The U.S. Supreme Court will consider on Feb. 21 whether to hear a challenge to its controversial 20-year-old ruling upholding eminent domain powers to seize private property for private economic development.
The new case was brought by a development company whose land was expropriated by a local development agency and given to a business competitor that wanted to use the land for a parking lot. Eminent domain is the power of governments to take—or expropriate—private property for public use, provided that the owner is given just compensation.
Traditionally, “public use” has meant projects the public uses directly, such as schools or roads, but the court expanded the meaning of the phrase, allowing local governments to expropriate private property for economic development and give it to private entities if doing so was thought to benefit the public.
In the 2005 ruling, the high court said it would not second guess the determination of the city of New London, Connecticut, that taking the real estate—15 properties, including the house of lead petitioner Susette Kelo—and giving it to a private developer whose plans for the property were expected to create jobs and boost tax revenues.
Writing for the majority, Justice John Paul Stevens rejected the private property owners’ suggestion that the court “adopt a new bright-line rule that economic development does not qualify as a public use.”
“Promoting economic development is a traditional and long accepted function of government,” he wrote.
“Clearly, there is no basis for exempting economic development from our traditionally broad understanding of public purpose.”
Justice Sandra Day O’Connor dissented, writing that as a result of the ruling, “the government now has license to transfer property from those with fewer resources to those with more.”
“The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms,” she said.
Seized for a Parking Lot
In the petition filed on Dec. 18, 2024, Bowers Development told the Supreme Court that it had been under contract to purchase land in upstate New York on which it planned to construct a medical office building.Co-respondent Central Utica Building LLC was constructing a different medical office building nearby and wanted to use the land at issue as a parking lot beside its planned building. In October 2021, Central Utica asked the Oneida County Industrial Development Agency to expropriate the property.
The agency believed that Central Utica’s use of the land would benefit the area economically and agreed to seize the land and give it to Central Utica, the petition said.
The Appellate Division of the Supreme Court of New York held that the condemnation for a health care-related use was outside the agency’s statutory authority to take property for commercial purposes. Condemnation is the process through which a government seizes private property to benefit the public.
The New York Court of Appeals overturned the ruling, finding that the condemnation was legally valid because “a parking facility used by the customers of a profit-making business plainly has a ‘commercial’ purpose.”
The court returned the case to the Appellate Division to address the petitioner’s other arguments, such as whether constructing “‘a parking facility used by the customers of a profit-making business’ was a public use under the ... Public Use Clause,” the petition stated.
Have Courts Misinterpreted Kelo?
Bowers Development said in its petition that the Supreme Court should reverse Kelo, which many states have rejected by amending their state constitutions and several state supreme courts have held “is both unjust and unadministrable, wrongly reading an enumerated right out of the Constitution.”Moreover, the Kelo ruling did not endorse “pretextual,” or spurious, private-to-private takings, the petition stated.
The petition stated that Kelo specified that there should be “careful public planning and the absence of an identified private beneficiary,” yet New York’s state-level courts “disregard Kelo’s caveats, holding that any private-to-private transfer survives constitutional scrutiny so long as the condemnor can articulate some theoretical public benefit.”
In federal and state courts in New York, “it is irrelevant that a taking was initiated at the behest of a single private beneficiary or that it takes place outside the context of a broader, government-driven development plan,” the petition stated.
The agency’s use of eminent domain to take control of land for a public parking lot constituted a valid public use, according to the brief.
The parking lot itself is part of a development plan for the Integrated Health Campus, or IHC, in downtown Utica, New York.
Because the lot is “publicly available because the patients and staff of the IHC use it during business hours, and the broader community uses it on nights and weekends,” the case “does not present the issue that was before the Court in Kelo,” the brief stated.
In addition, Bowers Development lacks standing because it is “a speculator that never owned the condemned property,” the brief stated.
The agency’s attorney, Paul Goldman of Goldman Attorneys in Albany, New York, declined to comment, telling The Epoch Times that the joint brief speaks for itself.
Central Utica’s attorney, Amy Habib Rittling of Lippes Mathias in Buffalo, New York, declined to comment.
The Epoch Times reached out for comment to Bowers Development’s attorneys, Robert McNamara and Andrew Ward at the Institute for Justice in Arlington, Virginia. No replies were received by publication time.
