Property Damage

(This piece originally appeared on June 24, 2005.)

With yesterday’s U.S. Supreme Court decision in Kelo v. New London, the nation's highest court has essentially given federal, state and local governments an unlimited ability to take a private citizen’s property as long as proper payment is made. The Fifth Amendment to the U.S. Constitution prohibits private property from being taken through eminent domain without "just compensation," but it further stipulates that the property must be taken for a "public use." In Kelo, the Supreme Court watered down the public use requirement so as to make it almost meaningless.

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The case involved an eminent domain dispute in Connecticut. The City of New London — described in the Supreme Court’s opinion as a "distressed municipality" — approved a downtown development plan that it hoped would create 1,000 jobs and increase its tax revenue. The plan included building a hotel, restaurants, shopping space, office space and a parking lot. Some residents willingly sold their houses to the city, but others, including Susette Kelo, did not.

Ms. Kelo owned a home in the neighborhood targeted for development. She claimed that New London's downtown development plan was not producing a public use; rather, it was merely transferring her property from one private party to another — specifically, from her to a commercial developer.

Yesterday, a 5-4 majority of the Supreme Court disagreed.

In an opinion authored by Justice Stevens and joined by Justices Breyer, Souter, Ginsburg and Kennedy, the majority held that the courts should defer to the determination of legislators and public officials as to whether a project could benefit the public. It also held that economic development and the potential increase of government tax revenue constituted a public use.

Justice O’Connor, who authored a dissenting opinion that was joined by Chief Justice Rehnquist and Justices Scalia and Thomas, recognized the likely result of the majority’s opinion:

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. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

The only bright spot in the majority’s opinion was that it stated, "We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power. Indeed, many States already impose ‘public use’ requirements that are stricter than the federal baseline." The majority cited last year’s Michigan Supreme Court decision Wayne County v. Hathcock as an example.

In Hathcock, the Michigan Supreme Court was faced with the question of whether a proposed business-and-technology park south of Detroit Metropolitan Wayne County Airport constituted a "public use." All seven Michigan Supreme Court justices agreed that a government could not justify taking private property merely on grounds that a different use of the property might increase government tax revenues.

Therefore the citizens of Michigan, unlike the majority of Americans, have protection against governments that seek to increase their revenue by forcing their residents to move. If it were not for Hathcock, local Michigan governments could try to enhance their own property tax revenues by taking the homes of longtime residents and turning those properties over to real estate firms that might build new housing developments or businesses. Given the provisions of Proposal A of 1994, governments pursuing this strategy could then collect higher taxes, since the taxable value of the properties would likely have increased.

Under Kelo, such actions would not violate the Fifth Amendment. Fortunately, under Hathcock, they would violate the Michigan Constitution.

For the foreseeable future, it will be up to the individual state courts and legislatures to alleviate the damage the U.S. Supreme Court has done to the Fifth Amendment. As for the Supreme Court, perhaps instead of searching through obscure European legal decisions in hopes of finding a new constitutional right to recognize, it should focus on protecting the rights the Founding Fathers enshrined in the Constitution. As James Madison said: "Government is instituted to protect property of every sort. … This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own."

The Kelo majority has lost sight of this principle and damaged our system of government.


Patrick J. Wright is senior legal analyst at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.