Over at the Land Use Prof Blog, property scholar Matt Festa has a good discussion of the implications of Pfizer’s decision to close down its New London headquarters for the ongoing debate over the use of eminent domain to promote economic development. As I explained in this post, the construction of this Pfizer facility was at the center of the firm’s successful efforts to lobby for the condemnations that eventually resulted in the Supreme Court’s controversial decision upholding “economic development” takings in Kelo v. City of New London.
Festa suggests that this experience, as well as other cases such as the notorious 1981 Poletown condemnations where some 4000 Detroit residents were forced out of their homes so that General Motors could build a new factory, may lead local governments to be more skeptical of economic development condemnations that depend on a single big firm for their viability:
Politicians and planners might be more cautious about hitching their redevelopment wagons to one big private entity. I’m as enticed as anyone by the idea of revitalizing a downtown/waterfront/etc. with a grand scheme that involves jobs, tax revenues, public-private partnerships, mixed-use development, walkable urbanism, transit, and the creation or enhancement of public space. But if the plan is based around promises from Pfizer, or GM, the incoming sports team, or any other single private entity or group, then the whole plan risks failure if the private actors decide to go elsewhere . . . When these plans fail to deliver, both the eminent domain power and the public fiscal resources are wasted.
I hope he is right. But I fear that this analysis may be too optimistic. The Kelo and Poletown takings occurred in large part because politically influential corporations (GM and Pfizer) lobbied for them in the first place. One of the designers of the Kelo development plan described Pfizer as the “10,000 pound gorilla” behind the taking (quoted in this article, pg 266). If the true purpose was to benefit these firms rather than promote development that benefits the general public, future “politicians and planners” might not be deterred from undertaking similar actions in the future merely because the promised long-term development could fail to materialize. To be sure, voters may eventually punish them at the polls. But, as I argued here and here, years are likely to pass before the project’s failure becomes clear. By that time, public attention is likely to have moved on to other issues, and the politicians who originally approved the taking may no longer even be in office.
pifu says:
I hope he is right. But I fear that this analysis may be too optimistic. The Kelo and Poletown takings occurred in large part because politically influential corporations (GM and Pfizer) lobbied for them in the first place. One of the designers of the Kelo development plan described Pfizer as the “10,000 pound gorilla” behind the taking (quoted in this article, pg 266). If the true purpose was to benefit these firms rather than promote development that benefits the general public, future “politicians and planners” might not be deterred from undertaking similar actions in the future merely because the promised long-term development could fail to materialize. To be sure, voters may eventually punish them at the polls. But, as I argued here and here, years are likely to pass before the project’s failure becomes clear. By that time, public attention is likely to have moved on to other issues, and the politicians who originally approved the taking may no longer even be in office.
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November 10, 2009, 10:23 pmDon K says:
I doubt anything other than real reform at the state level will stop these takings, because politicians love mega-projects. They give the mayor a chance to get on the front page and on the TV news to announce x thousand new jobs for (Detroit, New London) three times: at the announcement of the project, at the ground breaking, and at the ribbon cutting. And it’s lots easier than doing the kinds of things that result in real economic revival.
It’s the same reason politicians prefer building new highways to repairing the ones we have already.
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November 10, 2009, 11:30 pmThought says:
It seems to me that if the city required the developer/end user (Pfizer or its subcontracted developer) to provide a “break-up” fee (as in an M&A transaction) or a take-or-pay clause, the city could at least ensure that its eminent domain powers would generate some sort of baseline return for the voters. Of course, the developer may look for sites elsewhere given such a contract term....
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November 10, 2009, 11:58 pmdevil's advocate says:
I don’t think this is a truism any longer. Check the stimulus spending. all they are doing here in Rhode Island (and I expect most everywhere else) is early repaving, redoing every intersection or traffic circle they can get their shovels on, and replacing the new signs we bought a couple years ago with new-new signs.
They have the political will to mortgage the taxpayers future but they won’t touch any environmental sacred cows — because they would get accused of messing with future. go figure . . .
We’ve got lots of highways that need building that got stopped by the environmentalists, not to new places but to connect places that already exist — like the state university for one, and our main tourist destination in Newport, for another. Hartford would be well served by actually putting the rest of rte. 84 on the map. But . . . who cares about Hartford. It’s just our pleasant little New England version of Chicago lately.
Or maybe they could at least have built a third bridge at every highway overpass so they could maintain the bridges without creating chokepoints all over the interstate.
One of the few areas I wouldn’t mind seeing a little bit of government ribbon cutting — experiments at private roads notwithstanding, that interestingly raise a doffermet species of eminent domain questions. At least the post roads are in the Constitution, keep health care private and build some more interstates, I could live with that. (and, of course when I say keep health care private, I also infer that we should no more allow big drug companies to capture local government organs for their own purposes, than we should allow government to nationalize health care.)
So Kelo has now been an all around black eye for economic development takings, but despite this evidence of abuse we’ve made but modest gains in correcting it. Still, I remain convinced that, inverse condemnation is a far worse problem.
