14 Jul 2007 “A Virtual Blank Check to Condemn Private Property”

In a case that received a national outcry against property rights abuse, Susette Kelo took the City of New London, Connecticut all the way to the U.S. Supreme Court. Kelo fought to save her dream home whose property the city government wanted transferred, not for public use, but to benefit the pharmaceutical giant Pfizer.

Supreme Court Rules Governments Can Take One Property Owner’s Land and Give It to Another

There were families who lived on Walbach Street in the historic Fort Trumbull neighborhood of New London, Connecticut, whose members had resided there since 1895. Susette Kelo, who purchased her dream home there in 1997, does not boast such a lineage, but has nonetheless been overjoyed with her view of Montauk Point and Fisher’s Island. But these happy times may soon be over. Since the fall of 2000, Kelo and other residents have been engaged in a fight to save their homes from a redevelopment plan that advances private business interests.

On the day before Thanksgiving in 2000, Kelo and her neighbors were informed their community would be taken from them and demolished under the city’s power of eminent domain. Rather than building a hospital, road, park or other public necessity usually associated with eminent domain evictions, the land is instead being redeveloped to benefit the Pfizer pharmaceutical company – which first moved into the area in 1998 – and other non-public businesses. These plans are being executed by the New London Development Corporation (NLDC), which is exercising the city’s power to implement eminent domain decisions as part of a transfer of authority authorized by New London city officials in January 2000. In addition, the NLDC has final authority to make decisions with regard to contractors.

Among the proposed redevelopment plans is an expansion of the existing Pfizer campus, the construction of a new hotel and athletic club and a new high-end housing development. Prior to the announcement of the NLDC’s redevelopment efforts, the historic Fort Trumbull area was regarded as one of the poorest communities in Connecticut. It was also listed in 2000 by the Connecticut Trust for Historic Preservation as one of the state’s most threatened historic places. While NLDC president Claire Gaudiani contends the overall goal of her group is to enact urban planning promoting “social justice,” she has not specified how exactly the NLDC’s plan to expand private businesses and build luxury homes translates into positive change for the area’s lower classes.

Kelo and her neighbors believe the NLDC is engaging in an unconstitutional abuse of eminent domain powers. In addition, they argue the economic redevelopment plan, as currently designed, seeks to benefit only the rich and politically powerful. For example, the Italian Dramatic Club – a prestigious social club with influential members located within the proposed redevelopment area – was spared demolition. Private homeowners were not granted exemptions.

Political and economic patronage also seems to resonate throughout the NLDC’s proposal. George M. Milne, Jr., is a member of the NLDC’s board of directors. When the proposal was being developed, Milne was Pfizer’s senior executive vice president for global research and development. A significant portion of the redevelopment plan calls for the creation of a bioscience research park to accommodate Pfizer research partners and related businesses. The NLDC plan also includes the creation of a conference center and hotels. Milne retired from Pfizer in 2002.

Kelo and her neighbors filed a lawsuit against the NLDC. Their case was heard before the Connecticut Supreme Court in December 2002. By a 4-3 majority, in March 2004 the Connecticut Supreme Court ruled against the Fort Trumbull homeowners. Their lawyer, Scott Bullock of the Institute for Justice, warned that, “If allowed to stand, this decision gives local officials a virtual blank check to condemn private property at the whim of private parties.”

The residents appealed their case to the U.S. Supreme Court. But in a very controversial decision, a slim 5-4 majority established a troublesome and perhaps far-reaching precedent by siding with NLDC. The Court’s decision effectively expanded the power of eminent domain to permit local governments to clear homes and businesses for private development.

“Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded – i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public – in the process,” Justice Sandra Day O’Connor wrote in her sharply-critical dissent. “Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

The U.S. Supreme Court denied the Institute for Justice’s request for a rehearing in August 2005. In September, Fort Trumbull residents received eviction notices. Connecticut Governor Jodi Rell intervened on the residents’ behalf, according to Kelo, but a statewide moratorium on eminent domain takings, which NLDC voluntarily agreed to, applied only to new takings. The state legislature did not act to address eminent domain abuse, and the city government gave the remaining residents a May 31, 2006 deadline to accept a settlement or be evicted.

Exhausted, and faced with forever losing her home, Kelo reached a compromise with the City of New London in June 2006. The agreement saves Kelo’s home, though it will have to be moved to another neighborhood. Kelo says she submitted the same compromise agreement “years ago but was turned down flat” by the NLDC. “I am not happy about giving up my property, but I am very glad that my home, which means so much to me, will not be demolished and I will remain living in it,” says Kelo.

Sources: New London Development Corporation, The Heartland Institute (September/October 2001), Pfizer, The Institute for Justice, Reason Magazine (2004-2005 coverage), Washington Times (2004-2006 coverage), Hartford Courant (2004-2006 coverage), Tom Blumer’s BizzyBlog (June 30, 2006)

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