Much Ado About Kelo

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By: Jeffrey M. Bellamy

The headline of the Washington Post’s June 23, 2005 article read “Supreme Court Rules Cities May Seize Homes.” The United States Supreme Court had handed down its decision in Kelo v. City of New London holding that municipalities can condemn “blighted” private property for the purposes of economic revitalization. Prior to the Kelo ruling, State Representative David Wolkins’ (R, Winona Lake), introduced House Bill 1063 during the 2004-2005 session. The bill sought to restrict the use of eminent domain for redeveloping blighted areas. However, the bill was sent to the Interim Committee on Eminent Domain which first met on August 10, 2005 which now takes on the concerns fueled by the Kelo decision in addition to those that originally prompted HB 1063.

Both nationally and locally, many are calling for added restrictions on the government’s ability to take private property, especially where the taking appears to disproportionately benefit private interests. Alabama and Texas are considering such limitation. Editorials printed before the first meeting of the Interim Committee suggest that similar measures should be considered here. Before the Interim Committee rushes into the post-Kelo breach and suggests curtailing a local government’s eminent domain powers, it would be worthwhile to consider the some legal decisions on the subject.

Certain types of public takings for private purposes are already prohibited in Indiana. In 1978, the Indiana Court of Appeals found that taking private property to give to an adjacent private business to facilitate construction of an interstate on-ramp was unconstitutional and prohibited. State of Indiana v. Smith, 381 N.E.2d 873. Similarly, a taking of private property must either retain elements of use by the public or provide a necessary service or benefit to the public. Foltz v. City of Indianapolis, 130 N.E.2d 650. Takings for private purposes, though generating charitable, educational, and philanthropic benefits are still prohibited private takings. In 1927, the Indiana Supreme Court declared a statute unconstitutional because it would allow a charitable organization to be able to condemn the property it leased if it were unsuccessful in purchasing the property outright. Fountain Park Co. v. Hensler, 155 N.E. 465. The Court found that while social service organization did provide significant public benefits, such benefits were not the same as public uses.

While it appears that both pro-eminent domain and pro-property rights advocates are sounding off to the media and interim study commission, neither side has produced a ‘Hoosier’ Suzette Kelo. While Suzette Kelo’s situation is certainly worthy of sympathy, she is, in fact, a citizen of Connecticut. If a Hoosier version of Suzette Kelo were to emerge, based on Indiana’s present law, the emerging legal trends elsewhere, and even the Kelo v. New London case, there is reason to believe that a property owner with Kelo-like facts could succeed in Indiana where Kelo, herself, failed.

Further, the Interim Committee would be well-served if it knew how often Indiana’s municipalities used eminent domain to condemn viable properties under the banner of economic revitalization. Then, how many of those episodes lead to failed projects or adverse consequences, as found in Kelo. It would be right to engage the qualified faculty of the State’s universities to examine the question independently to gauge the prevalence of using eminent domain in municipal economic revitalization.

With all of the issues and interests before the Interim Committee, can steps be taken by the Legislature that promote property rights, increase transparency between government and citizens, and give municipalities the freedom to continue to use eminent domain for revitalization purposes? Here are some suggestions:

1. Define “blight.” The public use that the U.S. Supreme Court sanctioned in Kelo was the revitalization of “blighted” property. Justice Sandra Day O’Connor captured the collective fear of all property owners because “blight” is somewhat arbitrary and determining what is “blighted” is, at best, a comparative process. O’ Connor stated “[n]othing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.” The public fear is that there is always a more economically profitable use to supplant a stable present use, and that local government is available to assist a corporate citizen with the taking. The Interim Committee should tackle the problem by determining just how under-productive a property must be to be considered “blighted.”

2. Examine present State condemnation practices. While it may seem shocking, the Indiana Department of Transportation does not have to comply with the State’s Public Access to Records Law when condemning private property. The Access to Public Records law, with its noble preamble stating that it is “a fundamental philosophy of the American constitutional form of representative government is that government is the servant of the people and not their master,” gives Hoosiers the right to review the public records and actions of its elected, appointed, and hired public servants. However, if your property is the subject of a potential taking by INDOT, then all preliminary appraisals or studies conducted by the State can be classified as “confidential” and you have no right to review them. The Committee, in the interest of promoting trust in the eminent domain process, should abolish INDOT’s exemption to the Access to Public Records law and allow Hoosiers to see the valuations compiled regarding their property.

For all the uncertainty that the term “blight” evokes and for all the sympathy that Suzette Kelo deserves for her underdog fight, one need only drive past the Hummer plant in Mishawaka, or through Fall Creek Place (f/k/a “Dodge City”) in Indianapolis to see where municipal involvement in economic redevelopment has been successful. The Interim Committee’s deliberations should take into account the current status of Indiana’s eminent domain law, the positive uses of eminent domain throughout the State, and the problems that existed well before Kelo. Then the Committee should fashion a way to prevent and punish abuse of condemnation, promote fairness and transparency between citizens and government in the valuation and compensation process, look more closely at how the delegated authority to employ eminent domain is used, and allow municipalities to keep eminent domain authority for revitalization as a regulated and checked power.