WAITING FOR KELO: Will it have an impact on Eminent Domain in New Jersey?

Kelo v. the City of New London (04-108) should be decided this week by the United States Supreme Court. Don't hold your breath, property owners. It may be a non-event.

Berman v. Parker, 348 U.S. 26 (1954) created the narrow exception that led to eminent-domain abuse. Jeff Jacoby wrote in the Boston Globe:

Cities and states, eager for new development, began pronouncing neighborhoods blighted when they were simply working-class. Some went further, stretching the meaning of "public use" beyond "public purpose" into mere "public benefit." They condemned and seized private property on the grounds that another owner could use it to make more money, create more jobs, or generate more business -- all leading to more taxes, the supposed public benefit.... That 1954 ruling weakened the very foundation of our liberty: the right to own and lawfully enjoy property.

The question presented to the Supreme Court by the plaintiff Susette Kelo is this: What protection does the Fifth Amendment's public use requirement provide for individuals whose property is being condemned, not to eliminate slums or blight, but for the sole purpose of "economic development" that will perhaps increase tax revenues and improve the local economy?

Are there limits on government's use of eminent domain power under the public use requirement of the 5th Amendment? This is how the question was posed by attorney Scott Bullock (Institute for Justice)for the plaintiffs at the beginning the oral argument on February 22.

The colloquy between the Court and counsel is enlightening.

New London was in a depressed economic condition�The critical fact on the city side, at least is that this was a depressed community and they wanted to build it up, get more jobs.-- Justice Ginsburg
Oh, but Berman spoke, in the opinion, said that the determination of the legislature about these things is virtually conclusive, that there is only the narrowest, narrowest role for the judiciary. What kind of standard are you proposing we should get into here to second-guess the public use aspect?--Justice O'Connor
But there is no taking for private use that you could imagine in reality that wouldn't also have a public benefit of some kind, whether it's increasing jobs or increasing taxes, et cetera. That's a fact of the world. And so given that fact of the world, that is law, why shouldn't law say, okay, virtually every taking is all right, as long as there is some public benefit which there always is and it's up to the legislature.--Justice Beyer
But that's what they were being used for in Berman...everybody knows that private developers were the beneficiaries in Berman.... You want me to make a distinction between blight which is a permissible governmental use, governmental objective and economic revival, which isn't?....Blight is in the eye of the beholder.... --Justice Kennedy

Therein lies the legacy of Berman. Here's your one hope, property owners:

Let me ask you this, and it's a little opposite of the particular question presented. Are there any writings or scholarship that indicates that when you have property being taken for one private person ultimately to go to another private person, that what we ought to do is adjust the measure of compensation, so that the owner--the condemnee--can receive some sort of premium for the development?--Justice Kennedy

Possibly in takings for so called "economic benefit" the court will fashion a rule that the owner may claim value based on the positive influence of the project. This would set the "scope of the project" rule on its ear. See Jersey City Redevelopment v. Kugler 58 NJ 374, 379 (1971). This case stands for the proposition that any increase or decrease in value attributable to the project of the condemning authority should be excluded by the fact finder.

How would such a rule change play out in blight cases in New Jersey? We'll wait and see.
Download the transcript of the oral argument of February 22