Blog Ohio Real Estate Law / 06.29.2015

Remembering Kelo v. City of New London — 10 Years Later

Last week marked the 10th anniversary of the US Supreme Court’s 5-4 decision known as Kelo v. City of New London.  In that decision the Supreme Court ruled private economic development is a public use under the 5th amendment to the US Constitution. This decision allows governments at all levels to take people’s private property, including their homes, businesses and farms, and hand that property over to another private party to develop in a way more the that government’s liking with the expectation it will raise more tax revenue or create jobs.

Public reaction against the decision was strong.  I’m letting my own personal opinion show through here, but this cavalier approach to eminent domain shows a tremendous disrespect by governments for its citizens and their property and livelihood, combined with a bit of economic elitism.  This is exacerbated by the need for governmental agencies to obtain a valuation of the property that works within their limited tax dollars.  All around it leads to private citizens losing their property for objectionable reasons and receiving compensation that’s often on the low end of its fair value. If a small business is involved, the compensation for moving that business to a new location is frequently inadequate.

In the first 5 years after Kelo, approximately 43 states passed some level of reform to curb at least the excesses of eminent domain unleashed by Supreme Court’s decision.  Here in Ohio, the Ohio Supreme Court in 2006 issued its decision in City of Norwood v. Horney (110 Ohio St.3d 353) which essentially reversed the application of Kelo in the state of Ohio, and held that economic development, in and of itself, does not satisfy the public use requirement of the Ohio Constitution.

In 2007, Ohio’s legislature passed S.B. 7, which amended Ohio’s eminent domain law. S.B. 7 provided a comprehensive definition of ‘blight’ that narrowed its application and curbed some of the worst abuses of blight studies employed by some local governments.

S.B. 7 also put into place new pre-appropriation requirements and procedures for appropriation proceedings, and provided for additional compensation to landowners, along with provides for their costs and potentially attorney fee awards.

While many property rights groups and others feel that Ohio’s amendments to its eminent domain law were insufficient, these changes, when combined with the Norwood decision, constitute progress in the right direction.

As for the property taken by the City of New London, Connecticut as a result of the Kelo decision, what happened to it?  The houses were torn down except for Ms. Kelo’s house, which was moved at private expense. The land remains vacant and undeveloped, occupied only by some feral cats. The original development plan that triggered the eminent domain action and lawsuit was poorly planned and feel apart. After 10 years, there is finally some development planned for the condemned property–a park is planned for the parcel that was Ms. Kelo’s house.
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