Codex Per·Fidem - The Consequences of Kelo

The Consequences of Kelo

The government’s power to take private property, called eminent domain, has always been an important, and hotly debated, issue in American politics. The recent United States Supreme Court ruling in Kelo v. City of New London, CT has created a new sense of urgency. In an era where the electorate seems highly polarized, Kelo has become one issue that politicians from both sides of the aisle can agree on. To better understand the debate, it is necessary to examine the history of the power of eminent domain, its constitutional foundations, its development in case law, and the concerns Kelo has raised in the nation.

Constitutional Foundations

Eminent domain is recognized by the United States constitution and the constitutions of the states as an inherent power of government. The sovereign power has supreme authority over all property within its jurisdiction. The concept develops out of the belief that the property owner owes the security of himself and his property to the state. Without the state, there is no property and so the state has the inherent authority to take the property for its own use.

At the time of the American Founding, this power was so entrenched that the Framers of the constitution did not even bother including it among the enumerated powers. The only mention of eminent domain in the United States constitution is in Amendment V. This clause, known as the “takings clause” limits the power of the federal government’s exercise of this power by requiring that the property be taken for public use and that just compensation be paid to the previous owner. Section 17 of the first article of the constitution of the State of Texas limits the state’s power of eminent domain in a similar fashion. An exception is made to the requirement of “adequate compensation” if the property is taken with the consent of the owner.

Expansion of Power

For most of the history of the United States, the power of eminent domain has been used to facilitate the building of highways, schools, hospitals, and other structures vital to the welfare of the people and the state. However, several courts in the United States have recently expanded the government’s power to justify taking property for economic purposes. The most recent, and most debated, decision is Kelo v. City of New London, CT.

The roots of the Kelo decision go back to the early years of the American republic. Very soon after the ratification of the constitution, courts ruled that the constitution’s requirement of “public use” did not require public occupation.1 It is constitutional for government to use its power to buy private property and turn that property over to another private interest so long as the new owner will be performing a function necessary for the public. For example, the government may purchase land, then pass the land over to a private company that will build a railroad on it.

This power was expanded more in 1954 when the United States Supreme Court ruled in Berman v. Parker that government may take property that is considered blighted and sell it to a private developer.2 Here, the court reasoned that “public use” should be expanded to include a “public purpose.” In this case, the District of Columbia attempted to use eminent domain to purchase large tracts of land in blighted neighborhoods for the purpose of economic revitalization. The District planned to resell the land to a private developer. The court ruled that revitalizing an economically depressed neighborhood served a public good and therefore qualifies as a “public use” under the constitution.

In the 1960's the State of Hawaii noticed that nearly half of the land in the state was owned by only a few people. The state believed that this oligopoly was hurting the public welfare and the state’s economy. The state began a program to force these landowners to sell their land to the state who would then sell the land to the tenants living on it, thus redistributing the property and creating a fairer market.

The property owners sued and the case eventually found its way to the United States Supreme Court. In 1984, the court upheld this plan in Hawaii Housing Authority v. Midkiff. The court ruled that the takings were a just exercise of state police powers.3

Kelo

While the economy of the rest of the nation was expanding at an amazing rate in the 1990's, the City of New London, Connecticut saw its major employers and its tax base leave. In 1998, Pfizer, a pharmaceutical company, announced its plan to build a research facility near the Fort Trumbull neighborhood in New London. The City saw this announcement as a perfect opportunity to redevelop the depressed neighborhood and encourage new investment in the area. The City ordered the New London Development Corporation (NLDC), a private, non-profit entity created to help the city plan its economic redevelopment, to devise a plan that the City hoped would bring jobs to the local economy and expand its tax base. Once a plan was finalized, the City authorized the NLDC to buy land from property owners who were willing to sell. The NLDC was also authorized to use the City’s eminent domain power to force unwilling owners to sell.

Among the hold outs was Susette Kelo, who had lived in the area since 1997. She and eight other property owners, in all owning 15 properties in the neighborhood, brought suit in the New London Superior Court in an effort to stop the redevelopment plan. Their claim was that the City’s use of its eminent domain power did not qualify as “public use” and was therefore unconstitutional. The Superior Court granted a permanent restraining order preventing the taking of most of the properties. Both parties appealed to the Supreme Court of Connecticut.

