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Eminent Domain: A Year After Kelo

A year after the U.S. Supreme Court's earth-shaking eminent domain decision, Kelo v. New London, Susette Kelo is still negotiating with city leaders to keep her home.

Meanwhile, more than two dozen states have passed legislation to curb similar forced property sales for private development, and all eyes are on Ohio, where the first case to test those new laws has reached the state Supreme Court.

Last June, U.S. Supreme Court justices voted 5-4 to uphold a Connecticut court's opinion that the City of New London, Conn. was justified in the private taking of several homes for a development that would boost the local economy, meeting the Fifth Amendment's “public use” condition for enacting eminent domain powers.

However, the court essentially invited states to tighten their own eminent domain standards. In his majority opinion, Justice John Paul Stevens emphasized that some states observe narrower eminent domain limitations in their state constitutions or statutes, and “nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power.”

Lawmakers in dozens of states acted on that invitation this year. Of the 45 legislatures that were in session, 28 approved eminent domain reforms that have either been adopted or are awaiting signatures by governors, according to a June 20 report by the Institute for Justice, a Washington, D.C.-based libertarian advocacy group.

Most state legislatures have adjourned for 2006, although those in New York and New Jersey are still in session and both have eminent domain measures scheduled for consideration, according to Mandy Hagan, director of state and local affairs at the National Association of Industrial & Office Properties (NAIOP). Hagan tracks eminent domain legislation in states where NAIOP has chapters.

Legislative action in response to the Kelo decision is winding down, but Hagan expects eminent domain to remain a hot issue into 2007 and beyond. That's because new eminent domain laws enacted by legislatures around the nation will be tested in the courts.

It could take years for relevant cases to reach each state supreme court, finally giving justices an opportunity to determine whether new legislation is workable.

“It won't end with the legislative changes that we're seeing here,” Hagan says. “The battle will move to the courtroom.” The first eminent domain case to reach a state supreme court is Norwood v. Horney.

In the past, the City of Norwood, Ohio used eminent domain authority to compel Joseph Horney and other property owners to sell their homes or businesses to the city. A study funded by private developer Rockwood Partners found the area to be “deteriorating,” although none of the 99 parcels in the area were behind on property taxes. This enabled the city to take the properties in order for Rockwood to redevelop the neighborhood.

Ohio justices heard arguments on Jan. 11 and are expected to deliver a ruling later this year, says Scott Bullock, senior attorney at the Institute for Justice, which is representing the Ohio property owners.

“This being the first case after Kelo, it will provide a real indication as to which way the state courts are likely to go on this issue,” says Bullock, who also represented property owners in the Kelo case.

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