The U.S. Supreme Court is expected to soon decide a property rights case that could have ramifications on future development projects in downtown Glens Falls, N.Y.
In the case, homeowners in New London, Conn., argue that the city illegally used eminent domain to take their homes in order to redevelop the neighborhood for a hotel complex and luxury townhouses.
Eminent domain, also called condemnation, allows property to be taken for public use — provided there is adequate compensation.
Lawyers for the homeowners say taking property under a comprehensive urban renewal plan does not meet the standard of "public use" that entitles municipalities, school districts and some quasi-government agencies to take property by eminent domain.
The potential to lower the general tax burden, in and of itself, does not constitute a public use, property rights advocates say.
Those advocates say this case — if decided in the homeowners' favor — would substantially rein in the use of eminent domain for economic development practices that courts have generally allowed for more than two decades.
"It will affect every property owner across the country," said Steven Anderson of the Institute for Justice, a property rights group representing several New London homeowners.
The use of eminent domain became an issue in the Glens Falls mayoral race earlier this year when the Warren County Conservative Committee endorsed city 2nd Ward Councilman Peter McDevitt, largely because of his opposition to using eminent domain to acquire the Burger King property at the corner of Glen and Warren streets.
BBL Inc., an Albany-based development group, had proposed building a hotel complex at the site adjacent to the Glens Falls Civic Center, but owners of the Burger King said they're not willing to sell the property.
McDevitt and others have also said that Glens Falls Mayor Robert Regan may use eminent domain to redevelop property downtown for a Boscov's department store.
Regan acknowledged this week that he is monitoring the New London case closely, but he said he does not know if he will attempt to use eminent domain to facilitate either project.
"The way I look at it, we have a lot of projects we're working on, and we always look for the best ways to accomplish them," he said. "I don't put a lot of energy into thinking about specific mechanisms or get overly focused on them."
Courts have generally upheld the use of eminent domain to facilitate economic development projects since a landmark Michigan Supreme Court case in 1981, when the city of Detroit used eminent domain to redevelop a residential neighborhood for a General Motors plant, said Mark Moller, editor in chief of the Cato Institute Supreme Court Review.
The Michigan Supreme Court, however, recently reinterpreted some aspects of the earlier decision, providing the basis for the New London case.
In New London, Pfizer Inc., a pharmaceutical company, agreed to build a research center in New London, with the understanding the city in cooperation with the New London Development Corp., would develop a 90-acre site along the Thames River for a hotel, offices and luxury town houses.
The research center was completed in 2001, but the rest of the development is in limbo because several home owners have been fighting the eminent domain process.
The argument over eminent domain revolves around the interpretation of 12 words in the Fifth Amendment to the U.S. Constitution: "nor shall private property be taken for public use without just compensation."
Critics of the New London project, such as Moller and Anderson, say the intent was to limit the use of eminent domain to specific projects like roads and schools that benefit the general public.
Allowing local governments to seize property and turn it over to developers leaves the process susceptible to corruption and cronyism, critics say.
Left unchecked, they suggest, officials could target virtually any property for any reason.
"None of us are safe in our homes at all. That's what it comes down to," said Carol LaGrasse, president of The Property Rights Foundation for America, based in Stony Creek.
Regan said that it appears to him that the nation's forefathers wanted to make sure that people whose land was taken received fair compensation.
"The basic ability of a community to control its destiny needs to be conserved," he said.
Regan pointed to the use of eminent domain to acquire property for railroads as a precedent for taking property to facilitate private economic development projects.
"All of those were upheld, and they were 100 percent private companies," he said.
From his understanding of the New London case, it appears city officials may have been able to settle out of court, Regan said.
"It looked like there were some lost opportunities to negotiate," he said.
Money isn't always the issue, however, said Anderson, of the Institute of Justice.
One of the litigants in the New London case is an 87-year-old woman who has lived in the same house since she was born.
Regan said that the 1981 case in Detroit may be an example of when a city goes too far.
Even if the Supreme Court does overturn the New London acquisitions, he said, the court most likely will clarify under what conditions eminent domain can be used for economic development projects rather than reject its use wholesale.
If the court does rule that municipalities can not take properties to carry out comprehensive plans, the city could still take downtown property by declaring it blighted.
Courts have generally allowed municipalities to take blighted properties and turn them over to another private property owner to redevelop since the mid-1950s, experts on the topic said.
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