Is the government exhausting its powers? An empirical examination of eminent domain exercises in New York City pre- and post-Kelo

Abstract

A controversial U.S. Supreme Court decision in Kelo v. City of New London (2005) which did not limit the use of state's eminent domain powers, led to an unprecedented legislative reaction by almost all 50 states. Of all, New York State stands out as one of the single states not to respond with a legislative amendment. In this study, I ask whether the state's predation was greater in the years following these legal and political developments, in light of the freedom which was granted to local politicians by both the Supreme Court and the state's legislators. The article hypothesizes that contrary to common perceptions, judicial decisions impact local government actions even when no limits on the use of powers are being posed. I use rigorous statistics and scrupulously defined data to expand scholarly understanding of the aftermath of the judicial decision in Kelo. The main finding is that the decision has in fact affected political behavior, but in the opposite direction than commonly expected: politicians in New York City acted consistently with public opinion, which was hostile too Kelo, not by changing the law, but by changing their practice. Studying all known taking exercises in New York City between 1991 and 2019, the paper finds no increase in the number of development projects involving condemnations after 2005. In fact, the probability of a taking for economic development or urban renewal dropped by 90%. The use of eminent domain for such projects declined even when both state and federal courts refrain from interposing any actual limit on its use. The paper lends qualified support to an alternative assertion that takings decisions by government officials are largely shaped by planning and political needs and that officials are sensitive to revealed public preferences even when there is no constitutional or legal impediment on their exercise of power.