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Real Property Law—Legislative Response to Kelo
Have the Government and Courts Taken the Concept of Eminent Domain Too Far?

by Alan Nochumson & Harper J. Dimmerman

Winter 2006, Vol. 68, No. 4

In a 5-4 decision, the United States Supreme Court in Kelo v. City of New London ruled that the taking clause of the Fifth Amendment of the United States Constitution did not prevent a municipality from condemning a private homeowner’s property for private development in order to generate higher tax revenue for the municipality.

The Fifth Amendment allows local governments to take private property so long as just compensation is paid to the property owner and the property is converted to a public use. Eminent domain has conventionally been utilized for public projects, such as the construction of roads and bridges. For the past fifty years, local governments have been exerting their eminent domain power to revitalize blighted areas through private development projects.

The Kelo decision marks the first time the Supreme Court permitted a local government to seize non-blighted properties in a non-blighted area for economic development. From the moment the controversial decision came down, elected public officials have been embarking upon a search for a legislative solution limiting the scope of the decision.

Legislation in Pennsylvania
On July 1, 2005, State Representative Thomas F. Yewcic introduced House Bills 1835 and 1836, seeking to limit the eminent domain authority of local governments in the Commonwealth of Pennsylvania.

House Bill 1835 would amend Section 5403 of Title 53 of the Pennsylvania Consolidated Statutes. The bill would amend only certain powers in designated “business improvement districts.”

More significant is House Bill 1836, which would amend Section 406 of the Eminent Domain Code by allowing property owners to file preliminary objections during condemnation proceedings. Under the proposed legislation, a condemner has no power or right to appropriate condemned property for any of the following reasons or purposes:

  • to turn it over to a nonpublic interest;

  • to add to or increase the tax base of the condemner, if the condemner is a municipality; or

  • to take land by condemnation without a reverter clause in the declaration of taking, which assures that the property will revert to the condemnee or its heirs or assigns should the condemned property ever be used for a nonpublic purpose.

In recent hearings before the House Committee on Government, D. Benjamin Barros, associate professor of law at Widener University School of Law, testified that House Bills 1835 and 1836 are too broad a reaction to the Kelo decision. He stated that “what seems to be at the core of most people’s concern is the possibility that their local governments might take their homes to clear land for a private developer . . . Focusing on homes would be consistent with the common-sense notion that homes are different from other types of property.”

During his testimony, Professor Barros also highlighted two major flaws with the bills. First, neither bill contains an exception to use eminent domain for private development in blighted areas. If these bills became law, government projects such as the Neighborhood Transformation Initiative, as instituted by the City of Philadelphia, would become a thing of the past.

The second and even more troubling problem with these bills, as pointed out by Professor Barros, is that the bills require the inclusion of a reverter clause that is unlimited in duration. In other words, under the bills, if the condemned property is ever used for a nonpublic purpose, the former property owner or even his heirs would regain ownership of the property.

Another set of legislation, House Bills 2029 and 2059, have recently been introduced and referred to the House Committee on Judiciary. Although these newly introduced bills allow for private economic development of blighted properties, the bills would still severely restrict the way state and local governments utilize the power of eminent domain.

For instance, despite the blight exception contained in these bills, Philadelphia would continue to have a difficult time fulfilling its goal of revitalizing neighborhoods because individual non-blighted properties would remain in otherwise blighted parts of the city. Since most reputable developers require large continuous parcels of land before undertaking development projects of this magnitude, the proposed curtailment of the city’s eminent domain power would likely dissuade private developers from continuing to invest in neighborhoods that are otherwise in desperate need of the proverbial facelift.

Other States React to Kelo
Alabama, Delaware and Texas have already passed laws to ban or restrict the use of eminent domain for private development. At least twenty-seven other state legislatures have considered or will soon consider bills limiting the authority of local governments to so broadly exercise eminent domain. According to the National Conference of State Legislatures, the legislation that has been introduced in these states falls into one of the following five categories:

  1. Authorization for a Public Use These bills limit eminent domain for a “stated public purpose” or a “recognized public use.” For example, on July 21, 2005, Delaware Governor Ruth Ann Minner signed legislation requiring that “eminent domain only be exercised for the purposes of a recognized public use.”

  2. Restriction of Use to Blighted Properties These bills only allow the use of eminent domain for economic development purposes in blighted areas. For example, the new Alabama law contains an exception that would permit takeovers of blighted properties.

  3. Enhanced Public Notice, Hearing and Negotiation Criteria These bills mandate that local governments hold public hearings before condemning property for economic development purposes, notify affected property owners in advance of the hearing and negotiate in good faith with property owners before condemning land.

  4. Local Government Approval These bills require a vote of the locally elected legislative body before a redevelopment agency may initiate eminent domain for economic development purposes. In New York, Assemblyperson Joan K. Christensen sponsored a bill requiring a vote by the local government whenever the Onondaga County Industrial Development agency approves the use of eminent domain.

  5. Prohibiting Eminent Domain for Specified Purposes These bills prohibit the use of eminent domain for economic development, for the primary purpose of generating additional tax revenue, or to transfer private property to another private use. The Pennsylvania bills embrace this approach.

Placing a Moratorium
Other states have decided to place a moratorium on the use of eminent domain for economic development in order to assess the policy options. In July, Connecticut Governor M. Jodi Rell and state legislators called for a moratorium pending the enactment of legislation protective of property owners.

The concepts of public use and public interest, or even blight, are murky by their very nature. And despite the varied legislative reactions to Kelo, state legislative efforts signify variations on the same basic theme, chiefly that limitations and procedural safeguards are vital to prevent governments from overreaching or abusing the power of eminent domain. Legislative prophylactics, although potentially useful in curtailing abuses, nevertheless must still be applied to constantly evolving economic realities. The mere existence of legislative reaction should certainly not be taken for anything more than it really is: a reminder that condemnation issues tend to involve extremely close calls.