Should localities be able to seize private property for economic development?

PRO: Too much ado about a beneficial power

by David R. Gill
For Virginia Business
September 2005

Much has been made in the media over the recent Supreme Court decision in Kelo v. The City of New London, which upheld the right of New London to exercise its power of eminent domain to aid in the revitalization of the employment base of the Connecticut city. However, the hullabaloo surrounding the decision has ignored the necessary role the takings power has in creating vibrant, growing and stable communities.

In this era of reduced support from the state and federal government, local governments have increasingly been turning to public-private partnerships to fund vital public improvements. These partnerships turn on the ability of the locality to consolidate sufficient property to create a viable project that allows the private sector to bear the cost of providing broad public benefits. Allowing one or two holdouts to thwart a publicly beneficial project — one that increases the tax base, improves employment opportunities and provides vital public infrastructure — simply because the holdouts do not wish to move, hamstrings the ability of local government to provide vital, growing and safe communities. The holdouts also force the rest of the community to bear the cost of higher taxes and reduced employment opportunities.

Further, the impact of this decision, and the takings power generally, has been greatly exaggerated. The decision merely reinforced the law as it has existed for almost the past 200 years. From the time of our founding fathers, the takings power has been used to benefit private parties. For example, the takings power was often used to benefit timber mill owners who needed to flood neighboring properties to create timber ponds. Since the 1960s, localities have had the right to take "blighted" properties in an effort to revitalize their communities.

In addition, Americans now move, on average, every seven years, so the effect on a vast majority of people would be minimal. Lastly, taking people's homes is incredibly unpopular politically. It is an option of last resort. In fact, the Supreme Court emphasized that the takings power has to be exercised in an open and public manner subject to a legitimate public process to ensure the purpose of the taking will truly benefit the community.

In the end, the political and popular opposition to this decision will likely lead many states to limit or curb the takings power. This already is happening as Congress and more than 24 states (including Virginia) are exploring legislation to overturn or limit the impact of the Kelo decision. This myopic, knee-jerk reaction will further limit the ability of local government to create better and more successful communities. Therefore I urge everyone to think beyond the headlines and realize the true import of the decision.

David R. Gill is a lawyer in the real estate and land use department in the Tysons Corner office of McGuireWoods LLP.