| Wall Street Journal 01/11/1999 Letters to the Editor: Eminent Domain, or Just Greed? Gideon Kanner Los Angeles |
If a new mall is placed in one location, that means only that it and its sometimes
dubious benefits won't go to another one. Thus, when Michigan courts allowed Detroit
to bulldoze the entire Poletown community -- homes, businesses, churches and a
major local hospital -- in order to turn over the land to General Motors for a new Cadillac
plant, that only aided an inefficient business to secure a plant site at a bargain price,
and subsidized one of the world's wealthiest enterprises that even at the time could
well afford to pay full value for its facilities. The plant would have been built somewhere,
one way or another.
Redevelopment uses so-called incremental tax financing, whereby increases in
property taxes in the redevelopment area are diverted from local coffers (where they
could fund parks, schools, libraries and other truly public facilities), to redevelopment
agencies that subsidize private land acquisitions. The at times impoverished public
sector thus finances private profit-making enterprises, some of which -- adding insult to
injury -- fail in spite of the subsidies, leaving the public holding the bag, as was the
case in Yonkers where the city condemned private land for expansion of Otis Elevator
Co. facilities, only to see Otis shut down that plant and move out of town a few years
later.
The U.S. Supreme Court has held that there must be some justifying reason before
eminent domain can be used to take land from one private owner and transfer it to
another. Forcibly taking the land of one business, merely to facilitate the growth of
another, gives the "public use" constitutional limitation an Orwellian spin, and gives the
"trickle down" theory a bad name.
Finally, municipal behavior in these cases is often motivated by simple greed. New,
high volume, high-ticket merchandisers (notably automobile and other large malls),
generate large amounts of sales taxes that cities share. Thus, the high falutin' talk
about "public benefits" all too often camouflages an old fashioned pursuit of the elusive
free lunch: municipal officials want the added revenues but lack the backbone to
impose the necessary property taxes on the benefited community. James Buchanan
received the Nobel prize in economics for demonstrating that public officials act in
pursuit of their
self-interest, the same as everyone else. Here is the proverbial "Exhibit A" supporting
his thesis.
Gideon Kanner
Professor of Law Emeritus
Editor, Just Compensation
Los Angeles
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