Michael Swartz / July 27, 2018

Eminent Domain and Protection for Private Property

Congress is finally moving to undo the Supreme Court’s damage in the Kelo ruling.

While the Supreme Court’s 2010 Citizens United campaign-finance decision generates plenty of political controversy, observers on both sides of the aisle contend that the most egregious error made by the Court so far this century was the 2005 decision in Kelo v. City of New London. That ruling reshaped the definition of “the public good” to include the government’s right to claim “eminent domain” over private property for purposes of economic development. In Kelo, it was successfully argued that this exercise of government power benefits the people in some small way through increased job creation and greater tax revenue, even when a private-sector developer pockets most of the profit.

At the time, our Mark Alexander called Kelo a decision that “offended our Constitution.”

Susette Kelo was the plaintiff in the case. She owned a modest house in New London, Connecticut — a house that stood in the way of a proposed development that backers said would create hundreds of jobs and abundant economic activity. By leveraging a proposed adjacent Pfizer research facility, the New London Development Corporation (NLDC) hoped to create a larger mixed-use development on a site that was then a modest working-class residential neighborhood. (Ironically, the plans included new housing, presumably on a more luxurious level than Kelo’s little pink house.)

When Kelo and other landowners refused to sell, the NLDC, described in the case as “a private nonprofit entity established … to assist the City (of New London) in planning economic development,” took her and the other plaintiffs to court. The case was initially filed nearly three years after Pfizer announced its intentions and 10 months after the NLDC began purchasing properties in the neighborhood, taking more than four years to wind its way through the court system. This was a classic case of a group of working-class Davids vs. the Goliaths of government and special interests, with the libertarian Institute for Justice assisting Kelo and her fellow plaintiffs on a pro bono basis.

While the iconic house was eventually disassembled and rebuilt by a previous owner in another part of town, the surrounding neighborhood was cleared out — only to remain mostly undeveloped over a dozen years later as Pfizer backed out and other legal issues surfaced. Meanwhile, Kelo’s story inspired a book, which this past spring became the well-regarded movie “Little Pink House.” Over the years, public outrage from the Kelo decision also has led to a number of states revamping their laws governing eminent domain.

With the movie renewing interest in the topic, the Private Property Rights Protection Act unanimously passed the House by a voice vote, marking the fourth time since 2005 that the House has addressed the issue. In this instance, the bill from Rep. James Sensenbrenner (R-WI) contains an important “stick”: It “would make any state or locality that uses the economic development justification for eminent domain ineligible from receiving federal economic development funds for two years.”

While the Senate’s docket is fairly full, there’s reason to believe the PPRPA may make it through before this Congress finishes its work. A bill that’s already popular with Republicans may well pass muster with Democrats just so they can score some political points before the midterm elections. The reason: They can remind voters that, for all his populist platitudes and the roaring economy, Donald Trump has a sordid history on the topic of eminent domain.

Years ago, developer Trump had no compunction about seizing property when it stood between him and an enhanced limousine parking lot. “You’re talking about … a little group of terrible, terrible tenements; just terrible stuff, tenement housing,” Trump told John Stossel, then of ABC, in the 1990s. But Vera Coking, the owner of this particular “outparcel,” won her court battle against Trump.

Stossel also notes that Coking turned down a previous million-dollar offer when Trump sought to acquire the land for $251,000 — far from “just compensation,” his lowball offer, said Stossel, made Trump a “manipulative bully.” With Trump’s history, passing a bill limiting eminent domain and daring the president to veto it would provide powerful political ammo for the Left.

During the 2016 campaign, Donald Trump sold his nascent tax plan by promising, “In order to achieve the American dream, [this plan will] let people keep more money in their pockets and increase after-tax wages.” Susette Kelo put her money and sweat equity into a place where she believed she could make a better life for herself, only to see someone with deeper pockets push her out.

It’s a wrong that should have been righted 13 years ago, and we ought not let the opportunity pass by again. The next Congress, after all, may not be as friendly to private property rights.

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