The city of New London, Connecticut created a planned economic development of an area that included 115 private properties and was next to a park and a new pharmaceutical facility. The plan was for hotels, restaurants, stores, office space, a museum, and 80 new residences. Nine private property owners sued on the basis that the government could take private property for only “public use” and the creation of the planned area would ultimately be for private use.

On appeal, the Connecticut Supreme Court held that (1) the “economic development” in question qualified as a valid public use under federal and state law; and (2) all of the city’s proposed takings were valid (268 Conn. 1, 843 A.2d 500). Kelo appealed that decision to the Supreme Court of the United States.

A city that was attempting in the case at hand to acquire private land for an “economic development” plan through the power of eminent domain would not have been allowed, under the takings clause of the Federal Constitution’s Fifth Amendment, to take property under the mere pretext of a public purpose, if the city’s actual purpose was to bestow a benefit to another private party. In this case, there was no evidence that the city had an illegitimate purpose. Therefore, even if ultimately there might be 80 new private residences the development plan had not been adopted to benefit a particular class of identifiable individuals.

Issue: Did the taking of private property for “economic development” qualify as “public use?”

Legal Reasoning: The development plan qualified as a “public use” under the Fifth Amendment, so that the city properly could use the power of eminent domain to acquire the unwilling sellers’ property because the city had carefully formulated a plan that it believed would provide appreciable benefits to the community, including—but by no means limited to—new jobs and increased tax revenue. To effectuate the plan, the city had invoked a state statute that specifically authorized the use of the eminent domain to promote economic development.

Court Ruling: The proposed disposition of property “to increase tax and other revenues, and to revitalize . . . an economically distressed city” is held to qualify as “public use” within the meaning of the takings clause of the Federal Constitution’s Fifth Amendment.

Questions:

1. Explain the reasoning in Kelo v. City of New London for taking private property through eminent domain.

2. What is the difference between taking privately owned land for a school and taking privately owned land for economic revitalization?

3. After the Kelo v. City of New London decision, major banks adopted new lending policies. These new policies barred loans to developers who were using eminent domain to acquire private land for their own economic development projects. What are your thoughts on this private response to the Kelo decision?