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THE KELO DECISION
(Kelo v. City of New London, Conn.)

The decision in Kelo—handed down by the U.S. Supreme Court in June, 2005—is important because it expands the governments' power to take private property for public use (the power of Eminent Domain). Specifically, the decision expands the definition of the term "public use" to include private economic development when, as in this case, the State's statute specifically authorizes the use of eminent domain to foster such development.

The Fifth Amendment to the U.S. Constitution limits the governments ability to wield its power of eminent domain by specifying two requirements that it must satisfy in order to take private property: "public use" and "just compensation".

The Kelo decision is significant because it reduces the limitations of the government's eminent domain powers, thus making it easier for it to take private property. Prior to the Kelo decision, the term "public use' was interpreted to mean that the government would own the property it had taken and the public had a legal right to use it, as when the State expands a road, builds a school or hospital or constructs a utility station. The decision in Kelo now gives the government the authority to take private property for private use if the proposed use might foster economic development that may benefit the public through increased business revenues, greater employment levels, and subsequently, more money in the tax coffers.

What affect does the Kelo decision have on property owners and tenants? As Justice Sandra Day O'Connor wrote in her strong dissent, "The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing a Motel 6 with a Ritz-Carlton, any home with a shopping mall or any farm with a factory." Now, if a State's legislature has included economic development as a reason to invoke its power of eminent domain, a private developer can appeal to the government to use its power of eminent domain to take a parcel of private property for what the State would deem to be a more productive use. The State can simply take the private property from its owner and/or tenant and transfer the deed to the developer. Though the owner/tenant will be compensated for the loss of the property, the amount of compensation can vary greatly.

It is widely anticipated that the fallout from the States' exercising their newfound powers granted by the Supreme Court in this decision will adversely and disproportionately affect those who are least apt and able to fight for their rights— the poor and disenfranchised—while greatly benefiting those who have the ear of the politiclly connected.