At the core of the mini-dorm fight is a national property rights decision that the Supreme Court ruled on in 2005. A city in New London Connecticut decided that making way for a new Pfizer pharmaceutical campus, high end condos and mixed use retail would be better for all citizens and provide an economic multiplyer to the towns coffers.  The only problem was, Kelo happened to own a home right in the middle of the towns multi million dollar project.  The City of New London ultimately took Kelo’s house under eminent domain provisions which are usually used for cities and governments to build roads, utility lines or rail services.

Kelo sued all the way to the Supreme Court. The court ruled 5-4 in favor of the City of New London and Kelo’s home was removed in the name of progress. The back lash over the decision has caused numerous states to enact legislation or run ballot propositions to tighten the laws around private property rights beyond those being interpreted by the Supreme Court.

In Arizona Prop 207 was passed in 2006.  More about various states reactions to Kelo v New London HERE and HERE. Tucson ongoing battle with Mike Goodman over his mini-dorms in the Feldman neighborhood is the states first test of the new Prop 207. Like mini-dorms or not the decision has everything to do with a persons private property rights and how a community can interpret, restrict, expand or regulate those property rights.

From todays WSJ, it appears the big economic engine that sparked the entire argument has decided not to build after all. What remains for now is a dirt lot, similar to the many dirt lots around Tucson that have been left undeveloped due to a stale mate between city leadership, neighborhoods and developers.

The Supreme Court’s 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo’s land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.’s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.

The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other “desirable” elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.

That’s especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan “comprehensive,” while Justice John Paul Stevens insisted that “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.” So much for that.

Kelo‘s silver lining has been that it transformed eminent domain from an arcane government power into a major concern of voters who suddenly wonder if their own homes are at risk. According to the Institute for Justice, which represented Susette Kelo, 43 states have since passed laws that place limits and safeguards on eminent domain, giving property owners greater security in their homes. State courts have also held local development projects to a higher standard than what prevailed against the condemned neighborhood in New London.

If there is a lesson from Connecticut’s misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth.