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Supreme Court Looks at Economic Development as Justification for Taking Private Property

The approximately 90 acres of land that are in dispute are adjacent to a Pfizer global research facility. In justifying its redevelopment plans, the city says that the new use of the property would generate higher property tax revenue, provide new employment opportunities to make up for the closing of a local Navy facility, encourage access to the city’s waterfront and build momentum for revitalization of the downtown area.

The property owners claim that the city’s plans represent an unconstitutional transfer of land from one private property owner to another in violation of the Fifth Amendment. That view did not persuade the Connecticut Supreme Court, which ruled in favor of the city last March, taking a broad approach to the issue of public use and finding that courts do not need to carefully examine this type of taking when a legislature has spoken.

NAHB has filed an amicus brief in support of the property owner in the case — Kelo v. City of New London. While not taking the position that economic development can never be a public use under the Constitution, NAHB is advocating heightened judicial review of such municipal plans and views the case as an opportunity for the Court to set out some parameters to curb abuses by local governments.

It is fairly well established that parks, utilities and the redevelopment of slums are appropriate applications of public use in most states. The courts, however, have been splintered over the recent trend by localities to attempt to take private property using economic development — higher tax revenue and more job opportunity — as a “public use" appropriate for a taking.

A favorable response from the Supreme Court would also help provide some certainty to NAHB members who are working with local governments about which types of eminent domain projects can go forward.

The Supreme Court last Tuesday also heard arguments in the case of Lingle v. Chevron U.S.A., which concerns a well-established legal test for a Fifth Amendment taking. For a story on that case in this issue of Nation’s Building News, click here.

For more information, e-mail Mary Lynn Pickel, or call her at 800-368-5242 x8485.

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