By Martin L Haines
New London, Conn., adopted a redevelopment plan in 2000 to permit the construction of a hotel, conference center, office space and costly living accommodations on properties currently owned by private parties, including homeowners. The properties are not in a blighted area. The municipality intends to condemn the properties and lease them to a private development company that will arrange for the construction of the proposed facilities.
Those new facilities will generate much more tax revenue than the properties now do. The project will provide jobs and will accommodate employees of a recently constructed Pfizer pharmaceutical plant located nearby, the arrival of which promoted the condemnation plan.
Not everyone is happy with the proposal. Several dwellings are affected, some occupied by families who have lived in them for many years. They oppose the condemnation of their homes; they want to stay where they are. Their opposition has generated a lawsuit to prevent the city from proceeding with its redevelopment plan. The suit, Kelo vs. New London, was argued before the U.S. Supreme Court on Feb. 22. A decision is expected in June.
Under state and federal law, including New Jersey law, private property may be taken for "public" use provided "just compensation" is paid to the property owner. This is the power of eminent domain. New London is prepared to pay that compensation. The private property owners are not interested. They don't want money. They want to continue living in their long-time homes.
They argue that the city's proposed condemnation, since it is designed only to obtain economic benefits, is not a "public" use. They have sued to stop the project.
The Connecticut Supreme Court's decision was against them. It held that the New London taking was permissible, that it represented a public use of the property. It said:
"We conclude that economic development projects . . . that have the public economic benefits of creating new jobs, increasing tax and other revenues, and contributing to urban revitalization satisfy the public use clauses of the state and federal constitutions."
Takings for purely economic reasons are not unusual. According to the Institute for Justice, which represents the New London property owners, its research has discovered more than 10,000 such takings nationwide.
The issue has never been decided by the U.S. Supreme Court. The Michigan Supreme Court addressed it more than 20 years ago. It held that Detroit's taking of property, and its sale to General Motors (at a discount) for the construction of a new plant, was a public taking.
The power to condemn private property purely for economic reasons was challenged in Michigan two decades later. This time, its Supreme Court held that a proposed taking by Wayne County was unconstitutional. The court said that its earlier decision was a "radical departure from fundamental constitutional principles." This 2004 ruling may help the New London homeowners in their case before the U.S. Supreme Court.
Obviously, takings for solely economic reasons, like the one in New London, pit the rich against the poor. Such takings are attractive to developers, construction companies and business enterprises of all kinds. Large profits from the supposed improvement of the properties involved are realistic expectations.
This conflict of public vs. private interests is not easily decided. One's sympathies are with the homeowners, but the public interest is considerable.
If the court honors that interest, the homeowners will be heavily penalized. They will suffer permanent and unwelcome changes. They may have a long wait to receive their compensation. Condemnation proceedings, often subject to problems of compensation and other issues, can take time. The money the homeowners receive for their homes may be taxable, at least in part. They will have difficulty, especially in today's real estate market, in finding comparable replacement housing. Worst of all, they will lose their long-cherished homes, their familiar neighborhoods and their familiar friends.
New London's insistence that the taking is for a public use raises its own questions. Redevelopment success is a guess, not a certainty. The project may fail. How is that concern to be considered? How is a municipality's judgment to be weighed?
Reasonableness is a test we use in other areas of the law. It would be appropriate to use it here.
Asbury Park Press: www.app.com
Martin L. Haines, of Moorestown NJ, is a retired Superior Court judge.