USNews.com: Real angry over real estate (10/10/05)

10/10/05
Real Angry Over Real Estate
Why a recent Supreme Court ruling has lots of homeowners hot under the collar
By Silla Brush

Stan Dunn and his wife, Barbara, had just sold their home in California and were about to retire to the Buffalo suburb of Cheektowaga this spring when they heard the rumblings: A developer might tear down their new home--and more than 300 other nearby houses--in order to build a new complex of apartments, townhouses, and businesses to eliminate blight and boost the economy. And while town officials are excited at the prospect, the Dunns say they have no intention of selling.

Ever since the Supreme Court ruled in June that a Connecticut town could use "eminent domain" powers to take private property for a pharmaceutical plant, the Dunns and homeowners across the country have been girding for battle. Says Dunn: "The whole issue of taking property from one person to give to another to make a profit is incorrect."
The court indicated that it will not reconsider its ruling in the Connecticut case, Kelo v. New London. A week after the ruling, the House of Representatives passed a nonbinding resolution opposing the court's decision. Lawmakers in some two dozen states followed with proposals to restrict the power of eminent domain, and the governors of Alabama and Delaware have already signed such bills.

Tsunami. Real-estate developers are speeding up projects or setting them aside pending any changes in the laws, while homeowners have set up groups like the Dunns' "Citizens for Property Rights." Congress, meanwhile, is debating seven bills of its own. "This is an issue that resonates with the American people . . . and it's not just people on the right or the left or rich and poor," says Sen. John Cornyn, the Texas Republican who has a bill that would limit the use of eminent domain for economic development purposes. "It has to do with our suspicion and skepticism of government power being able to take private property."

The issue certainly is hot. Some activists have launched campaigns to seize the homes of Supreme Court Justices Stephen Breyer and David Souter. The Senate Judiciary Committee peppered then Supreme Court nominee John G. Roberts with questions on Kelo. The decision, Roberts said, "leaves the ball in the court of the legislature" to decide when eminent domain can be used.

The court's 5-to-4 decision said the government's constitutional power to seize property for "public use" in return for just compensation may extend to private development projects if the government sees a public benefit to them. "The specter of condemnation hangs over all property," Justice Sandra Day O'Connor wrote in dissent, shortly before announcing her decision to step down from the bench: "Nothing is to prevent the state replacing any . . . home with a shopping mall, or any farm with a factory."

Eminent domain has been invoked since the 1950s to seize areas for urban renewal projects. But Thomas Merrill, a Columbia University law professor who filed a brief with the Supreme Court supporting New London's use of eminent domain, says reaction earlier wasn't nearly as intense as it is now. "This is like a giant tsunami," he says, "compared to what we've had in the past."

Lawyers for Susette Kelo say that's because the ruling represents a philosophical leap from the traditional projects associated with "public use," such as highways or schools. Dana Berliner, a lawyer at the Institute for Justice, a libertarian group representing Kelo, says local governments have expanded their use of eminent domain in recent years to make way for big-box retailers and new housing complexes to boost tax revenue and create jobs. Between 1998 and 2003, Berliner says, there were some 10,000 examples of threatened or actual use of eminent domain for what she claims is essentially private commercial development. Jeff Finkle, head of the International Economic Development Council, counters that eminent domain is sometimes essential as a last resort. "If you don't have [the] ability to block holdouts, people that would have the ability to prevent cities from acquiring land and developing new types of opportunities, you're going to leave those urban distressed places exactly [as] they were," he says, citing New York City's redevelopment of Times Square as an "eminent domain" success story.
In Norwood, Ohio, Carl and Joy Gamble are the last of 65 homeowners holding on to their property, which the city said was deteriorating and could be seized through eminent domain. They have spent two years fighting their case in court and are awaiting a decision from the Ohio Supreme Court on their appeal of an earlier court ruling that they had to sell for $280,000. "We're not there for the money," says Carl. "We bought [the house], we want it, and we want to keep it."