On the day before Thanksgiving in 2000, Suzette Kelo came home to her lovingly-restored pink Victorian house in New London, Conn. to find a notice on the door. It was from the New London Development Corporation, and it said that she and her husband were losing their home.

New London’s politicians, bureaucrats and big business leaders were on an “economic development” binge, and the Kelos and their neighbors were standing in the way. Pharmaceutical giant Pfizer, which operated a major facility in nearby Groton, Conn., had just built an R&D facility in New London thanks in part to a deal reducing its property tax payments by 85% over the next decade. Now, the economic development plan was to take nine acres of the blue-collar Fort Trumbull neighborhood and turn it into an “urban village” for shoppers and tourists.

If Suzette and Tim Kelo and dozens of their neighbors had to lose their family homes to this master plan, that was too bad. The end result would be great for everyone…or at least everyone else.

With the assistance of the Institute for Justice, Suzette Kelo sued New London, arguing that the government only had power to take property like hers for “public use,” and that turning it over to a private developer was not a public use.

Suzette’s case made it all the way to the U.S. Supreme Court. But in 2005, by a vote of 5-4, the Court took New London’s side and said that “economic development” was a good enough reason to exercise the power of the state to take away people’s homes.

The Supreme Court relied on New London’s assurances that it had a plan to ensure that the public would benefit from the Kelos and their neighbors losing their homes. “The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue,” Justice John Paul Stevens wrote for the majority. “As with other exercises in urban planning and development, the city is trying to coordinate a variety of commercial, residential, and recreational land uses, with the hope that they will form a whole greater than the sum of its parts.”

Fortunately, the Kelo’s charming Little Pink House didn’t end its life at the business end of a wrecking ball. Instead, it was moved to another location in New London by historic preservationists. But Suzette and Tim Kelo no longer live there.

Justice Clarence Thomas’s warning in his dissent that the New London plan was “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation” turned out to be true after all. The project never ended up happening, and the formerly vibrant working-class neighborhood of Fort Trumbull is a vacant lot to this day.

And just when you thought things couldn’t get any worse, they did. In 2009 – just eight years after its arrival and having used up most of its 10-year property tax abatement – Pfizer announced that it was leaving New London and moving its 1,400 workers back to nearby Groton.

In 2015, New London’s new mayor – who had run on a campaign of abolishing the economic development corporation that took the Kelo’s home from them — proposed turning the vacant Fort Trumbull land into a public park, to include a monument recognizing the people whose homes had been lost to the city’s failed economic development schemes.

The only bright side of the whole Kelo saga is that it was such an indefensibly unjust outcome that in the wake of the Supreme Court’s decision, public outrage pushed 43 states to implement laws that improved private property rights against eminent domain. But that was too late for Suzette and Tim Kelo and their neighbors.

Return to the Economic Development Disasters home page