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Can a city give your home to a private developer? In 2005, the Supreme Court said yes.

Susette Kelo, a few months before the Supreme Court let the city of New London take her property.
Susette Kelo, a few months before the Supreme Court let the city of New London take her property.
Spencer Platt/Getty Images

Officially, the Supreme Court's decision in the case of Kelo v. City of New London, which was decided 10 years ago today, was a defeat for advocates of strong property rights. But in practice, it didn't work out that way. The case publicized how easily a city can take ordinary people's homes using a power called eminent domain. And it led to a political backlash that wound up strengthening property rights across the country.

The case was a classic David and Goliath story. Susette Kelo was a nurse who lived in a modest pink home in New London, Connecticut. The city wanted to take her house as part of a project to help the drug company Pfizer build a headquarters for its research division. Kelo argued this was unconstitutional because the Fifth Amendment only allows the government to take private property for public use.

On June 23, 2005, the Supreme Court sided with the city, ruling that the city's belief that the project would generate tax revenues and jobs was sufficient to satisfy the Fifth Amendment. The vote was 5 to 4.

Ironically, these tax revenues and jobs never materialized, and nothing was ever built on the site where Kelo's house once stood.

But the decision galvanized property rights supporters across the country. Many states have passed legislation to strengthen property rights over the past decade. And today, the view that the Fifth Amendment should bar taking the property from one private party for the benefit of another private party gets a lot more respect among legal scholars than it did a decade ago

"Public use" doesn't mean what it sounds like

By the time Kelo's case reached the Supreme Court, many of her neighbors' homes had already been demolished. (John Nordell/Christian Science Monitor via Getty Images)

When the government wants to take someone's land, it must meet two requirements spelled out in the Fifth Amendment. First, the government must pay "just compensation." And second, the taking must be for public use.

You might think "public use" would mean things like roads and post offices, but in recent decades the courts have interpreted it much more broadly. In the 1954 case Berman v. Parkerthe Supreme Court ruled unanimously to allow the government in Washington, DC, to take a man's department store because the surrounding neighborhood had fallen into "blighted" conditions. While the taking would result in the land being given to another private developer, the Supreme Court concluded that removing the public nuisance of blighted conditions was itself a sufficient public benefit to justify it — even though the department store itself was in good repair.

The Berman ruling became a blueprint for cities to routinely use eminent domain powers on behalf of well-connected private developers. City officials would commission a study showing that a particular neighborhood was "blighted" and then take people's land and turn it over to developers who wanted to build shopping malls, office buildings, or other facilities.

The term "blight" proved to be so elastic that almost anyone could be a target. Unsurprisingly, marginalized groups were disproportionately harmed. As the NAACP pointed out in a 2005 brief submitted in the Kelo case, cities undertook a series of "urban renewal" projects that so frequently targeted black neighborhoods they came to be known as "Negro removal" projects. Neighborhoods populated by working-class whites became targets, too.

By 2005, the use of eminent domain for private development had become routine. In an influential 2003 study, the Institute for Justice — the libertarian advocacy group that represented Susette Kelo — identified 10,000 properties that had been taken by eminent domain for use by another private party between 1998 and 2002.

Pfizer didn't even need Susette Kelo's house

Pfizer's New London facility, shown here in early 2005, had already been built when the Supreme Court heard the Kelo case. (John Nordell/Christian Science Monitor via Getty Images)

One sign of just how casual cities had become in their use of eminent domain: the city of New London didn't even need to take Susette Kelo's land — or the land of eight other property owners who challenged the takings — to allow Pfizer to build its new office complex. The city divided up the land into several parcels; the parcel Pfizer was using for its new office complex — which was completed in 2001 — didn't contain any of the objecting property owners' homes.

Those particular homes were in two other parcels. The city of New London planned to use one parcel for "research and office space as a market develops for such space," as the Supreme Court describes it. The other was vaguely designated for "park support."

Kelo's neighborhood wasn't blighted. So how did New London meet the Constitution's "public use" requirement? New London was in economic distress in the early 2000s, and the city government argued that the Pfizer project was essential for reviving the city's fortunes. It predicted the project would generate desperately needed tax revenue and jobs.

