The Fifth Amendment and most state constitu-tions prohibit government from condemning pri-vate property except for a “public use.” Traditionally,that has forbidden most condemnations that trans-fer property from one private owner to another.

In recent years, however, many state courtshave read “public use” more broadly to allowgovernment to transfer property from one pri-vate owner to another simply because the latter isexpected to make a greater contribution to thelocal economy. The most notorious of these deci-sions was the 1981 Poletown decision, in whichthe Michigan Supreme Court allowed the City ofDetroit to uproot some 4,200 people in order tomake way for a General Motors plant.

But last summer the Michigan SupremeCourt overturned Poletown, just after theConnecticut Supreme Court had relied on that

precedent to uphold economic development tak-ings in the case of Kelo v. City of New London.Shortly thereafter, the U.S. Supreme Courtagreed to hear the appeal of the property owners.If the Court decides in favor of the homeowners,the resulting decision will constrain economicdevelopment condemnations nationwide.

Federal and state courts should ban econom-ic development takings. Such takings are usuallythe product of collusion between large and pow-erful interests and government officials againstcomparatively powerless local residents. Theygenerally produce far more costs than benefits,as the Poletown case dramatically demonstrates.Finally, the economic development rationale ren-ders nearly all property rights insecure because itcan justify virtually any taking that benefits a pri-vate business interest.

Robin Hood in ReverseThe Case against Economic Development Takings

by Ilya Somin

_____________________________________________________________________________________________________

Ilya Somin is assistant professor of law at the George Mason University School of Law. He was the author of an ami-cus brief for the Institute for Justice and the Mackinac Center for Public Policy in County of Wayne v. Hathcockand is the author of an amicus brief for Jane Jacobs in Kelo v. City of New London.

Executive Summary

No. 535 February 22, 2005 Routing

Introduction

Recent court decisions have rekindled thelongstanding debate over whether governmentcan condemn private property and transfer itto new private owners for the sole purpose ofpromoting “economic development.” Both theFifth Amendment to the federal Constitutionand nearly all state constitutions contain a“public use clause.”1 By implication, suchclauses prohibit government from taking pri-vate property, even when compensation is paidto the owner, except for a “public use.” But forsome time the U.S. Supreme Court and manystate courts have allowed that restriction onthe condemnation power to atrophy. In 1984,in the leading case of Hawaii Housing Authority v.Midkiff, the Supreme Court held that condem-nations and private-to-private transfers areacceptable under the public use provision ofthe takings clause as long as they are “rational-ly related to a conceivable public purpose.”2 Asa result of Midkiff and similar decisions in manystate courts, local governments have been ableto undertake so-called “economic develop-ment takings”—transfers from one owner toanother, justified simply on the ground thatthe new owner is expected to make a greatercontribution to the local economy. The eco-nomic development rationale has allowed theuse of eminent domain in a much wider rangeof cases than the traditional view, which heldthat condemnation is permitted only for a“public use”—only if it leads to public worksprojects such as roads or bridges or, at the veryleast, paves the way for public utilities, such aspower lines used by all.

Thus, a recent treatise written by two well-known scholars concludes that “nearly allcourts have settled on a broader understand-ing [of public use] that requires only that thetaking yield some public benefit or advan-tage.”3 That statement was not entirely accu-rate even at the time it was written, as somestate supreme courts continue to follow amore restrictive approach to “public use.”4

Yet for a time it did reflect the dominantview.

More recently, however, the public use

issue has been reopened. In particular, lessthan a year ago, in County of Wayne v.Hathcock,5 the Michigan Supreme Court over-ruled Poletown Neighborhood Council v. City ofDetroit,6 the most notorious of the decisionsjustifying economic development takings.Shortly thereafter, the U.S. Supreme Courtdecided to review the Connecticut SupremeCourt’s decision in Kelo v. City of New London,7

a case upholding the constitutionality of eco-nomic development takings under the federalConstitution’s takings clause. Unlike Hathcock,decided under Michigan’s state constitution,Kelo raises the prospect that economic devel-opment takings might be banned or restrict-ed nationwide.