Using precedent established in Berman v. Parker and Hawaii Housing Authority v. Midkiff, as well as guidelines established in Connecticut statutes, the state Supreme Court ruled that the NLDC’s takings were justified as a public use. The Court reversed the lower court’s ruling, and the decision was appealed to the Supreme Court of the United States.

In a 5 to 4 vote, the Supreme Court upheld the lower court’s ruling.4 Justice Stevens wrote the opinion of the Court. Justice Stevens writes that the strict definition of “public use,” that the property to be taken be put to the direct use of the general public, was long ago rejected by the Court in favor of the looser requirement of “public purpose.” This rejection is seen in the previous decisions in Boston and Roxbury Mill Corp. v. Newman, Berman, and Midkiff. Berman, Justice Stevens argues, allows government to condemn blighted properties for redevelopment. Midkiff allows government to transfer property from one private owner to another so long as the new owner’s use of the property served the public good. Justice Stevens notes that the Court has relied on legislative definitions of public purpose. As always, just compensation must be paid to the previous owner.

Justice Stevens argues further that the City’s plan is justified because “[p]romoting economic development is a traditional and long accepted function of government.”5 New London’s scheme is a well researched and integrated plan that will obviously benefit the community as a whole, and is therefore acceptable. The Court rejects the property owners’ claim that if the City is allowed to continue with its plan, there is nothing to stop a city from transferring property from one owner to another owner simply because the new owner will put the property to a use that will generate more tax revenue for the city, and thus serves the public good. Justice Stevens argues that this is merely a hypothetical situation and such cases “can be confronted if and when they arise.”6

Justice Stevens concludes by noting once again that “public purpose” is to be defined by the legislature, not the courts. He writes that “nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”7

Despite Justice Stevens’ assurance that local legislatures will still define public purpose, many still fear that cities will abuse their power. Justice O’Connor is among those with this fear. In her dissent, Justice O’Connor writes that while it is good for the Court to defer to the legislature’s idea of what constitutes a public use, there must be a judicial check on that power. Otherwise, “the Public Use Clause would amount to little more than hortatory fluff.”8

It is constitutional for government to work with private parties to achieve its social goals, but a taking for purely private use is not permissible. Therefore, the Court has a role in verifying that the legislature’s intentions are for the public good and not merely a private benefit. This case, Justice O’Connor argues, is very different than the situations in Berman and Midkiff. In those cases, the former private use of the property obviously harmed the general welfare of the public. In Berman, the property was deteriorated beyond repair and not suitable for human habitation. It was more than a eye sore, it was a danger to the public health. In Midkiff, the property’s use created an economic harm on the community. In both cases, the government’s use of eminent domain “directly achieved a public benefit.”9 However, in the Kelo case, the current private use of the property is not a harm to the public.

Justice O’Connor argues that the Court’s decision allows the government to take private property for private use “so long as the new use is predicted to generate some secondary benefit for the public.”10 Nearly any private use could be determined to achieve such a secondary benefit, so the Court’s decision has taken all power out of the constitution’s limitations on eminent domain power.

The true danger of the Court’s decision, Justice O’Connor concludes, is that the wealthy and powerful will benefit while the poor will suffer. Justice O’Connor writes,“The Founders cannot have intended this perverse result.”11 Since the Fifth Amendment was intended to limit government’s power, the only proper interpretation of it is a narrow one. According to Justice O’Connor, the Court’s interpretation is too wide.

Legislative Reactions

The news of the Kelo decision spread across the nation quickly. Politicians from both parties were quick to denounce it. Both sides of the aisle fear eminent domain abuse. Those on the right see the evils of an overbearing government. Those on the left see the ruling as a blow to the disadvantaged in the continuing struggle between the rich and poor. Congress and legislatures in many states began to debate bills which would place statutory limits on eminent domain power.

On October 25, 2005, several Congressmen introduced the Private Property Protection Act of 2005.12 The bill would prohibit the federal government from using its eminent domain power for economic development. The bill would also prohibit states from using federal funds for such a purpose. The Private Property Protection Act passed the House on November 3 of that year by a vote of 376 to 38.13 A notable nay vote was House Minority Leader, Nancy Pelosi. The bill was sent to the Senate and referred to the Senate Judiciary Committee. The Senate also has its own version of this bill, but no further action has been taken by the Senate on either. An amendment to an appropriations bill for fiscal year 2006 which included similar limits was enacted.

