Very few cases have engendered the outrage over the past ten years as Kelo has. The Economist called it the worst decision of Justice John Paul Stevens career. The aftermath stands as a cautionary tale about the limits of economic reliance upon private developers.
For those of you unfamiliar with the case, Susette Kelo lived in the Ft. Trumbull area of New London, Connecticut. She had made numerous improvements to her property; it also had a view of the water. Another petitioner in the case, Wilhelmina Dery, had been born in her house in 1918, and had lived there her entire life. Her husband, Charles, had lived there sixty years. All told, five petitioners owned nine lots in the area.
New London had development plans for the area adjacent to Fort Trumbull. In addition to other development, pharmaceutical giant Pfizer had a facility there. The entire plan was designed to provide "economic revitalization" to the city. The private developers proposing the development stood to lease the land for $1 per year. A great deal if you can get it -- especially for 91 acres of waterfront property.
Although the city had reached agreements with most of the landowners in the area, these five petitioners remained. Since they were unable to reach agreement, the city exercised its right of eminent domain. The landowners sued.
This was not a blighted area. The eminent domain was exercised specifically to turn the property over to a private developer. The city essentially acted as a go between, with the hope that the development would jump-start the economy.
The Supreme Court ruled that exercise of eminent domain for purely economic purposes was an acceptable public use under the Fifth Amendment's takings clause, prompting a stinging dissent by O'Connor, joined by Rehnquist, Scalia, and Thomas. This is one of the rare times I agreed with the conservative wing of the court.
In the opening of her dissent, O'Connor wrote:
Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i. e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings "for public use" is to wash out any distinction between private and public use of property—and thereby effectively to delete the words "for public use" from the Takings Clause of the Fifth Amendment.
She was exactly right.
I am not a communist, nor am I prone to calling people communists, but this is, in effect, a communist idea: that property should be allowed to be used for what the government deems the "best" purpose, regardless of what the people who own it believe. That the entities who stand to benefit by this are developers and pharmaceutical companies does not change anything.*
What the city of New London ran up against, and what the Court ultimately dismissed as unimportant, was the attachment of people to the land they own. A house becomes a home by loving it, by living in it, by accumulating history within its walls. It is not true that "everyone has a price": how can you put a price on eighty years of a woman's life? There is a reason that eminent domains exists, and it is not only because people ask for more than the market values of the house. People often hold onto their houses because of the meaning they have for them. It is one thing for a house to be purchased for a road, or a park, or another clearly public use, but to be turned over to a private developer, even allegedly with the best interests of the city at heart, is appalling.
And even though it won in the courts, the story did not end well for the city.
In an move showing callousness towards the owners being displaced, the city originally announced it would charge the landowners rent for the five years the case had been winding through the courts. Since they had exercised eminent domain, the theory went, the owners had been living on city land for five years and owed thousands of dollars in back taxes. The case finally ended with New London paying a lot more for the landowner's properties, and agreeing to move Susette Kelo's house to a new location. All of this freed up the waterfront for the development the city claimed it so desperately needed.
It never happened. The developer couldn't get financing. Pfizer, the 500 pound gorilla in this picture, closed its New London facility and moved 1500 workers, just before the tax breaks from the city were due to expire.
And the place where Susette Kelo's house once stood is an empty lot. The city spent tens of millions on this enterprise just to see it evaporate.
I don't know what the moral is in this story, of if there is one. Cities are supposed to be about the people in them. And yes, jobs are important too, but the idea that a corporation -- any corporation -- can be trusted not to take the least expensive route -- or the route in its best economic interest, which may not be in line with the public's -- is naive. And government at any level is supposed to protect its citizens from predations by private entities, not abet them.
*Somewhere in here is a ranting post about how the free-market system isn't, but I don't have the energy right now.