NICK EICHER, HOST: It’s Monday morning, Labor Day, and what better use of Labor Day than to do a little work? Today is September 3rd, 2018. Good morning to you, I’m Nick Eicher.
MARY REICHARD, HOST: And I’m Mary Reichard. Today, we begin with a cautionary tale.
It’s about the Supreme Court, the meaning of words, and the liberty of property ownership.
EICHER: The year is 1998. Suzette Kelo is a divorced, middle-aged mother of five. She’s a nurse. And she’d scraped some money together to purchase a modest, 900-square-foot Victorian house.
She’d always dreamed of a view of the river, and at long last she could see it from her porch in New London, Connecticut.
She painted her house antique pink.
Soon she became part of a close-knit, lower middle-class neighborhood.
But Kelo hadn’t even lived a year in her little pink house before trouble came knocking at her door.
The city of New London wanted to use eminent domain to seize her land, and bulldoze her house and her neighbors’ houses—all in the service of a private developer.
REICHARD: Now, eminent domain is a legitimate legal concept. It’s designed to get rid of social harms, such as not letting a chronically blighted part of town ruin the whole.
But that wasn’t the case in Kelo’s neighborhood.
It had modest homes, but not blighted ones.
Nor were those homes in the way of critical public-use projects, either, like a highway or school.
That’s what the Fifth Amendment’s Takings Clause protects against: It bars government from taking “private property—for public use without just compensation.”
EICHER: City and state officials were trying to entice pharmaceutical giant Pfizer to town.
That would “reinvigorate” that area to include office space and upscale homes. It would bring in jobs. They would generate more tax revenue.
City officials argued that’s a legitimate public use, no matter that they’d proposed taking the land of one private property owner and giving to another.
But Kelo and the other families refused to sell.
A movie version of Kelo’s plight was released in April. It’s called “Little Pink House.”
Listen to this scene in which a government official comes by the house to convince Kelo to sell.
OFFICIAL: Mrs. Kelo! Hi!
OFFICIAL: Mrs. Kelo, I have great news! They have agreed to increase their offer by $10,000. Over market value!
KELO: Oh. Wow. You know, I’ve never noticed that locket. It’s beautiful.
OFFICIAL: Oh. Thank you. It was my great grandmother’s.
KELO: Oh. Yeah. Would you be interested in selling it?
OFFICIAL: Oh yea, it’s an heirloom. So…
KELO: $500? $1000? $2000 I’ll give you…what would it take?
OFFICIAL: Mrs. Kelo, if you don’t sell now the NLDC could pursue acquiring the property through other means.
KELO: Hm. Thank you for telling me that. Will you do me a favor and just relay a message. Uh, tell them, good luck. OK?
REICHARD: Kelo and her neighbors took it to court. And they eventually took it all the way to the Supreme Court.
Oral arguments in June 2005 included caustic exchanges between New London’s lawyer and Justices Antonin Scalia and Sandra Day O’Connor. They tested the limits of the city’s interpretation of “public use.”
SCALIA: I just want to take property from people who are paying less taxes and give it to people who are paying more taxes. That would be a public use, wouldn’t it?
O’CONNOR: For example, Motel 6 and the city thinks, well, if we had a Ritz-Carlton, we would have higher taxes. Now, is that okay?
HORTON: Yes, Your Honor. That would be okay.
EICHER: In that term’s blockbuster decision, a majority five justices ruled against Suzette Kelo and approved this use of eminent domain.
Those five were Ruth Bader Ginsburg, Stephen Breyer, David Souter, John Paul Stevens, and swing justice Anthony Kennedy. They decided that government officials could pursue their dreams for revenue-generating commercial development. They stretched the term “public use” to mean something altogether new.
By the way, the old neighborhood never got developed.
No gleaming office park. No upscale houses. No fat tax revenues.
The neighborhood did get demolished to make way for what is now just acres of rubble. It’s a dumping ground for storm debris after Hurricane Irene.
REICHARD: Since the Supreme Court’s Kelo ruling, most states tried to make it harder for this to happen. But it still happens.
About a month ago, the U.S. House of Representatives passed HR 1689, the Private Property Rights Protection Act.
Now it sits in the Senate, where similar bills have languished several times before, only to die.
One person who testified before the House in favor of the bill is Jeffrey Redfern. He’s with the Institute for Justice, the organization that represented Suzette Kelo in her fight.