For more than 20 years, Poletown stood asboth the most infamous symbol of eminentdomain abuse and a precedent justifyingnearly unlimited power to condemn privateproperty.8 As one scholar of the subject put it,“To many observers of differing political view-points, the Poletown case was a poster child forexcessive condemnation.”9 Poletown held thatcondemnations transferring property fromone private party to another satisfied the“public use” requirement even if the onlyclaimed public benefit was that of “bolster-[ing] the economy.”10 While it was not thefirst decision upholding so-called “economicdevelopment” takings,11 Poletown was by farthe most widely publicized and notorious. Itsnotoriety stemmed from the massive scaleand seeming callousness of Detroit’s use ofeminent domain: destroying an entire neigh-borhood and condemning the homes of4,200 people, as well as numerous businesses,churches, and schools, so the land could betransferred to General Motors for the con-struction of a new factory.12 Aside from themoral and humanitarian concerns at issue,Poletown raised the fear that if “economicdevelopment” could justify such massive dis-location, it could be used to rationalizealmost any condemnation that benefited aprivate business in a way that might “bolsterthe economy.”13

Thus, the Michigan court’s recent deci-sion to overturn Poletown was an important

2

The Poletowncourt justified

destroying an entire

neighborhoodand condemning

the homes of4,200 people, as

well as numerousbusinesses,

churches, andschools, so theland could be

transferred to General

Motors for theconstruction of a

new factory.

milestone in the history of eminent domainlaw. Moreover, Hathcock and Kelo are closelyconnected. Decided by the ConnecticutSupreme Court just a few months before theHathcock opinion was issued, Kelo relied heav-ily on Poletown in justifying its conclusionthat economic development is a valid “publicuse.” The majority opinion in Kelo describedPoletown as a “landmark case . . . [that]illustrates amply how the use of eminentdomain for a development project that bene-fits a private entity nevertheless can rise tothe level of a constitutionally valid publicbenefit.”14

In addition to those two highly publicizedcases, several lower federal courts and thesupreme courts of Illinois and SouthCarolina have recently invalidated or severelyrestricted the economic development ration-ale for takings.15 Eight state supreme courtsnow categorically forbid economic develop-ment takings,16 and several others, at the veryleast, seek to restrict them.17 But the battle isfar from over, even if the judicial tide is nowstarting to run against economic develop-ment takings.

This study argues that courts should baneconomic development takings. A categoricalban is the best solution to the problems cre-ated by Poletown and other such decisions.Several of Poletown’s most serious flaws per-sist in takings decisions in other states—flawsfound in Kelo itself. At the same time, it isessential to recognize that a ban of the kindthe Hathcock court fashioned is not a panaceafor all abuses of the power of eminentdomain on behalf of private interests.

The first part of this study uses thePoletown decision as an exemplar of the flawsof economic development takings generally.Such condemnations allow politically power-ful interest groups to “capture” the condem-nation process for the purpose of enrichingthemselves at the expense of the poor andpolitically weak. While economic develop-ment takings are not the only condemna-tions subject to this kind of abuse, they areespecially vulnerable to it because “economicdevelopment” can justify almost any con-

demnation that transfers property to a com-mercial enterprise.

Several other aspects of economic devel-opment takings also exacerbate the danger ofabuse, including the failure to require thenew owners of condemned property to actu-ally provide the economic benefits that sup-posedly justify condemnation in the firstplace, and the refusal of courts to considerthe social and economic costs of condemna-tion as well as the claimed benefits.

The Poletown majority was not completelyoblivious to such dangers, and it sought tomitigate them by requiring “heightenedscrutiny” in cases in which “the condemna-tion power is exercised in a way that benefitsspecific and identifiable private interests.”18

Unfortunately, the Poletown case itself and 23years of experience since then show that theheightened scrutiny test is not an adequatebulwark against the dangers of economicdevelopment takings, and may in some casesactually exacerbate those risks.

The second part of this study shows thateven a categorical ban on economic develop-ment takings is not a comprehensive solu-tion to the underlying problem of eminentdomain abuse. Although Hathcock held that“a generalized economic benefit” is not byitself enough to justify condemnation,19 itdoes not forbid all condemnations thattransfer private property to other private par-ties. The same is true of similar decisions inother states.