According to the website of the Castle Coalition, an activist group seeking to eliminate what it sees as eminent domain abuse, sixteen states so far, including Texas, have passed similar legislation in response to the Kelo decision.14 The Texas law, Senate Bill 7, amends the government code to prevent takings that benefit a private party, “is for a public use that is merely a pretext to confer a private benefit on a particular private party,” or for economic development.15 The bill makes an exception for urban renewal projects and to eliminate blighted areas and slums. Many of the state laws that have been passed make the same exception. As further proof of the bipartisan opposition to Kelo, this bill passed the Senate with a vote of 19 to 5, and the House with a vote of 140 to 1.

Municipal Reaction

Cities, however, have accelerated their takings in the wake of the Kelo ruling. In an article for Policy Review, a Conservative political journal, titled, “How Eminent Domain Ran Amok,” Carla Main writes that true reform to prevent eminent domain abuse is unlikely. Despite the furor created after the ruling, many cities have decided to move ahead with redevelopment plans that have been on hold while the case was being argued before the Court.16 And public shame seems to be no deterrence, either. As an example, Main writes that since their victory before the High Court, the City of New London has sent a bill for unpaid rent to the homeowners. The City reasons that the homeowners have been living on City land all these years that the case has been in the courts.

Main concurs with those who see the Kelo ruling as a blow to the poor. It is very unlikely that wealthy people will ever have to face such a threat. The victims of eminent domain tend to be the poor and minorities. Main notes that even in the Berman case, which most consider to be a proper use of eminent domain to clean up a blighted neighborhood, the residents who were displaced by the project were typically poor minorities. When the neighborhood was improved, those who moved in were typically upper middle class whites. The District may have intended its actions to benefit the community, but few of those who actually lived in the neighborhood saw any kind of improvement. More than likely, they were forced to move from one slum to another.

Victims of the Kelo ruling include the cities themselves. Many cities only engage in such takings after being pressured to do so. As an example, Main refers to Detroit, Michigan and its dealings with General Motors in the early 1980's. In the fall of 1980, GM proposed to build a new factory that GM promised would provide 6,000 new jobs. All it required of the city was 500 acres with access to highways and rail. As the buckle of the Rust Belt, Detroit had very high unemployment and knew that something had to be done. The GM proposal seemed like an excellent opportunity to improve the city’s economy. Aside from that, GM threatened to take its business elsewhere if the City did not cooperate. The City of Detroit agreed to GM’s proposal and condemned a poor neighborhood called Poletown. The City also agreed to give GM a 12 year, 50 percent tax abatement. The community of more than 3,000 would be quickly cleared out.

Unfortunately for Detroit, “[c]ost overruns are not unusual when governments involve themselves in real estate transactions.”17 When the City tried to buy out the residents, many of the business owners challenged the City’s valuation of their businesses. The City ended up having to pay a premium to clear these holdouts off the land. Many estimates of the total cost of the taking to the City come to around $300 million. General Motors finally bought the land for $8 million. To make the matter worse, the new plant rarely ran at full capacity and at its peak only employed about 3,000 workers. A far cry from the 6,000 GM promised.

Main sees very little chance of relief. She writes that legislation in many states is not likely to be passed. Those who support such legislation are those who fear they may be victims of eminent domain. They are, by definition, scattered and have few resources on their side. Those who oppose reform are the developers, urban planners, and local government officials. These groups are very powerful in the political arena with strong connections to legislators. In many states, law-making moves slowly, and as public anger over the Court’s ruling dies down few politicians will feel empowered enough to stand up to such groups. The author argues that even if these laws are passed, the blight exceptions found in many post-Kelo bills only create a loophole for more Kelo-like takings.

Kelo’s Affect on Churches

In 2003, the Houston Chronicle reported that the City Council of Stafford, a suburb south of Houston, began debating a zoning ordinance that would ban the construction of new churches and the expansion of existing structures within a zone covering about half the city.18 The ordinance would also ban religious groups from renting storefront facilities and require institutions outside the restricted zone to apply for special use permits from the City.