So I phoned him up and asked him to provide a brief history of eminent domain.
REDFERN: Eminent domain actually goes back at least a thousand years to England. There’s a long history of governments taking property—both personal property like crops, things that can be moved, and real property like land—for government use. And it was always understood that that was legitimate, but as far back as the Magna Carta there was a concern that rights be respected when this power was used. Eminent domain was always sort of accepted as something that government could do in the 19th century, but it didn’t really take off in the form that we’re seeing recently until the urban renewal movement in the 1950s and 60s. That’s where you have a lot of these urban planners deciding that they want to level what they called slums and redesign these cities from scratch. So there was wholesale seizure of private property, entire communities destroyed and dislocated, tens of thousands, hundreds of thousands of people in some cases getting dislocated and new neighborhoods getting built up from scratch by private developers, for the most part.
REICHARD: But would this bill that is sitting in the Senate fix the whole problem, if it becomes law? Short of the Supreme Court overturning the Kelo ruling or a wholesale Congressional fix, no. But still worth it:
REDFERN: The thing I’d like to say is that although this bill doesn’t fix the basic Kelo problem, it doesn’t outright prohibit private-to-private transfers with eminent domain. A big piece of the story here is about the money. The reason private developers go to their friends in government and ask them to use eminent domain is because they know that it’s the cheapest way to get the property. And part of that is because they can get grant money for these big projects, but another part of it is that they know that they can under-compensate people. That the only way you get just compensation is by litigating it and you have to hire a lawyer to do it, and so that means that the condemning authority has all kinds of leverage to lowball you, and unless your property is worth a ton of money, you basically have to accept what they’re offering. So, if we can start to fix the money side of the equation where even if it’s technically legal for these crony capitalists to get their hands on other people’s property, it doesn’t make economic sense for them to try to do it. I think we’re going to see a lot less abuse.
REICHARD: I asked Redfern, what about worries of legitimate blight? That’s the idea behind eminent domain in the first place. Would this bill block those fixes?
REDFERN: A few answers to that. One is that most eminent domain reform that has passed in most of the states does have an exception for blight. The issue is are we really talking about eliminating blighted properties or are we simply declaring a neighborhood blighted as a pretext to seize a lot of perfectly good properties, and the latter happens a lot more than the former. When people are actually not taking care of their properties and they’re vacant and they’re deteriorating and they’re not up to code, there are a lot of tools in place—even besides eminent domain—to handle that. In a lot of cities we see that fines are assessed and they put a lien on the property and they can simply seize it just using their inherent police power to protect the public for health and safety reasons. But what we see in neighborhoods where they do the neighborhood-wide blight designations is it’s not really scientific. You get a few people walking around in New York and they say, okay, well, there’s some chipped paint here, there’s a loose awning there, and it’s a subjective inquiry where they could find blight wherever they want to.
REICHARD: Nevertheless, Redfern doesn’t think the Senate will get around to passing the bill. President Trump doesn’t seem sympathetic to the bill, either.
REDFERN: I wish the public understood how much government subsidies are part of these kinds of eminent domain projects. It’s bad enough when you have a private developer who gets the government to help him get sweetheart deals on other people’s property, but it’s so much worse when the only reason that the developers are interested in doing these projects is because they’re not going to really have to foot the bill. Because they’re getting these subsidies. Oftentimes it’s tax-increment financing and things like that, but it’s just crazy to me that you destroy sometimes vibrant communities, oftentimes they’re lower income, but you have businesses, you have corner stores and restaurants and barbershops and things like that that have customer bases that are doing well. And if it really made economic sense for upscale retail establishments to be moving into a lot of these neighborhoods, it would happen organically. And it does happen organically in lots of neighborhoods in lots of parts of the country. When it doesn’t happen organically, then the way you make it happen is by making it artificially cheap with these kinds of subsidies, and that’s what we see happening over and over and over again.
REICHARD: What happened to Suzette Kelo is a picture of that dynamic.
Kelo said in a radio interview several years ago on NPR that,
“… it’s painful for people to realize that you go to work everyday, you pay your bills, you’re a law abiding citizen, you keep your yard clean, grow your vegetables in your little garden, raise your family, and to have this happen to people that were just trying to just be simple people and live their lives is really wrong.”
In other words, her little pink house and yours aren’t as secure as the Constitution seems to say it ought to be.
And that’s this week’s Legal Docket.