Grin and bear it.
February 23, 2005 1:47 PM   Subscribe

Seizure of land for the public good or unconstitutional cash grab? Originally, the power of eminent domain was used by government to condemn property for the public good, usually to build railroads or highways or bridges. This power has been expanded to redevelop dilapidated neighbourhoods, and ultimately, "economic development" (public good by way of jobs and taxes). What will you do when Pfizer wants to build a research facility *on* your backyard and your government helps them do it? Hint: it's nothing new, just wait for 2008 or 2012 (maybe).
posted by loquax (38 comments total)
Just read about this exact issue (the Pfizer research facility situation and eminent domain) in the Economist about 10 minutes ago during my break. Neat timing.
posted by Bugbread at 2:00 PM on February 23, 2005

I see the need for eminent domain in rare cases, but yeah, things like this go way too far. My suggestion for a solution would be a restriction that any land seized by eminent domain could not be sold, rented out, leased, etc. by the government for some very lengthy period after it was seized, e.g., 50 or 100 years. Not that it'll ever happen.
posted by DevilsAdvocate at 2:04 PM on February 23, 2005

Note (and apology if it's in the articles linked above) that eminent domain laws vary widely from place to place. Washington state, for example, forbids the use of eminent domain for private development.
posted by Bugbread at 2:10 PM on February 23, 2005

I smile when someone says they "own" the land their house is on. Maybe they are just leasing it from the government for the price of their real estate taxes???
posted by notreally at 2:14 PM on February 23, 2005

(a few more links, sorry for the delay)

The US Supreme Court is currently hearing arguments in Kelo v. New London, where the city has used its power of eminent domain to force the seven holdouts in a proposed redevelopment zone to sell their property for "fair market value". The new development would consist of, among other things, new condos, a hotel and a Pfizer facility. It looks like the city is going to succeed in their bid to turf owners for the benefit of private corporations, paving the way for future degradation of property rights in the US. Apparently, the only dissenting voice on the bench is Justice Antonin Scalia.

I knew that there had been a lot of these types of property rights cases lately, but no idea just how much. The number easily found on google is overwhelming. Interesting how this discussion has been somewhat muted compared to several other constitutional issues currently in the public eye, at least from what I've seen.

On preview: Bugbread, you're right, but state and municipal laws have been changing to allow for more condemnations and seizures. Even if the law hasn't changed, more and more is being read into existing statues, like the definition of "public good", or even "private development", which is the current constitutional problem. See this link for the evolution of the use of the power.
posted by loquax at 2:20 PM on February 23, 2005

Originally, the power of eminent domain was used by government to condemn property for the public good, usually to build railroads or highways or bridges.

You make it sound as if these practices were uncontroversial, or at least less controversial than modern-day uses of eminent domain. I assure you that those in the sights of 19th century rail barons thought otherwise. So did those who fought Robert Moses in the 20th century, with his "white roads through black bedrooms". This has always been a contentious issue.

(I'm not arguing one way or the other, just wanted to provide some context).
posted by casu marzu at 2:27 PM on February 23, 2005

OK, I haven't read all these links yet, but we did cover this a bit in the end of my Property class last semester (exactly this; Kelo v. New London (268 Conn. 1 (2004)) and also a similar Michigan case that came out the other way, Hathcock v. Wayne County (471 Mich. 445 (2004))). Originally I was firmly on the side of Kelo, but I'm not entirely sure anymore.

First of all, let's look at the Supreme Court precedent. The main historical case upholding property redistribution to private parties as a "public use" is Hawaii Housing Authority v. Midkiff 467 U.S. 229 (1984), in which some property owners in Hawaii contested the Hawaii legislature's dictate that they sell some of their land to the tenant/renters residing on that land. At that time, something like 70% of the land in Hawaii was owned by a small set of owners (I want to say... 12 organizations? Maybe more like 20-something). This led to a distorted market in which the remaining parcels were tremendously expensive and it was very difficult for typical island occupants to buy their own land. The Supreme Court upheld the Hawaii legislature's redistribution plan on the principle that it worked a public good. However, implicit in this holding is the acceptability of transferring land from one private party to another as a "public use."

