The Government Took a Developer's Land and Gave It to a Competitor. In New York, That's Business As Usual.
The case gives the Supreme Court an opportunity to revisit a widely reviled decision that invited such eminent domain abuses.
After the Mohawk Valley Health System announced plans for a new hospital in downtown Utica, New York, Bryan Bowers, a local developer, saw a business opportunity. He and his partner contracted to buy the former Rome Plumbing and Heating Supply building at 411 Columbia Street, across from Wynn Hospital, intending to offer medical office space. That project would have directly competed with another medical building next to it: Central New York Cardiology, which opened its Utica location in January 2024, three months after the hospital started accepting patients.
The cardiologists had different plans for 411 Columbia. In October 2021, their business, Central Utica Building, asked the Oneida County Industrial Development Agency (OCIDA) to seize the property under its eminent domain powers and transfer it to them so they could use it for a parking lot. Although Bowers objected, OCIDA favored Central Utica's proposed project, which it said would "result in the betterment of community prosperity within Oneida County." Last February, after years of litigation, a New York appeals court upheld OCIDA's decision, blessing the agency's protectionist intervention.
Specifically, the court said, "the acquisition of the property will serve the public use of mitigating parking and traffic congestion, notwithstanding the fact that the need for the parking facility is, at least in part, due to the construction of a private medical facility." In New York, it noted, "what qualifies as a public purpose or public use is broadly defined as encompassing virtually any project that may confer upon the public a benefit, utility, or advantage." That sort of broad deference, Bowers argues in a petition asking the U.S. Supreme Court to take up his case, nullifies the Fifth Amendment's "public use" requirement for government takings of private property.
"Taking our property wasn't for the public; it was to benefit our competitors," says Bowers, who is represented by the Institute for Justice. "New York's abusive use of eminent domain should not stand under the U.S. Constitution. We hope that the Supreme Court rights a historic wrong and affirms that the government can't take private property to benefit another private party."
The Supreme Court opened the door to such abuse with its widely reviled 2005 decision in Kelo v. City of New London, which blessed the use of eminent domain to promote economic development by transferring property from one private owner to another. But even under Kelo, the Institute for Justice argues, the Utica land grab is suspect. In any event, it says, "Kelo was wrong the day it was decided, and this Court should grant certiorari to reconsider it."
Writing for the majority in Kelo, Justice John Paul Stevens emphasized that the condemnation of homes in the Fort Trumbull neighborhood of New London, Connecticut, was based on "a 'carefully considered' development plan" that supposedly would "create in excess of 1,000 jobs," "increase tax and other revenues," and "revitalize an economically distressed city" (none of which actually happened). In Bowers' case, by contrast, OCIDA was not implementing a "development plan"; it was simply imposing its judgment that a parking lot was a better use for his property than the medical office space he planned to offer.
The main beneficiary OCIDA's assessment was a private business that stood to profit by limiting competition. According to the New York appeals court, that did not matter, as long as the project could conceivably "confer upon the public a benefit." But even Stevens suggested that such reasoning went too far.
"The City would no doubt be forbidden from taking petitioners' land for the purpose of conferring a private benefit on a particular private party," Stevens wrote. "Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit."
Stevens thought New London had avoided that problem. "While the City intends to transfer certain of the parcels to a private developer in a long-term lease—which developer, in turn, is expected to lease the office space and so forth to other private tenants—the identities of those private parties were not known when the plan was adopted," he said. "It is, of course, difficult to accuse the government of having taken A's property to benefit the private interests of B when the identity of B was unknown." In Bowers's case, by contrast, it is easy to accuse the government of doing precisely that.
Concurring in Kelo, Justice Anthony Kennedy amplified the concern about private benefits disguised as public use. "A court applying rational-basis review under the Public Use Clause should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits," he wrote, "just as a court applying rational-basis review under the Equal Protection Clause must strike down a government classification that is clearly intended to injure a particular class of private parties, with only incidental or pretextual public justifications."
