Eminent Domain - Ruling Blurs the Line Between Public Use and Private Economic Development

October 5, 2005

In June of this year, the U.S. Supreme Court, in a 5-4 ruling, granted cities and towns the right to take private property to promote private economic development projects even though the Constitution prohibits the government from taking private property except for a ‘public use.’

The ruling, derived from Kelo v. New London, a land-use law case argued before the court on Feb. 22, 2005, ended a bitter, intently watched confrontation between homeowners and the City of New London, Conn. The case arose from New London’s use of eminent domain to condemn privately owned real property so that it could be used for economic development.

A private entity acting as the city’s legally appointed agent, the New London Development Corporation (NLDC), created a development plan that included the construction of a resort hotel and conference center, a new state park, 80-100 new residences, and various research, office, and retail space. In 2000, the city of New London approved the plan and authorized the corporation to acquire the land in the Fort
Trumbull neighborhood.

The owners of approximately 100 of the subject lots agreed to sell to the corporation at a negotiated price. However, 15 owners did not agree, and the city ordered the development corporation to condemn the 15 holdout owners’ lots.

The last clause of the Fifth Amendment to the United States Constitution, known as the Taking Clause, states ...

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by: Todd C. Ratner, Esquire

BusinessWest
September 19, 2005

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