Cities Should Not Condemn Homes for Private Developers

In 2005, Wilhelmina Dery still lived in the Fort Trumbull house in New London, Connecticut, where she was born in 1918.^[1] In Kelo v. City of New London, decided June 23, 2005, a 5-4 Supreme Court upheld proposed takings of her property and 14 others for an integrated economic development plan. None was alleged to be blighted. A city’s forecast of more tax revenue should not cost an unwilling owner her home. Otherwise, an owner is only waiting for government to find a better tenant. Justice Sandra Day O’Connor warned in dissent that people with disproportionate political influence, including developers, were likely to benefit.^{[1, O’Connor, J., dissenting]}

New London’s unemployment rate was nearly double Connecticut’s in 1998.^[1] Coordinating housing, commerce and public space offered a plausible route out of decline. A single holdout can obstruct an assembled site, so the city had a serious case for compulsory purchase. The majority retained a ban on public-purpose pretexts for private benefit, but deferred to the comprehensive plan and the deliberation behind it. A sincere plan can still fail. The court rejected a requirement of reasonable certainty that the expected public benefits would materialize. In a September 2024 account quoted by Ilya Somin,^[2] The Day reported that the council approved nearly $6.5 million in tax breaks over 20 years for 500 planned apartments on two Fort Trumbull sections that had sat vacant for more than two decades. I would rather lose a commercial development than let its forecast override an owner’s refusal. The developer’s uncertainty should not become the seller’s obligation.

The early state response was mixed. The Castle Coalition’s August 2007 “50 State Report Card”^[3] counted 42 states with new laws. Among those states, A or B grades outnumbered D grades, 21 to 15, with six C grades; eight other states received F for passing no law. Pluses and minuses are pooled. The coalition was an Institute for Justice project,^[4] and the institute represented the New London owners.^[5] These grades assess the laws passed by August 2007, not seizure rates or the protections in force in 2025. Connecticut’s 2007 economic-development rules required a supermajority vote and barred takings primarily for increased tax revenue.^[6] The coalition gave Connecticut a D, arguing that a city could name another primary purpose.^[3] That is a specific weakness in a reform, not evidence that most reforms failed.

States by grade of their post-Kelo eminent domain laws, 2007

The Fifth Amendment requires just compensation,^[7] but payment and consent are different protections. The Supreme Court has acknowledged that fair market value, the usual measure, does not necessarily capture every value an owner derives from property.^[8] An owner may refuse from attachment or bargaining strategy; neither makes consent worthless. In a commercial deal, the cost of satisfying the owner belongs to the buyer. A connected railway presents a harder assembly problem, which is why I would preserve a narrowly drawn power for genuine public facilities.

States remained free to impose stricter limits.^[1] Legislatures should bar takings for private commercial redevelopment and limit blight powers to properties with demonstrable health and safety dangers, rather than neighborhoods officials would prefer to replace. Buyers would sometimes have to pay more, redesign or walk away. That is a real cost, and I accept it. When the buyer is a private developer, the owner’s no should end the negotiation.