Wednesday, November 11, 2009

Eminent Domain as Corporate Welfare

In keeping with our own observations, the Wall Street Journal weighs in on the fiasco that is Kelo: "The Supreme Court's 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo's land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.'s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut."

And the WSJ tells it like it is-corporate welfare in extremis: "The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other "desirable" elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation."

Did you get that price tag for futility? Yes, $78 million wasted for this pipe dream-and what about the vaunted economic development plan that Justices Kennedy and Stevens touted as the basis for their legal wisdom? "That's especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan "comprehensive," while Justice John Paul Stevens insisted that "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." So much for that."

It is time for the City of New York-and one Mike Bloomberg-to wake up and take a long hard look at the Willets Point pipe dream-a potential massive disaster in the making that will make New London's outlays look like the school bake sale. With city spending already out of control, and even larger deficits looming, can we afford to spend...Well, we're not sure how much, because EDEC and the mayor haven't been extremely transparent at revealing the full costs involved in the Willets project (or, as we have already indicated, the full impact of the traffic nightmare in the making).

So, in our view, it's time for the Bloomberg Administration to take a deep breath-and a step backwards. With city coffers running low, and the long term high cost of developing Willets Point unknown, this is not the time to be using eminent domain to remove tax paying businesses-and their workers-from the property that they own.

We'll give the WSJ the last word on the lessons of Kelo: "If there is a lesson from Connecticut's misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth."