Friday, November 13, 2009

Eminent Domain After Kelo...After Pfizer

The NY Times has an Op-Ed round table today on the meaning of the eminent domain fiasco in New London that we, and others, have been commenting on. The lead question is whether the New London situation is a harbinger for a renewed re-thinking about the use-and abuse-of the eminent domain tool by local government.

As the Times points out: "But the New London redevelopment never got off the ground, even after the local and state governments spent more than $80 million to buy and demolish private property to pave the way. Now comes the blow from Pfizer: how will its withdrawal affect future eminent domain battles in redevelopment projects? What are the lessons learned for urban planners and local governments?"

And the four respondents take a diverse view of the Kelo lesson-but at the same time, all agree that it is a cautionary tale. Even Paul Finkelman, the staunchest proponent of the legality of Kelo, believes that the decision wasn't as well thought through as it should have been:

"Whether the city of New London was wise in its decision is another matter. The issue was debated, and there were elections in the city while it was being debated. This is how democracy works. The Constitution allows the taking of private property for public use with just compensation. This happened in New London. The project, in retrospect, was ill-conceived. Obviously, the city should have required a greater commitment from Pfizer for the redevelopment program. But this is not a constitutional issue, it is simply an issue of economic development and political decision-making."

But the Finkelman point underscores, in our view, that municipalities should be using eminent domain with greater care-and that the eviction of people from their homes and businesses should be done cautiously, and in recognition that property rights deserve great respect. Dana Berliner of the Institute for Justice underscores this point:

"Risky real estate deals are, well, risky. That means they often fail. And if a private company made a risky deal that failed, we wouldn’t even be discussing it. But when government uses eminent domain to remove people from their homes, while spending tens of millions of public dollars on a failed risky deal, that’s a travesty."

But Finkelman may be right that the decision to use eminent domain is ultimately a political one-and that the decision by so many states to change their laws in Kelo's aftermath reflects this. But taking people's property, that Finkelman so cavalierly supports, runs the risk of creating a huge backlash-one that adds fuel to the tax revolt that appears to be on the horizon.

Paul Bass makes this point, and does so strongly: "The lesson learned in the City of New London’s Fort Trumbull neighborhood — or what was once the Fort Trumbull neighborhood — is that urban liberals make mistakes, big mistakes when they stand against the little guy through the misuse of eminent domain. These urban liberals — the Democrats running New London at the time — thought they could build a “better” neighborhood by destroying generations of individual investment. And they used government power, the power of eminent domain, to do it. Eminent domain makes sense when used for public safety, but it doesn’t make sense when it means giving already powerful interests an advantage in real estate development."

Which bring us-as it always does for us lately-to the issue of Willets Point. Does it make sense to take the property from the Willets Pointers when the city is currently in dire fiscal shape? Will the area end up like the one in New London? Or, even worse, the other example of blatant failure that Bass presents:

"Forty-seven miles south on I-95, in another Democratic city, that same lesson has been on display since the 1960s at another stretch of vacant land. That land just west of downtown New Haven used to be the site of a vibrant, multiethnic working-class neighborhood along Legion Avenue and Oak Street. Liberal Democrats seized it all — and much more in New Haven — through eminent domain, with the idea of bringing in investors to build a better neighborhood. The neighborhood never got built. Four decades later, the 26-acre stretch of land remains largely abandoned or used for surface parking, a testament to the failure of economic development-driven eminent domain."

So let's not be in a big rush to evict the businesses on the Iron Triangle. Let's insist that the city be more transparent and proffer openly the true costs that the development will incur-and burden the tax payers of the city with. How many services will the city be cutting in the coming months because of our dire economic circumstances? Is another mega real estate development worth further cuts and retrenchment in the public sector? These and other questions need to be answered honestly and openly before any move forward on Willets Point is even contemplated.