Guest Contribution: Walsh on Compulsory Acquisition for Private Development

We are very pleased to welcome this guest contribution from Rachael Walsh, a PhD candidate in Trinity College Dublin, on lessons for Irish courts from the US experience of compulsory acquisition of land for the purposes of private development. You can learn more about Rachael on our Guest Contributors page.

Compulsory Acquisition for Private Redevelopment – Lessons from the U.S.

A basic legal principle in most jurisdictions that protect the right to private property is that the State cannot take an individual’s property and transfer it to another person in order to confer a private benefit. Rather, the State must have a public purpose of some kind to support its use of compulsory acquisition powers. This limit on the State’s power safeguards an individual’s right to possession of his or her property rather than simply to the value of the property, as the State is not free to take property just because it pays compensation to the dispossessed owner.

Controversy has arisen in the U.S. over whether “economic development” is a sufficiently public purpose to support a compulsory acquisition of private property for redevelopment by another private individual or entity, reaching its height in the debate surrounding the Supreme Court’s decision in Kelo v City of New London 545 U.S. 469 (U.S. 2005). The Court held that New London, which was designated a “distressed area” because of its high unemployment rate, could compulsorily acquire the applicants’ homes in order to implement a development plan for the area. The plan was drawn up when Pfizer announced it intended to build a $300 million research facility in the city, and it proposed the construction of a waterfront conference hotel, restaurants, shopping and marinas, as well as research and development office space. In a 5-4 decision, the Supreme Court upheld New London’s exercise of its compulsory acquisition powers. The decision has been widely criticised in the U.S. and has galvanised the property rights movement, resulting in amendments to state constitutions to limit the use of compulsory acquisition powers. Unfortunately, in New London the planned construction has not happened, and the acquired lands remain undeveloped. To add insult to injury, Pfizer announced it was pulling out of the city in November 2009. (New York Times report)

The prospect of an Irish Kelo looks increasingly likely, given the current pressure on government to secure jobs and revenue at any cost, most recently evidenced in the controversy surrounding Hanger 6 at Dublin Airport. The recent case-law in this area suggests that the Irish courts would probably rule the same way as the U.S. Supreme Court. In Crosbie v Custom House Dock Development Authority ([1996] 2 IR 531(HC)) and Clinton v An Bord Pleanála ([2005] IEHC 84 (HC), [2007] 4 IR 701 (SC)), the courts indicated that private property can be compulsorily acquired for redevelopment by private developers. By accepting ill-defined and indefinite public purposes such as “redevelopment” and “regeneration” as justifications for the compulsory acquisition of private property, and by endorsing private involvement in such projects, the Irish courts are approving compulsory acquisitions whose primary and immediate effects confer a private benefit on a developer, who gets land that is not available on the open market. Moreover, the courts are reducing the right to private property to a right to compensation reflecting the value of one’s property.

In delivering the main dissenting opinion in Kelo, Justice Sandra Day-O’Connor stressed that urban renewal schemes necessarily target communities that are financially and politically weak, because those communities represent areas where the use of land can be upgraded to secure greater economic return. Justice Thomas went further, and characterised the exercise of the power of eminent domain for economic development as an unjust targeting of “discrete and insular minorities.” Article 43 of the Irish Constitution states the State ought to regulate the exercise of property rights in accordance with the “principles of social justice”.  An Irish Kelo would undermine the consonance of our property rights regime with social justice. Thus the Irish courts ought to draw on the US experience of compulsory acquisition for private redevelopment and adopt a more robust approach when next called upon to review the development objectives of planning authorities, and the means that they are permitted to use to achieve those aims.