I spent last evening with Palazzolo listening to his son Michael play Bass in the great New London Band, the Hoolios. The accordion player raises mice for Pfizer’s research operations. There probably is no New London band that doesn’t have a Pfizer employee on it, a much better contribution to the community. Adler should check them for a sunday song lyric, writer Jim Carpenter is a clever guy with a 40 something sensibility.
I have a habit of trying not to get close to people during their 15 minutes of fame and then drop ‘em for the next one. Not particularly efficient, but it gives you the required check on whether you are actually accomplishing anything, as well as a lot of friends if you’re a lonely heart like me.
If Kelo’s was the best loss we ever suffered, from a PR perspective, Palazzolo’s case is typical of how winning at the supreme court isn’t winning when it comes to takings. He is almost 10 more years down the road in the state courts and regulatory apparatus and no closer to any use of his property that he sought to develop in the early 1960s — and, of course, zero compensation.
Kelo is a farce. Palazzolo is a tragedy.
Brian
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November 11, 2009, 7:04 amRandy says:
Wow, I agree with every single post here!
I too am not terribly optimistic. In areas where there is any economic stagnation at all, let alone decline, most politicians will roll over and play dead to any corporation that makes pie in the sky promises. No one will ask for any conditions or terms because all the corporation has to do is say if you don’t like our proposal as is, we can take it somewhere else that will. That pretty much ends the discussion.
No politician wants to risk losing a multi-million project that will bring hundreds of jobs and increase property values. Doesn’t matter how viable or not the project is, just the promises alone are enough to push things through. Heck, I could propose some stupid project, and as long as I wear an expensive suit and have a really beautiful powerpoint presentation, I’ll get whatever I want. (And then, for the real kicker, I’ll offer that a few thousand dollars from the project will go towards building a children’s park. No one will be able to resist).
I’ve seen projects get approved on little more than that, and when they don’t produce the promised benefits (they never do, actually), no one seems to care. Afterall, some investment is better than none, right? And a few minimum wage jobs are better than none, right? Who cares if it cost the taxpayers millions — we have a few jobs!
it’s sickening how our local boards can be played off one another and how they consistently fall for it. And we taxpayers end up paying for these mistakes.
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November 11, 2009, 12:32 pmsol vason says:
“down town” area grow because of the down town location has some advantages over other locations. A town council can destroy these advantages by
1) raising taxes
2)restricting parking
3) controlling traffic through one-way streets, stoplights and stopsigns, etc etc etc
4) prohibiting certain businesses as unsightly, unseemly, or unsuitable
5) failure to enforce laws on shoplifting, vandalism, extortion, thuggery, and murder
6)shaking down local merchants for campaign contributions, protection money or just plain bribes by threats of “revitalization”.
A new coporate HQ will not “revitalize” this downtown. A WW2 style bombing will give the city a chance to start over from scratch.
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November 11, 2009, 12:38 pmMLS says:
I have to wonder what is the reaction of those who were displaced by New London’s actions.
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November 11, 2009, 12:45 pmTom952 says:
Scalia and Thomas: “See, we tried to tell you it was a bad idea, but did you listen? Noooooooooo”
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November 11, 2009, 3:03 pmcubanbob says:
Thought says: Interesting point. Now that New London has thoroughly debased itself I wonder if it can sue the drug company for a breach of promise and for the loss of expected future tax collections based on those promises? If the town can sue and win such a action it may sober future business leaders about getting in bed with local politicians.
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November 11, 2009, 4:11 pmOpher Banarie says:
Ah, hope springs eternal. I think the only solution would be to require the politicians to put up their own money in restitution to taxpayers when their schemes fall short.
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November 11, 2009, 7:22 pmThe Watcher says:
Poletown wasn’t really about the plant location or jobs. Then Mayor Young wanted to break the back of the remaining white strongpoint in the city and achieve his dream of a strong majority black city.
Any amount of money spent on a legal fight was worth the price.
He won.
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November 12, 2009, 5:31 pmThe Volokh Conspiracy » Blog Archive » NY Times Blog Discussion on the Implications of Pfizer’s Decision to Abandon its New London Facility Near the Site of the Kelo Takings says:
[...] previously wrote about Pfizer’s role in the Kelo case and its recent withdrawal from New London here, here and here. Categories: Eminent Domain, Kelo, Post-Kelo Reform, Property [...]
JohnKT says:
I too don’t see much hope for improvement.
Those takings for corporate benefit that I have seen have further problems besides the basic injustice and failure of government to protect the citizen’s right to his property.
There is a tremendous expense laid on the citizens for infrastructure. There has to be roads, schools, water lines, sewage, services, for all the new inhabitants, mostly out-of-area employees transferred to the new location. Not to mention crowded real estate development.
You commenters have missed these expenses.
Always, that I have seen, the corporation gets tax abatements so that it does not pay this expense.
In a few years, the corporation pulls out, leaving most of its imported employees behind, and the area devastated with high unemployment, high taxes, and the infrastructure (schools, roads, water, etc) in disrepair.
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November 15, 2009, 8:46 am