Justices Back Forced Sale of Property

WASHINGTON —  The Supreme Court gave cities broad power Thursday to bulldoze homes and small stores to make way for business development, a ruling the dissenters said put shopkeepers and homeowners at the mercy of revenue-hungry governments.

The 5-4 ruling against a small group of residents in New London, Conn., goes further than ever before in allowing government to invoke its power of “eminent domain” to seize private property from unwilling sellers.

The ruling is likely to encourage more city-backed plans to clear land for office complexes or big-box retailers, land-use experts said. It also would help cities that seek to redevelop but are strapped for tax money to pay for it, they said. Now local governments can turn to developers to finance the projects, more confident that courts will not stand in the way.

The Supreme Court dissenters accused the majority of sacrificing the rights of ordinary homeowners to please well-connected developers.

“Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner,” Justice Sandra Day O’Connor said. “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.”

The ruling’s effect in California probably will be blunted by protective state laws, although lawyers and redevelopment officials disagreed about that Thursday.

Under California law, a redevelopment agency may condemn property only in a “blighted area.” At least eight other states -- Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington -- have put similar restrictions on city redevelopment agencies.

The high court noted Thursday that other states could pass similar laws to restrict such seizures.

The Connecticut dispute was a test of government power versus individual rights, pitting a community’s hopes for economic rebirth against the rights of an individual -- in this case a nurse named Susette Kelo -- to keep her home.

The case turned on the provision in the Constitution that says the government may take private property “for public use” so long as it pays the owner “just compensation.”

Originally, “public use” meant the land was to be used by the public, such as for a road, canal, military base or government building. In the 19th century, railroads were permitted to take private lands because they served the public. Then in the mid-20th century, the court said officials could condemn homes and stores in “blighted” areas as part of a redevelopment plan. That helped spawn an era of “urban renewal” across the nation.

In Thursday’s decision, the court went a step further and said the condemned properties need not be blighted. Now, as long as the goal is to create new jobs or raise tax collections, officials can seize the homes or shops of unwilling sellers, the court said.

“Promoting economic development is a traditional and long-accepted function of government,” said Justice John Paul Stevens, adding that he and his colleagues were unwilling to “second guess” local officials on what was best for their community.

City councils, county boards and state agencies deserve “broad latitude in determining what public needs justify the use of the takings power,” Stevens said. Justices Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer joined him in the majority.

Based on that reasoning, the justices upheld a plan by officials in “economically distressed” New London to revitalize its downtown with an office complex, restaurants, a hotel and a marina. The city’s effort would complement plans by the drug company Pfizer Inc. for a $300-million research center nearby.

Thursday’s ruling allows city officials to seize the homes of nine New London families who had refused to sell.

Kelo sued the city -- hoping to save her small, pink Victorian home with a view of Long Island Sound. She and her neighbors maintained that the city could not bulldoze their homes simply to build more expensive homes or offices on the same land.

But she lost in the Connecticut courts and finally in the Supreme Court.

Kelo said she was “very disappointed that the court sided with powerful government and business interests” rather than “protecting the rights of working-class homeowners.”

Dana Berliner, one of her lawyers at the Institute for Justice in Washington, called it a “dark day for American homeowners.”

“Every home, small business or church would produce more taxes as a shopping center or office building,” Berliner said. “And according to the court, that’s good enough reason for eminent domain.”

In a separate dissent, Justice Clarence Thomas said the effect of these redevelopment plans fell most heavily on the poor, minorities and the elderly. “Over 97% of the individuals forcibly removed from their homes by the ‘slum-clearance’ project upheld by this court [in 1954] were black,” Thomas said. Chief Justice William H. Rehnquist and Justice Antonin Scalia joined the dissents.

But local government officials praised the decision as crucial to their efforts to revitalize depressed areas. Had Kelo and her neighbors won, a few holdouts could have blocked major redevelopment plans, they said.

“Where would Baltimore be without the Inner Harbor, Kansas City without the Kansas Speedway, [or] Canton, Miss., without its new Nissan plant?” asked Washington Mayor Anthony Williams, president of the National League of Cities.

In California, several experts said they didn’t expect a major impact from Thursday’s ruling.

It’s unlikely that a California government could try to take “perfectly inoffensive middle-class homes” like the ones in New London, said Los Angeles real estate lawyer Michael Berger. “Our courts have insisted there be evidence of blight before upholding condemnations.”

Murray Kane, legal counsel to several city redevelopment agencies -- including that of Los Angeles -- said: “We don’t see it as an expansion of eminent domain powers, but as an underpinning of the current powers that cities and redevelopment agencies have.”

But James Janz, a lawyer in the San Jose area, said the California law did not stop city officials from seeking to condemn entire city blocks that were in economically depressed areas, regardless of the condition of individual structures. “The word ‘blighted’ is giving a pretty loose definition,” he said. “Courts tend to defer to the redevelopment agencies.”

The ruling in the New London case marks the third defeat in a month for property-rights advocates in the Supreme Court.

In May, the justices said rent-control laws could not be challenged even if it was clear they were not achieving their objectives. The ruling upheld an odd law in Hawaii that limited how much major oil companies could charge in rent for service stations. The law’s goal was to lower gasoline prices for motorists.

On Monday, the court ruled that property owners could not go to federal court to challenge an ordinance that required them to pay the city a fee when they converted rental units into hotel rooms. The decision upheld a San Francisco ordinance under which the owners of the San Remo Hotel were forced to pay $567,000.

Times staff writers Daryl Kelley in Los Angeles and Daniel Yi in Orange County contributed to this report.