I'm still mad about Kelo and you should be too...

Some years ago the City of New London condemned a neighborhood of homes so they could be torn down. The property was not to be put to any public use, but rather was to be developed as a new research facility. In an opinion that essentially gutted the Takings Clause of the Constitution of any real meaning, 5 idiots members of the Supreme Court let the city get away with it. And now we learn:

The private homes that New London, Conn., took away from Suzette Kelo and her neighbors have been torn down. Their former site is a wasteland of fields of weeds, a monument to the power of eminent domain.

But now Pfizer, the drug company whose neighboring research facility had been the original cause of the homes' seizure, has just announced that it is closing up shop 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. Five justices found this redevelopment met the constitutional hurdle of "public use."

The Hartford Courant reports:

Pfizer Inc. will shut down its massive New London research and development headquarters and transfer most of the 1,400 people working there to Groton, the pharmaceutical giant said Monday.... Pfizer is now deciding what to do with its giant New London offices, and will consider selling it, leasing it and other options, a company spokeswoman said.

Scott Bullock, Kelo's co-counsel in the case, told me: "This shows the folly of these redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."

Ever since I was a little lawyer, I've found it appalling that the Supreme Court essentially ignores rights explicitly set forth in the text of the Constitution--such as the Takings Clause--while creating out of whole cloth penumbras rights of which the Founders never heard that then get vigorous protection.

Kelo remains one of the most appalling examples of this phenomenon. As I wrote back when the case was decided:

By a 5-4 vote, the Supreme Court on Thursday ruled that governments may seize your business and even your home in order to facilitate private economic development schemes.

It's well settled, of course, that the government can take your property in order to devote the land to some public purpose. The Binghamton campus of the State University of New York, for example, was built in part on land that the state took away from my family. In the case before the Supreme Court, however, the City of New London wanted to seize a neighborhood and turn the land over to a private developer who would then raze the homes and build a big industrial park.

This has become an increasingly common problem. State and local governments increasingly make use of their eminent domain power to take property for what are really private purposes As CNN reported:

        "At issue is whether governments can forcibly seize homes and businesses, 
        for private economic development. Under a practice known as eminent 
        domain, a person's property may be condemned and the land converted for 
        a greater 'public use.' It has traditionally been employed to eliminate 
        slums, or to build highways, schools or other public works.

        "The New London case tests the muscle of local and state governments 
        to raise what they see as much-needed revenue, which they argue serves 
        a greater 'public purpose.'" (Link)

The Economist explained the problem quite succinctly:

        "Put simply, cities cannot take someone's house just because they think 
        they can make better use of it. Otherwise, argues Scott Bullock, Mrs Kelo's 
        lawyer, you end up destroying private property rights altogether. For if the 
        sole yardstick is economic benefit, any house can be replaced at any time by 
        a business or shop (because they usually produce more tax revenues). 
        Moreover, if city governments can seize private property by claiming a 
        public benefit which they themselves determine, where do they stop? If they 
        decide it is in the public interest to encourage locally-owned shops, what 
        would prevent them compulsorily closing megastores, or vice versa? This 
        is central planning."

Exactly. The government's takings power is a necessary evil that, if used broadly, can destroy the entire concept of private property rights. As Russell Kirk pointed out, doing so will have devastating affects on society:

        "[F]reedom and property are closely linked. Separate property from private 
        possession, and Leviathan becomes master of all. Upon the foundation of 
        private property, great civilizations are built. The more widespread is the 
        possession of private property, the more stable and productive is a 
        commonwealth." (Link)

The Kelo case is a particularly egregious example of how the takings power can be abused. According to the Economist:

        "The day before Thanksgiving 1998, Susette Kelo, a registered nurse, got 
        an unwelcome holiday gift: an eviction order. Her house, and those of 
        six other families living on an abandoned submarine base called Fort Trumbull, 
        had been compulsorily purchased. She had five months to get out.

        "What is unusual about this is that her house is no rat-infested health hazard. 
        She bought and spruced it up three years before. Nor is it being seized by a 
        branch of government: the evictor is the New London Development 
        Corporation (NLDC), a private non-profit body."

The Supreme Court has held that private property can be seized via eminent domain as part of an urban renewal project when the property is blighted, a loophole that local authorities have greatly abused to seize private property. Yet, in this case, the government didn't even bother trying to hide behind that fig leaf. They baldly asserted the power to seize private homes because they think some other user can put them to a higher tax generating use, as the following description of the oral argument in Slate made clear:

        "Justice Antonin Scalia ... describes [City of New London lawyer] Horton's 
        position as: 'You can always take from A and give to B, so long as B is richer.' 
        And O'Connor offers this concrete example: What if there's a Motel 6 but 
        the city thinks a Ritz-Carlton will generate more taxes? Is that OK?

