• Retail -- Kelo v. City of New London: Paving the Way for New Development?
  • November 9, 2005 | Author: Lewis S. Wiener
  • Law Firm: Sutherland Asbill & Brennan LLP - Washington Office
  • From financing to changes in eminent domain to labor issues, the retail sector often seems as though it requires counsel to be jacks-of-all-trades. In-house counsel must be nimble to keep their companies competitive and secure on a series of fronts. Honing the focus on the following issue will help counsel be prepared to handle the challenges ahead.

    In Kelo v. City of New London, the Supreme Court upheld a Connecticut statute authorizing the use of eminent domain power to condemn private property to support economic redevelopment. Unlike the Court's earlier decisions favoring the use of eminent domain to support economic redevelopment, the taking in Kelo was not predicated upon and designed specifically to remedy an antecedent finding of blight or other social harm.

    What does this decision mean?

    In Kelo, the Court found compelling that the takings and proposed redevelopment would benefit the entire community by creating jobs and increasing the tax base pursuant to a carefully considered and comprehensive development plan. A plan that singles out a single property owner or that would favor a specific developer would likely not pass muster. In addition, owners of property that is taken by the government are entitled to just compensation for the value of their property.

    Eminent domain may be exercised only by the government. Private parties may not compel such a sale of private property. However, legislatures control whether a state or local government may exercise its power of eminent domain to condemn property for purposes of economic redevelopment. Several states, including Arkansas, Florida, Illinois and Kentucky, have enacted statutes that specifically prohibit the use of eminent domain solely for economic redevelopment. Other states, including Connecticut, Kansas, Maryland and New York, specifically approve the practice. Know your state law.