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Supreme Court examines limits of city's eminent domain powers

Residents in working-class neighborhood square off against city

From Bill Mears
CNN Washington Bureau

• Case docket:  Kelo v. New London  (FindLaw)external link
• Institute for Justiceexternal link
Supreme Court
City Planning

WASHINGTON (CNN) -- Striking an unusual populist tone, the Supreme Court appeared divided Tuesday over whether city officials in Connecticut have the authority to seize homes in a working-class neighborhood and turn the property over to private developers.

The court heard arguments on the limits of eminent domain, the legal principle under which a government can condemn and seize a person's property and convert it to a greater "public use."

Public agencies have traditionally used eminent domain to eliminate slums, build highways and schools, or other public works. New London, Connecticut, officials argue the use of eminent domain should also be allowed to achieve "economic development" even if private business benefits, since it would increase tax revenue and improve the local economy. (Case background)

The seven homeowners challenging New London say the case is about enriching well-connected developers.

"Without any limits on the government's eminent domain power, every home, church, or corner store" would be vulnerable to being replaced by "shopping centers, business parks and office buildings, since they produce more tax revenue," said Scott Bullock, attorney for the homeowners, before the high court Tuesday.

Matt Dery and his parents, who live next door to each other, were among those who rejected the city's compensation package.

"There's no amount of money that can compensate for what the other side of that coin would be," said Dery, who attended Tuesday's court arguments. "Truly, my parents don't want to wake up rich, I mean, that amount of money you're talking about. They don't want to wake up rich tomorrow, they just want to wake up tomorrow, where they live." The Dery family has lived in Fort Trumball for a century.

Should cities wait for blight?

In Tuesday's arguments, Bullock said there should be a very high standard when applying eminent domain since "every city has [economic] problems and wants more tax revenues."

That brought a flood of sharp questions from the justices, who appeared to agree with the city that the Fort Trumball neighborhood, while not "blighted," was in a "distressed" part of New London, and was zoned for commercial development.

"What if we wait five or six years before we're going to have blight" in certain neighborhoods, asked Justice Anthony Kennedy. By acting now, he said, "the benefit is we're going to have economic development," which he said serves a "public purpose."

"More than tax revenue was at stake" said Justice Ruth Bader Ginsburg, since New London "had gone down and down" and needed to improve its economy.

Bullock countered that there was no assurance the new businesses would boost the city's fortunes, and that tough standards should be in place before land is transferred from one private party to another.

"Do you really want the courts in the business of deciding whether a utility or a business will be successful?" asked Justice Sandra Day O'Connor.

Justice David Souter said that in many cases, "There isn't another practical benefit" besides taking someone's land the government believes would ultimately help all residents. "There is a public benefit if the city is acting in good faith," he said.

Scalia questions public use

New London city officials also faced tough questions from the justices.

Wesley Horton, representing New London, said governments need the flexibility to allow private development in areas that could produce more tax revenue.

"So if you took away a Motel 6 and replaced it with a Ritz Carlton," asked O'Connor, "More taxes. That's OK?"

"Yes it's OK," Horton replied quietly.

"So if B pays more than A, that's acceptable?" countered Justice Antonin Scalia.

Again Horton answered "Yes."

O'Connor asked why the private developers did not just buy the property themselves, instead of relying on eminent domain. "What's wrong with that?"

Edward O'Connell, an attorney for the New London Development Corporation, said eminent domain is needed to prod homeowners to sell their property. O'Connell said eminent domain is especially useful for urban redevelopment, to prevent businesses from relocating to suburbs.

Justice Stephen Breyer told Horton to "put yourself in the homeowner's shoes. He has to pay the taxes, he has to move. What assurances can you offer to give some protections ... Isn't he inevitably worse off?"

Scalia went further in support of homeowners such as Susette Kelo.

"What this lady wants is not more money. There's no 'public use.' You're just giving one individual's private property to another private individual."

Horton said the city understands the situation the homeowners face, "but you have to remember that can happen if there was a road going in, or a school. It doesn't make any difference what type of condemnation there is. Obviously that's a sad situation, there's no question about it. But you can't have one rule for roads and another rule for blight and a third rule for economic development. It's all the same thing."

Two members of the bench were missing from the oral arguments, which were led by O'Connor, the third most senior justice. Chief Justice William Rehnquist has been absent since October, since being diagnosed with thyroid cancer. Justice John Paul Stevens also did not appear, because, said O'Connor, his "flight was canceled."

The case is Kelo v. City of New London (04-0108). A ruling is expected by late June.

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