The other main case that Kelo(the CT court opinion) depends on is an older Michigan case, Poletown v. City of Detroit; that one was factually much more similar to the Kelo situation. GM needed some land for a new factory, and Detroit decided to annex some land in Hamtramck to facilitate the construction, even though it involved knocking out a substantial part of a neighborhood. Now, here's where we get to "policy" concerns in these cases. At the time of the Poletown holding, Michigan was in a severe state of economic decline. There was something like 15% unemployment, and much higher among certain groups (predominantly African-Americans) in eastern Michigan. Manufacturing, and any other business really, has a lot of positive externalities: people get jobs, the company pays taxes, other businesses spring up to serve the company and its employees... it's good, on average, to have major companies operating in your area.

Now take a look at New London. From what I've heard (and I'll defer to any CT residents who live near there), New London was originally a whaling town. That business declined quite some time ago, and then it turned to industrial manufacturing. I don't think that's doing so well, and New London needs some economic vim and vigor. This plan would help. From the Connecticut Supreme Court opinion, the plan is
expected to generate approximately between: (1) 518 and 867 construction jobs; (2) 718 and 1362 direct jobs; and (3) 500 and 940 indirect jobs. The composite parcels of the development plan also are expected to generate between $680,544 and $1,249,843 in property tax revenues for the city... 268 Conn. 1, 10 (2004)
Now, the thing we have to overcome here is that the people currently occupying that property have property rights (remember, however, no one is talking about complete disenfranchisement; they would be compensated at fair market value). We generally tend to think of property rights as absolute (except where we don't); you never have to sell if you don't want to. Essentially, if you have a property right, your asking price can be infinite, you can refuse any offer amount. But think about how closely we really want to follow that policy. What if there really ARE serious economic problems in an area? Should everyone in the area really suffer the ongoing absence of new economic development just to preserve the sanctity of one person's absolute property right? I know that here it involves more than one person, but the principle stands; if you disallow private transfer, then even 1 person could hold up the development.

Now, back to Poletown. The thing about Poletown is, GM changed their mind about the factory, even after the Michigan Supreme Court validated the transfer of land to them as a public use. So basically the Poletown neighborhood lost out for no benefit. I don't know if Michigan is stll stinging from that or what, but they just overturned the Poletown decision in Hathcock v. Wayne County. The thing is, they did it on the basis that the state constitution prohibited private transfer uses of imminent domain. So I guess my thing is, there's always the federalism option; why not let the states decide whether private transfer should be a valid public use? At least in some situations, it seems valid. Why do we have to make it a federal rule?
posted by rkent at 2:32 PM on February 23, 2005

Also, the link to the Morning Edition coverage of this case.

From what I remember hearing (yesterday), I believe that this case should go to the City of New London. The land has always been zoned for business, not homes. Lesson: Don't build a home on land that is zoned commercial, even if others have.

Now the question becomes much more interesting in a case where the land was not always zoned commercial.
posted by spock at 2:32 PM on February 23, 2005

This has always been a contentious issue.

You're right, I did phrase that badly. I completely agree, in many ways earlier purly "public use" condemnation was more offensive that some of the current incarnations.

spock: do you have a link to the zoning issue? I haven't seen that in relation to this case yet. That would add another dimension.
posted by loquax at 2:39 PM on February 23, 2005

Eminent Domain Watch
posted by sad_otter at 2:44 PM on February 23, 2005

I'm pretty sure it is mentioned in the audio link in my comment. I was listening pretty closely and it struck me that it is a pretty big fact to leave out, but convenient when you are trying to paint the City as the big bad wolf.
posted by spock at 2:44 PM on February 23, 2005

So an armed monopoly wants to disenfranchise a few individuals for the benefit of "society." Hey man, that's the American egalitarian ideal, right?
posted by ZenMasterThis at 2:51 PM on February 23, 2005

You're right spock, the zoning in the New London case appears to be commercial and industrial. Funny that isn't made clearer, even by the city's own lawyers. According to the NPR report though, there are houses on the land that pre-dated the zoning. Even if there is a zoning issue, that is not the issue being argued at the Supreme Court. It also doesn't change the fundamental principle at stake, either in this case or the thousands of others across North America.
posted by loquax at 2:57 PM on February 23, 2005

The biggest issue with compensation at "fair market value" is that the owners are compensated at yesterday's value. The day the deal is completed and land is transferred to the new developers, that value of the land doubles, triples or more. All of this premium accrues to the developers, not the original owners. If you truly wanted just compensation, the original owners would receive shares of the profits in the new development.

