Legal Briefs

Developers Must Establish Public Purpose to Justify Eminent Domain

Eminent domain is the well-established right of government to condemn or take private property for public purposes. Most arguments relating to eminent domain deal with whether or not the owners of taken properties received just compensation. The general rule is that a taking for public purposes is upheld so long as the owner is compensated fairly for the condemned property.

In the past, cases challenging the public purpose of takings rarely were successful, even when a clear private benefit resulted from the condemnation. Recently, however, more courts are rejecting the use of eminent domain power.

Private vs. Public Historically, courts interpreted the concept of public purposes very broadly. Few challenges were made, since the projects resulted in improved infrastructure or came under the heading of urban renewal.

Increasingly though, local governments view the public good as economic development and encourage private developers to propose more redevelopment projects. Cities want to create destination shopping areas and mixed-use residential/retail/ office developments to lure residents and shoppers back to downtown areas. Suburban and rural municipalities woo national companies to their small and midsize towns to provide jobs and boost local economies.

In many cases, local governments provide private developers largesse in the form of tax incentives and other attractive offers that sometimes involve the use of eminent domain. For example, in order to provide the Ikea furniture store with a retail site, the city of New Rochelle, N.Y., designated its City Park neighborhood blighted and condemned 29 businesses, 24 residences, and two churches through eminent domain. Public outcry derailed the development before it reached the courts, but a number of other cases are pending, as land-use planners attempt to establish the boundaries of public good and private benefit.

Of course, government entities are anxious to encourage needed and desirable redevelopment. But when does a municipality`s desire to improve rundown areas or to increase the tax base overreach its power of eminent domain? And at what point does public good get lost in private benefit? Any private party involved in a public project stands to benefit or profit to some degree from such involvement. But a lack of certainty as to the validity of a taking and what constitutes an acceptable public purpose may inhibit private developers from obtaining land for their projects.

Challenging Eminent Domain Today, site selection specialists and development professionals should be aware that a number of recent cases have rejected or at least challenged the use of eminent domain power in situations where the taking benefits private development.

For example, in Township of West Orange v. 769 Associates in New Jersey, a developer already had obtained dedicated road access to its proposed project, but it wanted to condemn more property to provide additional access to facilitate more intensive development of the site. The court concluded that such a taking served the private interests of the developer and was not a permissible use of the power of eminent domain.

A recent decision from the Pennsylvania appeals court blocked condemnation of a plant that was to be taken and developed into a hotel/office complex. The court found that the local redevelopment authority improperly delegated its condemnation power to the private developer.

In another case, HTA Ltd. Partnership v. Massachusetts Turnpike Authority, a Massachusetts court upheld the right of the Massachusetts Turnpike Authority to condemn land for park-and-ride lots adjacent to the turnpike. Such lots were part of a compliance plan under the Clean Air Act, intended to encourage carpooling activities. The court found that the lots were related enough to the turnpike to be considered a turnpike purpose.

However, the plaintiff also challenged the turnpike authority`s taking of the specific land, from which access to adjacent commercial property was provided. The plaintiff alleged that the land had been selected to benefit the private owner by providing access to its property. The court determined that the land selected did not properly meet the state`s needs, that other nearby land was available, and that no hearings or studies had been conducted before the site in question was selected. The court concluded that an incidental private benefit was acceptable, so long as the primary purpose of the taking was public. However, when a clear public purpose cannot be determined, the taking is subject to challenge as being an abuse of the eminent domain power.

In still another recent decision, Pequonnock Yacht Club v. City of Bridgeport, the Connecticut Supreme Court rejected the city`s plan for redevelopment that included taking the club`s property, which was in good condition when the club sought assimilation into the project but was rebuffed. The court found that the city failed to establish that taking the club`s property was essential to redevelopment. Rather, it found the taking would enhance the desirability of the project for private investors.

In a nearly four-year conflict, 14 residents and business owners in Fort Trumbull, a historic neighborhood in New London, Conn., challenged the city`s right to condemn their properties for construction of an upscale mixed-use development to enhance an adjacent Pfizer Global Research and Development facility. The residents argued that the development did not satisfy public use and that the city had unconstitutionally delegated power to the New London Development Corp., a private body created to oversee the redevelopment. They also complained that the takings were not justified and that they violated equal protection rights.

In March, a Superior Court judge ruled that the city could not condemn 11 of the properties in question because the development plans requiring the land were too vague. However, four buildings were condemned because the plans for an office park on their land were more specific.

Of course, each situation is different. But in the cases discussed above, public purposes were not properly established in the courts` views or were not in proportion to the condemnation sought. Failure to establish these parameters is likely to muddy the development waters and make it harder for private developers and public bodies alike to accomplish their objectives. While this line of cases remains a minority view, it seems to represent a trend toward closer scrutinizing of condemnation actions worth watching.

Carol C. Honigberg, JD

Carol C. Honigberg, JD, is a partner in the real estate group at Reed, Smith, Hazel, & Thomas LLP in Falls Church, Va. Contact her at (703) 641-4220 or The discussion of legal issues in this column is for informational purposes only. Results may vary depending on state laws and individual circumstances.


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