        "Yes, says Horton." (Link)

This is no minor technical dispute. Kirk's dicta is confirmed by the brilliant work Richard Epstein did in his classic book Takings, which makes a compelling case that the power to take private property is the critical and central power of government that must be constrained if liberty is to have any substance.

Ms. Kelo and her lawyers relied on the Takings Clause of the 5th Amendment, which provides:

        "Nor shall private property be taken for public use, without just compensation."

Note that the Takings Clause has two independent requirements: (1) just compensation must be paid; (2) the property must be taken for a "public use." The Supreme Court could -- and should -- have held that this second requirement means that the government may not take away your property to give it to some other private individual (or company) who will then devote it to their own personal or business use.

But the 5 justice majority did not. Instead, so long as the government compensates you, it can take your land and turn it over to some other private person or company.

Unfortunately, the requirement to pay fair market value is a grossly inadequate safeguard on government power for two reasons. First, it fails to take into account the subjective valuations placed on the New London property by people whose families have lived on the land, in at least one case, for a 100 years. In other words, the government now will be able to seize land at a price considerably below the reservation price of the owners. Indeed, as Will Collierexplained:

        "... the price even a willing seller would be able to get from his property just 
        took a huge hit. All a developer has to do now is make a lowball offer and 
        threaten to involve a bought-and-paid-for politician to take the property 
        away if the owner doesn't acquiesce."

Second, unlike the prototypical eminent domain case, in which the land is seized to build, say, a school or road, in this case the city is using eminent domain to seize property that will then be turned over to a private developer. If this new development increases the value of the property, all of that value will be captured by the new owner, rather than the forced sellers. As a result, the city will have made itself richer (through higher taxes), and the developer richer, while leaving the forced sellers poorer in both subjective and objective senses.

Justice O'Connor's dissent makes the point eloquently:

        "Any property may now be taken for the benefit of another private party, 
        but the fallout from this decision will not be random."

        "The beneficiaries are likely to be those citizens with disproportionate 
        influence and power in the political process, including large corporations 
        and development firms."

After news of Napoleon's victory in the Battle of Austerlitz was conveyed to British Prime Minister William Pitt, Pitt pointed to a map of Europe and said: "Roll up the map; it will not be wanted these ten years." In light of the Supreme Court's decision to side with New London, we might just as well roll up the Takings Clause of the Bill of Rights, because we won't need it any longer.

Comments

[Cornellian]

"Ever since I was a little lawyer, I've found it appalling that the Supreme Court essentially ignores rights explicitly set forth in the text of the Constitution--such as the Takings Clause. . ."

Well, strictly speaking, Kelo wasn't asserting a right "explicitly set forth in the text of the Constitution." The Takings Clause applies only to property taken for a public use. The Takings Clause is silent on what happens in the case of a non-public use, which is what you're saying happened here. The idea that the Takings Clause flat-out prohibits non-public takings is not an idea one finds in the text of the Takings Clause. That's an inference or, as a critic might say, a idea found in a penumbra of the 5th Amendment.

In fact the Constitution explicitly contemplates that the government can take your property provided you're given due process before it does so.

I'm not saying Kelo was a good decision or a correct one, just that an attempt to criticize it from a strictly textualist point of view falls a bit short of the mark.

[Jason in Michigan]

Query, should Pfizer be required to follow through with their contract with the city of New London? The holding of Otis Elevator would seem to indicate the answer is no. So now the people of New London and the city of New London are left hanging and Pfizer walks away the winner.

[Daniel]

Like you, I'm still ticked off about Kelo. In the fall, my wife and I took a swing by New London to see what the land that was taken from Susette Kelo and her neighbors looks like today. Here are some of the pictures I shot: http://www.dr5.org/kelo-v-new-london-the-aftermath/
It's really sad to see that all that is left is an few empty fields.

[BSKB]

The Kelo problem is more pronounced in California thanks to Proposition 13. Municipalities now seek increase their tax base by simply flipping properties.

This leads me to the question of whether an increase in property tax base is enough to satisfy a "public use" in the modern ED scheme. Given all of the other things that qualify, one would be hard pressed to see how they are any different on a conceptual level.