But an unexpected backlash against the ruling stopped the cheering and threatens to derail some projects that depended on the use of eminent domain to seize property.
In the St. Louis suburb of Florissant, Mo. — a historic city that boasts what is said to be the oldest Catholic church between the Mississippi River and the Rocky Mountains — developer MLP Investments pulled out of a planned $30 million project to build condos, lofts and retail space when the owner of a piece of vacant land refused to sell. The city could have used eminent domain to force the sale of the land — a "dump" according to Mayor Robert G. Lowery — but MLP wanted no part of that. The project, which was supposed to raise tourism, is now stalled.
MLP did not reply to calls seeking comment but has publicly blamed soil and flooding problems, in addition to the eminent-domain issue, for pulling out. City officials, however, say the real reason was eminent domain.
In the six weeks since the Supreme Court's ruling in the Kelo v. New London case, bills have been introduced in Congress and in more than half of the state legislatures that would restrict, to varying degrees, the use of eminent domain for private development. Delaware has gone the furthest, passing a law restricting the use of eminent domain. In Alabama, legislation curbing eminent domain for economic purposes has passed both houses and awaits the governor's signature.
Real-estate and economic-development officials are growing increasingly concerned that the backlash will block more projects, potentially causing big losses for developers and canceling long-planned projects.
In Washington, D.C., a proposed federal ban on giving federal money to communities that use eminent domain for private developments could imperil the Skyland Shopping Center project, which has been 15 years in the making.
The project, in the southeast part of the city, would replace a cluster of nail salons, a liquor store and check-cashing facility with a big-box discount retailer, a restaurant and bookstore. City economic-development officials, who say the project could still go through without federal money, have notified six owners that their property will be condemned to make way for the center, which is designed to improve the neighborhood's shopping and create jobs.
But the backlash against the Supreme Court ruling has emboldened land owners to fight the seizures. In Washington, the business and property owners had already been fighting the seizure. Elaine Mittleman, a lawyer for some of them, says the city never proved the area was blighted to support its use of eminent domain.
Real-estate developers and government officials are frustrated that they have not responded more effectively to the forces fighting eminent domain. But disparate interests within the groups that depend on eminent domain have made that difficult. The International Council of Shopping Centers won't take a stand on the issue because some members are at risk of being forced to sell by eminent domain, while others benefit from the action.
Whether the Institute for Justice can take credit or not, the issue has struck a nerve with Americans. In Connecticut, where the Supreme Court case originated, a Quinnipiac University poll shows just how much the eminent-domain issue resonates. By an 11-to-1 margin, those surveyed said they opposed the taking of private property for private uses, even if it is for the public economic good. According to the poll, 89 percent of those surveyed were against condemnations for private economic development, compared with 8 percent for them. Douglas Schwartz, head of the poll, says he has never seen such a lopsided margin on any issue he has polled.
Real-estate and economic-development executives say it's difficult to counter the emotional side of the argument that focuses on individual property rights.
The group has posted an eminent-domain resource kit on its Web site and is talking to members of Congress about the importance of using eminent domain to redevelop cities and attract business.
