Big Developers Get Pinched
Written by Jacob Laskin on 04 Jan 2021
When the Supreme Court handed down its verdict in Kelo v. City of New London in June of 2005, few imagined the development industry in the role of victim. On the contrary, most opponents of the decision supposed, not unreasonably, that construction companies and building firms would be the likeliest beneficiaries of municipalities' disputed right to seize private property under the "public use" clause of the Fifth Amendment: Who else would be contracted to develop their dubiously gotten gains? But a little-noticed case from New Jersey suggests that the battle lines in the political war over eminent domain are more ambiguous than critics have heretofore assumed. In 2002, the development company MiPro won approval from the zoning commission of Mount Laurel Township, a residential community of 41,000 in Southern New Jersey, to develop a 16-acre parcel of land for 23 single-family homes. The deal aptly underscored Mount Laurel's motto: "A Home for Businesses and Families." Then the township had a change of heart. Reasoning that a new residential development would mean urban sprawl, and all its attendant complications, the city sought to buy the land from the developer. MiPro, as was its right, declined the offer. And there the trouble began. Rather than accept the refusal, the town moved to condemn the entire property. It justified the decision with reference to the "public use" clause and its powers of eminent domain. In fact, though, the town's plan was to set the land aside as open space; its sole "public" purpose in acquiring the land was to block further development. It's possible to sympathize with the township's land grab. New Jersey is already the country's most densely populated state. A 2001 study of urban growth in New Jersey by Rutgers University found that "the daily urban growth rate in New Jersey was equivalent to adding 41 football fields worth of new urban land every day while losing 20 football fields of farmland, 9 football fields of forest and 6 football fields of wetlands." Thus the problem the town's political leadership sought to address is real. At issue, however, are their methods. To use eminent domain solely to thwart residential development is to expand the meaning of "public use" beyond all recognition. Such was the sensible conclusion of a state Superior Court Judge, who in a 2003 suit sided with the developer. Conservation, while a noble cause, was not a defensible use of eminent domain, the judge ruled. But the judge's ruling proved an aberration. An appeals court overturned his decision in 2005. And late last year the state's Supreme Court rendered its ruling in the case of Mount Laurel Township v. MiPro Homes, L.L.C. The state's highest court issued a near-unanimous ruling repeating that mistake. The lone note of disapproval was sounded by state Supreme Court Justice Roberto Rivera-Soto. In his dissenting opinion, Rivera-Soto noted that the town had abused its eminent domain powers and dismissed as grossly inadequate the damages it would have to pay to the developer. Just as dismaying as the court's ruling has been the public response. Local newspapers from the start lined up with the township and have hailed the Supreme Court's verdict as a triumph of legal wisdom. Meanwhile, environmentalist groups like the Sierra Club and the New Jersey Conservation Foundation have rushed to proclaim the ruling a victory for land preservation. The latter's embrace of eminent domain is not without irony. Conservationist organizations, it may be remembered, originally emerged as vocal critics of the Kelo ruling. Groups like the American Farmland Trust fretted that local governments could use eminent domain to acquire private agricultural land and turn it over to the mercies of unscrupulous developers. Now that eminent domain may favor their cause, these same groups seem more interested in preserving property than principles. The legal drama playing out in New Jersey may seem to be of parochial concern. What gives it broader import is the precedent set by the state's highest court. At the time of the Kelo ruling, many worried that activist governments, backed by sympathetic judiciaries, could use eminent domain statutes to seize private property on the thinnest of pretexts. With preservation of open space now deemed an appropriate "public use," their worst fears have been realized. Still, there may be one consolation. The case demonstrates concretely what some critics have been suggesting theoretically: When governments abuse eminent domain, big developers, no less than small property owners, stand to loose.