Journalist Jeff Benedict is the author of an excellent book on the Kelo condemnations, that I reviewed here. In this Hartford Courant op ed, he discusses the Pfizer Corporation’s recent decision to close down its headquarters in the New London, Connecticut neighborhood where it had previously played a key role in instigating the notorious condemnations that led to the Kelo litigation:
I’m often asked if I’d consider writing a novel. My answer is always no, truth is better than fiction ... and often harder to swallow.
Consider the bitter pill that Pfizer Inc. slipped New London this week. Barely a decade after constructing a $300 million research and development headquarters in the city, the pharmaceutical giant announced it was shutting down the facility. Just like that, New London will lose 1,400 jobs and become home to a gigantic, vacant office park that sprawls over a 24-acre campus.
Never mind that an entire residential neighborhood was bulldozed by New London to change the look of a 90-acre landscape around the Pfizer campus. And never mind that along the way the city used eminent domain to drive out homeowners and then fought a costly eight-year legal battle against holdouts Susette Kelo and her neighbors that went all the way to the U.S. Supreme Court....
After all the shouting, the developer ran out of money and the city has zero prospective replacements. Barren weed fields are all that exist where homes once stood.
Now that all of New London’s best-laid plans have been laid to rest, Pfizer is leaving, too. It’s tempting to suspect a connection. After all, let’s not forget that Pfizer never wanted to make its corporate home on the edge of New London’s urban Fort Trumbull neighborhood. “Pfizer wants a nice place to operate,” one well-connected Pfizer employee famously told a reporter shortly after New London officials courted the drug company. “We don’t want to be surrounded by tenements.”
What Pfizer wanted next door is what drove New London’s plan to raze buildings and replace them with a five-star hotel, a health club and spa, office space and upscale housing. At one point, Pfizer even talked about guaranteeing 50 percent occupancy at the hotel. The state did its part to sweeten the deal by kicking in close to $100 million in public money to the project, some of which was used to acquire and demolish private homes.
In the end, the Pfizer facility is the only thing that went up, although many would argue that a lot of taxpayer money went up, too — in smoke, that is. At least Pfizer employees haven’t had to look at tenements for the past 10 years. But how are those brownfields looking about now?
I have previously written about Pfizer’s withdrawal from New London and its role in the Kelo takings in this series of posts, and in a recent New York Times forum.
Randy says:
Excellent post. Unfortunately, communities that are suffering from an economic freefall often fall for any pie-in-the-sky proposal. Some big company or developer comes to town offering jobs, and the local community fawns all over them. No one will dare ask for gaurantees, reimbursements, or any thing at all for fear of angering the developer. Afterall, as they make very clear, they can go somewhere else where they are appreciated.
There oughta be a law that if any developer wants tax abatements, subsidies or whatever from a community, they must pay back, with interest, all that they got if they leave. I know that’s hardly practical, but we simply cannot trust local officials to look out for the longterm interests of their communities
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November 15, 2009, 5:08 pmbystander says:
You are certainly correct that cities will do anything to attract large employers to their communities, but if we are talking about tax abatements, they should be extended to the residents of a community (in the form of lower taxes) and not to a corporation that can take their ball and go home whenever they choose.
That being said, there is no small satisfaction in seeing New London receive a comeuppance for the Kelo fiasco.
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November 15, 2009, 5:24 pmMikhail Koulikov says:
As is usual with articles like these — are the Pfizer employees who were in fact there not as much taxpayers as the people they kicked out?
We *all* pay taxes. And “being a taxpayer” really should stop being an excuse for something. Political/decision-making power is not a right, it’s something you have to work to get.
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November 15, 2009, 6:40 pmdenton says:
Hmmm... the buildings are vacant, the weeds are growing, the place is....blighted. We could condemn the land, put in homes... Wait. We already tried something like that.
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November 15, 2009, 8:02 pmDavid Welker says:
If the economy suffers, then economic development suffers. Obviously. That one particular project has failed (along with a lot of other projects) is obviously not an argument against the concept of economic development takings, just as the fact that some charter schools will fail is not an argument against the concept of charter schools.
