New London Disaster

National Journal Online                       

Tuesday, Sept. 1, 2009

The New London Disaster

Why The Supreme Court’s ‘Kelo’ Decision Was A Waste

Gideon Kanner is a professor of law emeritus at the Loyola Law School in Los Angeles and has been the editor of Just Compensation, a monthly periodical on the law of eminent domain, since 1974. He is past president of the California Academy of Appellate Lawyers. Kanner was counsel for property owners in a number of precedent-setting eminent domain cases before the California Supreme Court.


          Few Supreme Court decisions have angered the American public more than Kelo v. New London. Polls taken after the Supreme Court’s 2005 5-4 decision showed public disapproval rates of as much as 90 percent — figures unheard of in political polling.

The Kelo majority held that the Fifth Amendment’s limitation on takings of private property for “public use” only was no obstacle to New London’s taking of unoffending homes in a lower middle-class New London neighborhood, then razing them and giving their sites to a private redeveloper for construction of high-end condos and shops. The city contended in defense of its action that this would attract a more affluent population to New London, by then an old, down-at-the-heels town that was facing problems after the U.S. Navy’s closure of a local submarine base. This redevelopment, thought the city, would create needed jobs and generate higher tax revenues.

The city contended in court that its thoroughly formulated and carefully vetted redevelopment plan would dovetail with plans of the Pfizer pharmaceutical company, which had built a $300 million research center across the Thames River from the redevelopment project. Pfizer’s well-paid professional employees, the city contended, would become the clientele of the upscale businesses and dwellings planned for the redeveloped site. As the Supreme Court put it, “local planners hoped that Pfizer would draw new business to the area, thereby serving as a catalyst to the area’s rejuvenation.”

The city’s contention was characterized by the Connecticut Supreme Court, as well as the U.S. Supreme Court, as an effort “projected to create in excess of 1,000 jobs, to increase tax and other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas.” New London’s lawyer took the position in oral argument that even if the city were to take a Motel 6 to replace it with a Ritz Carlton in order to generate higher tax revenues, that would be a permissible “public use.” The court’s majority agreed, thus deferring entirely to the judgment of municipal redevelopment agency functionaries, and de facto allowing them to pass judgment on the constitutionality of their own handiwork. Thus, it was the perceived quality of the town’s redevelopment plans that carried the day.

But as the Kelo case wended its way through the courts, the city’s vaunted plans began unraveling. By the time oral arguments were heard by the Supreme Court in April 2005, the proposed five-star hotel that would cater to Pfizer’s conjectured upscale guests was scrubbed. It went downhill from there. Even though the redevelopment project was begun in 2000, and the court ruled in favor of the town in 2005, nothing has been done on the ground after the taken neighborhood was razed, except for an attempt to create a Coast Guard museum, which ran out of funds and had to be abandoned. By degrees, the 90-acre tract of waterfront land that comprised the redevelopment area became a trash-strewn, weed-infested urban wasteland. The latest dispatch from New London’s newspaper, The Day, reported that the site is becoming a favorite of birds and bird watchers.

The redeveloper chosen by the city (who was slated to get a 99-year lease for $1 per year) was unable to secure financing even before the crash, and eventually withdrew. No substitute redeveloper has been selected and none appears interested in giving it a try. And as for Pfizer, the glowing projections of increased employment also proved chimerical. Instead, after the Food and Drug Administration disapproved one of its promising new drugs, Pfizer had to retrench and lay off some 10,000 employees.

The cost of this moral and economic debacle came to some $80 million in state and municipal funds. A viable, well-maintained lower middle-class neighborhood was destroyed, and some 90 acres of urban land were removed from the tax rolls for an indefinite period of time, with nothing to show for it except a tidal wave of public ill will directed at the court and at the process of eminent domain in general.

Your tax money at work.