tax bill by almost 400 percent.
After the Pfizer announcement, the "San Francisco Chronicle", in November 2009, in its lead editorial called the "Kelo" decision infamous:
 The well-laid plans of redevelopers, however, did not pan out. The land where Susette Kelo's little pink house once stood remains undeveloped. The proposed hotel-retail-condo "urban village" has not been built. And earlier this month, Pfizer Inc. announced that it is closing the $350 million research center in New London that was the anchor for the New London redevelopment plan, and will be relocating some 1,500 jobs.
The "Chronicle" editorial quoted from "The New York Times": "They stole our home for economic development," ousted homeowner Michael Cristofaro told the "New York Times". "It was all for Pfizer, and now they get up and walk away."
The final cost to the city and state for the purchase and bulldozing of the formerly privately held property was $78 million. The promised 3,169 new jobs and $1.2 million a year in tax revenues had not materialized. As of 2021, the area remains an empty lot.
Public reaction.
Opposition to the ruling was widespread, coming from groups such as AARP, the NAACP, the Libertarian Party and the Institute for Justice. The American Conservative Union condemned the decision. Much of the public viewed the outcome as a gross violation of property rights and as a misinterpretation of the Fifth Amendment, the consequence of which would be to benefit large corporations at the expense of individual homeowners and local communities. Many owners of family farms also disapproved of the ruling, as they saw it as an avenue by which cities could seize their land for private developments. Since the opposition to the ruling was so widespread American journalist Charles C. W. Cooke argued in 2015 that a constitutional amendment like the one drafted by law professor Ilya Somin might attract enough support by a non-partisan coalition of progressives, independents and conservatives to undo the Supreme Court ruling in "Kelo v. City of New London".
Some in the legal profession construed the public's outrage as being directed not at the interpretation of legal principles involved in the case, but at the broad moral principles of the general outcome. Federal appeals court judge Richard Posner wrote that the political response to "Kelo" is "evidence of [the decision's] pragmatic soundness." Judicial action would be unnecessary, Posner suggested, because the political process could take care of the problem."
As a result, many states changed their eminent domain laws. Prior to the "Kelo" decision, only seven states specifically prohibited the use of eminent domain for economic development except to eliminate blight. Since the decision, forty-five states have amended their eminent domain laws, although some of these changes are cosmetic.
The "New York Times" editorial board agreed with the ruling, calling it "a welcome vindication of cities' ability to act in the public interest." The "Washington Post"s editorial board also agreed with the ruling, writing, "[t]he court's decision was correct. . . . New London's plan, whatever its flaws, is intended to help develop a city that has been in economic decline for many years."
The "Kelo" fiasco eventually cost the taxpayers tens of millions of dollars, with nothing to show for it. The "carefully vetted" municipal plans that formed the basis for the Supreme Court's decision proved to be illusory. Eventually, the City of New London extended an apology to Susette Kelo and her neighbors, and so did one of the Connecticut Supreme Court justices who voted for the city.
Presidential reaction.
On June 23, 2006, the first anniversary of the original decision, President George W. Bush issued an executive order instructing the federal government to restrict the use of eminent domain However, since eminent domain is most often exercised by local and state governments, the presidential order may have little overall effect.
Congressional reaction.
On June 27, 2005, Senator John Cornyn (R-Tex.) introduced legislation, the "Protection of Homes, Small Businesses and Private Property Act of 2005" (S.B. 1313), to limit the use of eminent domain for economic development. The operative language
Similar bills have subsequently been put forth in the House of Representatives by Congressman Dennis Rehberg (R-Mont.), Tom DeLay (R-Tex.), and John Conyers (D-Mich.) with James Sensenbrenner (R-Wisc.). As some small-scale eminent domain condemnations (including notably those in the "Kelo" case) can be local in both decision and funding, it is unclear how much of an effect the bill would have if it passed into law. This bill has been reintroduced several times.
Scholarly reaction.