The Hathcock court outlined three cate-gories of takings in which private-to-privatetransfers are still permissible: “public necessityof the extreme sort”; cases in which the con-demned property remains subject to “publicoversight” after transfer to a private entity; andsituations in which the condemned property“is selected because of ‘facts of independentpublic significance’” rather than because ofthe new owner’s uses.20 Unfortunately, bothlogic and experience in other states show thatthese exceptions, particularly the second andthird, may be vulnerable to some of the samekinds of interest group exploitation as eco-nomic development takings. If not properly

3

Even a categoricalban on economicdevelopment takings is not acomprehensivesolution to theunderlying problem of eminent domainabuse.

policed, they could even result in what wouldamount to a back-door revival of the econom-ic development rationale under a new name.

Dangers of the EconomicDevelopment Rationale for

CondemnationA categorical ban on economic develop-

ment takings is the best way to control abuseof the eminent domain power for the benefitof private interests. A variety of circumstancesrender these types of condemnations unusual-ly vulnerable to interest group exploitation.

The Economic Development RationaleCan Justify Almost Any Taking ThatBenefits a Commercial Enterprise

One of the main driving forces behindHathcock is the court’s recognition that allow-ing “economic development” to justify con-demnation of private property is almost ablank check for the abuse of governmentpower on behalf of powerful private interests.As the court explained:

[The] “economic benefit” rationalewould validate practically any exerciseof the power of eminent domain onbehalf of a private entity. After all, ifone’s ownership of private property isforever subject to the government’sdetermination that another privateparty would put one’s land to betteruse, then the ownership of real proper-ty is perpetually threatened by theexpansion plans of any large discountretailer, “megastore,” or the like.21

That claim is not new. Indeed, it was advancedby the dissenters in Poletown. Justice Fitzgeraldwarned that “the decision that the prospect ofincreased employment, tax revenue, and gen-eral economic stimulation makes a taking ofprivate property for transfer to another privateparty sufficiently ‘public’ to authorize the useof the power of eminent domain means thatthere is virtually no limit to the use of con-

demnation to aid private businesses.”22 Theeconomic benefit criterion, he continued, pro-vides virtually a blank check for takingsbecause “[a]ny business enterprise producesbenefits to society at large.”23

Courts in at least two of the other statesthat forbid economic development takingshave reached the same conclusion. Like theMichigan Supreme Court in Hathcock, thesupreme court of Illinois recently refused toallow a “contribu[tion] to economic growthin the region” to justify a taking because sucha standard could justify virtually any con-demnation that benefited private industrysince “every lawful business” contributes toeconomic growth to some degree.24 Thesupreme court of Kentucky, which bannedthe economic development rationale in1979,25 did so largely on grounds that,“[w]hen the door is once opened to it, there isno limit that can be drawn.”26 The Kentuckycourt noted that “[e]very legitimate business,to a greater or lesser extent, indirectly bene-fits the public by benefiting the people whoconstitute the state”; thus, the economicdevelopment rationale can be used to justifyvirtually any condemnation that transfersproperty to private businesses.27

Those decisions slightly overstate the case,but their basic logic is sound. Economic devel-opment can rationalize virtually any takingthat benefits a private business because anysuch entity can claim that its success might“bolster the economy.”28 It is possible to try tolimit the scope of the development rationaleby requiring that the economic benefit gainedexceeds some preset minimum size. This,indeed, is what the Poletown court tried to dowhen it held that the benefit must be “clearand significant.”29 Yet this amounts to simplysaying that any taking benefiting a sufficient-ly large business enterprise can qualify.Moreover, this rationale actually creates per-verse incentives to increase the amount ofproperty condemned for any given project.Although the economic development ration-ale may not be limitless in the way thatHathcock’s more expansive rhetoric implies,neither can it be easily constrained.

4

Economic development can

rationalize virtually any

taking that benefits a privatebusiness because

any such entitycan claim that its

success might“bolster the

economy.”

