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Thread: Kelo v. New London update

  1. #1
    Cyburbian Planit's avatar
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    Kelo v. New London update

    In 2005 the infamous Kelo vs. New London case was heard by the Supreme Court...but we knew that. Since that time there have been many places who have voiced strong opposition to using eminent domain. In fact in our little burg, we have had to take condemnation (even "friendly" condemnation) off the table to build greenways.

    Well lets look now four years after the SC decision on the Kelo case...Pfizer is moving out.

    http://www.nytimes.com/2009/11/13/ny...r.html?_r=1&hp

    That sentiment has been echoing around New London since Monday, when Pfizer, the giant drug company, announced it would leave the city just eight years after its arrival led to a debate about urban redevelopment that rumbled through the United States Supreme Court, and reset the boundaries for governments to seize private land for commercial use.
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  2. #2
    The government has never had the power to seize private property for commercial use without establishing a public purpose nexus. New London, in the opinion of five justices of the Supreme Court, did exactly that: they established a public purpose nexus.

    If Ms. Kelo hadn't been about the money, and the money only, Pfizer wouldn't have lost years and gobs of money fighting her. They would likely be so vested in New London now that a retrenchment to Groton wouldn't be on the table, even in these hard economic times.

    The reaction to Kelo is disheartening but not surprising.
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  3. #3
    Cyburbian
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    I thought Kelo had to do with using eminent domain to promote economic development, not necessarily a commercial use.

    Was there anything in the original ruling that said that the company HAD to stay in the same community for X number of years? The company paid local taxes on 20%of the assessed value of the site. I imagine Pfizer also had to pay off a significant number of bonds/financing while they were in town.

    The article plays down the tough role that Pfizer will have tying to find a buyer. The property would need to be marked down significantly, and even then, as the artcile points out, it would still be very difficult to fill a giant office complex in difficult times, especially when Pfizer was the largest employer in the community. I think the community is partly to blame for not only giving Pfizer a ton of incentives to build on developed land but also failing to significantly diversify its economy during the interim.
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  4. #4
    Cyburbian The One's avatar
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    How much?

    Anyone know how much Kelo got paid for the land as a result of the eminent domain finale? It must have been enough for her to be able to sell the house for a buck to be displayed as an anti-law and more importantly anti-economic development symbol
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  5. #5
    I read in yankee magazine that kelo purchased the new london home for $60,000 a few years before the eminent domain proceedings began. She was offered $120,000 and rejected it. Ultimately, she settled for $420,000. The house was not (or will not be) demolished it will instead be relocated.

    Call me a cynical SOB, but it wasn't about the principal of eminent domain, nor public use, nor even public purpose: it was about the money.

    http://www.cyburbia.org/forums/showt...highlight=kelo
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  6. #6
    Cyburbian The One's avatar
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    WOW!

    Quote Originally posted by Gedunker View post
    I read in yankee magazine that kelo purchased the new london home for $60,000 a few years before the eminent domain proceedings began. She was offered $120,000 and rejected it. Ultimately, she settled for $420,000. The house was not (or will not be) demolished it will instead be relocated.

    Call me a cynical SOB, but it wasn't about the principal of eminent domain, nor public use, nor even public purpose: it was about the money.

    http://www.cyburbia.org/forums/showt...highlight=kelo
    That is a joke. I can't even consider her a victim with a straight face. NUFF SAID.
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  7. #7
    Cyburbian Planit's avatar
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    Quote Originally posted by Gedunker View post
    The government has never had the power to seize private property for commercial use without establishing a public purpose nexus. New London, in the opinion of five justices of the Supreme Court, did exactly that: they established a public purpose nexus.

    .
    True - and I get the point that the public pursoe nexus had to be satisfied (and essentialy was). Was she greedy, well maybe - but I don't know if that was her main driving force to sue. I don't know.

    My point in this post was more of the idea of companies taking the incentives and then leaving as they dry up (and we have seen this in many other cases) combined with the use of eminent domain for a project that wasn't happening. Maybe New London got the cart before the horse and needed a viable project with guaranteed development milestones before they went after the land. A juridiction's use of eminent domain has been hampered by this case and this recent action will hurt it further (in my humble opinion).
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  8. #8
    Cyburbian Plus Whose Yur Planner's avatar
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    IMHO, I thought the Kelo decision was stupid. It was all about the bucks by both parties. I've always been leery fo using eminent domain for economic development purposes. The property rights folks have been using the Kelo decision to challenge both legitimate eminent domain uses-i.e., schools, parks, roads, etc and planning and zoning. The blow back to the profession has been bad.

