NLC to Intervene on Behalf of City in Eminent Domain Case
by David Parkhurst
Posted: October 18, 2004
The National League of Cities will intervene in a Supreme Court case that could
have a significant impact on cities’ ability to use eminent domain to acquire
private property for economic development purposes.
The United States Supreme Court recently agreed to review a case involving New
London, Connecticut’s use of eminent domain for a redevelopment plan that
requires the city to acquire private homes. A group of homeowners filed a suit
in December 2000 opposing the plan. On appeal of a state trial court’s decision,
the Connecticut Supreme Court ruled 4-3 in favor of the city’s plan.
At issue is the scope of the Fifth Amendment, which allows governments to take
private property for a public use through eminent domain in consideration for
giving the owner “just compensation.”
Under the proposed redevelopment plan, the City of New London would convey the
acquired property to its non-profit, private economic development corporation to
implement a comprehensive mixed-use redevelopment plan.
The plan relies on private sector participation and promises not only jobs and
new tax revenues for this economically distressed community, but other proposed
public benefits including new parking facilities for a state park, expanded
retail space, public marinas and a waterfront walkway.
An important influence on the redevelopment plan was the decision by Pfizer
Inc., to establish its global research facility, which opened in 2001, beside
the proposed redevelopment site.
The homeowners asked the court to stop the city from taking their property,
arguing that the city had no assurance that the private sector participation
would occur and, without it, there was no assurance that the promised public
benefits from the redevelopment would materialize.
The Connecticut Supreme Court found that there were sufficient checks in place
to assure that the private sector participants would adhere to the plan and
supported the city’s action.
“This case deals with an essential local government tool for economic
development,” said NLC Executive Director Donald J. Borut. “While it is one case
involving one city, a Supreme Court decision stopping New London from using
eminent domain to implement this economic development plan would have major
ramifications for every city in America.”
Borut asked NLC’s Legal Advisory Committee, chaired by S. Ellis Hankins,
executive director of the North Carolina League of Municipalities, to review the
case. The committee recommended that NLC participate as a “friend of the court”
on behalf of the City of New London and its economic development corporation.
He also asked the State and Local Legal Center, which frequently intervenes in
Supreme Court cases on behalf of state and local governments, to review the case
and consider intervening.
NLC First Vice President Anthony A. Williams, mayor of Washington, D.C., in an
October 4 interview with The Bond Buyer, cautioned that a reversal in the New
London case would lead to “jacking up the cost of economic development in poor
neighborhoods dramatically, because then people can just sit, and sit, and sit,
and wait, [and] bring their costs up way beyond just compensation.”
“The way the opponents of eminent domain always want to portray it is, ‘Oh, Old
Mother Hubbard is getting kicked out of her cupboard by an evil government,’” he
said.
The Supreme Court will review the case early in 2005.
More Information: Eminent Domain Vital to Local Economic Development
Eminent Domain Vital to Local Economic
Development
by Donald J. Borut and S. Ellis Hankins
Posted: October 18, 2004
The recent decision by the U.S. Supreme Court to review a case involving a local
government’s use of eminent domain threatens to unravel more than 50 years of
constitutional precedent that provides broad judicial latitude to municipalities
in carrying out economic development plans.
The case — and the eventual Supreme Court ruling — has far-reaching implications
for cities and towns of all sizes throughout the country. It deals with a
fundamental economic development tool that must be protected.
The ability of local leaders to reenergize communities through economic
development demands local and regional self-sufficiency, not naïve reliance on a
continuous and sufficient flow of state and federal dollars.
Therefore, it is in the public interest for municipalities to pursue economic
development locally and regionally because a healthy economy helps generate the
revenue necessary to provide services and infrastructure needs of the public. At
times, the ability to provide for the public good requires municipalities to
exercise the power of eminent domain granted by state authority.
That authority must be available to be used wisely, with considerable caution
and with an eye toward achieving a greater public good that will benefit the
entire community and the region.
The challenge from private property rights advocates that will play out when the
case of Kelo vs. City of New London comes before the U.S. Supreme Court puts
that tool at risk.
Opposition to eminent domain also has unintended consequences because
marketplace uncertainty and increased risk threatens to increase municipal
borrowing costs associated with economic development projects.
That’s why NLC is intervening in the case on behalf of all cities and towns.
This case is a perfect example of the important role the National League of
Cities plays not only in lobbying Congress and the administration on federal
priorities for cities and towns but also in ensuring a local voice on precedent
setting court cases.
More than a year ago, NLC expanded its legal advocacy work by creating a special
fund and establishing a Legal Advisory Committee to decide when and how NLC will
intervene in court cases. One fundamental criterion for intervening is the
importance of the case to the interests of local government. This eminent domain
case clearly meets that standard, and we want to make sure that the local
message is heard and considered.
Beyond the New London case, NLC is already advocating on behalf of
municipalities before the judicial and legislative branches to protect the
ability of state and local governments to conduct economic development that is
necessary to promote economic growth, including job retention and creation.
NLC’s advocacy efforts, however, do not include unqualified approval of the
indiscriminate use of economic incentives by state and local governments to
induce firms to move from one location to another. NLC believes that with
legislative authority comes legislative responsibility to negotiate economic
development incentive packages that avoid “smokestack chasing,” to design
redevelopment plans that protect the public interest from predatory
redevelopment and to ensure efficient economic outcomes that provide tangible
public benefits.
NLC is prepared to take the lead in the legal and legislative battles brought on
by attempts to reverse more than 50 years of legal precedent that supports
municipal authority to conduct economic development.
Be assured that NLC will work tirelessly to preserve the ability of municipal
officials to use their best judgment to improve their communities.
Donald J. Borut is executive director of the National League of Cities.
S. Ellis Hankins is executive director of the North Carolina League of Municipalities, and chair of NLC’s Legal Advisory Committee.