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Downtowns & Main Streets

The Supreme Court’s Kelo Decision: Good News or Bad News for Downtowns?

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Can local government take private property away from its citizens and develop it for something that will generate more tax revenue? On June 23, the U.S. Supreme Court sided with the City of New London, Connecticut, in an eminent domain case that has set off tidal waves of anxiety, praise, anger, and confusion across America. Within hours, dozens of weblogs (both conservative and liberal) claimed the decision tramples the rights of private property owners -- but dozens of others praised the decision for affirming a crucial community development tool.

The American Planning Association and National League of Cities hailed the Court's decision, while the National Trust for Historic Preservation called it "bad news to many preservationists." Mayor Bart Peterson of Indianapolis and former mayor John Norquist of Milwaukee (both Democrats) faced off against each other on PBS's NewsHour. The Brookings Institution called the ruling "an important revitalization tool." CNN called it a "big box bonanza."

So, what does the Supreme Court's ruling in Kelo v. City of New London mean for America's main streets? Will it make it easier for some communities to strengthen their downtowns? Yes, undoubtedly. Will it make it easier for some communities to build new commercial complexes that drain revenues from their downtowns? Yes, undoubtedly.

Here's what the case is about. In 2000, the City of New London condemned Susette Kelo's house and the houses of a few other property owners in a historic waterfront neighborhood in order to give the land to a private developer who promised to build a new marina, housing, and offices there, generating substantially more tax revenue for the city than the existing houses. Kelo (who, incidentally, had just rehabbed her Victorian house three years before) and her neighbors sued the City.

Their argument: while the Fifth Amendment to the Constitution says that eminent domain can be used for public purposes, it doesn't allow the condemnation of property for "private" purposes, and turning the land over to a private developer constitutes a "private" purpose and is therefore unconstitutional. The City argued that its redevelopment plan is a key component of the community's economic development strategy and therefore has a public purpose.

Ironically, the question of whether eminent domain could be used to promote economic development in this way has served as a lightning-rod for many from opposite sides of the political spectrum. ...

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