    As for Pfizer pulling up stakes, I've seen other corporations do the same in other places. Once the incentive deals dry up-tax abatement and the such-they try to renegotiate the deal to extend them or pull up stakes, leaving the jurisdiction with an empty building.
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  9. #9
    Cyburbian The One's avatar
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    Yeah.....

    Quote Originally posted by Whose Yur Planner View post
    IMHO, I thought the Kelo decision was stupid. It was all about the bucks by both parties. I've always been leery fo using eminent domain for economic development purposes. The property rights folks have been using the Kelo decision to challenge both legitimate eminent domain uses-i.e., schools, parks, roads, etc and planning and zoning. The blow back to the profession has been bad.

    As for Pfizer pulling up stakes, I've seen other corporations do the same in other places. Once the incentive deals dry up-tax abatement and the such-they try to renegotiate the deal to extend them or pull up stakes, leaving the jurisdiction with an empty building.
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  10. #10
    Cyburbian Plus
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    Further reading of opinions on it impact from the New York Times -

    A Turning Point for Eminent Domain ?
    http://roomfordebate.blogs.nytimes.c...minent-domain/
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  11. #11
    Cyburbian Cardinal's avatar
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    The question of which companies to pursue through economic development is one I am spending a good deal of time with right now. Most economic development programs focus on larger companies, seeking to lure a branch operation. On the surface it seems like a good thought. A little more than 18,000 companies have more than 500 employees, have an average of 62 locations, and employ more than half of all workers. But the Pfizer example points out a downside to this approach. One establishment with a large number of employees can have a significant impact on the local workforce and economy. In fact, what is least understood about our economy is the comparative rates of job creation and job destruction. And in recent years, large employers have been responsible for the lion's share of job losses in the country. Smaller firms may have much higher rates of exit (death, sales, acquisition) but they also have less impact on the local economy.

    New London pursued the costly game of high-profile economic development. It might have paid off for them under different circumstances. As it is they will have to contend with unemployment among less technical workers, and the likely departure of the talent pool that formed around Pfizer. To compound the problem, the City pinned its hopes of urban renewal on having the Pfizer research facility as an anchor. Now that the City has destroyed a neighborhood and spent millions in the process, the market for residential and commercial development has tanked and the reason for redevelopment has disappeared. I suspect they will have to contend with a vacant building and vacant land for many years to come.

    Just a side note: Although the Pfizer project was the impetus for the redevelopment, the finger-pointing for this debacle really belongs with the City and its leadership. That is not to say that Pfizer is not a poor corporate citizen for pulling out, but it was the City that pursued urban renewal and eminent domain.
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  12. #12
    Cyburbian WSU MUP Student's avatar
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    Kelo Revisited

    I saw this article on the WSJ online regarding the fate of the property taken in the Kelo v New London case and that the proposed development is now stalled and it sounds like there is little chance of it moving forward.

    The article leaves me wondering what the city or developers plan to do now that nothing is happening - and to make matters worse, Pfizer is leaving the city altogether! What are the odds of the property reverting back to the original residential owners? I would imagine that the majority of the homes have been demolished but maybe they would be willing to build new homes there?

    Pfizer and Kelo's Ghost Town

    The Supreme Court's 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo's land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.'s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.

    The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other "desirable" elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.

    That's especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan "comprehensive," while Justice John Paul Stevens insisted that "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." So much for that.

    Kelo's silver lining has been that it transformed eminent domain from an arcane government power into a major concern of voters who suddenly wonder if their own homes are at risk. According to the Institute for Justice, which represented Susette Kelo, 43 states have since passed laws that place limits and safeguards on eminent domain, giving property owners greater security in their homes. State courts have also held local development projects to a higher standard than what prevailed against the condemned neighborhood in New London.

    If there is a lesson from Connecticut's misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth.
    Moderator note:
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    Threads merged.
    Last edited by Gedunker; 16 Nov 2009 at 12:53 PM.
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