Given more than two centuries of public policy it's difficult to comprehend the radical nature of the just-decided Supreme Court decision, Kelo et al v. City of New London.

The Kelo case is about the right of government to seize your home under the "taking" clause of the Fifth Amendment. Under the Fifth Amendment, government can acquire private property for public use, but not "without just compensation."

The point the Founding Fathers tried to make was this: Unlike other countries where your home could be taken away at the whim of government, the U.S. would be different. Here private property ownership was a right that government was required to respect.

In just a few words the Fifth Amendment provides a logical and reasoned balance of interests. Government, on rare occasion, may need to acquire private property for public use. Acquiring private land with fair compensation to construct a highway, as one example, is typically okay because a road benefits society in general rather than one particular party.

But what if government takes your property so that someone else can profit from its development? Is that an allowed "public use" within the meaning of the Constitution?

Under Kelo, five of the nine justices think it's just dandy that 15 property owners will lose their homes so that New London can use the land for private development, development which will also produce larger tax revenues for the city. Instead of a "public use" test -- the one found in the Constitution -- Kelo instead offers a "public purpose" standard.

Using such logic as Kelo provides, it might make sense for a local government to take your house so the land beneath it can be used for townhouse development. The nice garden you have might make a great micro park. The farm you wanted to save for your children despite encroaching development can now be seized by local bureaucrats to create another tax-paying subdivision.

Kelo essentially allows government to raise taxes without the discomfort of recorded votes. If a local government needs money, under Kelo it can assemble property from private owners, pay owners fair market compensation based on current usage, change the zoning, assemble the land as a single parcel, re-sell it at a substantial profit to private parties and then generate new fees and taxes.

What leverage do property owners have to fight such takings? Just about none under the Kelo decision.

The hope now is that Congress, the states and the courts will quickly enact legislation to protect the right to own property without fear of expropriation for the benefit of others.

As of this writing, bills have been introduced in several states to prevent unwarranted government seizures. At the federal level, the House -- by a vote of 231 to 180 -- approved a measure last week which would prevent the use of some federal funding for eminent domain projects designed to produce a profit. In other words, projects which are not for "public use" in the traditional sense. This legislation, however, does not apply to all federal funding, has not been accepted as yet by the Senate or the President and if passed can simply be reversed by a future Congress, thus there is more work to be done.

As well, over many years the court system has earned a reputation for reasoned decisions involving complex and contentious issues, but when decisions are shown over time to make little sense courts can and do change direction.

For instance, in 1981 the Michigan Supreme Court ruled in Poletown Neighborhood Council v. Detroit that government could take more than 1,000 homes to develop an auto manufacturing plant because there was a "clear and significant" general benefit in the form of new jobs and greater tax revenues. Kelo largely followed the logic of this decision. (See: Michigan Should Alter Property Grab Rules, Detroit News, January 8, 2004)

At this point some might ask: What about land use planning? Why limit the right of eminent domain? Do not Poletown and Kelo help communities make better use of local property?

Better for whom? Why should private ownership be trumped automatically by land use planning? If it's okay to tear down 1,000 homes to build an auto plant, is it also okay to require the operation of that plant even though it runs at a loss? After all, local jobs would be maintained even if private property owners -- the shareholders -- suffered. Isn't keeping local jobs an important public purpose?

Interestingly, in 2004 Poletown was overturned. In County of Wayne V. Edward Hathcock, the Michigan Supreme Court ruled that the county could not take private property to create a 1,300-acre business park even though such development would create additional employment and generate new taxes. In effect, it ruled that when it comes to property even average people have rights.

The 2004 Michigan decision was a return to basic principles, a reversal of an earlier case and a balancing of interests that one day will again be adopted by the Supreme Court.

For more articles by Peter G. Miller, please press here.

Published: July 5, 2005

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .