RealEstateEconomyWatch.com

Nearly five years ago, the Supreme Court sanctioned the use of eminent domain-the government’s power to condemn property-for economic rather than public purposes.  Many viewed the case of Kelo v. City of New London as a watershed in the historic struggle between private property rights and public need.

In the backlash that followed the decision, 43 states passed laws limiting the use of eminent domain.  Thousands of families continue to lose their homes every year, though most were lost to public works projects rather economic development projects like the one in New London.

The lack of state or national data makes it very difficult to assess how frequently and for what purposes governments are condemning homes and property. However, there are indications that as stimulus funds make their way to the state and local levels, more property than ever may be at risk.

“Spending billions to repair and expand our nation’s aging infrastructure will require governmental agencies to acquire properties through eminent domain. But it is vital that these real estate acquisitions are conducted with fairness and openness with full disclosure of the facts,” said David Lewis, whose firm advises governments on property acquisitions.

 Airports, water projects, highways, power lines, windmills, bridges, universities, even Maryland horse tracks are using or considering using governmental eminent domain powers to acquire land, even though surveys and polls continue to show two out of three citizens oppose eminent domain.

Much of the attention lately has focused on New York, one of the few states that has not passed legislation in the wake of the Kelo decision and continues to allow condemnations for economic development purposes.  In 2002, Columbia University announced plans to expand its campus onto 17 acres in West Harlem, which would displace 400 residents and light industrial businesses employing more than 1,600 people. Last month Columbia University lost an appellate court decision on the grounds that it had failed to make a case for the use of eminent domain.

The New Jersey Nets basketball team, however, won the court’s approval to build a new home for the team in the much-litigated Atlantic Yards project in Brooklyn, a case that is being appealed to the state supreme court.  Hundreds of families live in the project’s 22-acre footprint.  At the site of the Barclays Bank Center on Prospect Heights, the denizens of a local bar have vowed cuff themselves to the “Chains of Justice” that manager has conveniently installed on the bar. “Because people like bars and people hate banks,” explained the manager.

A group called the Institute for Legal Justice analyzed current New York cases and found that eminent domain for private use is disproportionately trained on the poor and particularly on minorities in New York City and Long Island. Project areas where eminent domain is authorized have a greater percentage of minority residents (92 percent) compared to surrounding communities (57 percent). Median incomes in project areas are less ($21,323.32) than surrounding areas ($29,880.25). And residents of project areas are more likely to be impoverished (28 percent) than in surrounding communities (17 percent).

Meanwhile, up the road in New London, Connecticut, the homes destroyed by the project that Suzanne Kelo fought so hard five years ago are now vacant, weed-filled lots.  Pfizer, the sponsor of the project that was to bring economic development to the community, announced last year that it was pulling out of New London.  Not only is it abandoning the homes Kelo fought to save,  it is shutting down its massive New London research and development headquarters and transferring most of the 1,400 people working there.

Scott Bullock, Kelo’s co-counsel in the case, told the Washington Examiner, “This shows the folly of these redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain.”