Have Post-Kelo Restrictions on Eminent Domain Influenced State Economic Development?

Abstract

The use of eminent domain for economic development purposes has long raised the ire of free-market advocates who object to its infringement on private property rights. Advocates for strong property rights are joined in opposition to eminent domain by many anti-corporate progressive advocates who may not object to eminent domain per se, but object to local governments using eminent domain to transfer property from small businesses and homeowners to big businesses and developers. The publicity which followed the Kelo ruling [Kelo v. City of New London, 545 U.S. 469 (2005)] raised both of these issues to a more prominent place in the public's consciousness creating a public backlash against the use of eminent domain for economic development purposes. This backlash resulted in an outburst of state laws pertaining to such use of eminent domain. In the two years following Kelo, 41 states passed such legislation, although there was great variation in the extent to which the new laws placed effective limits on local governments' use of eminent domain. This paper examines whether restrictions on local governments' use of eminent domain for economic development purposes had any impact on state economic development.