Eminent Domain for Private Development - An Irrational Basis for the Erosion of Property Rights

Abstract

Municipalities have become increasingly bold in their use of eminent domain. This sovereign power was once reserved for public works, but municipalities have increasingly used eminent domain for such putatively private projects as building factories, shopping malls, and upscale condominiums - using the increased tax revenue that these projects will produce rather than the public's ability to make use of the development itself to justify their actions. This Note [written prior to the Supreme Court's decision in Kelo v. New London] explores the controversial exercise of eminent domain for the purpose of promoting private development. After tracing the history of the eminent domain power in America, this Note suggests a judicially manageable test for determining the validity of a proposed taking. Those acts that are traditionally within the scope of the eminent domain power should be treated as presumptively valid, whereas takings for the purpose of transferring property to private entities should be subjected to a higher level of scrutiny. This solution will not prevent all takings for the purpose of private development; it would, however, acknowledge the limitations imposed by the Fifth Amendment's Public Use Clause and limit the use of eminent domain to those projects that truly benefit the public.

Keywords: eminent domain, public use, takings clause

JEL Classification: K11