Should localities be able to seize private property for economic development?

CON: Kelo decision chips away at rights

by Joanna Frizzell
For Virginia Business
September 2005

In the Supreme Court’s recent decision, Kelo v. City of New London, the court took the public purpose clause of the Fifth Amend-ment to the Constitution one step further, removing a barrier that previously served as the upper limit of local governments’ power to take property. In the words of Justice Sandra Day O’Connor, the decision allows the locality to “... take private property currently put to ordinary private use, and give it over for a new, ordinary private use, so long as the new use is predicated to generate some secondary benefit for the public.”

What does this mean for today’s property owner? While the short-term effects of this decision will not likely be drastic, in the long term, local governments may begin to push this new outer limit to the detriment of individual property ownership rights. The Kelo case, simply put, states that it is constitutional for the government to take property that is not being used to its “full” potential if the government finds what it believes to be a more productive use for the property.

The Supreme Court had already expanded the traditional “public use” definition to include addressing social harms caused by the property, such as blight. However, the Kelo decision further expands the definition to include addressing social harms that are not directly related to the property being taken. For example, as held in Kelo, local governments may transfer private property from one owner to another simply in order to increase the tax base of an economically strapped town.

By validating the local government’s ability to take property for this purpose, the Supreme Court has created the need for the property owner to be politically aware and even active in order to prevent his or her property from being taken for the benefit of a redevelopment plan. While property owners have always had an obligation to be aware of zoning regulations and changes that might affect their property, until Kelo the Constitution prevented local governments from implementing the zoning changes by redeveloping the property without the owner’s consent simply for economic gain.

The saving grace for property owners is state law, like that of Virginia, where permissible local government action is proscribed. The state has the ability to define the purpose for which a local government may take property. Therefore, we must now rely on the state legislatures to narrow the ability of local governments to take advantage of this newly validated mechanism for increasing their tax base. The public purpose clause is meant to provide protection for the individual property owner against the will of the whole. The Kelo decision slowly chips away at this protection, leaving property owners vulnerable to the political process without the constitutional shield to stand behind.

Joanna Frizzell is a lawyer in the real estate and land use department at the Tysons Corner office of McGuireWoods LLP.