There may be a lesson here though. Perhaps New London should have secured stronger and longer term contractual commitments from Pfizer before engaging in the condemnation process.
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November 15, 2009, 9:58 pmRandy says:
David: “Perhaps New London should have secured stronger and longer term contractual commitments from Pfizer before engaging in the condemnation process.”
I would support this. However, Pfizer would just say no, and go to another community that wouldn’t require such commitments. That’s the problem — there is always someplace more despirate for development.
David: “That one particular project has failed (along with a lot of other projects) is obviously not an argument against the concept of economic development takings.”
Exactly. So if PFizer couldn’t make this profitable without huge government subsidies, then it can’t be profitable. The city should have said we welcome Pfizer to do business like any other. Pfizer can buy land where ever it may be available, and if they abide by the usual zoning laws, then they can build whatever they want. But they want a dime in public monies, or special treatment, the answer is no.
Had they done that, the city would have saved itself millions of dollars.
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November 16, 2009, 12:20 amED Maven says:
Actually, the Fort Trumbull project failed before the crash. Remember that NL had the go-ahead from the Supreme Court in the summer of 2005. But its developer couldn’t even get financing. Second, Pfizer decided to move out of NL, not because of the recession, but because its merger with Wyeth required a consolidation of research activities, and the place chosen for them is Groton.
Moral: redevelopment is not a public use, but rather a subsidized private entrepreneurial activity that is subject to market risks and failures. That is why redevelopers should have to risk their own money, not the public’s. This fiasco has cost state and local agencies in Connecticut some $80 to $100 million. But as long as the redevelopers have no skin in the game, and can just walk away, that’s exactly what they will do every time it suits them.
BTW, exactly the same thing happened in Yonkers which condemned privately owned land, and gave it to Otis Elevators which shortly thereafter moved out of town, leaving the city holding the bag. But these guys never learn. Why? Because they aren’t risking their own money.
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November 16, 2009, 1:08 amDavid Nieporent says:
No, but the failure of the Soviet Union is obviously an argument against the concept of economic development takings.
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November 16, 2009, 3:19 amAdjoran says:
David Welker is quite right. That this taking went nowhere is more likely due to the prevailing economic conditions than anything to do with the taking itself.
A more cogent and practical argument against “economic development” takings is to track the records of those which were completed as planned. There are many dozens of examples across the country, perhaps hundreds. Almost invariably they failed to deliver the promised benefits and, in many cases, could not be sustained even with continuing public subsidies.
The constitutional arguments remain unresolved — the Kelo decision was essentially a 4–4 standoff with Kennedy narrowly concurring with just enough of the pro-taking side’s holdings to decide the case 5–4, not the stuff of which enduring precedents are forged.
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November 16, 2009, 5:31 amRichard Aubrey says:
Love to see forensic audits of various officials involved.
You’d think they’d be smart enough or have sufficient integrity not to do this.
There had to be something to overcome the intelligence and integrity, right?
Wonder what that might be.
Does anybody have a history of such takings? Do they work? Ever? Some of the time? Most of the time?
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November 16, 2009, 7:55 amuberVU - social comments says:
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This post was mentioned on Twitter by kevinforrester: More on the Pfizer Corporation’s withdrawal from New London, Connecticut, and the Kelo condemnations: http://bit.ly/272JGi...
David Welker says:
How so?
At first glance, this assertion makes no sense. The sort of taking that occurred in the Soviet Union (where the government takes ownership and control) is precisely the sort of taking that would have been encouraged by an opposite result in Kelo.
If the failure of the Soviet Union tells us anything from a policy perspective (which I doubt), it seems to tell us that Kelo was rightly decided. But I would love to hear your take.
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November 16, 2009, 9:02 amDavid M. Nieporent says:
Only if you assume that the taking would have taken place anyway in the eventuality of the opposite result; there’s no reason to believe that. As has been documented, this process was driven by Pfizer from the beginning; if it couldn’t have the land, the city would have had no incentive to take the land.
In any case, however, your question misses the point; I wasn’t merely criticizing takings in which property was transferred from one private owner to another; I was criticizing all economic redevelopment takings.
