In 2005, the Supreme Court made a monumental ruling in the legal case of Kelo vs. the city of New London. In the ruling, the High Court determined that state or Federal entities could enact eminent domain on any parcel of privately owned property, using the reason of greater economic development for the public good than what the property or business was currently creating. Subsequently, this ruling affirmed the fact that in the history of the United States, going back to a 1905 case regarding the first primary instance of eminent domain being used by a government entity to seize private property, no citizen has ever been successful in defeating a government takeover of their property.
However, in the fictional television show Suits which aired on July 23, an interesting argument was made to defeat the ironclad legal right of the government to take private property that it deems could create more economic production and revenue than what is currently being created by a business in its own right. Even if this land or business does not fall within the defined window of economic blight.
In the show, the lawyers argued that when the government seizes property under the legal boundaries for eminent domain, the cost value of the new development must surpass the potential future revenues and value of the property if it were left in the hands of the private owner.
Mike: Your honor, based on the new zoning put through for their (government) project, we’re simply asking for a new revised valuation of the property that they are taking.
Judge: $100 million?
NYC Lawyer: That valuation has no basis.
Mike: It has a mathematical basis…
Lewis Litt: Specifically, the present value of future cash flow, as shown right there (Brief handed to Judge)
NYC Lawyer: BS. You’ve heard of Voodoo economics, this is voodoo math. They’re making crazy assumptions to inflate their value, just like…
Lewis Litt: Kelo, but that didn’t seem to bother you when it was in your favor. – Suits, Season 4, Episode 2
The reason why this is of such importance, even in a fictionally created argument, is that for eight years since the City of New London, CT acquired the waterfront property from private ownership, absolutely zero development has been done to the seized property, either by private contractors, or the city itself. In fact, in light of the developer being unable to acquire financing to build the project that started the eminent domain proceedings, the land now has been turned into a city dump site, with no revenue or economic good coming to the public.
Eminent Domain is a protected and vital tool for any government entity to function, when, and only when, it profits the public good, and aids in the current and future growth of an area. Yet, as seen by the Supreme Court’s 2005 ruling that eminent domain can be enacted by the state to seize private property, which can later be sold or handed over to other private interests, the door is now wide open for corrupt politicians to seize property for use as political favors, or for a government to use this legal power to destroy political opposition in the economic sphere.
Simply look at the Obama administrations seizure of General Motors, and subsequent use of taxpayer money to rebuild it, at tremendous loss to the public, and to the prior owners and bondholders.
Americans were shocked when it came to light that the Federal Government, and perhaps agencies within the Executive Branch, used the I.R.S. to silence political opposition during the 2012 Presidential campaign. And with the power now to seize private property as they see fit, with the full backing of the Supreme Court, it is not out of the realm that any business or property in America could find itself seized and under false pretenses, just as the land seized in the Kelo case has never been used as the City argued it would be.