Any Motel 6

Every country lets the state take private land for public use, and pay for it. Roads have to go somewhere. A railway cannot detour around one stubborn owner. The word doing the work in that arrangement is public.

In 1997 Susette Kelo bought a small house in the Fort Trumbull neighbourhood of New London, Connecticut, where the Thames River meets Long Island Sound. She repaired it herself and painted it pink. What the city eventually took it for was not a road.

The plan

New London was struggling. Its naval base had closed. The city and the state set up a private development corporation and put together a plan for Fort Trumbull: a hotel, offices, housing, a marina, a conference centre, laid out beside a research facility that the pharmaceutical company Pfizer was building.

Pfizer was not taking the seized land. That is the point people get wrong about this case. Pfizer's employees were meant to be the customers for what would be built there, and the presence of the company was what made the rest of the plan look plausible to everybody who had to approve it.

The plan promised 3,169 new jobs and 1.2 million dollars a year in extra tax revenue.

Most owners sold. Some would not, and the city moved to take their homes by compulsion.

What the court decided

The Fifth Amendment to the American constitution ends with a clause that has been argued over since it was written: nor shall private property be taken for public use, without just compensation.

Nobody disputed the compensation. The fight was over public use. New London was not going to build a road or a school. It was going to hand the land to a developer and hope for jobs.

On 23 June 2005 the Supreme Court held, five votes to four, that this was permitted. Justice Stevens wrote the majority, joined by Kennedy, Souter, Ginsburg and Breyer. The reasoning was that economic development is a legitimate public purpose, that courts should not second guess a legislature's judgement about what will benefit a community, and that a carefully considered development plan does not stop being public simply because private parties will execute it and profit from it.

The dissent

Justice O'Connor dissented, joined by Chief Justice Rehnquist and Justices Scalia and Thomas. Thomas wrote separately.

Her objection was not that the plan was foolish. It was that the majority's test does not exclude anything. If the standard is that the new use might produce more jobs or more tax than the old one, then almost any transfer from a poorer owner to a richer one qualifies, because a richer owner will nearly always generate more revenue from the same ground.

"Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

And then the sentence that the following two decades did not improve on.

"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."

What actually happened to the land

The houses came down. The neighbourhood was cleared.

Then nothing was built on it. Not delayed, not scaled back. Nothing.

In late 2010 Pfizer closed its New London facility altogether and cut more than a thousand jobs, at the point when the tax breaks it had been given were expiring and its property tax bill was due to rise by close to 400 per cent. The company whose presence had justified the whole exercise left the city five years after the judgment that cleared the ground for its neighbours.

By then the cost of the project to the city and the state had reached 78 million dollars. The land was an empty lot. It was still substantially empty many years later, and construction on a community centre had only begun by 2024.

The plan promised 3,169 jobs. The count, on the land taken, was zero.

What happened to the house

Susette Kelo's house was not knocked down. The city eventually paid additional compensation and agreed to move the building, and it was relocated to a site on Franklin Street, finished about three years after the decision.

It is worth sitting with the arithmetic of that. The house survived and the neighbourhood did not. The one structure that was worth the trouble of saving was saved because it had become famous for being taken.

What the country did about it

This is the part that complicates the story, and it should be told, because the judgment did not end the argument. It started one.

Forty five states amended their eminent domain statutes in the years afterwards, and twelve amended their state constitutions, to restrict takings for private benefit. The Supreme Court had said the federal constitution permitted this. Almost every legislature in the country then said its own law would not.

That is the system working, slowly and from the bottom, and it is a better outcome than the case on its own suggests. It is also cold comfort to the people whose houses had already gone, because none of those statutes were retrospective and none of them rebuilt anything at Fort Trumbull.

Why it still gets cited

Kelo is quoted constantly in India, in Britain, anywhere a state wants land for a project it says will benefit everybody. It gets used by both sides, which is a reasonable sign that the case is genuinely hard rather than obviously wrong.

The useful lesson is narrower than the slogans. It is not that governments should never take land. It is that when the justification for taking it is a forecast, somebody should be obliged to go back afterwards and check the forecast against the ground.

Three thousand one hundred and sixty nine jobs. Seventy eight million dollars. One field.

Sources

• Supreme Court of the United States, "Kelo v. New London, dissenting opinion of Justice O'Connor", 23 June 2005 (the passage that nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory; and the passage that the beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms, while the government now has license to transfer property from those with fewer resources to those with more).
• Wikipedia, "Kelo v. City of New London" (the decision of 23 June 2005 by five votes to four; Justice Stevens writing for the majority joined by Kennedy, Souter, Ginsburg and Breyer, with O'Connor's principal dissent joined by Rehnquist, Scalia and Thomas, and a separate dissent by Thomas; the development plan's promise of 3,169 new jobs and 1.2 million dollars a year in tax revenues; Pfizer's employees being the intended clientele for the redevelopment; the closure of Pfizer's New London facility in late 2010 with the loss of over 1,000 jobs as tax breaks expired and property taxes were due to rise by close to 400 per cent; the land remaining an undeveloped empty lot, with a total cost to city and state of 78 million dollars and only a community centre under construction by 2024; the relocation of Susette Kelo's house to 36 Franklin Street about three years after the decision; and the amendment of eminent domain laws by forty five states and of constitutions by twelve).
• Duke University School of Law, "Voices: Kelo" (the background to the taking at Fort Trumbull, the litigation brought on behalf of the remaining owners, and the condition of the cleared site in the years following the ruling).
• Today in Connecticut History, "June 23: Eminent Domain Redefined in New London" (Susette Kelo buying and restoring the house at Fort Trumbull in 1997 where the Thames River meets Long Island Sound, and the local course of the dispute).
• National Constitution Center, "On this day, the Supreme Court redefines eminent domain" (the public reaction to the ruling and the legislative response across the states).