Why Kelo Is Not Good News for Local Planners and Developers

• Publication year: 2010

Georgia State University Law Review

Volume 22 , ,

Article 5

Issue 4 Summer 2006

6-1-2006

Why Kelo Is Not Good News for Local Planners and Developers

Daniel H. Cole

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Recommended Citation

Cole, Daniel H. (2005) "Why Kelo Is Not Good News for Local Planners and Developers," Georgia State University Law Review: Vol. 22: Iss. 4, Article 5.

Available at: http://digitalarchive.gsu.edu/gsulr/vol22/iss4/5

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WHY KELO IS NOT GOOD NEWS FOR LOCAL PLANNERS AND DEVELOPERS

Daniel H. Cole*

Introduction

On June 23, 2005, the U.S. Supreme Court decided the case of Kelo v. City of New London and all hell broke loose.¹ The political controversy that erupted around Kelo took legal scholars by surprise. After all, the decision did not significantly alter eminent domain doctrine; the Court simply followed well-established precedents. But Justice O'Connor's hyperbolic dissent inflamed property rights advocates, media pundits, and state and federal legislators, who assailed Kelo as the death knell for private property rights.²

Kelo's combination of relative legal insignificance and high political salience makes it an interesting case study in cross-institutional dynamics—how political, legal, and social forces combine and recombine to determine the content of our laws. In this case, we have a judicial decision that has generated a political controversy and is leading to legislative changes in the law. Those legislative changes will, in turn, affect future court decisions. Such cross-institutional effects are not particularly unusual. They are a distinguishing feature of landmark cases (think, for example, of Brown v. Board of Education¹ or Roe v. Wade⁴). But Kelo is not a landmark case, Justice O'Connor's claims to the contrary notwithstanding. It neither creates a new legal rule nor significantly expands an old one. Relying entirely on precedent, it is a legally

* R. Bruce Townsend Professor of Law, Indiana University School of Law at Indianapolis. I am grateful to my colleagues Florence Roisman and Robin Craig for their many helpful comments, to Margaret Esler (2007 J.D. candidate) for her research assistance, and to Faith Long Knotts for her general assistance. I remain exclusively responsible for any errors of commission or omission.

1. 125 S. Ct. 2655 (2005).

2. See infra Part II.

3. 347 U.S. 483 (1954).

4. 410 U.S. 113 (1973); see also, e.g., David J. garrow, liberty and sexuality: The Right to Privacy and the Meaning of Roe v. Wade (1994); Eva R. Rubin, Abortion, Politics, and the Courts: Roe v. Wade and Its Aftermath (1982).

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conservative decision, which makes its political reception all the more surprising and interesting.

The primary purpose of this Article is to explore the aftermath of Kelo—particularly the strident media criticism of the Court and the political response to that criticism—as a socio-legal phenomenon, which is perhaps more important than the Supreme Court's ruling itself. By addressing the political and legislative aftermath of Kelo, we can understand why the Supreme Court's decision in the Kelo case ultimately is not good news for local planners and developers. Because of Kelo and its aftermath, local planners and developers are likely to find it significantly more difficult to engage in urban redevelopment throughout the United States.

This Article also has a secondary purpose, which is to place Kelo and its political reception within a larger comparative institutional context—a context I explore at length in another article, Political Institutions, Judicial Review, and Private Property: A Comparative Institutional Analysis.⁵ American jurists traditionally have assumed, often quite casually, that if the courts did not diligently protect private property rights, political institutions would quickly and thoroughly erode those rights. However, Kelo and its aftermath support the proposition that political bodies, as well as courts, protect private property rights. Indeed, those political bodies sometimes are substantially more protective of property rights than the courts.

Part I of this Article reviews the Kelo case in the context of previous Supreme Court rulings on eminent domain and public use. Part II explores the political controversy Kelo spawned and its legislative consequences, up to the end of January 2006. Based on those consequences, Part III explains how Kelo and its aftermath support positive political-economic theories concerning the political protection of private property rights. The Article concludes with predictions about Kelo's legacy for private property owners, municipal planners, and developers.

5. Daniel H. Cole, Political Institutions, Judicial Review, and Private Property: A Comparative Institutional Analysis, 17 SUP. Ct. ECON. REV. (forthcoming 2007).

