The Institute for Justice tells the story of Susette Kelo, who dreamed of owning a home that looked out over the water. In 1997, she purchased and lovingly restored her little pink house in the Fort Trumbull area of New London, Ct., where the Thames River meets the Long Island Sound. She’s enjoyed the great view from its windows ever since.
The Dery family down the street from Kelo has lived in Fort Trumbull since 1895; Matt Dery and his family live next door to his mother and father, whose parents bought their house when William McKinley was president The richness and vibrancy of this neighborhood reflects the American ideal of community and the dream of home ownership.
“The U.S. Supreme Court’s eminent domain decision impacts the industry.”
Tragically, the City of New London has turned that dream into a nightmare. In 1998, pharmaceutical giant Pfizer built a plant next to Fort Trumbull, and the city determined that someone else could make better use of the land than the Fort Trumbull residents. The City handed over its power of eminent domain—the ability to take private property for public use—to the New London Development Corporation (NLDC), a private body, to take the entire neighborhood for private development.
As the Fort Trumbull neighbors found out, when private entities wield government’s awesome power of eminent domain and can justify taking property with the nebulous claim of “economic development,” all homeowners are in trouble.
Even more tragically, they fought their way through the courts system all the way to the U.S. Supreme Court, where the deeply divided justices found for the City of New London in a 5-4 decision last June. This case made major headlines, and its effects have reverberated throughout our industry.
Not more than a couple of weeks after this ruling, a long-time client of our firm received notice from his municipality that they were exercising their right of eminent domain pursuant to this ruling. This comes as no surprise to us, as this same municipality had attempted using eminent domain on our client back in 1991. At the time, we fought that effort shoulder-to-shoulder with our client—and won.
A different era
This time, the news is not so good. The attorneys representing our client tell us we have no recourse. So we are making the best case for arguing the value of the plant our client will be losing, which is in a prime location and ideally situated for servicing its customers in its dense, urban setting. The economic loss, we argue, is not the value of the plant and the real estate, but rather the operating profit generated at the plant level and which is contributed to the parent, a very profitable multi-plant operation.
The municipality has its own experts who disagree. This probably is headed to long, protracted litigation that will take years to resolve. Sadly, our only argument is over the value, because we don’t have a leg to stand on with the issue of the eminent domain action itself.
This entire sea-change wrought by the Kelo decision is scary. The pending action is the first of many this industry will see. All across the nation, concrete plants sit on property they have occupied for decades. Unfortunately, many feel the best or most profitable use of the property is a Wal-Mart, not a ready mixed plant. But these plants often are extremely close to customers, and are very profitable.
Private property owners are not taking this lying down. Organizations like Hands Off My Home and the Castle Coalition have taken up the fight, and lawmakers in 21 states and counting are in various stages of pressing new legislation to curb eminent domain abuse.
But our industry is an unpopular neighbor. Several years ago, a survey found that ready mixed-concrete plants were third, behind prisons and landfills, as the most unfriendly of neighbors. With the dark shadow of the Kelo ruling looming over us, our entire industry must work harder at running clean, safe operations that are neighbor-friendly while Congress and state legislatures throughout attempt to repair eminent domain abuse.
In Their Own Words
Favoring the Eminent Domain Ruling:
“The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue. Promoting economic development is a traditional and long-accepted governmental function.” — John Paul Stevens
“The taking occurred in the context of a comprehensive development plan meant to address a serious citywide depression.” — Anthony Kennedy
Opposing the Eminent Domain Ruling:
“The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. The Founders cannot have intended this perverse result.” — Sandra Day O’Connor
“Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities.” — Clarence Thomas
Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at firstname.lastname@example.org or telephone 985-727-4310.
© 2006 Hanley Wood, LLC. All Rights Reserved. Republication or dissemination of “A New Threat” (The Concrete Producer, May 2006) is expressly prohibited without the written permission of Hanley Wood, LLC. Unauthorized use is prohibited. Allen-Villere is publishing “A New Threat” under license from Hanley Wood, LLC.