Seizure of private property through eminent domain was how Bush made his fortune. He had failed at every enterprise he had undertaken until an investment group owning the Texas Rangers took on Bush as their puppet partner. His father was President at the time and they needed some muscle to convince the local government to seize the land for a new baseball stadium. In addition, they seized surrounding land for hotels, restaurants, office buildings and other developments. On top of this, they got the government to finance it though government bonds and increased taxes. And this is the guy who says he wants to get government of the backs of the people. Bush is the poster child for corporate welfare.
posted by JackFlash at 2:59 PM on February 23, 2005


Also, rkent, you cite the passive voice comment
.... Who expects that? Why? What if they don't hit the promised numbers?

Speaking of logical inconsistencies, you turn an "expectation" into a "promise" between sentences. Anyway, there wasn't a cite for those particular numbers, but from the context of the opinion at that point, it looks like a prediction produced by the development corporation itself.

Of course, there is a moral hazard problem with taking these predictions at face value; from the opinion it's not at all sure that they considered contesting evidence, and they definitely should. And as I pointed out, it's come out negatively in the past, as in the Poletown case on which CT relies so heavily, where there was no development at all.

But the anti-private-transfer position doesn't account for the possibility that the estimates are accurate; the reponse would be "so what?" The point is that, when there's a valid prospect for economic development, there's at least an argument that the transfer serves a valid public purpose.
posted by rkent at 3:07 PM on February 23, 2005


If you truly wanted just compensation, the original owners would receive shares of the profits in the new development.

That's a brilliant point, and it would be really cool if the Supreme Court would change the interpretation of "just compensation" to consider factors like that. Of course, from the pessimistic perspective, they'd be SOL of the development fell through.
posted by rkent at 3:10 PM on February 23, 2005

Institute for Justice
posted by ZenMasterThis at 3:12 PM on February 23, 2005

the problem as i see it is that the definition of public good is becoming so vague that just about any development project will qualify ... do we really want to live in a country where any corporation can force you to sell your property for "the public good"? ... if this isn't stopped, there may eventually be few places that aren't owned by corporations
posted by pyramid termite at 3:37 PM on February 23, 2005


if this isn't stopped, there may eventually be few places that aren't owned by corporations

This made me laugh, even if I agree somewhat with PT and as JackFlash pointed out Bush's history. Ownership society my a55. As always, there are three key factors figuring in: the legal fiction that corporations are people, precedent, and the question of where to draw the line.
posted by billsaysthis at 4:00 PM on February 23, 2005

if this isn't stopped, there may eventually be few places that aren't owned by corporations

Ignoring the fact that corporations hardly have unlimited amounts of money, there still remains the requirement that a government body take possession of the property first, then resell it. And governments involve elected representatives. So this will never be a runaway situation.

In fact, that's the problem that the Supreme Court has here: no matter how problematical a particular eminent domain case might be, it's a judgment call as to how poor the state of the existing buildings and neighborhood are, and how much the city/county/whatever will benefit from the redevelopment. It isn't at all clear that there is any sort of rule (other than simply depending upon elected representatives to be reasonable) that the Supreme Court can lay down that will separate out good projects (if you believe, as I do, that there are cases where redevelopment is good) from bad ones (where developers are, presumably, in cahoots with elected officials).

What would help - but presumably is a fantasy - is that property seized in eminent domain cases be sold to the highest bidder. That would largely eliminate corruption/colusion, and (in theory) some of the profits could even be distributed to those forced to sell. But the reality is that these redevelopment projects are proposed by a group which spends a fair amount of money on the detailed proposals and may be a local company looking to expand, so a public auction isn't reasonable.
posted by WestCoaster at 4:06 PM on February 23, 2005

What if the pharmaceutical companies like Pfizer went and arranged "eminent domain" over a large proportion of the taxes that you are to pay over the next few decades by bribing lawmakers to push through gargantuan guv'mint boondoggles such as the medicare prescription drug benefit?

To Pfizer, seizing a little land must seem like a lark.
posted by telstar at 4:16 PM on February 23, 2005

This would all seem much fairer to me if the requirement was that the people who are forced to lose their property be compensated at more than fair market value. Say 1.5 or 2X fair market value + moving expenses since they give up both the property and the right. This would also make it less likely that these measures are used recklessly.

The future profit option seems a bit too heavy on the other side since the evicted folk assume none of the risk or workload..
posted by srboisvert at 4:22 PM on February 23, 2005

My vote, just to complicate things further: Four-thirds of market value, plus the total projected annual income of the development after completion, multiplied by the percentage of the area of developed land that the owner is being forced to contribute, paid by the developer?