The problem, according to the City, is that Stafford does not collect property tax, and so must rely on sales taxes. However, within this city of about seven square miles, there are 55 religious institutions (a little less than eight churches per square mile). The City believes that the churches in the city are taking up land that could be occupied by businesses that would generate tax revenue. The City argues that many other cities have taken similar actions and such actions have been found to be legal and not a violation of religious freedom. The Chronicle notes that in San Jose, California, a church’s plan to locate in a technology park in the city was opposed by city officials who would rather see the space occupied by a business.

The Stafford ordinance never passed, but incidents like these lead some who are opposed to the Kelo ruling to say that a greater threat posed by the decision could be to Churches. The fear here is based on the fact that while even the poorest citizens pay taxes, churches pay no tax at all. If, as some argue, the Kelo ruling allows governments to take private property so that it can be put to a more profitable (and more taxable) use by another private party, then churches certainly have much to fear. The Kelo decision may not just be a blow to the poor, but it may also be a blow to religious freedom.

Mark Stricherz, a reporter for the evangelical Christian magazine Christianity Today, reported on these concerns. Stricherz warns that Churches may soon find themselves in the same situation as the New London homeowners.19 Since churches pay no taxes, municipalities seeking to increase their tax revenue may find it enticing to take church land and hand it over to another private party. As an example, Stricherz points to two cases. In 2002, the City of Cypress, California attempted to take property owned by Cottonwood Christian Center to build a retail center. In 2003, Living Faith Christian Center, an African American church in New Jersey, bought 28 acres owned by the South Jersey Expo Center for $6 million. Local officials voiced their disapproval, and the church was faced with the possibility of having to sell the land to the government.

Similar cases have come up. Heather Wilhelm writes in National Review Online, a website associated with the right-leaning magazine National Review, that the City of Sandy Springs, Oklahoma plans to pave over a deteriorating neighborhood that includes Centennial Baptist Church, then sell the land to a private developer who will build retail space.20 The land that the City plans to take includes several businesses, homes and two other churches. Wilhelm argues that the City could work around Centennial Baptist and still have plenty of land to build the retail center. The City is working around a McDonald’s and an O’Reilly’s muffler shop that are located near the church. However, Wilhelm argues, cities will be eager to take church land after the Kelo decision because aside from not generating tax revenue, churches often occupy “prime, envied real estate.”21

Baptist Press, the news service of the Southern Baptist Convention, reported that the City of Long Beach, California has declared Filipino Baptist Fellowship’s building blighted.22 The City plans to force the church off of the land. The City has offered alternative sites to the church, but the church says none of the offers are adequate. The church is being defended by the Claremont Institute’s Center for Constitutional Jurisprudence. John Eastman, the Center’s director, believes that the church’s case is the best way to get the Court to reverse its ruling. The Kelo decision did not involve a church. Eastman says that since a church has no economic value to the community, then any kind of development would qualify as an economic improvement under Kelo. Eastman believes that the Court did not take this into consideration when making their ruling, so a case involving a church might make the Court reconsider.

Religious Protections

Many plans, like the City of Stafford’s, never come to fruition. In fact, Stafford is now home to a large, $100 million Hindu temple, and a 70-acre Buddhist complex. According to the Stricherz article from Christianity Today, churches have many advantages on their side that residents and businesses do not. There is, of course, the First Amendment which protects religious freedom. There is also the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA). This act prevents governments from implementing a “land use regulation in a manner that imposes a substantial burden on the religious exercise” of a person or religious institution.23 According to Stricherz, the City of Cypress’ attempt against Cottonwood Christian Center was struck down by a U.S. District judge citing religious discrimination. Living Faith Christian Center in New Jersey was not forced to sell when a federal court prevented the attempt citing RLUIPA.