In 2008, land use Professor Daniel R. Mandelker argued that the public backlash against "Kelo" is rooted in the historical deficiencies of urban renewal legislation. In particular, the article cited the failure to incorporate land use planning and a precise definition of blight in urban renewal legislation as problematic. In 2009, Professor Edward J. Lopez of San Jose State University studied passed laws and found that states with more economic freedom, greater value of new housing construction, and less racial and income inequality were more likely to have enacted stronger restrictions sooner.
Severe criticism of the "Kelo" decision came from Professor Gideon Kanner of the Loyola Law School, Los Angeles. Kanner wrote, "The principal failing of the "Kelo" decision is that it misreads the case law on which it purports to rely as a seminal precedent, and by its holding frustrates the usual mode of constitutional analysis." He likened the language in the majority's decision ("'public' means 'private' and 'use' means 'purpose,' or 'prognosticated municipal prosperity'") to the abuse of language in George Orwell's "Nineteen Eighty-Four".
State legislation.
Prior to "Kelo", eight states specifically prohibited the use of eminent domain for economic development except to eliminate blight: Arkansas, Florida, Kansas, Kentucky, Maine, New Hampshire, South Carolina and Washington. , 45 states had enacted some type of reform legislation in response to the "Kelo" decision. Of those states, 22 enacted laws that severely inhibited the takings allowed by the Kelo decision, while the rest enacted laws that place some limits on the power of municipalities to invoke eminent domain for economic development. The remaining five states have not passed laws to limit the power of eminent domain for economic development.
Arizona.
Proposition 207, the Private Property Rights Protection Act, passed in 2006.
California.
Under pre-existing California law, takings (for conveyance to a private party, as opposed to a public use that may incidentally benefit private parties) were already illegal.
Proposition 90, which attempted to exploit the unpopularity of "Kelo" for a different objective, failed in the November 2006 election. The initiative also included language requiring that government pay financial compensation to any property owners who could successfully argue that regulation caused them significant economic loss. Subsequently, Proposition 99 passed in the June 2008 election. It amends the state constitution to prohibit (subject to some exceptions): In 2012, California abolished its redevelopment agencies.
Florida.
Florida passed a 2006 ballot measure amending the Florida Constitution to restrict use of eminent domain. The amendment says in part:
Iowa.
The Iowa Legislature passed a 2006 bill restricting the use of eminent domain for economic development. Gov. Tom Vilsack (D) vetoed the bill, prompting the first special session of the Iowa Legislature in more than 40 years. The veto was overridden by votes of 90–8 in the Iowa House and 41–8 in the Iowa Senate.
Kansas.
In response to the "Kelo" decision, the Kansas Legislature enacted K.S.A. 26-501a and K.S.A. 26-501b and amended K.S.A. 26-501.
K.S.A. 26-501a. Eminent domain; limited to public use; transfer to private entity prohibited; exception. On and after July 1, 2007: (a) Private property shall not be taken by eminent domain except for public use and private property shall not be taken without just compensation.
(b) The taking of private property by eminent domain for the purpose of selling, leasing or otherwise transferring such property to any private entity is prohibited except as provided in K.S.A. 2009 Supp. 26–501b, and amendments thereto.
(c) This section shall be part of and supplemental to the eminent domain procedure act.
History: L. 2006, ch. 192, § 1; May 25.
