This Op-Ed is reprinted from a previous edition of Next American City.

In the 1960s, New London believed it could bring business back into the center city by using the power of eminent domain to replace historic neighborhoods with highways. The city’s strategy backfired. Today, New London remains a depressed city, replete with vacant lots and a riverfront lined with obsolete industry.

In a new plan designed to increase the city’s tax base and reverse decades of decline, New London seeks to use eminent domain to condemn middle-class homes in the Fort Trumbull neighborhood to make room for new mixed-use development. Several homeowners have refused to sell their properties and have taken their case all the way to the U.S. Supreme Court.

The question recently argued before the court is whether privately built “economic development” projects qualify as a “public use.” Although the Constitution clearly allows government to condemn land for public uses — such as roads, schools or publicly constructed urban renewal projects — private development for the purpose of increasing a city’s tax base occupies a grey area. Instead of strictly ruling for either side, the court has the opportunity to take a middle ground by requiring safeguards to ensure that “economic development” projects really do give cities public benefits.

New London undertook an exhaustive planning process and decided that it needed new development, coupled with a downtown river walk and improved infrastructure, to lure citizens to a revitalized waterfront. City officials argue that the proposed retail, housing and office project will help revitalize the city through increasing its tax base, thus increasing city services.

Several residents of the Fort Trumbull neighborhood, on the other hand, see the project as remarkably similar to 1960s urban renewal — a big government scheme that takes land from individual homeowners, with no guarantees that the project will provide the benefits that supposedly justify taking land. Even worse, land is being taken from one private owner and given to another private owner, not the state.

The Supreme Court faces a tough decision: If it rules in favor of the New London homeowners, it severely constrains the ability of depressed cities to improve the economic opportunities available to their residents. If it rules in favor of New London, it sets a precarious precedent for condemning any property that can be more efficiently run by another owner — or, even worse, condemning properties simply because politically powerful companies with friends in city hall desire them.

The court should find a middle ground by encouraging cities and companies involved in economic development plans to put their money where their mouth is through “clawbacks.” Clawbacks hold developers financially accountable for doing what they say they are going to do to promote economic development. Down the Connecticut coast, New Haven uses clawbacks. So should New London.

The Progress Report interrupts to point out that this smells corrupt, like corporate welfare. It sounds like giving handouts to corporations, and if they don’t do what they promised, then maybe the taxpayers can spend a few years trying to sue for the return of a fraction of the money — unless the corporations have already gone bankrupt, or else lobbied or bribed their way clear from blame. Instead of corruption and corporate welfare, we should hunt for solutions that benefit all people and do not place unfair risks on the taxpayers.

Eminent domain is a powerful tool — one that effectively destroyed many cities in the 1960s. Yet, this same tool, if cautiously applied, can help revive these cities. Economic development should qualify as a form of eminent domain, but only if the law includes further restrictions such as clawbacks to increase its image and to minimize its abuse.