Eminent Domain
A few weeks back, Paul posted a comment on the Pfizer decision to pull out of New London, a decision that throws that city’s redevelopment plans into disarray and likely means that its use of eminent domain to obtain title from the holdouts against redevelopment in the Fort Trumbull neighborhood was unnecessary. He suggested that the failure of New London’s redevelopment plans was evidence that the Supreme Court’s decision in Kelo v. New London was wrong and that the dissenters were right. While Paul’s discomfort with eminent domain is, I think, perfectly reasonable, his view of the Kelo case reflected what is in my opinion a common misunderstanding of that case’s significance. Far from weakening the Constitution’s protection against eminent domain where it had previously existed, my reading of the case is that it broke no new ground in its interpretation of the “public use” limitation on the eminent domain power and that, if anything, it actually increased protection from eminent domain abuse by introducing the idea that eminent domain undertaken for pretextual reasons violates the Fifth Amendment.
This recent decision from the New York Appellate Division invaliding the use of eminent domain in support of Columbia University’s expansion in West Harlem provides a nice illustration of the protective potential of that “pretext” language in the hands of an engaged court. Relying heavily on Kelo, and on an unfavorable contrast between the processes used by the condemning authority in the New London and Columbia University cases, the First Department found that the public benefits the New York Urban Development Corporation had proffered to justify its use of eminent domain to help Columbia University complete its planned expansion into the Manhattanville neighborhood were mere pretexts and that the use of eminent domain in that project violated the U.S. Constitution.
Although the First Department’s opinion is far from perfect, the result seems correct to me in light of the fairly shocking facts described by the Court. More significantly, it belies the notion — widely peddled by property rights activists — that Kelo somehow eviscerated constitutional protection against eminent domain abuse. To justify its decision, the First Department pointed to the lack of any comprehensive effort by New York City to create a redevelopment plan for the neighborhood independent of Columbia University’s proposed expansion needs. It also pointed to specific evidence strongly suggesting that the Development Corporation had, in effect, been “captured” (my word, not the Court’s) by Columbia University and was acting almost as an arm of the university rather than as an independent agent of the public interest. In initially determining that the neighborhood was blighted, for example, the Development Corporation hired Columbia University’s own consultant to study conditions in the neighborhood. Unsurprisingly, the consultant found the neighborhood to be blighted. Similarly, in rejecting an alternative plan set forth by the responsible Community Board, the Development Corporation simply observed that the plan did not meet the conditions identified by Columbia University. Obviously, it’s just one decision by one mid-level state appellate court, but I think the First Department’s decision offers some vindication of the intuitions, central to the majority’s decision in Kelo (and to Justice Kennedy’s concurring opinion in that case), that a determination that the public interest justifies the use of eminent domain is, in the first instance, properly made by (local) political branches of government, but that there is room for judicial review of the underlying processes to ferret out the sort of private capture that the First Department found to have been at work in the Manhattanville plan.
It will be interesting to see what, if anything, the New York Court of Appeals does with this case. It recently upheld the use of eminent domain in the Atlantic Yards case, but it’s not clear to me that the evidence of pretext and capture was as strong in that case.
on December 8th, 2009 at 11:30 am
This is an incorrect reading of the Kelo case. The earlier cases that allowed private-to-private property transfers were clear public uses (e.g., railroads and public utilities), or used the harm elimination rationale. Property could be taken, they said, where the process of taking eliminated a public harm, such as slums, blight, title misallocation, etc. True, some unoffending properties could be included in the taking where that was necessary for the carrying out of the redevelopment viewed as a whole – not on a parcel by parcel basis. In other words, harm elimination was the dog and the incidental taking of a few unblighted parcels was the tail. After Kelo, the process can be all tail.
Kelo allowed the taking of an entire unoffending lower middle class neighborhood in order to enrich wealthy redevelopers in the hope that some of their prosperity would trickle down to the community in the form of taxes and jobs. As it turned out, the city’s plans were not worth the paper they were written on. Its chosen redeveloper couldn’t even get financing – and that was before the crash. Pfizer’s departure from New London was only the latest blow.
