When it comes to economically distressed cities, Kelo vs City of New London (2005) said cities could use their police power, particularly the eminent domain power, to demolish a Holliday Inn to make a Mandalay Hotel, if it increased the tax revenues and was a public use, for example.
To start, the Kelo case involved these facts. Susette Kelo is the petitioner and the City of New London, Connecticut is the respondent. That being said, the city of New London came up with a business plan to increase taxes and funds to revitalize their city since it was economically distressed. Therefore the city bought some land; however there were some hold outs (Kelo and othersz) who did not want to sell their land. This being the case, the city used its power of eminent domain to get the remaining land; needless to say, the city had to go to court.
This is the rule of law coming out of Kelo. The court followed the Midkiff rule in which economic development qualified as public use under federal and state constitutions. New London could use it’s eminent domain power if the land it took was reasonably necessary for public use, and the land the city took was for reasonably foreseeable needs.
Kelo involved this issue: Did the business plan of New London quality as public use under the takings clause of the Fifth Amendment?
The Supreme Court made the following ruling. The city’s plan to improve their distressed state fell within the meaning of the taking clause of the Fifth Amendment; particularly, the court said public use is public purpose.
In dissent of the majority, Justice O’Conner had an interesting comment. She said the majority’s ruling allowed for demolishing a Motel 6 for a Ritz Carlton. Justice O’Connor wasn’t pleased with this ruling.
The Kelo case produced an undesired effect for the City of New London. The said corporation, Phizor, a pharmaceutical, never set up shop or brought new taxes to the City of New London. To this day, the said property sits abandoned and this case was for nothing.
Justice Thomas had something to say about the Kelo case too. He said African Americans suffer most from the eminent domain process. He cites statistics, which remain accurate to this day, that show African Americans and poor people are displaced most according to urban renewal or slum clearing because the bulldozer could go through. Although other justices were not willing or able to say this, Justice Thomas did identify a racial aspect of the eminent domain process in his opinion.
As well, Justice Thomas discussed politics and this case. He said the wealthy could stop eminent domain proceedings by using political power. On the other hand, he said the poor lacked the political power to stop the eminent domain process. Thomas brought up these ideas in his court opinion.
In short, Kelo vs New London is a great case for property law. It sets precedent for the power of eminent domain and cities. As well, it highlights how cities could go wrong using this power. It also shows how big business can push out people, be it poor or African Americans, if a city lets corporations in the name of the bottom line. Kelo, a case similar to the Mount Laurel case in property law, is a case all students of property law should know.