K.S.A. 26-501b. Eminent domain; transfer to private entity authorized, when. On and after July 1, 2007, the taking of private property by eminent domain for the purpose of selling, leasing, or otherwise transferring such property to any private entity is authorized if the taking is:
(a) By the Kansas department of transportation or a municipality and the property is deemed excess real property that was taken lawfully and incidental to the acquisition of right-of-way for a public road, bridge or public improvement project including, but not limited to a public building, park, recreation facility, water supply project, wastewater and waste disposal project, storm water project and flood control and drainage project;
(b) by any public utility, as defined in K.S.A. 66-104, and amendments thereto, gas gathering service, as defined in K.S.A. 55-1,101, and amendments thereto, pipe-line companies, railroads and all persons and associations of persons, whether incorporated or not, operating such agencies for public use in the conveyance of persons or property within this state, but only to the extent such property is used for the operation of facilities necessary for the provision of services;
(c) by any municipality when the private property owner has acquiesced in writing to the taking;
(d) by any municipality for the purpose of acquiring property which has defective or unusual conditions of title including, but not limited to, clouded or defective title or unknown ownership interests in the property;
(e) by any municipality for the purpose of acquiring property which is unsafe for occupation by humans under the building codes of the jurisdiction where the structure is situated;
(f) expressly authorized by the legislature on or after July 1, 2007, by enactment of law that identifies the specific tract or tracts to be taken. If the legislature authorizes eminent domain for private economic development purposes, the legislature shall consider requiring compensation of at least 200% of fair market value to property owners.
(g) This section shall be part of and supplemental to the eminent domain procedure act.
Michigan.
Michigan passed a restriction on the use of eminent domain in November 2006, Proposition 4, 80% to 20%. The text of the ballot initiative was as follows:
A proposed constitutional amendment to prohibit government from taking private property by eminent domain for certain private purposes
<br>
The proposed constitutional amendment would:
Minnesota.
The state restricts eminent domain to public use. Minnesota Statute 117.025 Subd. 11(b) (passed in 2006) clearly states: "The public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose."
Mississippi.
On November 8, 2011, Mississippi Initiative #31 restricting eminent domain, was approved by voters 73–27%. The text of Initiative # 31 is as follows:
Nevada.
On November 25, 2008, a voter-approved amendment to the Nevada constitution, colloquially titled the "People's Initiative to Stop the Taking of Our Land", or "PISTOL", was put into effect following its review by the Nevada State Supreme Court. Among other provisions, the amendment included the following text:
The amendment also modifies the definition of "fair market value"—used to determine the monetary compensation a property owner receives—to represent the highest value the property would be sold for on the open market, and returns seized property to the original property owner "if the property is not used within five years for the original purpose stated by the government."
New Hampshire.
In New Hampshire, various libertarian activists, in response to the decision, sought to use eminent domain to seize Justice David Souter's farmhouse in Weare, New Hampshire and build a hotel (the "Lost Liberty Hotel") on the site. The proposal was not supported by the town's five-member board of selectmen, and Weare voters rejected the activists' attempt to place a proposal on the local ballot to seize Souter's farm.
In 2006, the New Hampshire Legislature proposed an amendment to the state constitution providing that "no part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property." The amendment was overwhelmingly approved by New Hampshire voters in the November 2006 elections. Some New Hampshire commentators suggested that the state had gone too far in restricting the exercise of eminent domain in the "Kelo" backlash.
Ohio.
An attempted use of eminent domain was brought before the Ohio Supreme Court in "City of Norwood v. Horney". In July 2006, the Supreme Court of Ohio unanimously held in favor of the property owners, finding the seizure would violate the Constitution of Ohio.
Wisconsin.
On March 29, 2006, Gov. Jim Doyle signed into law 2005 Wisconsin Act 233, which prohibits condemnation of nonblighted property for transfer to a private entity. Nonblighted property is defined by a list of conditions that may make the property a detriment to the "public health, safety, or welfare." Two days earlier the governor signed into law 2005 Wisconsin Act 208, which creates procedures designed to protect property owners including public notice and public hearing requirements.
The Wisconsin law has been criticized as one having little or no real protection for property owners because it provides protection against property condemnation for economic development but does allow property condemnation under a broadly defined description of blighted.
Legacy.
The block of land at the heart of the case, adjacent to Fort Trumbull, still stood vacant as of April 2018.
Jeff Benedict wrote an account of the case in a 2009 book, "Little Pink House: A True Story of Defiance and Courage". Benedict's account was adapted into a film, "Little Pink House", released in 2018.