Today, the 90-acre Fort Trumbull redevelopment area is a trash-strewn, weed-overgrown wasteland that has no foreseeable prospects of being redeveloped. Between $80 and $100 million in public funds was wasted with nothing to show for it, except a tidal wave of public anger directed at the Supreme Court and the process of eminent domain.
on December 8th, 2009 at 11:35 am
Gideon — your views on Kelo are well known. I just disagree with your characterization of the prior caselaw. It is impossible to read the actual opinions of the Court in Midkiff and Berman and agree with the way you limit the prior decisions. As the Court put it in Midkiff, any legitimate government purpose can be pursued through the use of eminent domain. And no one disputes that economic development is a legitimate government purpose. So Kelo breaks no new ground not already broken by Justice O’Connor and the Midkiff majority. In any event, I hope we can agree that the First Department’s decision was the right one and shows the ways in which courts can use the protective language in Kelo to defend landowners against abusive misuse of the state’s eminent domain power.
on December 8th, 2009 at 11:58 am
Chacun a son gout. But if you reread Midkiff, you will find that the rationale was the legislative elimination of title misallocation — of the supposed “oligopoly” that was said to prevail on the island of Oahu. Yes, O’Connor threw in some extreme language (that in an act of divine justice, she had to eat in Kelo), but in the end she restated the traditional rule disallowing takings of A’s land in order to transfer it to B. The holding, as opposed to dicta and make-weight judicial rhetoric, was that transfer of fee titles from lessor to lessee of land that had been leased as home sites, in order to eliminate the dreaded “oligopoly” and stabilize home prices, was a permissible “public use.”
And by the way, Midkiff too turned out to be a disaster — it produced the opposite from what it ostensibly intended. It resulted in doubling of Oahu home prices within a half-dozen years after the decision, and enabled the transfer of some of the best housing on Oahu to Japanese tycoons. For details, see 31 U Haw. L. Rev. 423, 429-433, notes 30-34.
Aloha!
on December 8th, 2009 at 12:06 pm
The fact that a rule of decision is broader than strictly necessary to decide the specific case before the Court does not make it dicta. Perhaps the Midkiff statute was bad policy, as you suggest, but that’s not unconstitutional unless it rises to the level of a due process violation. See Lingle.
on December 8th, 2009 at 12:32 pm
What does it take to persuade liberals that the process of redistributional eminent domain, as practiced in today’s America, is a replay of the “robber baron” practices of the 19th century railroad era? It is nothing more than reverse Robin Hoodery.
Putting bad policy (on which we agree) aside, interpreting the phrase “public use” is not rocket science. Any intelligent, English-speaking person knows — or should know — that, if nothing else, tearing down an unoffending lower middle class neighborhood in order to turn it over to a wealthy corporation that plans to improve it with upscale shops and condos catering to the upper and upper middle classses, isn’t “public” use. It is enrichment of the haves at the expense of the have-nots, particularly given the prevailing undercompensation that is a part of prevailing eminent domain law. To the extent judges play semantic games purporting to show the contrary, that only offends the public and damages their stature, and rightly so.
on December 8th, 2009 at 1:30 pm
It cracks me up that you make this comment in response to a post that largely praises a state appellate court striking down the use of eminent domain. Sheesh.
on December 8th, 2009 at 3:03 pm
I agree that Kelo provided some openings for opponents of broad use of eminent domain. As I wrote in a 2005 article, “the majority was troubled enough by the apparent unfairness to note that states can restrict the power of eminent domain.” Many states did so, although not New York. The key, though, was that Justice Kennedy wrote in a concurring opinion that deals “intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits,” should be forbidden.
My experience in writing about economic development is that when the state condemns land for a private developer, it is often done without bidding, and often to benefit entities that are politically powerful. Often enough, it is the poor who suffer displacement in the name of economic development that is aided with substantial tax breaks to the wealthy.
I don’t know the details of how the New London plan was developed, but I don’t think the questionable process in the Columbia case is so unusual, at least in New York City.
In the case of The New York Times headquarters, which I mentioned in an earlier post, the government officials involved at first said they were going to seek bids on the property, then withdrew that when The Times became interested and threatened to move jobs out of New York City unless it could make a heavily subsidized, sole-source deal. Another developer who had built a skyscraper elsewhere in the Times Square area came forward with a proposal for the property, but was not permitted to bid (and he owned part of the property, and stated he would not seek tax breaks, which the Times has received to the tune of tens of millions of dollars).
