With so much bad news emanating from the nation’s courts, it is a treat to see a court get it right for once. In a unanimous decision late last month, the Michigan supreme court overruled a case called Poletown, which for over 20 years has hovered like the Sword of Damocles over Michigan’s property owners. The ruling is a victory not only for Michiganders, but for Americans in every state whose property is threatened by eminent domain.
The Poletown case began when the city of Detroit seized an entire neighborhood–called Poletown after the large number of Polish immigrants who lived there–in order to give it to General Motors to build an automobile factory. The city claimed the factory would “create jobs” and increase tax revenue. But the homeowners in this modest neighborhood pointed out that the Michigan constitution (like the constitutions of practically all states) limits the government’s condemnation power to taking property for “public use.” An automobile factory, they argued, is not a public use, but a private use; GM would keep all its profits. If that was a “public use,” then anything would be, and there would be no limits to the power of eminent domain.
The Michigan supreme court ruled in favor of the city. If the city decided that taking homeowners’ land and giving it to a private party was in the public’s interest, then the court would do nothing to stop it. Eminent domain, once limited to public uses like roads or post offices, was unleashed in the service of any well-heeled private party able to persuade the local government to see things its way.
In the years since Poletown, eminent-domain abuse has exploded nationwide. As Ramesh Ponnuru has pointed out, powerful corporations frequently send representatives to lobby cities for “free” real estate. The city takes a neighborhood, usually of modest homes, and gives it to a developer or a megastore, and then rakes in the higher taxes. The only losers are the home- and small-business owners, who lack the political influence necessary to persuade local officials to respect their rights.
Poletown has become the leading symbol of eminent-domain abuse. Every law student reads the case in law school, and even lawyers unfamiliar with eminent domain will recognize the case’s name. Since Poletown, most state courts, and the federal courts, have adopted the same rationale, allowing government to redistribute property to whatever group they consider more worthy. A report by the Institute for Justice documented 10,000 reported cases of threatened or completed condemnations benefiting private companies. As the Ninth Circuit Court of Appeals once wrote, “the whole scheme is for a public agency to take one man’s property away from him and sell it to another. The founding fathers may have never thought of this, but…our hands are tied–if the book on the procedure is followed.”
Eminent-domain abuse is an abuse of the entire political process. Its primary victims are minority property owners and the poor, who lack the lobbying power of a retail giant or pharmaceutical company. Last year, in Boynton Beach, Florida, the director of the city’s redevelopment agency told the city council that the reason he advocated condemning a large black neighborhood was “to compensate for the loss of one of the city’s major taxpayers. Our property-tax values are meager compared to other cities and this redevelopment is our attempt to enhance property values within this City…. In Boynton Beach, there is a significant amount of property that pays little or no taxes. Given that reality, we must do other things to compensate for that loss of tax dollars.” In other words, if the city throws out the poor folk, the city’s median income will go up. Perhaps that’s true. But that is just why groups as different as the Pacific Legal Foundation and the ACLU of Michigan joined forces to urge the Michigan supreme court to rein in the use of eminent domain, and protect the property rights of all citizens, particularly the most vulnerable.
In their decision last week, the justices agreed that such abuse cannot be tolerated: “if one’s ownership of private property is forever subject to the government’s determination that another private party would put one’s land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, ‘megastore,’ or the like….”
The message is clear: Michigan’s failed experiment with eminent domain is over. If businesses want land, they must pay for it like anyone else.