June 24, 2005
The Limits of Property Rights
The Supreme Court's ruling yesterday that the economically troubled city of New London, Conn., can use its power of eminent domain to spur development was a welcome vindication of cities' ability to act in the public interest. It also is a setback to the "property rights" movement, which is trying to block government from imposing reasonable zoning and environmental regulations. Still, the dissenters provided a useful reminder that eminent domain must not be used for purely private gain.
The city of New London has fallen on hard times. In 1998 - when its population was at its lowest since 1920, and its unemployment rate was nearly twice the state average - an effort was begun to turn New London around. State and local officials put together a redevelopment plan, anchored by a $300 million Pfizer research facility, that would bring restaurants, stores and a new Coast Guard museum to one hard-hit neighborhood.
The city authorized a nonprofit development corporation to clear the necessary land by eminent domain, a forced sale in which the seller is given appropriate compensation. The development corporation got control of most of the land it needed, but a few people refused to sell.
Eminent domain allows governments to take property for a public use, such as building a road. The property owners in New London claimed that handing over private property to a private developer cannot be a public use, even if it is part of a comprehensive plan to turn around a depressed city.
The Supreme Court, by a 5-to-4 vote, sided with the city. The court noted that in past cases it had taken a broad view on this issue, and given governments wide discretion to determine when a taking of property meets this standard. New London, the court held, was within its rights to decide that its development plan was a valid public use. (The New York Times benefited from eminent domain in clearing the land for the new building it is constructing opposite the Port Authority Bus Terminal.)
In a blistering dissent, Justice Sandra Day O'Connor lamented that the decision meant that the government could transfer any private property from the owner to another person with more political influence "so long as it might be upgraded." That is a serious concern, but her fears are exaggerated. The majority strongly suggested that eminent domain should be part of a comprehensive plan, and Justice Anthony Kennedy, writing separately, underscored that its goal cannot simply be to help a developer or other private party become richer.
That is not the situation in New London. Connecticut is a rich state with poor cities, which must do everything they can to attract business and industry. New London's development plan may hurt a few small property owners, who will, in any case, be fully compensated. But many more residents are likely to benefit if the city can shore up its tax base and attract badly needed jobs.
How can anyone claim to be "for the people" and support this decision?
Well, it seems that they have their reasons.
And this isn't happening just in small towns. In New York City, just a few blocks from Times Square, New York State has forced a man to sell a corner that his family owned for more than 100 years. And what's going up instead? A courthouse? A school? Nope. The new headquarters of The New York Times.
The world's most prestigious newspaper wants to build a new home on that block, but Stratford Wallace and the block's other property owners didn't want to sell. Wallace told 60 Minutes that the newspaper never tried to negotiate with him. Instead, The Times teamed up with a major real estate developer, and together they convinced New York State to use eminent domain to force Wallace out. How? By declaring the block blighted.
“I challenge them,” says Wallace. “This is not blighted property.”
But New York State's Supreme Court disagreed and ruled that the newspaper's new headquarters would eliminate blight - and that even though a private entity (The New York Times) is the main beneficiary, improving the block would benefit the public.
Executives from The New York Times wouldn't talk to 60 Minutes about it on camera.
Back in Lakewood, Ohio, Jim and Joanne Saleet are still waiting for their court decision. Most of their neighbors have agreed to sell if the project goes ahead. But the Saleets, plus a dozen others, are hanging tough.
“I thought I bought this place. But I guess I just leased it, until the city wants it,” says Jim Saleet. “That's what makes me very angry. This is my dream home. And I'm gonna fight for it.”