The Property Rights Fight Since Kelo

The recent one-year anniversary of the U.S. Supreme Court’s noxious Kelo v. New London decision provides an opportunity to review developments in the fight to protect property rights. While federal reform efforts have stalled, Michigan residents are well placed to prevent the government from cynically confiscating the property where they live, work and worship.

The U.S. Constitution allows the government taking of private property only when it is for a "public use" and just compensation is paid. In Kelo, the Supreme Court held that a municipality may take private property and turn it over to another private party for "economic development," i.e. increased tax revenue for the municipality. The ruling so undermined the federal public use requirement that it became meaningless.

Two of the most well-known Kelo plaintiffs are Susette Kelo and Wilhemina Dery, who both owned homes in the area that New London, Conn., officials are seeking to "redevelop." Kelo has been forced to leave her property. Wilhemina was able to spend the entire 88 years of her life in her home; she passed in March of this year before New London officials could get their hands on the property. Her husband, Charles, who had lived with her since they were married in 1946, acceded to the ultimatum since he was unable to maintain the home on his own.

While the New London homeowners are the most well known, they are not alone. Nationally, many homeowners, business owners and churches have been assailed by local governments post-Kelo. Justice O’Connor predicted as much in her dissent in Kelo:

"Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result."

Federal legislative efforts to prevent such abuses have stalled. The U.S. House passed a bill, H.R. 4128, which would prohibit economic development takings when a state or municipal government receives federal economic development funds. But that bill has been languishing in the Senate.

The only bright spot in Kelo was the Supreme Court’s recognition that states could provide more protections to property owners than the justices themselves could manage to find in the U.S. Constitution. To be effective, the states need to protect against both takings for economic development and takings to cure "blight." Blight is often poorly defined, allowing a government to declare nearly any property blighted, particularly when this determination is made on an area basis as opposed to a property-by-property basis. The practical effect is that even if economic development takings are forbidden, local governments can still attain their desired results by declaring a neighborhood "blighted" and handing it over to a developer.

In Michigan, economic-development takings are forbidden due to the Michigan Supreme Court’s decision in Wayne County v. Hathcock, which held that such takings are not a "public use" under the Michigan Constitution. Hathcock reversed a 1981 court decision, known as Poletown, wherein an entire Detroit neighborhood was leveled for an auto plant. But the potential for "blight" abuse remains in Michigan. In fact, the city of East Lansing has declared a prime 35-acre area adjacent to the Michigan State University campus to be "blighted" despite the fact that the area includes numerous thriving apartment buildings, businesses and rental homes.

The Michigan Legislature has proposed a constitutional amendment, SJR-E, which would severely limit potential takings abuses and will appear on the November ballot. If enacted, SJR-E would explicitly prohibit economic development takings, preventing any possibility of a future court returning to Poletown. The amendment would require the government to meet a heightened burden of proof for takings and pay a premium when taking an owner’s principal residence. Finally, it requires blight to be determined on a property-by-property basis. Legislation is also pending in the state Legislature that would tighten the definition of blight. If this legislation and SJR-E are passed, Michigan’s residents will be well protected against potential takings abuse.

Patrick J. Wright is senior legal analyst at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.