Desperate Cities: Eminent Domain and Economic Development in a Post-Kelo World


Kelo v. City of New London unleashed an unprecedented legislative response when the Court upheld the use of eminent domain for private economic development as consistent with the Takings Clause of the Fifth Amendment. By exhibiting an extreme deference to the legislative branch and failing to consider the current model of economic development, in which “desperate” cities have seen their economic bases contract and have embarked on fervent urban revitalization campaigns as a result, the Kelo Court failed to take into account the immense influence that large corporate interests wield in the legislature. This influence is generally exercised to the detriment of the interests of the average citizen whose home or small business is at risk of being seized on behalf of powerful private interests and in the name of economic development. Unwittingly, Kelo has opened the doors for abuse of these average citizens.

Kelo saw its precursor in the infamous 1981 Poletown decision by the Michigan Supreme Court. Poletown’s lessons and the Michigan Supreme Court’s subsequent reversal of it are instructive in a post-Kelo world. While balancing the interests of cities and states desperate to revitalize their tax bases and those of the average citizen who are given very little recourse in Kelo and in many legislatures, this paper advocates a new framework under which economic development takings may be analyzed.

This framework comprehends a process, mandated by either the courts or by the legislature in enabling legislation, in which Social Capital Impact Assessments (SCIA) would be used to correct the imbalance of power between large corporate interests and government, on the one hand, and the average citizen, on the other. Successfully implemented under the National Environmental Policy Act (NEPA), Environmental Impact Statements and Assessments, that mandate the study of federal agencies’ actions and their impact on the environment, have revolutionized the influence of previously excluded environmental groups on environmental policy by using the courts as a mechanism for enforcement. By implementing a process by which governments must respond to questions relating to the social impact of proposals that contemplate economic development takings and by providing opportunities for public comments, as in NEPA, the legislative balance-of-power implications post-Kelo may be corrected.


Constitutional Law | Property Law and Real Estate

Date of this Version

March 2006