Eminent Domain: City May Take Private Property and Transfer It to Private Party To Develop for Public Purpose Under Development Plan

In Kelo v. New London (2005) 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439, defendant city approved a development plan aimed at economic revitalization. The plan, created over a number of years and approved by various state agencies, involved a 90-acre area consisting of seven parcels to be developed for specified residential, commercial, and recreational uses. Most of the land was acquired through purchase, but when defendant attempted to acquire the remainder by eminent domain, plaintiffs, the owners of 15 properties in parcels 3 and 4A, brought the present action, claiming that the takings violated the "public use" restriction in the Fifth Amendment's Takings Clause. While the action was pending, defendant announced that it planned to lease some of the parcels to private developers in exchange for their agreement to develop the land according to the terms of the development plan. The trial court granted a permanent restraining order prohibiting the taking of the properties in parcel 4A, but denied relief as to the properties in parcel 3. Both sides then took an appeal to the Connecticut Supreme Court, which held that all of the takings were valid. Held, decision of the Connecticut Supreme Court affirmed.

(a) The Takings Clause requires that private property be taken for a "public use." Thus, defendant could not take plaintiffs' land for the sole purpose of conferring private benefits on particular private parties. Here, however, the takings would be executed pursuant to a carefully considered development plan, and there is no evidence that the plan was adopted to benefit a particular class of identifiable individuals. While it is true that defendant was negotiating a lease with a particular private developer, that developer is expected to sublease to other private parties whose identities were unknown when the plan was adopted. It is, of course, difficult to accuse defendant of having taken plaintiffs' properties to benefit the private interests of unknown parties. (125 S.Ct. 2660, 162 L.Ed.2d 450.)

(b) A sovereign may transfer property from one private individual to another if future public use is the purpose of the taking. Defendant is not planning to open the condemned land to use by the general public, but "use by the public," which was once the accepted test of "public use," has long been replaced by the "public purpose" test. The question is thus whether a city development plan serves a "public purpose," and Berman v. Parker (1954) 348 U.S. 26, 75 S.Ct. 98, 99 L.Ed. 27, 8 Summary (10th), Constitutional Law, §978, and Hawaii Housing Authority v. Midkiff (1984) 467 U.S. 229, 104 S.Ct. 2321, 81 L.Ed.2d 186, 8 Summary (10th), Constitutional Law, §1123, support an affirmative answer. Defendant, rather than acting to remove a blight in the area in question, proceeded on the determination that the area was sufficiently distressed to justify a program of economic rejuvenation. Local determinations of this type are entitled to great deference. (125 S.Ct. 2661, 162 L.Ed.2d 451.)

(c) "As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us . . . to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan." (125 S.Ct. 2665, 162 L.Ed.2d 454.)

(d) Plaintiffs argued for a bright-line rule that defendant's development plan does not constitute a "public use." This argument ignores the fact that promoting economic development is a traditional function of government. Moreover, there is no method of distinguishing economic development from the other public purposes that have been recognized, such as redevelopment of a blighted area (see Berman, supra), breaking up a land oligopoly that created an artificial barrier to normal functioning of the residential land market (see Midkiff, supra), and eliminating a barrier to entry into the pesticide market (see Ruckelshaus v. Monsanto (1984) 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815). (125 S.Ct. 2665, 162 L.Ed.2d 454.)

(e) Plaintiffs contended that using eminent domain for economic development impermissibly blurs the distinction between public and private takings. They are correct in stating that the pursuit of a public purpose will often benefit private parties. However, the achievement of a public good is not rendered ineffective by the fact that it coincides with the immediate benefiting of private parties. Notably, the private developers here were required by contract to use the property to carry out the development plan. (125 S.Ct. 2666, 162 L.Ed.2d 455.)

(f) It is furthered argued that without a bright-line rule nothing would stop a city from transferring citizen A's property to citizen B for the sole reason that citizen B will put the property to a more productive use and thus pay more taxes. Such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented here. While such an unusual exercise of government power would certainly raise a suspicion that a private purpose was afoot, the hypothetical cases posited by plaintiffs can be confronted if and when they arise. They do not warrant the crafting of an artificial restriction on the concept of public use. "A parade of horribles is especially unpersuasive in this context," because the Takings Clause largely operates as a conditional limitation, permitting the government to do what it wants so long as it pays the charge. (125 S.Ct. 2667, 162 L.Ed.2d 456.)

(g) Alternatively, plaintiffs maintained that takings of this kind should require a "reasonable certainty" that the expected public benefits will actually accrue. However, "[j]ust as we decline to second-guess the City's considered judgments about the efficacy of its development plan, we also decline to second-guess the City's determinations as to what lands it needs to acquire in order to effectuate the project." The disadvantages of a heightened form of review are especially pronounced in this type of case. Orderly implementation of a comprehensive development plan obviously requires that the legal rights of all interested parties be established before new construction can be commenced. A constitutional rule that required postponement of the judicial approval of every condemnation until the likelihood of success of the plan had been assured would unquestionably impose a significant impediment to the successful consummation of many such plans. (125 S.Ct. 2667, 162 L.Ed.2d 456, 457.)

(h) Allowing defendant to take plaintiffs' properties will cause substantial hardship. "We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power. . . . As the submissions of the parties and their amici make clear, the necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate. This Court's authority, however, extends only to determining whether the City's proposed condemnations are for a 'public use' within the meaning of the Fifth Amendment to the Federal Constitution." (125 S.Ct. 2668, 162 L.Ed.2d 457.)

A dissenting opinion, joined by three other justices, argued that all private property is now vulnerable to being taken and transferred to another private owner, so long as its use might be upgraded in the process. To reason, as the majority does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings "for public use" is to wash out any distinction between private and public use of property, and thereby effectively to delete the words "for public use" from the Takings Clause. (125 S.Ct. 2671, 162 L.Ed.2d 458.)

Witkin References

On eminent domain generally, see 8 Summary (10th), Constitutional Law, §1112 et seq.

On what constitutes a public use, see 8 Summary (10th), Constitutional Law, §1118 et seq.

On what constitutes a public purpose in private use, see 8 Summary (9th), Constitutional Law, §§1122, 1123.