When a private development corporation in New London, Conn., announced plans in 2000 to develop new townhomes on waterfront property, most of the 113 residents who owned homes on the 90-acre parcel sold without a fight.

But seven neighbors refused, and the city moved to take their properties via eminent domain. The homeowners argued that the takings were illegal because the New London Development Corporation wanted their land for private development instead of public use. With nurse Susette Kelo in the lead, they took their battle all the way to the Supreme Court in 2005 and lost, igniting a national debate.

While Kelo now lives in Groton, Conn., across the river from New London, supporters have moved her house to another part of New London and reassembled it on donated land. She is no longer doing interviews, but the Institute for Justice, which litigated the case, says Kelo hasn't yet determined how or if she will use her house. Kelo minced no words in testifying before a congressional committee a few months after the decision: "What we have now amounts to 'government by the highest bidder,' and that has got to stop."

Michael Cristofaro, a computer engineer and member of a family that participated in the suit, was painfully familiar with eminent domain even before the Kelo controversy. In the 1970s, his family lost their home. "The city of New London told us they were taking our home for a sea wall," he says. "That wall was never built there, but a private development was. If that can happen to us twice, it can happen to anyone, anywhere."

All of the homeowners involved in the case have since left New London save for Cristofaro, who laments the fact that the Supreme Court decision destroyed a close-knit group and says he'll be moving soon, too. "I've had enough of this stuff," he says. "I'm not waiting around for them to take a third [home]."

Shortly after the Kelo decision settled the fate of his property, Cristofaro saw the area bulldozed for the development. He's flabbergasted that it remains largely empty near two years later. "The place is a big dust bowl," Cristofaro says. "Nothing's happened." There is no economic development."

A representative of the NLDC, who asked not to be named, says the legal costs involved with the Kelo case and the sagging housing market have delayed construction. He says they expect to begin building townhomes elsewhere on the 90-acre parcel shortly, but it will be next year before they use the land from the Kelo suit for infrastructure, such as roads and sewers.

"I'll believe it when I see it," Cristofaro says.