Nine Years After Kelo vs New London - The Aftermath

About nine years ago the US Supreme Court handed down its decision in the Kelo vs New London case, deciding 5-4 that the city of New London, Connecticut had the right to seize pprivate property by eminent domain for the purpose of private development, something the city had hoped would raise much needed tax revenues.

But after the decision that allowed the city to move forward and seize the final few properties that had been part of the kelo suit, things didn't turn out as the city had planned.

In the landmark 5-4 ruling, named for the lead plaintiff, a nurse named Susette Kelo, the Supreme Court upheld a state Supreme Court ruling that the city of 27,000 and a nonprofit entity called the New London Development Corp. were entitled to seize those properties in the name of economic development. Previously, eminent domain had been seen as limited to cases involving projects deemed as benefiting the public, but not a private economic interest.

So how does New London, specifically Fort Trumbull, look now? (Fort Trumbull was the neighborhood affected by the Kelo decision - dce)

“The homeowners were dispossessed for nothing,” wrote The Boston Globe's Jeff Jacoby. “Fort Trumbull was never redeveloped. Pfizer itself bailed out of New London in 2009. The Kelo decision was a disaster, as even the city’s present political leaders acknowledge.”

Where a neighborhood once filled with residents stood, barren yards filled with nothing but weeds and abandoned utilities along empty streets are all one sees. The hoped for economic development never happened, with pharmaceutical giant Pfizer, one of the linchpins of the redevelopment effort, pulling up stakes and leaving, taking 1500 jobs with it when it left. That was after New London had already offered an 80% 10-year tax abatement to the corporation as an enticement to locate a $300 million research facility in the city.

Between its legal costs in fighting the class action suit, the money it spent reimbursing property owners for the loss of their properties under eminent domain, and the never achieved tax revenues it had counted on, the city lost millions of dollars. The city also became a symbol of overreaching government, one used to change eminent domain laws in over 40 states, with some going as far as amending their state constitutions to narrowly limit the scope of eminent domain, preventing a future outcome like that of New London. (My home state of New Hampshire is one of the seven states that amended its constitution to better secure the property rights of its citizens.)

Though Kelo is nine years in the past, it is still having long term effects on the property rights of landowners and limiting the overreach of governments, state and local. If the government is going to use the power of eminent domain, it now has to have a much better justification than “We need the revenue redevelopment by a private entity will generate for the tax coffers.”