WASHINGTON – In a case that could affect urban development nationwide, the Supreme Court yesterday considered limiting the power of governments to raze private property to make way for lucrative real estate projects.

A group of families from New London, Conn., asked the court to prevent the forced sale of their longtime homes to enable a large private commercial development.

A victory for the families could stiffen constitutional protections for property owners, and strengthen the hand of opponents of projects such as a planned sports arena at Brooklyn.

At oral argument yesterday, several justices expressed concern that an unchecked power to take land for “public use” hurts some property owners in order to profit others. But the justices were also wary of drawing courts into the details of local decision-making.

Arguing that the development was necessary to turn around a declining tax base and bring in thousands of new jobs, New London was backed by local governments, including New York City, and the National League of Cities.

The case, known as Kelo v. New London, concerns the limits on the government’s power of “eminent domain,” which allows the government to take private property for “public use” in exchange for compensation.

In its brief, New York officials argued that the power of eminent domain was crucial to the development of the city, including the creation of landmarks such as Lincoln Center, the World Trade Center before its destruction, and the redeveloped Times Square. Economic redevelopment projects allow cities to use corporations to accomplish the public purpose, the brief states.

The lawyer for Susette Kelo and six other homeowners who have battled for five years to keep their homes, argued that without greater limits on government power, any property could be closed to make way for enterprises that pay higher taxes.

“Every home, church, or store would produce more in tax revenues and jobs if it were a Costco or a private office building,” the lawyer, Scott Bullock, told the court “You’re going to put poor and working-class neighborhoods into jeopardy,” he added.

But his arguments also came under aggressive questioning from the judges, who said cities need to find ways to revitalize depressed neighborhoods.

“You’re leaving out that New London was in a depressed economic condition,” Justice Ginsburg told Mr. Bullock only minutes after he began his argument.

The New London families argued that eminent-domain power does not apply to speculative real estate developments the way it has been found to apply in the past – to land used for public purposes such as railway lines, power plants, and hospitals.

Their argument appeared to find favor with Justice Scalia, who said he did not think public utilities and private real estate ventures “are comparable at all.”

But some justices sided with the lawyer for New London, Wesley Horton, who argued that there is no difference between using land for potentially lucrative real estate deals and other public purposes.

“If a person can’t find a job or can’t get basic services because the town can’t afford it, it’s just as important as the trains running on time,” Mr. Horton told the judges.

Justice Souter agreed. “There isn’t another public way to do it, and that ought to qualify as a public use,” he said.

The president of the National Leagues of Cities and the mayor of Washington, D.C., Anthony Williams, attended the hearing and said afterward that the power of eminent domain is crucial to cities that want to rejuvenate neighborhoods.

But the lawyer for New London made clear that the cities are claiming a power that is not restricted to poor areas.

When Justice O’Connor asked whether a city has the right to require a Motel 6 to sell its land in order to make way for a Ritz-Carleton Hotel, simply to gain more taxes, Mr. Horton said yes.

Justice O’Connor then asked why the city should not simply have to buy the land at market value, to which Mr. Bullock responded that some owners would not sell for any price. Their rights troubled Justice Scalia.

“You are also taking property from someone who doesn’t want to sell it,” he said. “That counts for nothing?”

Several justices stressed the difficulty of distinguishing projects that are strictly for private or public benefit. “There is no taking for private use that wouldn’t have a public benefit of some kind,” Justice Breyer told Mr. Bullock. “That is a fact of the world,” he said.

They also expressed concerns that the families’ arguments might require the bench to overturn its own precedents.

Mr. Bullock suggested that courts should at the very least require a government to demonstrate that the public benefits of proposed ventures are not merely speculative.

The prospect of such a judicial test raised concerns from Justice Scalia, who asked, “You want us to sit here and evaluate the prospects of every [development project]?”

Justice Breyer suggested that perhaps cities should have to show that a public benefit from the private project was at least “reasonably foreseeable.”

The justices also questioned whether homeowners were entitled to a premium based on the expected profits from proposed developments.

The discussion heartened the homeowners, who were joined by groups representing retired people, racial minorities, churches, and community activists opposed to developments, including a group of activists from Brooklyn.

“I am excited, and I believe it was a victory for the little guy,” said a Brooklyn member of the New York City Council, Letitia James, who attended the hearing with a group of opponents of a proposed arena and office-building project in Prospect Heights. “Clearly the Supreme Court is troubled by the abuse of eminent domain.”

In a separate and potentially far-reaching property rights case heard yesterday, the court considered whether property owners should be compensated for lost revenues due to rent control regulations. The case could affect a broad range of government regulations that affect the value of private property.

The case concerns a Hawaii regulation requiring the oil-company Chevron to reduce the rents charged on gas stations in a state effort to reduce gas prices. The scheme was struck down by the San Francisco-based U.S. Court of Appeals for the 9th Circuit because it did not “substantially advance” the goal of lower prices.

Lawyers for Hawaii and the federal government asked the Supreme Court to reverse that decision, arguing that it turns courts into “super-legislatures.”

Chevron lawyers said the company should be compensated for lost revenues. The justices appeared reluctant to judge the “goodness or badness” of the regulation.

Chief Justice Rehnquist, who is being treated for thyroid cancer, did not attend the arguments. Justice Stevens also did not attend due to an airline flight cancellation. Justice O’Connor announced that both judges would participate in deciding the case based on written briefs and transcripts of the hearing.