This is the process we are used to in New York. I wrote on this some years back in The Village Voice, noting that the lease for the Times property:
“bars renting space in the 52-story building for `a school or classroom or juvenile or adult day care or drop-in center.’ It forbids `medical uses, including without limitation, hospital, medical, or dental offices, agencies, or clinics.’ It gives the New York Times Company `the sole and absolute discretion’ to reject United Nations or foreign-government offices, including any `considered controversial’ or that are potentially the focus of demonstrations. It bans any employment agency (other than executive-search firms) or job training center and auction houses, `provided, however, the foregoing shall not apply to high-end auction houses specializing in art and historical artifacts.’ Discount stores are forbidden. And the deal bars `a welfare or social-services office, homeless shelter or homeless assistance center, court or court-related facility.
“In fact, any government office is excluded from the building if it would attract people who arrive `without appointment.’ ”
Full article: http://www.villagevoice.com/2005-08-09/news/times-to-commoners-go-elsewhere/
on December 8th, 2009 at 3:04 pm
Nice try, Eduardo. I wrote about Kelo in response to what you had to say about Kelo. Seeems relevant to me.
Wanna talk about the Kaur case? You’re on. You first. Then again, perhaps you’d like to wait until after the NY Court of Appeals is heard from. Your call.
on December 8th, 2009 at 3:19 pm
No, Gideon — your most recent comment was about liberal indifference to eminent domain. My thoughts on Kaur are clear enough from the post.
Paul — I don’t think your problem is with Kelo, it’s with the New York courts. The bigger problem I have with this line of attack is that, contra Gideon, the property rights agenda is not at the end of the day about protecting the little guy. It’s about constitutionalizing some sort of Ayn Randian utopia. Eminent domain abuse is a small part of it. It’s anti-government and anti-redistribution through and through.
on December 8th, 2009 at 3:24 pm
Good snapshot of the process, Mr. Moses. New York, alas, is the sub-basement of American eminent domain law, both procedurally and substantively.
The public pays through the nose, and the redeveloper gets the land at either a greatly subsidized price, or gratis (in Kelo it was $1 per year for 99 years).
As for the NY Times caper, if you want to have some fun, look up the option to purchase clause of the 99-year land lease of the new NY Times building site. Love it!
BTW, for all the usual “planning” the Times caper has been unsuccessful. The Times has had to sell its interest in that building and is now a tenant with an option to purchase if things improve. Doubtful, given the ongoing decline of all newspapers.
on December 8th, 2009 at 3:42 pm
An unrelated note to Mr. Moses:
Hey, dude, watch who you callin’ a “Randian.” At my age, I might be flattered to be called “randy,” but not Randian. Maybe you misspoke, Mr. Moses. I am a disciple of the late, lamented Don Hagman of UCLA, who aptly observed that the libertarians are 100% right about 50% of what they say.
Having been in these trenches for over 40 years, my observation has been that the “property rights movement” has been largely reactive, initially responding to the early 1970s effort of the CEQ advory committe Establishment types who wanted to import a stealth version of the British Town & Country Planning Act of 1947 into the United States. What they wanted and made no bones about, was a regime in which private rights to improve land would be abolished, subject only to being created on an ad hoc basis by government issuance of an appropriate permit. To that end they sough an overruling of Pennsylvcania Coal Co. v. Mahon. They failed. Good thing.
on December 8th, 2009 at 5:36 pm
To refresh the memories of the rest of us shlubbs:
http://civilliberty.about.com/od/freetradeopenmarkets/p/kelovlondon.htm
http://www.courts.state.ny.us/reporter/3dseries/2009/2009_08976.htm
And to introduce one of the posters:
http://prfamerica.org/biography/Biography-Kanner-Gideon.html
on December 8th, 2009 at 10:46 pm
Eduardo, I guess I really slipped one over my editor at the Village Voice by sneaking Ayn Rand’s views into that paper. None of us would have looked at it in those terms, though.
on December 9th, 2009 at 10:33 am
Thank you Jimmy Mac for the publicity. But I should note that I have no connection with the organization that posted my resume. I spoke once before them, and in an effort to be nice, I guess, they posted my resume on line. For the record, I would never pick that awful shade of green as background.
on December 9th, 2009 at 11:31 am
A more general observation about the New London situation is that it is yet another example of how, when governments use the power of the state to manage economic or create prosperity, they typically make a hash of things.
Everything from farm subsidies, to rent control, to involvement in the mortgage industry usually ends up a mess. Now we are going to have the government manage health care. Good luck with that.