In the adding insult to injury category, the city officials that triumphed over a group of Connecticut homeowners in a landmark Supreme Court property-rights case are expecting those residents to pay the local government rent dating back to the year 2000.
The June 23 Supreme Court ruling in Kelo v. City of New London gave the town the approval to seize the residents’ homes and transfer them to a private party for development of an office complex. In the highly controversial decision, the justices ruled 5-4 that the economic development resulting from the eminent domain action qualified as “public use” under the Fifth Amendment of the Constitution.
The city now says that since it won the case, the homeowners actually have been living on city property since 2000 when it first began condemnation procedures against them, so they must pay back rent – to the tune of hundreds of thousands of dollars.
“It’s a new definition of chutzpah: Confiscate land and charge back rent for the years the owners fought confiscation,” wrote Jonathan O’Connell in the Fairfield County Weekly.
Not only is the city demanding rent, but the buyout offers on the table are based on the market rate as it was in 2000, before most of the growth in the current real-estate bubble.
The New London Development Corporation, the semi-public organization hired by the city to facilitate the deal, first addressed the rent issue in a June 2004 letter to residents, calling the alleged debt retroactive “use and occupancy” payments.
“We know your clients did not expect to live in city-owned property for free, or rent out that property and pocket the profits, if they ultimately lost the case,” the agency said. It warned that “this problem will only get worse with the passage of time,” and that the city was prepared to sue for the money if need be.
The Kelo case is named after Susette Kelo, who owns a single-family house in New London with her husband. Kelo was told she would owe around $57,000 in rent.
“I’d leave here broke,” Kelo told the weekly. “I wouldn’t have a home or any money to get one. I could probably get a large-size refrigerator box and live under the bridge.”
Matt Dery owns four houses on the building site, including the home his 87-year-old mother was born in and still lives in. Dery’s past-due rent, according to the city, exceeds $300,000.
It remains to be seen if a suit will be filed against the residents.
“From a political standpoint, the city might be better off trying to reach some settlement with the homeowners,” Jeremy Paul, an associate UConn law dean who teaches property law, told the paper.