RLUIPA was passed after the Supreme Court struck down the Religious Freedoms Restoration Act (RFRA) in City of Boerne v. Flores.24 That case, like the Stafford incident, dealt with a zoning issue. The Archbishop of San Antonio, Texas planned to expand a church in Boerne. The building permit was denied by the City because the City considered the church to be a historical landmark. The City said the expansion would violate ordinances that demand the preservation of historical buildings. The Archbishop sued, citing the Religious Freedom Restoration Act. The Court ruled that Congress had overstepped its powers in its passage of RFRA. In response, Congress toned down the protections offered by RFRA and wrote RLUIPA to focus on harmful zoning ordinances and protecting the religious freedom of prisoners. RLUIPA was challenged in Cutter v. Wilkinson.25 The Sixth Circuit court ruled that RLUIPA was a violation of the Establishment Clause since it offered special rights that were not held by non-religious prisoners. In a unanimous decision, the Supreme Court disagreed, upholding the constitutionality of RLUIPA.

Churches also have the support of the community. It may be easy for the public to look the other way when a business or home is bought out by the government. But, when a church is forced to move, the public can be expected to become very concerned. Churches, by their nature, are already very well organized. Their members usually include very important people in the community, and they usually have very strong regional, national, and even international connections. The Archbishop in City of Boerne v. Flores may have lost his case, but with the backing of the Catholic Church he was able to speak loud enough to get Congress’ attention.

It seems that, for now at least, churches and other religious institutions have little to worry about. The Kelo decision is not a step in the right direction, however. RLUIPA was passed to prevent local governments from using zoning ordinances to prevent church growth, but Kelo gives revenue-hungry cities a new tool to replace the one banned by RLUIPA.

Even though churches and other religious institutions have a few tools to their advantage, there is still the issue of private homeowners and business owners. As evidenced by the reaction from both sides of the aisle to Kelo, many believe that Kelo is a gross expansion of government power that was never intended by the Framers. Private property is still at greater risk than ever before of being taken after the Court’s ruling. Some states have passed legislation to prevent eminent domain abuse, however many states have not taken action. The United States Senate has yet to pass the Private Property Protection Act which passed in the House last year. If Carla Main’s observation is right, legislation that is not passed quickly while anger over Kelo is high will never be passed. Until the Court’s ruling is balanced by proper legislation (as the Court expects) there is no protection for property owners.

Endnotes

1. Boston and Roxbury Mill Corp. v. Newman, 29 Mass. 467 (1832).

2. Berman v. Parker, 348 U.S. 26, 31 (1954).

3. Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984).

4. Susette Kelo, et al. v. City of New London, Connecticut, et al., 000 U.S. 04-108 (2005). Opinion of the Court.

5. Ibid., 14.

6. Ibid., 17.

7. Ibid., 19.

8. Susette Kelo, et al. v. City of New London, Connecticut, et al., 000 U.S. 04-108 (2005). O’Connor dissenting 5.

9. Ibid., 8.

10. Ibid.

11. Ibid., 13.

12. H.R. 4128, 109th Congress.

13. Data from website of U.S. House Clerk; available from http://clerk.house.gov/evs/2005/roll568.xml; Internet; accessed 23 April 2006.

14. Data from website of the Castle Coalition; available from http://maps.castlecoalition.org/legislation.html; accessed April 23, 2006.

15. 2005 TX S.B. 7

16. Main, Carla T. “How Eminent Domain Ran Amok,” Policy Review 133 (October & November 2005) [journal on-line]; available from http://www.policyreview.org/oct05/main.html ; internet; accessed 23 April 2006.

17. Ibid.

18. Richard Stewart & Danny Perez, “Stafford may halt spread of churches,” Houston Chronicle, 25 October 003, Sec. A, p. 1.q

19. Stricherz, Mark, “Court Decision Worries Churches.” Christianity Today 49, no. 9 (September 2005): 30.

20. Wilhelm, Heather. “Unholy Land Grab.” National Review Online, 17 January 2006 [archive on-line]; available from http://www.nationalreview.com/comment/wilhelm200601170926.asp; Internet; accessed 23 April 2006.

21. Ibid.

22. Roach, Erin. “City Moves to Condemn SBC Church using Eminent Domain,” Baptist Press, 9 March 2006 [archive on-line]; available from http://www.bpnews.net/bpnews.asp?ID=22812; Internet; accessed 23 April 2006.

23. 42 U.S.C. §§ 2000cc, et seq

24. City of Boerne v. Flores 521 U.S. 507 (1997).

25. Cutter v. Wilkinson 000 U.S. 03-9877 (2005).

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