First China & Zimbabwe, Now Here: More Eminent Domain Abuse

GWB's "ownership society," my ass: in a short update to last Thursday's SCOTUS decision in Kelo v. New London, I thought it would be good to see which communities will prove that abuse of eminent domain for the sake of private profit will be the rule rather than the exception. I think we'll find far more communities using this decision to simply purchase properties for far less than their market value, and turning the land over to private developers to reward campaign contributions.

This is no different from the (in)famous case of the City of Detroit and State of Michigan, at a time when unemployment in that state was close to 15%, paying to utterly destroy Poletown to build a plant for General Motors - an action which on appeal, almost 20 years later, caused the Michigan State Supreme Court to drastically restrict government right to take land using eminent domain laws - especially when such seizures were primarily to profit private enterprise - in that state.

As of last week, the ironically-named town of Freeport, Texas is getting ready to seize several pieces of property from local seafood companies, one of which has been operating for more than fifty years at that location, to construct a multi-million dollar private marina - because as the city of Freeport estimates, the current $37,000 a year in property tax revenue will be increased to at least $400,000 a year after private development.

Comments

[Ian]

Freeport is quite a dump; I've been there many, many times. It's an older town that had all of its income and businesses sucked out by the newer, planned community (Lake Jackson, built by Dow Chemcial Co.).

Freeport is somewhat in a bind. Its economic bases are the chemical plants, shrimping, and the port. It's a precarious situation being a small port facility in the shadow of the 800lb gorilla, the Port of Houston. And shrimping is a dangerous bet; the industry could be wiped out. All the high-income earners at the plants live in the nicer Lake Jackson.

However, what strikes me as amazing is that a town in as desperate shape as Freeport wants to bulldoze several established businesses ($40 million/yr business is a big deal in a small, run down town..) on a "pie in the sky" revitalization attempt with absolutely no guarantee of success.

But then again, it worked in Kemah, another small coastal town in the area. Landry's corporation basically bought the small town and built the "Kemah Boardwalk" which turned out to be a major success. Well, relatively speaking. All the profits go out of town, and the jobs it established are all $6/hr unskilled labor. But I suppose there is a "halo effect" for non-boardwalk businesses.

[jmcg]

The difference is, Kemah did it without using eminent domain. If private capital uses its own private property, that's legitimate development. $6MM from the backs of taxpayers + eminent domain + tax abatements for the developer as far as the eye can see <> the free market.

[Ian Rees]

Yes, of course that's true. However, I doubt Kemah's town council is in a hurry to do anything hostile to Landry's Corporation. Using the power of emminent domain would just be icing on a very sweet cake :)

Perhaps what's troubling is more the disease and less the visible symptom -- the fact that today, municipalities themselves must compete against one another in offering sweetheart deals to secure investment, however meagre it may be (in terms of secure, mid- and high-wage jobs, secondary development, etc.) This ruling just removes any lingering doubt that city governments could be easily bought and manipulated. It takes these deals, which have always happened less directly, out of private meetings and simply recognizes government mediated property seizure as just a part of normal government function.

What's next -- governments entering into agreements whereby competitors products are excluded for purchase in certain areas, like schools? Oh, wait...

[Hamlet's Dreams]

I actually see this SCOTUS case really differently. It's important to understand that there's been a concerted campaign by real estate interests to define any regulation (zoning, whatever) as an unjust taking. With this court case, and several others recently, the court has reaffirmed the right of elected officials to act in the public interest. See my post on this at:

http://hamlets_dreams.blogs.com/hamlets_dreams/2005/07/kelo_vs_new_lon.html

As a final point, the original post suggests that the compensation for properties seized by eminent domain are "far below" market value. I'm not sure that's generally true- most governments require "just compensation", which is often close to the full assessed value of the property.

[john doe]

i personally hope it works for them. i lived in a blighted property and was forced out of it by the landlord who couldnt pay for repairs to major utilities in the house. i hope they take his first.:)