Posted by Eugene Volokh:
Ilya Somin responds:
I would like to thank Professor John Mogk for his [1]reply to my
[2]post on the Michigan Supreme Court's overruling of Poletown, and
also thank the Volokh Conspiracy for providing such a worthy forum
for our debate. Readers of the Conspiracy may recall that Poletown
was the notorious 1981 decision in which the Court had upheld the
city of Detroit's decision to condemn the homes of over 4200 people
in order to transfer the property to General Motors so that it
could build a new factory. The recent Hathcock decision overruled
Poletown and held that private property could not be condemned for
transfer to other private interests so long as the sole rationale
for doing so was "economic development." Unfortunately, Prof. Mogk
continues to be mistaken in his claim that all the other 25 largest
cities in the country have the power to condemn private property
for transfer to other private interests purely for purposes of
"economic development." He is also off-base in his discussion of
the consequences of the Poletown decision itself, which did not
create 6000 jobs, as he claims. Finally, the fact that Detroit
remains the poorest large city in the country after 23 years during
which the Poletown rule was in effect undermines Mogk's claim that
Poletown takings are essential for economic progress in "distressed
areas." In my [3]original criticism of [4]Prof. Mogk's argument, I
cited decisions by Illinois, California, and Florida supreme courts
that concluded that economic development was not an adequate
rationale to justify takings that transfer property to private
interests. Obviously, these states include cities that are clearly
among the nation's largest, and have somehow managed to prosper
without a rule similar to Poletown. It is misleading for Mogk to
argue that these cases "are distinguishable on the basis of
involving a predominant private benefit or not being authorized by
the legislature." The whole reason why these courts decided that
the condemnations at issue involved a predominant private benefit
or were not authorized by legislation is precisely because the only
public benefit claimed was economic development. For example, the
Supreme Court of Illinois concluded that a "contribu[tion] to
economic growth in the region" cannot be a legitimate ground for
condemnation because "incidentally, every lawful business does
this." Southwestern Illinois Development Authority v. National City
Environmental, LLC, 768 N.E.2d 1, 9 (Illinois 2002). This is
virtually the exact same reasoning that [5]the Hathcock court
adopted in overruling Poletown on the ground that its "economic
benefit" rationale "would validate practically any exercise of the
power of eminent domain on behalf of a private entity."] Prof.
Mogk's claim that Poletown contributed to Detroit's development by
"transferring 6000 jobs" to the city is also misleading. Detroit
and GM claimed at the time that this would happen. In reality, the
new factory employed only 2500 people as of 1988. It has never
employed anywhere near 6000 workers. See, e.g., Marie Michael,
"Detroit at 300: New Seeds of Hope for a Troubled City," Dollars &
Sense, July 2001. Moreover, the Poletown condemnation wiped out
some 400 businesses, 16 churches and a number of hospitals and
schools. It is quite possible that these institutions employed as
many or more workers as the factory did. If you factor in the
destruction of 4200 peoples' homes and the fact that the City spent
over $200 million "preparing the site" for GM, it is highly
probable that Poletown inflicted far more harm on Detroit's economy
than benefit. Sadly, the Poletown Court did not even consider these
massive economic harms in its decision. Another serious flaw of
Poletown is that it imposed no obligation on the new private owners
to actually provide the "economic development" that supposedly
justified the condemnation in the first place. Poletown created a
blank check for takings that transferred property to GM and other
powerful corporations on the basis of dubious claims of economic
benefit that the new owners had no obligation to live up to.
Obviously, GM and others took full of advantage of this loophole.
The political power of the new owners had far more influence on
condemnation decisions than any economic benefits they might create
for the community. Thus, it is no surprise that, as [6]Prof. Mogk
himself points out, Detroit remains the nation's "most economically
distressed" large city even after 23 years of Poletown-style
condemnations. Finally, it is difficult to understand Prof. Mogk's
claim that condemnation is necessary to facilitate development in
"distressed areas [where] the market is virtually non-existent or
in a state of collapse," despite the fact that he admits it is "not
needed to further economic development where the market is strong
and growth is occurring." As anyone who has ever tried to buy real
estate knows, it is much easier to acquire property in "distressed
areas" -- where prices tend to be low, especially if the market is
"in a state of collapse" -- than in growth areas, where they are
usually much higher. If a developer has a viable project in a
distressed area, she should find it easier to buy the necessary
property there than in a growth area. If, on the other hand, the
project is not viable, then it certainly should not be supported by
the use of eminent domain. In addition to inflicting grave
injustices on property owners, takings that transfer property to
powerful private interests are not needed to rescue distressed
urban areas. Indeed, as Poletown dramatically demonstrated, they
are often likely to do more harm than good. Readers wanting more
detail on the case against Poletown can find it [7]here and
[8]here.
References
1. http://volokh.com/archives/archive_2004_08_14.shtml#1092782789
2. http://volokh.com/archives/archive_2004_08_07.shtml#1092075732
3. http://volokh.com/archives/archive_2004_08_07.shtml#1092075732
4. http://www.detnews.com/2004/editorial/0408/08/a13-235258.htm
5. http://courts.michigan.gov/supremecourt/Clerk/Opinions-03-04-Term/124070.pdf
6. http://www.detnews.com/2004/editorial/0408/08/a13-235258.htm
7. http://www.detnews.com/2004/editorial/0408/08/a13-235258.htm
8. http://www.ij.org/PDF_folder/property_rights/MI_Hathcock_Amicus_Brief.pdf
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