Editorial: Legal land grabs

New Jersey is one of seven states with fuzzy eminent domain laws that make it easier to wrongly take people's property. It's a measure the Garden State should clarify, especially in the wake of the fallout from a landmark Connecticut case.

Eminent domain allows governments to take private property and compensate its owners when the result would benefit the greater community. That may sound reasonable, but it isn't when the greater good isn't so clear cut.

A perfect example is the recent announcement that Pfizer Inc. is shutting down a Connecticut facility that became the poster child for the wrong way to apply eminent domain. People were kicked out of their homes to make room for new development, including a hotel, that never occurred.

It began more than a decade ago, when Pfizer announced it wanted to build a $300 million office complex in New London, Conn. The town sought to solidify the deal by promising to redevelop the adjoining Fort Trumball neighborhood, using eminent domain to evict homeowners who wouldn't voluntarily move.

Some property owners proved pretty ornery, however. Seven sued the town and took their case all the way to the U.S. Supreme Court.

The court ruled 5-4 in Kelo v. New London against the plaintiffs in 2005. The court said it's OK for government to take property for private development if the net is a plus for citizens.

The "plus" in this case was supposed to be all the additional tax revenue that New London would collect on the redeveloped property. Trouble is, people were moved, houses were razed, but that redevelopment never occurred. And now, Pfizer is moving out, taking 1,400 jobs with it.

The Kelo decision shook people up since it essentially equated "public use" with "private use" of property to increase tax revenue.

In following that reasoning, said Justice Sandra Day O'Connor in her dissent, "Nothing 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."

Most states responded to Kelo by rewriting their laws to make it clearer when eminent domain could be properly applied. But so far, not Hawaii, Arkansas, Mississippi, Oklahoma, Massachusetts, New York, and New Jersey, which has legislation pending.

Of particular importance is how the states define "blight," which is the category typically used to designate properties when a government wants to acquire that land for redevelopment.

"The definition of blight has become so expansive that tax-hungry governments now have the ability to take away perfectly fine middle- and working-class neighborhoods and give them to land-hungry private developers who promise increased revenue and jobs," said the Institute of Justice in a study of eminent domain.

The New Jersey Supreme Court in a 2007 ruling said property shouldn't be deemed blighted unless it is a detriment to the health, safety, and welfare of its residents. That's the standard that should be included in the eminent domain legislation under consideration in that state.

Eminent domain can be useful, when applied correctly. But the Kelo case shows what can happen when a huge appetite for tax ratables also consumes reason.