In 2007, the courts started to apply the U.S. Supreme Court’s decision in Kelo v. City of New London, 545 U.S. 469 (2005), especially how to mesh the Court’s deferential standard of review with property owner claims of pretext.
Kelo left intact the standard that a determination that a taking will be for public use is measured by whether the legislature “conceivably” could have believed it would result ineconomic benefit, while leaving open the possibility that certain takings would not pass judicial review. Justice Kennedy elaborated on that issue, and provided the roadmap for how a court should deal with a claim of pretext:
A court applying rational-basisreview under the Public Use Clause should strike down a takingthat, by a clear showing, is intended to favor a particularprivate party, with only incidental or pretextual publicbenefits, just as a court applying rational-basis review underthe Equal Protection Clause must strike down a governmentclassification that is clearly intended to injure a particularclass of private parties, with only incidental or pretextualpublic justifications.
Kelo, 545 U.S. at 491 (Kennedy, J., concurring). Justice Kennedy added:
A court confronted with a plausibleaccusation of impermissible favoritism to private partiesshould treat the objection as a serious one and review therecord to see if it has merit, though with the presumption thatthe government’s actions were reasonable and intended toserve a public purpose.
Id. After Kelo, property owners and property takers were leftwith the question of what would qualify as a “pretext” sufficient toovercome a claim by government that a condemnation was supported by apublic purpose. Several post-Kelo cases addressed the pretext issue, with varying results, and methods of analysis.
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In 49 Wb, LLC v. Village of Haverstraw,2007 NY Slip Op 05506 (Jun. 19, 2007), a New York state courtinvalidated a taking because the evidentiary record in the casedemonstrated the government was attempting to take property for thesole purpose of benefiting private, not public, interests.
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In Goldstein v. Pataki,however, a New York federal court dismissed a property owner challengeto a taking because the property owner’s complaint did not allegeenough facts to show a private benefit (Goldstein was appealed to the Second Circuit where it awaits a ruling).
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Didden v. Village of Port Chester, 173 Fed. Appx. 931, 2006 WL 898093 (2d Cir. Apr. 5, 2006) held the property owner’s claim that a private developer demanded cash in return for not exercising eminent domain was not actionable under the Public Use Clause.
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In Franco v. National Capital Revitalization Corp., No. 06-CV-645 (July 12, 2007), the District of Columbia Court of Appeals reinstated a pretext claim that had been dismissed by the trial court, holding that the trial court should have undertaken a factual inquiry “to determine that the legislation had ‘anoverriding public purpose’ and ‘will provide substantial benefits tothe public'” as claimed by the condemnor. The court held that the trial court’s “discussion suggests that, once the legislaturehas declared that there is a public purpose for a condemnation, anowner is foreclosed as a matter of law from demonstrating that thestated reason is a pretext. We do not interpret Kelo so broadly.”
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In MiPro Homes, LLC v. Mount Laurel Township, 878 A.2d 38 (N.J. Super. 2005), aff’d 910 A.2d 617 (N.J.) (per curiam), cert. denied,___ U.S. ___ (2007), the New Jersey state courts held that evidence thegovernment was taking property to stop development and preserve openspace was a public use and not pretextual.
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In Western Seafood Co. v. United States,No 04-41196 (5th Cir., Oct. 11, 2006), the court held that aprivate-to-private transfer for economic development that wasaccomplished as part of a “carefully considered development plan”passed muster.