Government officials do not violate the US Constitution when they seize and demolish homes and businesses to make room for private development.
In a major decision that narrows the constitutional protection of property owners, the US Supreme Court ruled Thursday that the Fifth Amendment's Takings Clause authorizes government seizure of private property even when it merely offers a benefit to the public, rather than actual public use.
The 5-to-4 decision means that state and local officials can continue to use the government's power of eminent domain to take private property and turn it over to a private builder as a form of economic development. Writing for the majority, Justice John Paul Stevens said that a century of case law interpreting the Takings Clause "dictates" that the court adopt a permissive interpretation of the government's eminent-domain power.
In a dissent, Justice Sandra Day O'Connor warned that the ruling could bring dangerous consequences for owners of homes and other properties. "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," she writes.
The ruling is a major victory for planning and development officials in economically depressed regions struggling to spark economic renewal. The decision will make it easier to encourage some private development projects by exempting them from the usual requirement that property be purchased on the open market.
At the same time, the court's action marks a crushing defeat for a group of New London, Conn., residents who filed suit in December 2000 to block efforts by the city to seize and demolish their homes and businesses to make room for a 90-acre office, hotel, and housing complex. Facing the wrecking ball are 15 homes and businesses owned by seven families in the city's Fort Trumbull neighborhood.
Scott Bullock, a lawyer with the Institute for Justice, which represented the homeowners, said the court's decision marks "a sad day for the country and a sad day for the Constitution."
"The fight against eminent-domain abuse will now turn back to the state supreme courts, where the battle will be fought out under state constitutions," he says. "We and many other people will be there to fight [on behalf of] homeowners."
City officials said the riverfront project was necessary to boost New London's sagging tax base, and thus it qualified as an economic development project, justifying the city's use of its eminent domain power.
Residents countered that the project was a land grab. since their property was being turned over for $1 a year to a private developer who would retain all profits from the completed project. The benefit to the city was an anticipated boost to local tax rolls.
The Constitution's Fifth Amendment says that private property may be taken by the government if fair compensation is paid to the owner. But there is a second requirement: The property may be taken only if it is for "public use."
The precise issue before the Supreme Court was whether a privately owned development project amounts to a "public use" of the homeowners' former properties.
Such public uses include a public highway, public school, or military base. Public use also includes the taking of property for privately owned businesses such as railroads, power companies, and other firms that need contiguous land to offer regulated services to the public. Elimination of urban blight has also been identified as a public-use taking.
The New London case raised the most controversial application of public use.
"While the city is not planning to open the condemned land - at least not in its entirety - to use by the general public, this court long ago rejected any literal requirement that condemned property be put into use for the public," Justice Stevens writes.
"Promoting economic development is a traditional and long accepted function of government," Stevens writes. "There is no principled way of distinguishing economic development from other public purposes."
Stevens's majority opinion was joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer.
Justice O'Connor was joined in her dissent by Chief Justice William Rehnquist and Justices Antonin Scalia and Clarence Thomas. She writes that the high court has opened the door for cities to in effect turn over private property from one person to another.
"Today, nearly all real property is susceptible to condemnation on the court's theory," she says. "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," she says. "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."
In a separate dissent, Justice Thomas says that the court's ruling erases the public-use clause from the Constitution. "Today's decision is simply the latest in a string of our cases construing the public use clause to be a virtual nullity, without the slightest nod to its original meaning," he writes.
David King, a professor at Quinnipiac School of Law in Hamden, Conn., says O'Connor's dissent is "an exaggeration."
"This case is quite consistent with the court's jurisprudence of the last 50 years," he says. "I don't think this is something the average American has greatly to fear."
In siding with city planners against the homeowners, the high court declined to draw a bright-line distinction between projects involving a public use and those implicating a public purpose. The court said a project that benefits the public in some way can rise to the level of public use needed to satisfy constitutional protections of private property.
State supreme courts have been divided on the public-use issue. Eight have ruled that private economic development does not amount to a public use and have barred condemnations in such cases. They are Arkansas, Florida, Illinois, Kentucky, Maine, Michigan, South Carolina, and Washington.
Six state high courts have ruled that private economic development projects are a public use. Those states are Kansas, Maryland, Minnesota, New York, North Dakota, and Connecticut.
In March 2004, the Connecticut Supreme Court ruled that the New London project was a public use because it is aimed at bringing higher tax revenues and jobs to the economically depressed city. The state high court employed an expansive reading of the term. Public use can mean "public usefulness, utility, or advantage, or what is productive of general benefit," the state high court said.
• Linda Feldmann contributed to this report.