How Far Can Government Go to Take Land for Economic Development?

The U.S. Supreme Court recently ruled 5-4 in an important decision dealing with governmental takings known as eminent domain or condemnation. In Kelo v. City of New London, the court affirmed a ruling by the Connecticut Supreme Court that upheld the City of New London's condemnation of several properties that were not blighted or in bad condition. These properties, however, were in a district that the city sought to redevelop for commercial and residential use. The controversy related to whether the city's proposed disposition of the property qualified as a "public use" within the meaning of the Fifth Amendment to the Constitution.

It is well established that the government, including municipalities, states, and the federal government, have the legal right to take private property for a public use provided just compensation is paid to the property owner. Just compensation generally means that the property owner is fairly compensated for the property, as well as certain other costs and expenses.

The Connecticut Supreme Court had ruled that the city properly condemned all of the properties in question, including those that were to be ultimately used for private development. The U.S. Supreme Court agreed and affirmed the decision, ruling that the city satisfied the "public use" requirement. The court relied upon a Connecticut law, which recognized that the taking of land for economic development was a "public use" and in the "public interest".

It is not uncommon for a local municipality (such as a city, township or borough), an authority, or the state to condemn property for use as a road or highway, sewer or water line, or other similar uses where the public generally will benefit from the taking. It is becoming more common today that property is being condemned for economic development or municipal "revitalization", which ultimately results in non-public use or development.

It is important to realize that the government's power in this regard is not unlimited and that the taking comes with an obligation of paying just compensation. Just compensation, as indicated previously, includes more than the fair market value of the property. Depending upon the particular statute involved, the property owner may also be entitled to interest, moving expenses, engineering costs, appraisal fees and legal fees.

In its analysis of the "public use" question, the U.S. Supreme Court acknowledged that courts have generally deferred to legislative judgments in this area. Thus, the fact that the Connecticut legislature recognized economic development as a "public use" in the "public interest" allowed it to conclude that the city's condemnation unquestionably served a public purpose, satisfying the public use requirement of the Fifth Amendment to the U.S. Constitution.

The U.S. Supreme Court recognized that any state could amend its own constitution or enact legislation placing further restrictions on its exercise of the power of eminent domain. It noted that many states already impose "public use" requirements that are stricter than those required under the U.S. Constitution.

There is already some movement in Pennsylvania to introduce legislation seeking to "protect" private property from these types of takings.

It is expected that the controversy over these types of condemnations will continue, particularly in view of the fact that the 5-4 decision by the U.S. Supreme Court will probably not deter future litigants from seeking another review of this issue.

The Court's Decision

The U.S. Supreme Court ruled in a recent 5-4 decision that a city could condemn private property for economic development. Some of these properties were neither blighted nor in bad condition. The court held that the takings were proper and that this condemnation of land for economic development was for a "public use" within the meaning of the Fifth Amendment to the U.S. Constitution.

If you have questions about this ruling or about eminent domain, please contact us.