The narrow (5/4) decision in this case upheld the right of the city to take (and compensate for) the homes of residents who did not want to move, so it could make room for what is planned as a significant mixed-use development adjacent to a multi-million dollar pharmaceutical research centre. The City of New London, which is also confronting the potential loss of its Navy submarine base, has been eager to reinvent itself for a knowledge-based economy.
The US Constitution provides for the taking of private property for “public use” and the majority opinion of the court asserts that public use goes beyond bridges and roads to include a “public purpose”, such as creating jobs.
The reaction to this decision included support by some local officials as an affirmation of their plans to remake their communities.
Others deplored the idea of taking from one private property holder just to enable another private property holder to create wealth, seeing it as an intrusion of liberty as well as a potential for discrimination against those with fewer resources, particularly minorities.
As a way to demonstrate the impact, one activist petitioned a local city council to “take” the home of a Supreme Court Justice to make room for a new tax-paying, job-producing development – the Lost Liberty Inn.
In Connecticut, home state of New London, state leaders’ reaction seems to mirror what may be the paradoxical impact of the ruling: proposals to limit and restrict the use of eminent domain when the purpose is economic development.
Eight US states already had such limitations in place. Now, although the Supreme Court seems to have opened the door to a more aggressive “public purpose” use of eminent domain powers, local officials may, at least for a time, sense a need to be increasingly sensitive to how they apply their taking powers.
Investors whose plans require using such powers may need to reconsider the impact in their short-listed communities.
Daniel Malachuk works with business and government leaders on global direct investment strategies. During his career, he has advised many of the world’s leading companies and served in the public sector as Director of White House Operations.