CONCORD, N.H. – In 1867, the New Hampshire Supreme Court upheld the state’s right to take private land for dams to power the mills that were the economic engines of the time.

“Nature has denied to us the fertile soil and genial climate of other lands, but by way of compensation has endowed us with unrivaled opportunities of turning our streams of water to practical account,” the court said.

The court said the jobs provided by the privately owned mills and the future wages spent on commodities produced in New Hampshire were public benefits that justified the takings.

This past June, the U.S. Supreme Court provoked outrage by affirming the same principle in a case from New London, Conn.

In Kelo v. New London, the court let the small Connecticut city take a group of older homes along the city’s waterfront for a private developer who plans to build offices, a hotel and convention center. The city wants to bolster its sagging economy and make itself more competitive with suburban communities that have more land available for similar projects.

“The Kelo case did not make new law,” said Concord attorney Martin Gross, a former Concord mayor.

But the outrage it provoked has led to efforts to pass laws to prevent private property from being taken by the government for private development regardless of any economic benefit to the public.

To highlight the argument that private landowners’ rights should be pre-eminent, the New Hampshire Libertarian Party is asking Plainfield to use eminent domain to take U.S. Supreme Court Justice Stephen G. Breyer’s 167-acre vacation homestead to turn it into a public park.

U.S. Supreme Court Justice David Souter’s home in Weare is the target of a similar effort, which calls for turning his farmhouse into the “Lost Liberty Hotel.”

Both justices ruled in New London’s favor.

Gross said proposals targeting a single property “for revenge” don’t pass the “laugh test.” But seizing land for private redevelopment certainly does.

“The fact that private entities are involved in the taking alone isn’t the question,” said Senior Assistant Attorney General Mark Hodgdon, New Hampshire’s expert on eminent domain. “The question is the motivation behind the taking. It’s how broad and unmistakable the benefit is to the community at large.”

In fact, Maine, Vermont and New Hampshire have allowed the use of eminent domain in urban redevelopment projects for years. The laws do not specifically allow takings strictly to bolster a community’s tax base with new, higher-value buildings, though that is often a secondary benefit.

Generally, the government must prove the area is blighted and the takings will improve the community as a whole. The most common use of eminent domain is in road building, not for economic development projects.

“I don’t think you could have a situation where a neighborhood was wiped out that was not substandard housing,” said Vermont Assistant Attorney General John Dunleavy.

Nor would Maine allow that, said Jonathan Reisman, associate professor of economics and public policy at the University of Maine at Machias.

Liam Murphy, a Burlington, Vt., lawyer who specializes in real estate law, said Burlington and Winooski used eminent domain authority to redevelop their downtowns in the past 30 years. Burlington’s effort was a success, but Winooski is now fixing mistakes made the first time – this time with cooperation from property owners.

Murphy said it’s fortunate that eminent domain wasn’t needed this time. “If we had, it would have been a much longer process.”

Maura Carroll of the New Hampshire Municipal Association said towns rarely use eminent domain.

“I don’t think there’s any need to panic that eminent domain is going to be used improperly, willy nilly over the state,” she said.

Nevertheless, New Hampshire legislators are considering bills to allay fears. One proposal is to change “public purpose” in eminent domain laws to “public use.” That could preclude taking property for private redevelopment while allowing it for public uses such as highways, schools and the like.

“If they aren’t careful in pursuit of this, New Hampshire cities may not be able to do revitalization projects with eminent domain,” Gross said.

“If you allow veto power [by a property owners], people won’t start projects. There’s too much risk,” Murphy said.

Finding a middle ground is proving tricky, however.

Manchester lawyer Eugene Van Loan tried advising a House panel on how to decide when redevelopment projects should override property owners’ rights.

“If it’s a slum – assuming we can agree what a slum is – I don’t have a problem,” said Van Loan. “Drawing the line is always the problem.”

Concord lawyer Chuck Douglas, then on the New Hampshire Supreme Court, helped decide Merrill v. Manchester 20 years ago. The case spells out how to weigh the public benefit of a property seizure against its social cost. Douglas told the House panel he no longer thinks the ruling is enough to protect private rights.

“There are phrases and a balancing test built into Merrill that could be used as a wedge to open up the door,” Douglas said. “I would never assume you’re always safe.”

A lot of takings may serve the public purpose “in some incidental or tangential way,” he said.

Deciding what’s a slum and what’s just a run-down neighborhood boils down to who has money and power, Douglas said.

“When you start picking favorites, you’re going to get into politics, money and influence,” he said.

Former New Hampshire House Speaker Gene Chandler believes the door should be closed to those types of takings.

“The biggest reason is, who decides? It’s subjective,” he said.

Gross doesn’t see the need to change the law.

“There is simply no example anyone can point to that this power has been abused in New Hampshire. My question is, ‘What’s the problem?”‘ he asked.

“You can’t trust government to do the right thing,” responded Fran Wendelboe, deputy House majority leader.