So, say, Pfizer is about to build a 100,000 square foot lab, or something, and make $160 million a year on it. Through eminent domain, John Doe is forced to give up his 5,000 square foot property. 5% of the developed land was contributed by him, so Pfizer hands him $8m. Fun for everyone!
Maybe $8m over 20 or 25 years, or something... Pfizer could afford it.
posted by blacklite at 4:45 PM on February 23, 2005

(Yes, I realize that is totally unrealistic.)
posted by blacklite at 4:47 PM on February 23, 2005

This is bad. There are worse things, though. Here's a true story:

Part of a local town was separated from the rest by a major highway. The cut-off part was a residential area, with a fair amount of woodland. A local attorney convinced the Town Meeting to rezone part of the neighborhood as "light industrial," to allow construction of a huge UPS terminal.

The site of the UPS facility included a lot of bedrock ledge, which required blasting. All day, every day, for years. The residences in the neighborhood suffered damage - cracked walls, broken windows, etc. The owners had to sell out at well below what had been market value. Remember the attorney? He bought out the homeowners for pennies on the dollar, then knocked the houses down and built office blocks and an apartment complex on the former house lots.

The homeowners were forced to start over, with all their equity wiped out. The attorney made a ton of money. (It was apparently not for him; he wound up in prison for embezzling a client's trust fund.)
posted by Kirth Gerson at 4:51 PM on February 23, 2005

"not enough for him."
posted by Kirth Gerson at 4:52 PM on February 23, 2005

Over my 2nd amendment.
posted by buzzman at 5:10 PM on February 23, 2005

Ignoring the fact that corporations hardly have unlimited amounts of money, there still remains the requirement that a government body take possession of the property first, then resell it.

The Supreme Court isn't stupid; they understand that that would be a technicality. From HHA v. Midkiff at 243-44, "The mere fact that property taken outright by eminent domain is transferred in the first instance to private beneficiaries does not condemn that taking as having only a private purpose. The Court long ago rejected any literal requirement that condemned property be put into use for the general public."

But I think the justice of the compensation is really interesting. I mean, it's just silly to make someone sell his property at fair market value when that value is about to be jacked way up. Even if you don't want to give absolute deference to existing property rights, they should still get significant deference. I get srboisvert's point about not taking on any of the risk, but a lot of people simply purchase shares of the profit, or negotiate for them in other ways, why couldn't it be part of the transfer fee for the land?

Oh, I finally found a link for Hawaii Housing Authority v. Midkiff, so I can stop using all those pretentious legal cites.
posted by rkent at 5:17 PM on February 23, 2005

There's a great piece in the latest Mother Jones on emminent domain and the part it plays in not only screwing home owners but also pitting them against each other when a handfull decides not to sell out. Scary stuff.
posted by photoslob at 5:37 PM on February 23, 2005

From that Mother Jones article:

Citing certain facts -- small driveways, narrow streets, lots that don't conform to current zoning regulations, houses that are more than 40 years old, a neighborhood subject to all the light and noise and traffic that progress (much of it Rookwood-related) has brought -- the study declared the neighborhood blighted and thus eligible to be seized, emptied, and razed.

That's crap. That stuff isn't blight; blight is drug deals and gang violence and piles of garbage in the streets. Sheesh. They should've just waved the "economic development" wand and gotten it over with. The fact that they didn't indicates to me that they probably couldn't even have met that (relatively weak) standard, and it was probably all about the corruption.
posted by rkent at 5:48 PM on February 23, 2005

A neighborhood with small driveways, narrow streets and houses more than 40 years old is considered blight? I guess its time to bulldoze that horrible city San Francisco and rebuild it Houston style. 4 car garages, wide-ass freeways and McMansions sure sound nice.

I can't believe they are still using those justifications for seizing land. Its the 1950-60s all over again!
posted by Boydrop at 6:35 PM on February 23, 2005

I'm just scratching my head. We're in the "Republican era" now, and I thought these guys stood for nothing if not "property rights." But this just apalls me. Near where I live, a local city took a church, so it could be replaced with a Costco. Everyone I know finds this heavy-handed and excessive, but local governments are so hungry for tax revenue that they seem to have forgotten their mission.

I have no problems removing or breaking up genuinely blighted neighborhoods, or using eminent domain in support of a public infrastructure project. But an enhanced tax base does not seem an adequate rationale for removing someone from his own home.
posted by curtm at 6:41 PM on February 23, 2005

Here's a self-link to my thoughts on Kelo, which is obviously generating a lot of attention here in the state (and, although I don't entirely agree with his position on the issue, kudos to UConn Law alum Wes Horton, who did a bang-up job before the Supremes on Tuesday).

