Kelo Property Rights Rulings Shouldn’t Worry Tennesseans

As published in the Nashville Business Journal

Last November, we noted in this publication the importance of an eminent domain case pending before the United States Supreme Court. On June 23, the Supreme Court decided Kelo v. New London, holding that the taking of private property to promote economic development in New London, Conn., was a "public use" permitted by the Fifth Amendment.

This decision has prompted concern about the erosion of private property rights, but whether the decision will have a significant impact on Tennessee is another matter.

The Fifth Amendment imposes two limitations on the government's power of eminent domain: The property must be taken for a "public use" and the government must pay "just compensation" to the property owner.

The issue in Kelo was whether the taking of private property for the sole purpose of "economic development" that may increase tax revenues and improve the local economy was permissible in light of the Fifth Amendment's public use requirement.

The Supreme Court, equating "public use" with "public purpose," held that the taking was permitted so long as it was made pursuant to a development plan and was not meant to "confer a private benefit on a particular private party."

The dissenting opinion, authored by Sandra Day O'Connor, noted that "the specter of condemnation hangs over all property. 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."

But in Tennessee, it's unlikely that property owners will be threatened with such circumstances.

The Tennessee General Assembly hasn't authorized state or local governments to condemn property for the sole purpose of promoting economic development. Tennessee statutes authorizing the exercise of the power to authorize condemnation for the purpose of constructing specified public improvements, with limited expectations.

The authority granted to housing authorities to condemn private property in redevelopment districts when a redevelopment plan will remedy blighting conditions. Cities and counties may condemn private property for industrial parks that have been certified by the Tennessee Department of Economic and Community Development. And cities and counties may condemn private property for sports facilities and sports authorities.

Most importantly, Tennessee courts haven't always deferred to the legislation finding of public use, as the Kelo case does, but instead have held that whether a proposed taking is for a "public use" is a judicial question. Thus, Tennessee courts aren't as likely to permit the legislative body to unilaterally determine whether a use is a "public use."

As noted by Justice John Paul Stevens, the majority author of the Kelo decision, "nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power."

In fact, legislation is already pending which would seek to protect Tennessee property owners by prohibiting "the use of eminent domain solely or principally for the purpose of improving tax revenue or the tax base, or for the purpose of economic development."

Even if the legislation isn't adopted, it appears Kelo will not have a substantial effect upon Tennesseans.