THE SUPREME COURT'S 5–4 RULING last June in Kelo v. City of New London against the homeowners and in favor of the city's plan to condemn 90 acres of waterfront property is one of the most unpopular court decisions in history.

“This issue is the 21st-century equivalent of the Boston Tea Party: the government taking away the rights and liberties of property owners without giving them a voice,” says Connecticut Gov. M. Jodi Rell. “But this time it is not a monarch wearing robes in England we are fighting—it is five robed justices at the Supreme Court in Washington.”

The crux of the case is whether the redevelopment project in New London, Conn., was enough of a public use to justify an eminent domain action and the removal of citizens from their homes and businesses. The city wants to redevelop the area, which sits adjacent to a $300 million research facility built by Pfizer.

While the majority of the families and businesspeople in the 90-acre area left, nine refused to sell, including Susette Kelo, who claimed that the city abused its power of eminent domain.

The Institute for Justice, the policy group that represented the nine homeowners, filed a motion for the high court to reconsider the case, but such efforts rarely succeed.

“What this case says is that a homeowner has no protection under the U.S. Constitution if a local government wants to take someone's home away because something else would produce more taxes and jobs,” says Dana Berliner, senior attorney for the Institute. “Everything could be more profitable as something else,” says Berliner.

Lawmakers in 21 states are working to restrict municipal eminent domain powers. In Connecticut, the state's legislature called for a voluntary moratorium on eminent domain projects until the issue can be worked out by the legislature. The state held public hearings in July and August and plans a follow-up hearing this month. Legislation may be introduced later this year or during the 2006 session next February. The city of New London is cooperating with the voluntary moratorium, so it will be several months before the city can break ground.

Thomas J. Londregan, New London's director of law, in speaking at a public hearing last July, argued that the majority opinion in the Kelo case states that a municipality cannot execute a one-to-one transfer of property solely for economic reasons.

“There must be substantial and significant benefits as part of a carefully considered and integrated development plan,” says Londregan. “Yet, the media, with the urging of the Institute for Justice, continues to claim that the majority now allows property to be taken from A and given to B without any public benefits solely on the basis that someone will pay more taxes—this characterization is wrong.”

“While the NAHB supported the homeowners in the Kelo case, our primary concern was that the court develop a clear test for review of public-private takings,” says Jerry Howard, the NAHB's executive vice president and CEO. “This decision is disappointing because it not only fails to establish such a test, but also provides broad deference to local governments, increasing the likelihood for abuse of eminent domain power,” he says.

Visit the Institute for Justice Web site for more information on the Kelo case.

Learn more about markets featured in this article: Norwich, CT.