Tuesday, August 03, 2004
Copyright © Las Vegas Review-Journal

EDITORIAL: 'We overrule Poletown'

Michigan high court admits eminent domain transfers were unconstitutional

Back in 1981, the Michigan Supreme Court opened the door for municipalities to use their power of eminent domain to seize private property not just for public use like highways and fire stations (the restriction embodied in the Fifth Amendment), but rather for transfer to private third parties. The rationale was that said developers would then use the land to create new jobs, "spurring economic growth."

That 1981 decision came in the so-called "Poletown case," in which the city of Detroit was allowed to seize and bulldoze thousands of homes and dozens of churches and private businesses in the city's former Poletown neighborhood -- turning the land over to General Motors so it could build a factory.

"Poletown was the first major case allowing condemnation of areas in the name of jobs and taxes," writes Dana Berliner, an attorney with the Institute for Justice and author of the book "Public Power, Private Gain."

So wild did the land-swapping-at-gunpoint eventually become that between 1998 and 2002, 10,000 private properties were either taken or threatened with eminent domain seizure in the United States.

"State Supreme Courts from Nevada to Connecticut have relied on the Poletown decision when upholding the condemnation of land for private parties," according to the Washington-based Institute for Justice -- including property seized for redevelopment on and near Fremont Street in downtown Las Vegas.

Last week, based in part on a brief filed by the Institute for Justice, the Michigan high court finally looked at what it had wrought, and reversed its Poletown decision -- unanimously.

In doing so, the court last week rejected Wayne County's attempt to seize private land south of Detroit's Metro Airport for a proposed high-technology park.

Renouncing his court's own 1981 decision, Michigan Justice Robert Young called the Poletown ruling a "radical departure from fundamental constitutional principles." The sweeping powers to seize private land granted in the Poletown case violated the state's 1963 constitution, the court now admits.

"We overrule Poletown," Justice Young wrote, "in order to vindicate our constitution, protect the people's property rights and preserve the legitimacy of the judicial branch as an expositor, not a creator, of fundamental law."

The new ruling specifically rejects the notion that "a private entity's pursuit of profit was a 'public use' for constitutional takings purposes simply because one entity's profit maximization contributed to the health of the general economy."

The very rationale for such redevelopment schemes exposes their inherent flaw. Left to their own devices, private developers will generally undertake only those projects which they believe will pay a profit. But government redevelopment efforts "direct" developers into less profitable projects, promising to "make up the difference" with various tax subsidies -- including lower-priced land acquired at gunpoint.

The final irony of this kind of unconstitutional rape of the property rights which are vital to a stable and thriving economy -- the abuses which started with Poletown and continued with the eminent domain seizure of so much of downtown Las Vegas -- is that they don't even work. They encourage the development of white elephants which have not met the first and most basic economic test: a private investor asking, "Can we really make money on this?"

And meantime blight is worsened, as land-owners subject to such abuses ask why they should invest in maintaining their existing properties, if some fat cat with friends at City Hall can seize them at whim?

After 23 years, the Michigan Supreme Court has finally seen the light. Let us hope Nevada's own Supreme Court -- which has happily cheered on the 20-year festival of looting -- will now also take a hard look at this decision.