Professor John Mogk wanted to jump in again to the thread we had on the subject in August; the latest entry was Ilya Somin’s post, which links back to the older posts, and here’s Professor Mogk’s response:
OVERRULING POLETOWN
On August 17 I replied to Professor Somin’s comments posted on August 9, 2004, regarding my view that the Michigan Supreme Court’s recent Hathcock decision overturning Poletown will have a crippling effect on Detroit’s future development. Somin’s response to my reply was posted following mine. He is completely off base in his analysis.
First, on August 17 he had two criticisms regarding the facts of the Poletown case: (1) GM did not commit to producing the economic development that justified the use of condemnation and (2) 6000 jobs were never generated at the plant, as expected.
The fact is that a $2 billion industrial complex was built in the early 1980s on the Poletown site, operates today and will most likely continue for decades to come. GM committed to fulfilling a development agreement with the City. Thereafter, GM upped its commitment in the 1990s by expanding its Poletown auto body facility by 277,000 sq/ft at an investment of an additional $250 million.
Critics of Poletown have skewed the debate with a focus upon 6000 jobs, which were the number to be moved out of the City, if the Poletown plant were not built. The total economic impact of Poletown involves jobs to be captured directly at the plant and indirectly through a significant multiplier effect applicable to auto manufacturing operations, in addition to increased tax revenues. It is naive to believe that planners and policy makers view the public benefits any other way.
With the expectation that Poletown economic impact assessments would be suspect, I offer the figures from the Troy State University economic impact assessment for a much smaller Mercedes plant built in an open field of Alabama in the mid-1990s. The plant created 1500 auto assembly jobs and was expected to produce 10,000 direct and indirect jobs when fully operational (in supplier plants, warehouses, transportation operations, etc.). The multiplier effect was 6/1. Employment levels in the Poletown plant have reached close to 4000, as the auto industry has continued to be buffeted by foreign competition.
Second, Professor Somin represents an inaccurate picture of the condition of the Poletown neighborhood in the late 1970s. According to The Detroit News reporting on conditions in the neighborhood at the time: “Many homeowners agreed at the outset to sell their homes to the city and leave their crumbling neighborhood. The old workingmen’s houses, once solid, were losing mortar or siding. Blight was already driving residents north in the city and to Warren and Sterling Hts.” See: http://info.detnews.com/history/story/index.cfm?id=18&category=business
The average price housing in the neighborhood at the time was $13,000 and under the federal relocation act each homeowner received up to an additional $15,000 to purchase a standard home in another neighborhood, invariably much newer and blight free, and $3500 in relocation assistance.
Third, Professor Somin’s has offered a tortured and what I believe to be a totally incorrect interpretation of Southwestern Ill. Dev. Auth. v. National City Envtl., LLC., 710 N.E.2d 896 (1999) to criticize my position that Detroit after Hathcock stands alone among the largest cities in the Country in being unable to utilize condemnation to foster economic development authorized by the legislature that serves a legitimate public interest and provides a predominant public benefit. This is the Poletown standard for “general economic development” under which Detroit acted prior to the standard being scrapped by the Hathcock opinion.
SWIDA was an Illinois state empowered development authority which issued bonds to finance a race track for a private owner. The success of the private race track dictated that additional parking be built. The court found from the evidence that parking could have been provided on the premises of the track, but the private owner induced SWIDA to condemn the adjoining parcel owned by a metal recycling center to meet SWIDA’s expanded parking needs.
The Illinois Court expressly found that: “While the activities here were undertaken in the guise of carrying out its legislated mission, SWIDA’s true intentions were not clothed in an independent, legitimate governmental decision to further a planned public use. …. Clearly, the foundation of this taking is rooted not in the economic and planning process with which SWIDA has been charged. Rather, this action was undertaken solely in response to Gateway’s expansion goals and its failure to accomplish those goals through purchasing NCE’s land at an acceptable negotiated price. It appears SWIDA’s true intentions were to act a a default broker of land for Gateway’s proposed parking plan.”
Readers should juxtapose the Illinois court’s express finding of private purpose with the Michigan court in Poletown which determined: “The power of eminent domain is to be used in this instance primarily to accomplish the essential public purpose of alleviating unemployment and revitalizing the economic base of the community. The benefit to a private interest is merely incidental.”
Moreover, totally unlike Hathcock, but identical to Poletown, the Illinois court relies upon the reasoning in the Berman case in which the U.S. Supreme Court interprets the breath of the term “public use” contained in the 5th Amendment to the U.S. Constitution to encompass the expansive boundaries of the “police power” and equates the term to “public purpose.” Just the opposite view is found in Hathcock which characterizes any reference to Berman in interpreting the Michigan Constitution as “disingenuous” and rejects any notion that “public use” and the police power are inextricably related.
Lastly, Professor Somin’s misplaced belief that it is possible to assemble major tracks of distressed urban land for redevelopment through negotiated purchases alone might be treated as vain humor, if did not address one of the nation’s most pressing needs – reversing urban decline.
Urban areas that experienced their zenith in the economy of the early and mid-20th century were broken into land use patterns that are often completely incompatible with 21st century economies. These areas have a multitude of small, fragmented and obsolete parcels. Each parcel has multiple property interests outstanding that must be acquired or removed to sustain redevelopment, such as freehold estates, future interests, easements, covenants, leaseholds and security interests, any one or more of which could be jointly held. In addition, owners of these interests are often difficult to identify and reach.
For example, in order to assemble 400 acres in the late 19th century Poletown neighborhood, several thousand parcels had to be acquired, involving as many as 10,000 property interests. On the other hand, in the 21st century ex-urban, undeveloped area of Hathcock, only 46 parcels were need to acquire 300 acres.
In the case of Poletown, there was no private development interest and it was fostered by the city. In Hathcock, the land is located in a growth area adjacent to one of the world’s busiest international airports and is under increasing private development pressure.
The Poletown project in Detroit could not have been undertaken without the use of condemnation. It is reasonable to conclude that the Hathcock project could have been, or another would soon take its place. Attorneys for Wayne County, the condemning authority, announced after the Hathcock ruling that the project would proceed without the use of condemnation.
Rather than overturning Poletown, the Michigan Supreme Court should have tailored the Poletown standard to prohibit the use of condemnation under the development circumstances involved in Hathcock, if it so desired, but allowed for the use of the power where private land assembly is impractical and development pressure virtually non-existent. Professor Somin needs a reality check, as does the Michigan Supreme Court.
Comments are closed.