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I. The Kelo Case

A. Background: Urban "Blight," Redevelopment Plans, and Suzette Kelo's Home

The City of New London, the second smallest municipality in the State of Connecticut, is situated on Long Island Sound at the mouth of the Thames River.⁶ Founded by John Winthrop and other settlers from the Massachusetts Colony in 1646, New London was at one time a center for the whaling industry.⁷ When New Londoners depleted the whale stocks, they turned to manufacturing.⁸ Before the Kelo case, the city's greatest claim to fame may have been that Benedict Arnold's troops burned it down in 1781.⁹

Like many other old industrial cities in New England, New London has struggled economically in recent decades.¹⁰ According to the 2000 census, median household income in New London was $33,809, 20% below the national average.¹¹ New London's unemployment rate, at 7.6%, is nearly double the state-wide rate of Connecticut.¹² As jobs have left New London, people have left with them. By the Kelo litigation in 2004, the population of New London had fallen to less than 24,000, the city's smallest population since 1920, from a high of 34,182 in I960.¹³ When New London's economic base declined, the city deteriorated physically, a problem that is associated with "urban blight."¹⁴ In 1990, the State of Connecticut officially designated New London a "distressed

6. ePodunk, New London Community Profile, http://www.epodunk.com/cgi-bin/genInfo.php?locIndex=9221 {last visited Apr. 9,2006).

7. Id; Brief of the Respondents at 1, Kelo v. City of New London, 125 S. Ct. 2655 (2005) (No. 04108).

8. Brief of the Respondents, supra note 7, at 1.

9. ePodunk, supra note 6.

10. Brief of the Respondents, supra note 7, at 1.

11. ePodunk, supra note 6.

12. Brief of the Respondents, supra note 7, at 2.

13. Id.; Kelo v. City of New London, 125 S. Ct. 2655,2658 (2005).

14. "Originally a term for a plant disease, the term 'blight' was first applied to neighborhoods during the Progressive era, by urban planners who conceived of cities as similar to living organisms." Timothy Sandefur, The "Backlash " So Far: Will Citizens Get Meaningful Eminent Domain Reform? 11 (Pac. Legal Found. Program for Judicial Awareness, Working Paper No. 05-015,2005).

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municipality."¹⁵ Six years later, New London's economic distress increased when the Navy closed its Naval Undersea Warfare Center (NUWC) on the Fort Trumbull peninsula (Figure 1), putting another 1,500 people out of work.¹⁶

It was in this historical and economic context that New London undertook to redevelop the City's waterfront area near historic Fort Trumbull. In 1998, Pfizer Pharmaceuticals announced plans to build a $300 million research facility in the Fort Trumbull neighborhood.

Figure 1. The Fort Trumbull area of New London, Connecticut. Source: New London Development Corporation, http://nldc.org/business/fttrmbll.htm. Reprinted with permission.

Pfizer's announcement gave impetus to New London's efforts to

1 P»

redevelop the adjacent area. In April 1998, the New London City Council authorized the New London Redevelopment Corporation (NLDC), a private, non-profit corporation (with no independent

15, Brief of the Respondents, supra note 7, at 1. 16 W.at2

17. New London Development Corporation, Sites - Fort Trumball, http://nldc.org/business/fttrmbll.htm (last visited Apr. 9, 2006) Pfizer's research facility opened in 2001. Id

18 Id.

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power of eminent domain), to plan and oversee redevelopment of the Fort Trumbull neighborhood.¹⁹ Initially created in 1978, the NLDC was reconstituted in 1997 specifically to assist the City of New London in planning for redevelopment of the 32-acre site formerly occupied by the NUWC.²⁰

After six public meetings, held between April and November of 1998, and preparation of environmental impact and economic evaluations in accordance with Connecticut state law²¹ (both completed in 1998), NLDC staff issued a draft Fort Trumbull Municipal Development Plan ("the plan") in August 1999.²² The plan included retail, commercial, and residential properties; a waterfront hotel; conference center; marina; museum; and other public amenities.²³ NLDC expected the plan to create between 1,736 and 3,169 jobs and to generate as much as $1.25 million in tax revenues for the city.²⁴ The NLDC Board formally adopted the plan on January 18, 2000.²⁵ The New London City Council approved the plan the same day and "authorized the NLDC to acquire the properties located in the plan area, by eminent domain if necessary." Funding for the project came primarily from the State of Connecticut, which contributed $78 million, although the City of New London contributed $4 million, and the...