The majority opinion did not address the question of how courts should handle such cases. Stevens noted the argument that "without a bright-line rule nothing would stop a city from transferring citizen A's property to citizen B for the sole reason that citizen B will put the property to a more productive use and thus pay more taxes." But he said "such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case." Although "such an unusual exercise of government power would certainly raise a suspicion that a private purpose was afoot," he said, "the hypothetical cases posited by petitioners can be confronted if and when they arise."
As Bowers' situation shows, such cases are more than hypothetical, and the Kelo dissenters presciently warned that the majority was inviting this sort of abuse. "Under the banner of economic development," Justice Sandra Day O'Connor wrote in a dissent joined by Justices Antonin Scalia and Clarence Thomas, "all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings 'for public use' is to wash out any distinction between private and public use of property—and thereby effectively to delete the words 'for public use' from the Takings Clause of the Fifth Amendment."
O'Connor was not impressed by Stevens' qualifications or Kennedy's assurances. "If legislative prognostications about the secondary public benefits of a new use can legitimate a taking," she said, "there is nothing in the Court's rule or in Justice Kennedy's gloss on that rule to prohibit property transfers generated with less care, that are less comprehensive, that happen to result from less elaborate process, whose only projected advantage is the incidence of higher taxes, or that hope to transform an already prosperous city into an even more prosperous one."
Bowers' petition presents the Supreme Court with two options. It can put some teeth in Kennedy's supposed limitation by ruling that "the Public Use Clause require[s] something more than minimal rational-basis review when the government takes land from one private owner to give it to a specifically identified private owner outside the context of a comprehensive economic redevelopment plan." Or it can overturn Kelo, an outcome that at least four justices—Thomas, Neil Gorsuch, Brett Kavanaugh, and Samuel Alito—seem inclined to favor.
"The most natural reading" of the Public Use Clause, Thomas argued in his own Kelo dissent, "is that it allows the government to take property only if the government owns, or the public has the legal right to use, the property, as opposed to taking it for any public purpose or necessity whatsoever." As Bowers' petition notes, "Justice Thomas's careful, heavily cited discussion of the original text and meaning went unanswered by the majority." That failure to grapple with originalist objections, it says, "is entirely out of step with this Court's modern approach to the Fifth Amendment, which, at every step, is informed by text and history."
Kelo is also "inconsistent with this Court's other modern cases because it affords complete deference to legislative decisions about an enumerated right," the Institute for Justice argues. "No other right has been so fully jettisoned—and, in fact, this Court has squarely rejected the idea that enumerated rights can even be jettisoned."
The Kelo dissenters were right about the decision's practical consequences as well as its reasoning, the petition argues. "The Kelo rule has…proven unworkable because, as illustrated by the perfunctory analysis conducted by the lower court in this case, it is no rule at all," the Institute for Justice says. "Instead, it replaces the enumerated public-use requirement with a standard that allows the government to decide for itself what public use means."
The petition notes that 47 states have responded to Kelo with laws that "make private-to-private transfers more difficult." But as George Mason law professor Ilya Somin noted on the 15th anniversary of Kelo, "much of the new legislation was largely ineffective." In addition to statutory restrictions, some state courts have been skeptical of "public use" excuses for condemnations that primarily benefit private parties. But in other states, pretty much anything goes.
"New York's highest court has consistently rubber-stamped any taking that comes with an asserted public benefit," the Institute for Justice notes. The U.S. Court of Appeals for the 2nd Circuit, which includes New York, has been similarly deferential: "In the Second Circuit's view, private beneficiaries of eminent domain are not merely permissible. They are irrelevant."
Although Bowers' case pits one developer against another with more political influence, eminent domain cases often involve people of modest means who are outmatched by the resources of developers who covet their land. "Redevelopment through eminent domain overwhelmingly targets areas disproportionately populated by poor people and racial minorities," the petition notes.
"This Court may not see public-use questions very often, but that is to be expected," the Institute for Justice says. "Litigating about public use can be expensive and risky for property owners, who face great pressure to settle. The Court should not mistake the relative rarity of petitions raising these questions for an absence of eminent-domain abuse. In the lower courts (and at dinner tables where homeowners have to decide whether to litigate or to let private businesses force them off their land), Kelo continues to run rampant."
