Following the unfavorable Kelo decision in 2005, governmental entities started abusing their power to exercise eminent domain and attempted to deem lower grade neighborhoods as blighted in order to acquire the property and have the area redeveloped in order to increase their tax base. Even though the area may not be technically blighted, governments have been objectively calling it that to settle the public use definition. In a few states like New York, the definition of blight is broad and lacks clarity making it easier for governments to misuse this designation in order to exercise their eminent domain authority. As a result, this area of eminent domain law is still very unsettled and interpreted differently by different states.
This whole concept promulgated into the Kelo v. City of New London decision, where the City of New London Connecticut redeveloped an area without even relying on the blight designation. Their intention was to create a more valuable tax base by handing off to a developer for a new Pfizer headquarters, so they proceeded to take property under the power of eminent domain for the sole reason of creating a more valuable tax base. They argued that the creation of a more valuable tax base was in fact a sufficient public use to justify taking property away from one private property owner and giving it to another. As you can imagine, there was a loud human cry across the country about what happened. The Supreme Court of Connecticut upheld the actions that the City of New London took and the case was appealed to the U.S. Supreme Court. There in a very contentious five to four split decision, the U.S. Supreme Court stated that although they didn’t agree that economic development was the proper public use to be used anywhere, the federal government through the federal constitution would not stand in the way of a taking for economic redevelopment for the sole purpose of increasing tax benefit purposes as a proper public use.
This decision ultimately granted each state the power for crafting language in their statutes and constitutions specific to public use, the blight definition and whether or not eminent domain could be used for the sole purpose of economic gain. As you can probably imagine because of the tremendous outrage that was created throughout the country, 43 states responded by enacting “post-Kelo” legislative reform to help curb eminent domain abuse. In a few states, blight was statutorily removed from the public use category.
There is a lot of litigation in this area, and I expect that until truly objective blight standards are established on a state by state basis, this will continue to be an area that is going to see a lot of litigation in the court system.