Revitalization Projects Hinge On Eminent-Domain Lawsuit: Washingon (DC) Post, 5/21/05

By Kirstin Downey

Seven years after a real estate agent came knocking at her door [in New London CT] to tell her that her house was being condemned by the city to make way for a luxury hotel and office complex, Susette Kelo, a 48-year-old nurse, is still seething with rage.

Perched stiffly at the kitchen table of the cozy Victorian cottage she refurbished "from the concrete in the basement to the shingles on the roof," Kelo pours out the story of how she has fought the city and state, taking her case all the way to the Supreme Court. "I don't like to be pushed around," she said.

Now one woman's anger and determination may affect urban revitalization projects all over the country. She and her backers say the government has overstepped; those on the other side say such actions are needed for the public good.

Kelo's lawsuit, filed with eight neighbors and financed by the libertarian advocacy group Institute for Justice, alleges that New London's plan to redevelop the waterfront area where Kelo lives is unconstitutional because the government wants to take her land for private redevelopment, not public use as the Fifth Amendment permits.

While the Constitution grants governments the power to take land for public use, it specifies only that owners be given "just compensation" for their loss. Through the years, the people on the losing end of the arrangement have disliked it; the people deciding what needs to be taken have defended it.

There is little dispute over many kinds of public land use, such as that for schools, roads and water-treatment plants. In the past five decades, however, municipalities have expanded the interpretation of "public use" to include revitalizing dilapidated downtowns, removing urban blight and boosting tourism and tax revenue.

In the Washington area, the power of eminent domain, or the threat of it, was used to spiff up Pennsylvania Avenue and to build the Metro system and the development parcels around its stations. The District hopes to redevelop a down-at-the-heels cluster of stores in Southeast Washington known as the Skyland Shopping Center into a more upscale shopping complex, and if the 16 property owners there don't agree to sell their land to the city voluntarily, city officials say they will take the land through eminent domain. That plan could die if the Supreme Court rules in favor of Kelo.

City officials around the nation are watching uneasily as the Supreme Court deliberates. D.C. Mayor Anthony A. Williams (D), who is president of the National League of Cities, said he is worried that the case could interfere with "the critical need of cities to use this tool — reluctantly — for public purpose and benefits."

Williams said the success of the Kelo lawsuit represents the growing political strength of what he views as radical property-rights activists.

"Some of these people wouldn't use eminent domain to build a highway or a railroad," Williams said.

The Institute for Justice says it accepts the use of eminent domain for roads, schools and parks and opposes it for privately owned, for-profit operations. Lawyers there say they have taken Kelo's case because they think it represents a classic case of excessive use of government power. "It's an unholy marriage between land-hungry developers and tax-hungry local governments," said John E. Kramer, an institute spokesman. Institute officials say they found 10,282 incidents of filed or threatened condemnation procedures in which land was given to private, for-profit parties, such as Target or Costco stores or casino parking lots, between Jan. 1, 1998, and Dec. 31, 2002.

The Kelo case arose when New London, an old and scruffy city seeking to jump-start its economy, turned to urban redevelopment. Once a whaling center second only to New Bedford, Mass., and then a shipping and manufacturing hub, New London has slowly lost its industrial and commercial base.

In 1997, Pfizer Inc., the giant pharmaceutical firm that makes such drugs as Zoloft, Viagra and Celebrex, began discussions with state and local officials about a $300 million research plant in New London that would bring 2,000 jobs. It was the first time a major manufacturer had expressed interest in moving to New London in more than 100 years.

In a March 1999 letter, George M. Milne Jr., president of Pfizer's Central Research Division, wrote that the company's New London expansion "requires the world class redevelopment planned for the adjacent 90 acres," which included Kelo's neighborhood, encompassing about 115 properties. Milne said Pfizer needed a 200-room waterfront hotel, a conference center, a physical fitness area, extended-stay residential units and 80 units of housing.

Kelo learned about the government's plan for her property when a real estate agent showed up on her doorstep in early 1998, telling her that her home was scheduled for demolition and that she had better sell quickly. Kelo bought the two-bedroom, one-bathroom house for $53,000 in 1997. The real estate agent offered her $68,000. Kelo told the agent to get off her property. Other area residents were easier to persuade.

The issue of compensation was a sticking point. When Kelo bought her house, the Fort Trumbull area was run down, wedged between a decommissioned military installation and a ramshackle marina, near a malodorous sewage-treatment plant. But by the time demolition of the neighborhood began, there was a blue-chip corporate research center and an attractive waterfront park with bike trails and green lawns. The sewage smell had abated. And when Pfizer decided to build a state-of-the-art day care center for the children of its employees, the corporation bought homes near its compound, paying prices considerably higher than the previous going rates. One house reportedly sold for $400,000. Kelo said the final government offer she received was $125,000.

In a statement, Pfizer said it is not a party to the suit and has no stake in its outcome. It said it had been a "good citizen" in New London and is now the city's largest taxpayer.

Kelo decided to fight the condemnation and got support from area activists who also opposed the project. With the backing of the Institute for Justice, Kelo and eight other property owners sued and won at the Connecticut Superior Court, but the city appealed to the state Supreme Court, which sided with the city. In February, the U.S. Supreme Court held oral arguments on the case, and a ruling is expected sometime this spring.

No construction has occurred at the site because prospective developers were frightened away by the lawsuits and controversy, said New London city manager Richard M. Brown.

In the meantime, the city's financial plight has worsened. In a recent budget statement, Brown reported that the city lost $1 million in expected tax revenue, partially because the Fort Trumbull neighborhood that had once paid taxes has been destroyed. The city's budget had relied on projected building permit fees that never materialized. Homeowners will likely face higher taxes, city officials said. The city took another blow last week, when the Pentagon announced plans to close the U.S. Naval Submarine Base, one of the city's largest employers, eliminating 7,096 military jobs and 952 civilian jobs.

For Kelo, not much of a victory is possible. Her house faces a gated state park with the modernist, six-story Pfizer research headquarters looming overhead. The blocks where her neighbors lived are a flattened expanse of dusty, rock-strewn soil with a handful of remaining structures poking out desolately. A nearby vacant lot is a dumping ground for smashed and abandoned buses and burned-out cars.

"It was always a quiet neighborhood," Kelo said. "Now it's just quieter. I don't like the fact they're all gone, but what can you do?"

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