The right balance

June 26, 2005

IT MAY be difficult for private homeowners or shopkeepers to see their property condemned and replaced by office complexes and shopping malls, even with fair compensation. But a closely divided U.S. Supreme Court seemed to strike the right balance in last week's 5-4 ruling allowing cities to take private land in the larger public interest of economic development.

The case involved efforts by New London, Conn., to recapture tax dollars and jobs after decades of decline. By 2000, after the federal government had closed a waterfront naval facility, spiking unemployment and helping to push the city's population to a near 80-year low, state and local officials had targeted the city for revitalization and authorized a private nonprofit development agency to help bring the waterfront area back to life. In part piggybacking on Pfizer Inc.'s decision to build a $300 million research facility in the area, officials came up with a plan for research-and-development office space as well as a hotel, restaurants, stores, new residences and a pedestrian riverwalk, among other improvements. A small group of landowners refused to make way for the project and sued in state court.

As a matter of practice, New London's plan was similar to what officials in many cities are doing to spur redevelopment. Imagine Baltimore without the Inner Harbor, Charles Center and the west-side development, each accomplished using some form of eminent domain.

But was New London's plan permissible as a matter of law? The majority, led by Justice John Paul Stevens, stressed the court's history of allowing the acquisition of private land for public use, specifically for major projects such as railroads or eliminating tracts of blighted areas. But the majority also read "public purpose" into public use when cities want to seize private land for economic development that will revitalize the tax base and create jobs.

The dissenters, led by Justice Sandra Day O'Connor, rejected this broader reading and sternly warned that any private land that might be upgraded is now vulnerable. But the majority did not give municipalities carte blanche to displace private landholders or to merely transfer their property to private developers. In this case, the majority seemed impressed by the extensive local planning and approval process - and agreement by the state's highest court. Justice Stevens noted that states and localities could impose more stringent eminent domain restrictions.

This court doesn't consistently give deference to state or local decision-making, but saying that's the proper forum to determine the rules and limits of redevelopment strikes the right chord.

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