But critics pointed out that this interpretation of the public use requirement removed any meaningful limits on the use of eminent domain. Presumably, cities wouldn't be pursuing a development project in the first place unless they anticipated some benefit to the public.

The jobs and tax revenue the city of New London predicted never materialized. After the real estate market turned sour in 2008, the city couldn't find anyone interested in developing the land that had once held Kelo's house. Today, the site is an empty field, providing no jobs to anyone.

Meanwhile, Pfizer left New London in 2010, a year before generous tax breaks by the city were scheduled to expire.

Earlier this year, the mayor of New London proposed turning the field where Susette Kelo's home once stood into a "memorial to all those adversely effected by the city’s use of eminent domain."

The Kelo ruling galvanized property rights activists

This 2007 image shows a sign painted by St. Louis eminent domain activist Jim Roos on the side of one of his buildings that had been slated for condemnation. (christina rutz)

Susette Kelo fought the taking of her property all the way to the Supreme Court. On June 23, 2005, she lost in a narrow 5-4 ruling.

Then, as now, the swing voter on the court was Justice Anthony Kennedy. Kennedy and the court's four liberals ruled that the Constitution's public use requirement really just requires that the government have a public purpose — and that increased tax revenue or economic activity qualified.

"The specter of condemnation hangs over all property," wrote Justice Sandra Day O'Connor, in a dissenting opinion signed by the court's conservatives. "Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

The public disagreed with the court ruling, with polls showing that around 80 percent of Americans opposed the use of eminent domain for economic development projects. And public anger about the ruling led to legislative changes in dozens of states.

Ilya Somin, a legal scholar at George Mason University who recently published a book about the Kelo case, estimates that 45 states have passed eminent domain legislation. He estimates that about 20 of the reforms placed serious limits on eminent domain abuse, while the rest made only minor or cosmetic changes to the law.

Even in states that didn't change the law, local officials became more reluctant to use eminent domain, for fear of alienating voters. Overnight, the Supreme Court ruling transformed eminent domain abuse into a high-profile, populist issue.

And Somin says the Kelo ruling has transformed the scholarly debate over property rights and the Fifth Amendment.

"Before Kelo, most experts thought it had been settled that a public use was whatever the government said it was," Somin says. "Kelo shattered that. Now there's an active debate over public use."

It's hard to know how much difference these efforts have made, because there's no national database of eminent domain cases. But Somin believes that, at least in the 20 states that enacted significant reforms, eminent domain abuse occurs less often than it did a decade ago.

Could Kelo be overturned?

The justices who decided the Kelo decision, shown here in a 1998 photo. (AFP/Getty Images)

While the Kelo ruling is unpopular with the public, there's little reason to think the decision is going to be overruled any time soon. Justice Kennedy, the swing voter in the case, is still on the court. And while four justices from the Kelo era have left the court, each has been replaced by someone ideologically similar. So if another case reached the Supreme Court today, it's likely the court would reach the same result it did a decade ago.

Yet Somin believes that might change in the coming years. He draws a parallel to the infamous 1986 case of Bowers v. Hardwick, in which the Supreme Court upheld the constitutionality of anti-gay sodomy statutes. While gay rights supporters lost the case, it helped raise the profile of the issue. And the fact that four of the court's nine justices dissented from the majority's ruling suggested that support for gay rights was on the upswing. Seventeen years later, in 2003, the high court reversed itself and held that sodomy laws were unconstitutional.

By the same token, the Supreme Court's division in the Kelo case suggests that property rights advocates have been making progress. The court's 1954 ruling expanding eminent domain had been unanimous, and courts had rarely placed limits on government takings prior to 2005.

Somin hopes that a new generation of legal scholars — and, eventually, justices — could overturn the Kelo decision. "I think left-wing opposition to Kelo outside of the judiciary might eventually influence the views among federal judges, particularly as new generation enters the system," Somin says.

He notes that while eminent domain has an ideological split in the courts — with conservatives supporting property rights and liberals favoring greater latitude for cities — that split is not so evident in the general public. Letting cities take people's homes for the benefit of wealthy developers offends many liberals as much as it does conservatives.