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“Public Needs” Abuse Eminent Domain for Economic Development

The Fifth Amendment encompasses so much more than TV crime shows would lead you to believe; it’s not solely “pleading the fifth,” refusing to answer incriminating questions. In reality, the amendment details five rights of citizens with respect to grand juries, double jeopardy, self-incrimination, due process, and just compensation. Its “Takings Clause” outlines the government’s power of eminent domain — the authority to seize private property for public use — and a private property owner’s right to “just compensation.” Over the years, the Supreme Court has expanded the notion of eminent domain, raising questions about overreaching federal power.

Kohl v. United States (1876) set one of the first major precedents for eminent domain when the federal government seized Kohl’s property to raise a public building. The Supreme Court upheld eminent domain and its utilitarian purpose, noting in its opinion that it “is essential to the governmental duty to serve the public and outweighs any inconvenience to individuals.” In 1984, Hawaii Housing Authority v. Midkiff ended an oligopoly in proprietorship, thus expanding eminent domain. The Hawaii Housing Authority claimed too few families owned much of the land, and as a result, dominated the housing market. The land in question was entrenched in Hawaii’s ancient Polynesian feudal system and prevented outsiders from gaining property rights. The court’s ruling allowed Hawaii to acquire private land and redistribute it.

Within the past 10 years, the definition of “public use” has expanded further to include general public welfare. Eminent domain was historically used for the construction of bridges, water supply, and defense, like in Kohl v. United States. Today, it encompasses the ability to encourage economic growth with a tradeoff of harming private property owners. Kelo v. City of New London is a perfect example. In 1998, the New London Development Corporation (NLDC) gave the pharmaceutical company Pfizer the power to seize Susette Kelo’s waterfront property in New London, Connecticut. In 2005, the Supreme Court deemed this usage of eminent domain legal, because its purpose was to create economic development, a “public use.”

In her dissenting opinion on Kelo v. City of New London, Justice Sandra Day O’Connor questioned the categories of “public” and “private” property use. She declared that economic-development takings were not constitutional since individual benefits for Pfizer and New London residents could not be clearly defined. This is a valid distinction: though governments justly compensate the fair market value for condemned property, eminent domain abuse results in economically depleted property owners that suffer due to corporate procedure. Furthermore, the claim of economic-development takings is a nebulous, and, in Kelo’s case, inaccurate one. Eight years after the landmark decision, the bulldozed property became a wasteland when Pfizer, and 1,400 jobs, left New London.

There’s a difference between “public use” and “public need.” Jim Blasingame of Forbes claims that “public needs” place one private property owner’s land into the hands of another private owner, as opposed to a public owner. Such comments effectively lead to a key argument about public use; as the three Supreme Court decisions have shown, redefining public use has negatively affected property owners. Because the federal government has not demarcated “public use” from “public needs,” eminent domain abuse is still prevalent.

States have taken initiatives to protect residents from the expansion of eminent domain, as Kelo demonstrated. Following the 2005 decision, 43 state legislatures and nine state supreme courts bolstered protection for economic development takings. Florida and Michigan were two of the most successful states, both removing economic blight — areas with declining properties and economies — as the primary option for eminent domain claims. This change prevents seizures from solely relying on economic development. Michigan’s constitution requires blight be proved on an individual property basis. In Florida, legislators entirely removed blight; the state even boasts a 10-year waiting period on private transfers of land. This gives security to private landowners and prevents corporations from taking advantage of the current economic climate.

Despite these increased state-level fortifications, there are still seven states lacking protective measures. Illinois has legislation against private development in agricultural land, but blighted areas can be subject to seizure. Case in point: Northeastern Illinois University has recently looked to expand on-campus housing and retail stores in Chicago’s North Park neighborhood. The state college lacks student housing, and the president wishes to double the area of the school’s campus and attractions for student life. But property owners Garrick Beil and Bill Tong may soon be victims of eminent domain abuse: Both own commercial spaces with family history in the 3400 block space NEIU wants to claim. The fight for the North Park properties has turned into a community action; the “NEIU Land Grab” strives to prevent NEIU success in expanding its campus to the already residentially and commercially relevant areas of Bryn Mawr. Members attend meetings, sign petitions, and educate their neighbors about the issues — all hallmarks of an advocating group. Unfortunately for the NEIU Land Grab, Northeastern Illinois University has categorized North Park as blighted, and room for potential economic improvement validates NEIU’s eminent domain claim.

On the local level,“public use”justifications  particularly threaten the properties of or near low-income racial and ethnic minorities. Professor Ilya Somin of George Mason University notes in his paper “The Civil Rights Implications of Eminent Domain Abuse” that in spite of condemnations being defended as promoting economic growth in poor communities, “they often destroy far more wealth than they create.” Regardless of property value, poor communities are subject to arbitrary eminent domain claims. For example, the Philadelphia Redevelopment Authority condemned artist James Dupree’s studio in Mantua, Philadelphia — which has a poverty rate of around 50 percent — in December 2012, intending to replace it with a supermarket complex and parking lot. Despite the incredible artistic and symbolic value attached to the property of the world-renowned artist, the PRA attempted to bulldoze Mantua’s potentially stagnant “economic growth”.

Today, the changing powers of public use have appeared in the contentious debate with TransCanada Corporation’s construction of the Keystone XL pipeline. Keystone provides an interesting combination of public use and public need; it falls under the category of infrastructure that aids Americans (a nod to the historical definition of eminent domain), but is contracted through a private company. Furthermore, when the government attempts to take land along the pipeline, like in Nebraska, those lots could qualify as economic-development takings. But as an economic development, Keystone may be less lucrative than originally projected. A video from the New York Times shows that the falling prices of crude oil decrease the pipeline’s profit, even more so because “the oil sands have small profit margins to begin with.” Moreover, Keystone offers counterproductive economic and environmental consequences in the form of oil spills. From May 31, 2010 to May 29, 2011, there were 12 spills, a far cry from the predicted one spill per every seven years. Keystone XL is yet another case where government has aggrandized its jurisdiction to supposedly improve the quality of living among its citizens.

Syntactically, the term “public needs” seems like a more urgent category than “public use.” The former sounds like something that Americans should welcome, because who doesn’t want to satisfy their needs? But the distinction lies in the risk involved in creating this additional well-being. There is also the difference of how private land changes hands. Public needs, in the eyes of legislators and real estate developers, may be improvements necessary for residents. But good intentions don’t mean good results. In medical school, aspiring doctors are taught primum non nocere, or “first, do no harm.” It would serve politicians and entrepreneurs well to learn this lesson, because trying to fulfill public needs comes with the larger consequences of evicting homeowners and ruining small businesses.

Image Credit: “Eminent Domain Gate And Wall” (CC BY-NC-ND 2.0) by Steve Soblick

About the Author

Jennifer Kim '19 is a Staff Writer for the Brown Political Review.