Why do you think New London’s Five Year Plan for economic development would work any better than the original such Plans of which it was a mere pale imitation? Why would a city council suddenly become competent to centrally-plan an economy?
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November 16, 2009, 9:36 amDavid Welker says:
You are of course free to oppose economic development takings. But you cannot deny that even if Kelo had gone the other way, economic development takings where the government takes actual control would be Constitutional.
If Kelo had gone the other way, at least two things would have happened. (1) Overall, the number of economic development takings would have decreased. (2) Nonetheless, the number of economic development takings where the government takes complete ownership would have increased.
First of all, of course the government can take actions that positively impact economic development. If you knew anything about actual history (as opposed to libertarian fantasies), you would know that this emphatically true. It is simply nonsense to suggest otherwise. Secondly, the economic problem of holdouts is a real one. The limited actions of the government in helping eliminate such problems obviously increases economic efficiency. It should be remembered that the vast majority of property for the Pfizer project was acquired without resort to eminent domain.
Long before the Soviet Union came into existence, the United States exercised the power of eminent domain on behalf of private railroads. Are you going to equate this enormously successful endeavor to five-year plans too? The comparison would be nonsense in both cases.
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November 16, 2009, 10:34 amPatHMV says:
David Welker, how in the world do you conclude #2? If Kelo had come out the other way, it would have required the Court to look more closely at the actual use to which the land would be put, not merely the seizing government’s description of it. How would you have any economic development project in which the government takes complete ownership? If the government owned the property but leased it out long-term to Pfizer, the Court could easily look through the nominal “lease” and conclude that it was primarily for the benefit of a private business, and thus not a “public use.” Are you suggesting that the government would seize more property to turn over to for-profit hospitals and schools (or even sports stadiums) to get around such a decision?
You complain about libertarian ideologues ignoring facts, but this idea of your seems to be based entirely on some ideology of your own. What kind of “economic development takings where the government takes complete ownership” would occur?
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November 16, 2009, 11:24 amDavid Nieporent says:
Well, I could deny that, for the reasons PatHMV says, but let’s say I accept it; the rest of your argument doesn’t follow.
That seems easily testable; some states do ban economic development takings. Do those states have a higher rate of the government using eminent domain to become a private landlord for the purpose of benefiting
campaign contributorseconomic redevelopment? One would think that if this were deemed an adequate substitute, then places like New London wouldn’t spend years and millions fighting Susette Kelo in the courts, when they could just take the property and lease it to Pfizer.Of course it can. And astrologers can make predictions that come true, too. One would hesitate to attribute this to anything except random chance, however; make enough predictions, and some will happen to be right, and they’ll come true. If the government does something which happens to be a good idea, well, it will positively impact economic benefit. (Of course, that’s Parmenides’ fallacy in action, but set that aside.) Which is why your citation to the railroads, even if accurate, would prove nothing.
You “obviously” have a different definition of “obvious” than I do. If Susette Kelo values the property more than the Pfizer Corporation does, it is in no way “economically efficient” to forcibly transfer the property from the former to the latter. (In fact, as the IJ pointed out repeatedly, the so-called “problem of holdouts” was fictitious in New London; the city was happy to allow politically connected property owners to hold out — without it preventing the project from going forward — but because Kelo did not have any influence, her “holdout” was a big deal.)
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November 16, 2009, 1:43 pmDavid Welker says:
PatHMV,
Maybe I should be more clear. I am not talking about the government leasing space to a private party.
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November 16, 2009, 2:25 pmDavid Welker says:
Here is a relevant post from Eugene Volokh from back when Kelo was decided. Good stuff. Can you say unintended consequences?
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November 16, 2009, 3:38 pmScott says:
If I were the Hartford Courant, I would be grateful for the citation (and link) to the interesting op-ed, but not as grateful that all but four paragraphs of it was copied on the blog. That said, I don’t know anything about copyright or the accepted VC conventions with this kind of thing.
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November 16, 2009, 4:16 pmThe Kelo comes home to roost « David Knights’ Weblog says:
[...] decided Kelo decision from the U.S. Supreme Court. Turns out that Karma is indeed a b*tch. More here. Possibly related posts: (automatically generated)Inspiration for Kelo vs. New London Case Leaves [...]