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By Kristina Dalman |
Condemning Property to Foster
Redevelopment
The U.S. Supreme Court is currently considering a case that many legal scholars
consider to be the most important property rights case in decades. The Supreme
Court in February heard oral arguments in Kelo v. City of New London, Connecticut
and will rule on the case before its summer recess.
In Kelo, 15 property owners comprising 1.54 acres of land are challenging the constitutionality of New London’s condemnation and threatened condemnation of over 90 acres as part of a redevelopment plan for the Fort Trumbull area of the city. New London’s redevelopment plan for the area, which is located on the Thames River, includes making way for commercial and residential uses to complement the neighboring Pfizer global research facility, which opened in 2001.
The city contends that the redevelopment plan will create new jobs, increase taxes and other revenues and encourage public access to and use of the city’s waterfront. They believe it will eventually build momentum for the revitalization of the rest of the city, including the downtown area.
The proposed Fort Trumbull plan includes the development of a waterfront hotel and conference center, a new marina for tourist boaters and commercial fishing vessels, 80 new residences, new parking lots and office buildings.
The objecting property owners argue that New London’s actions violate the Fifth Amendment to the U.S. Constitution, which states that private property shall not “be taken for public use, without just compensation.” They argue that taking their property for redevelopment as another private use is a violation of their constitutional rights.
Thus, at the center of the Kelo case is the question that is directly applicable in the context of brownfields — is it ever a “public use” for a governmental entity to foster the redevelopment of property through the use of its eminent domain power?
Earlier Eminent Domain Rulings
The court’s decision to hear the Kelo case follows a major reversal by
the Michigan Supreme Court on this issue. In 2004, the Michigan Court, in Wayne
County v. Hathcock, reversed its position articulated in its landmark 1981 Poletown
Neighborhood Council v. City of Detroit decision, which granted Detroit the
right to condemn an entire neighborhood in the city to make way for the construction
of a new Cadillac plant by General Motors.
Although the Poletown case was not reviewed by the U.S. Supreme Court, it has been relied upon by many states as the basis for rejecting constitutional challenges to the taking of private property for private economic development purposes.
As the Michigan Supreme Court pointed out in Hathcock, the economic benefit for the greater community is a troubling basis for “taking” private property because it can validate practically any exercise of eminent domain power. As the Hathcock court pointed out, “[a]fter all, if one’s ownership of private property is forever subject to the government’s determination that another private party would put one’s land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, ‘megastore,’ or the like.”
In the case of brownfields, many have been comforted in knowing that state laws and cases are well developed in finding that it is not a violation of the Fifth Amendment to condemn blighted properties to foster redevelopment.
However, the traditional safe harbor of taking “blighted” properties is likely to be addressed by the court in Kelo or in its expected progeny of cases in light of some recent state court decisions which have revealed some creative uses of the term “blighted” in order the justify the taking of land.
In short, the abuses of some are likely to call into question the use of all eminent domain power in the context of Kelo. Further, it is not unreasonable to expect that Kelo will write the first of many new chapters in the discussion of the limits of eminent domain powers, with each new chapter addressing different facets of the law.
A Chilling Effect
The lack of clarity in EPA’s own policy guidelines may also have had a
chilling effect on the redevelopment of brownfields. At issue is EPA’s
1995 “Policy on CERCLA Enforcement Against Lenders and Government Entities
That Acquire Property Involuntarily.”
The agency’s policy provides an exemption for “involuntary acquisitions” but does not specifically address whether local governments are protected from liability when they redevelop lands acquired involuntarily. It is also unclear whether the exemption applies when local governments use their eminent domain powers to gain site control in an attempt to foster the redevelopment of abandoned lands.
The Local Brownfields Acquisition Task Force, a coalition that includes the National Association of Local Government Environmental Profession-als (NALGEP), the International Municipal Lawyers Association (IMLA) and the International City/County Management Association (ICMA), is in the process of studying whether EPA’s guidelines have chilled municipal brownfield redevelopment efforts.
The group may seek to further clarify EPA’s guidelines in recognition that local governments are often the driving force behind many brownfield redevelopment projects.
Although the creation of a new law or the further refinement of the law can be a painfully slow process, it is necessary in order for developers to make investment-backed decisions concerning the development of land and for municipalities to feel comfortable in exercising their powers.
However, rather than waiting for the courts to define the parameters of the eminent domain law, federal and state legislators should act quickly to fill in the blanks and the holes left by Kelo when it issues its decision later this year. BFN
Kristina M. Dalman is a partner in the Real Estate Land Use practice of Gardner Carton & Douglas’ Chicago office.
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