One minor quibble: The private corporation leading the charge for the city of New London is not Pfizer, but the New London Development Corporation, a separate entity. This wasn't a giant backroom corporate conspiracy, but a chance at urban renewal which the local business community supported with enthusiasm. The point made above that elected representatives will ultimately be held accountable for eminent domain decisions is probably too optimistic. Money, not votes, drives the train - and regardless, the Fort Trumbull condos will soon be filled with voters.
posted by Saucy Intruder at 6:49 PM on February 23, 2005

*Sigh* It's tough to be a New London resident sometimes. In its 300 year history, New London is famous for exactly 3 things:
  • Getting burned to the ground by Benedict Arnold,
  • Refusing to hire a police officer because he scored too high on an IQ test (that alone kept Leno going for weeks), and
  • eminent domain
As you can probably imagine, we have a bit of a self-image problem. I wish I had more to add on this issue, but it's been going on so long that I don't really keep up any more. Pretty embarassing when you consider I live a mere 1/2 mile away.
posted by boaz at 7:11 PM on February 23, 2005

From the Slate article -
And Kennedy muses that "it seems ironic that 100 percent of the premium for this new development goes to the developer and not the property owner" (who is entitled only to the "fair market value" of her home and not a share in the marina's future revenues). Breyer agrees that the real problem here isn't the "public use" issue but rather whether this represents just compensation.
Oooh... looks like they might address the compensation issue after all! I've been trying to get my hands on a copy of the arguments, but the librarian tells me one just has to wait until the term closes and it gets posted on :(

From the summary in that Slate article, though, it sounds like they'll probably let this development go ahead, and possibly put some strictures on the exercise of public domain in this kind of case. Could be as vague as a "reasonableness" standard, but it would be nice if they demanded some kind of certainty about the increase in tax revenue or other public utility. And / or a share of the profits for the former property owners, which it sounds like they bandied about, but ... I just can't see this court requiring that.
posted by rkent at 8:09 PM on February 23, 2005

remember, however, no one is talking about complete disenfranchisement; they would be compensated at fair market value

UM, is it just me, or does anyone else think this is a complete load of horse hockey pucks? The whole point of this is that these corporations don't want to pay fair market value, that's why they're coercing local governments into doing this. If a corporation can't get one or two propety owners to sell out, tough. They can find somewhere else to build.

Incidently, some of the biggest abusers of this have been big box stores. Will the economic development of most towns really be impacted that greatly if Wally World can't build in it's ideal first choice spot? I think not.

If these corps want to build they chould have to pay whatever the owners ask or build elsewhere.

UM, why did New London not want to hire a smart cop?

posted by berek at 12:09 AM on February 24, 2005

...I thought these guys stood for nothing if not "property rights." But ...local governments are so hungry for tax revenue that they seem to have forgotten their mission.

The new Bush budget will make this even more of a problem. Urban renewal funds have been slashed in the budget, and so cities that need help will have to find it other ways.

The Bush Administration proposed a sweeping restructuring of federal aid to municipalities for community development. The plan calls for 18 existing programs, mostly based in HUD's community planning and development program, to be consolidated into a new "Strengthening America's Communities Initiative" grant program to be administered by the Department of Commerce.

Funding for the new program would be pegged at $3.71 billion, however that amount represents a significant cut. FY 2005 funding for the Community Development Block Grant, one of the 18 consolidated programs, was $4.7 billion.

Another part of the problem is that municipalities and even states have a bad habit of giving things away to corporations in order to have them located in their locality. Thus, a stadium is built with public funds and then given to private team owners, never recouping the investment from the city. Businesses and factories are lured to town with huge tax breaks, so that, essentially, some people get jobs but all people must bear the tax burden of the corporation, which does not have to pay.

ED, in this context, should seem much less surprising than it seems to in this thread. I mean, sure, ownership society is a nice phrase, but the operative phrase has most always been: 'Socialize debts and privatize profits.'
posted by OmieWise at 6:24 AM on February 24, 2005

UM, why did New London not want to hire a smart cop?

They were afraid they'd spend $BIGNUM training him but that he'd quit for a better job soon after training as being a beat cop can apparently be real damn boring.
posted by ROU_Xenophobe at 6:25 AM on February 24, 2005

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