Dangers of the Failure to Impose BindingObligations on New Owners ofCondemned Property

The danger of abuse created by the eco-nomic development rationale has been greatlyexacerbated by courts’ failure to require newowners of condemned property to actuallyprovide the economic benefits that justifiedcondemnation in the first place. The lack ofsuch a binding obligation creates incentivesboth for businesses to look to acquire proper-ty “on the cheap” through eminent domainand for public officials to rely on exaggeratedclaims of economic benefit that neither offi-cials nor businesses have any obligation to liveup to. In some cases, this could even lead tothe use of “bait and switch” tactics underwhich the new owners need not use the con-demned property for the originally intendedpurpose at all. Such incentives greatly increasethe likelihood that economic developmenttakings will lead to abuse. As the SeventhCircuit recently held, “[t]he public use require-ment would be rendered meaningless if itencompassed speculative future public bene-fits that could accrue only if [the new]landowner chooses to use his property in abeneficial, but not mandated, manner.”30

Courts in a number of jurisdictions haveheld that property cannot be condemnedwithout advance assurances that it will beemployed only for specified public uses.31

Unfortunately, Poletown and other decisionspermitting economic development takingsdepart from this sensible principle.

Poletown’s Failure to Impose Binding LegalObligations on the New Owners of CondemnedProperty. The Poletown court upheld the mas-sive condemnations in Detroit primarily, ifnot solely, because of the “clear and signifi-cant” economic benefits that the GM factorywas expected to provide for the city.32 Indeed,the majority suggested that if the expectedbenefits were not so great, “we would hesitateto sanction approval of the project.”33 Thisfact renders all the more dubious the court’sfailure to require either the city or GM toensure that the expected benefits would actu-ally materialize.

Yet, as Justice Ryan emphasized in his dis-senting opinion, the court failed to imposeeven minimal requirements of this kind.34

City of Detroit v. Vavro,35 a 1989 MichiganCourt of Appeals decision interpretingPoletown, confirmed Ryan’s view, holdingthat “a careful reading of the Poletown deci-sion reveals that . . . a binding commit-ment [to provide the economic benefits usedto justify condemnation] is unnecessary inorder to allow the city to make use of emi-nent domain.”36 Indeed, the Vavro court wenton to conclude that Poletown did not evenrequire the new owner to proceed with theproject that was initially used to justify thecondemnation, much less proceed with it ina way that provided some predeterminedlevel of economic benefit to the public.37

Although the Vavro court expressed its dis-taste for those conclusions and even took theunusual step of urging that Poletown be over-ruled,38 it nonetheless felt compelled to holdthat Poletown imposes no obligation to actu-ally provide the “clear and significant” eco-nomic benefits on which the power to con-demn supposedly hinges.39

Inflated claims of economic benefit inPoletown. The Poletown condemnations dra-matically illustrate the danger of taking inflat-ed estimates of economic benefit at face value.The City of Detroit and GM claimed that theconstruction of a new plant on the expropriat-ed property would create some 6,150 jobs.40

The estimate of “at least 6,000 jobs” was for-mally endorsed by both Detroit Mayor Cole-man Young and GM Chairman ThomasMurphy.41 Yet neither the city nor GM had anylegal obligation to actually provide the 6,000jobs or the other economic benefits they hadpromised.

The danger inherent in this arrangementwas apparent even at the time. As JusticeRyan warned in dissent, “there are no guar-antees from General Motors about employ-ment levels at the new assembly plant . . .[O]nce [the condemned property] is sold toGeneral Motors, there will be no public con-trol whatsoever over the management, opera-tion, or conduct of the plant to be built

5

The Poletown con-demnations dra-matically illus-trate the danger of takinginflated estimatesof economic benefit at facevalue.

there.”42 Ryan pointed out that “GeneralMotors will be accountable not to the public,but to its stockholders”; it would thereforemake decisions as to the use of the propertybased solely on stockholder interests, not thecity’s economic interests, which the condem-nation was intended to further.43 “[O]nething is certain,” Ryan emphasized, “[t]helevel of employment at the new GM plantwill be determined by private corporate man-agers primarily with reference, not to the rateof regional unemployment, but to profit.”44

Justice Ryan’s warning was prescient. TheGM plant opened two years late; and, as of1988—seven years after the Poletown condem-nations—it employed “no more than 2,500workers.”45 Even in 1998, at the height of the1990s economic boom, the plant “stillemployed only 3,600” workers, less than 60percent of the promised 6,150.46

Inability to Impose Binding Obligations as aSystematic Weakness of the Economic Develop-ment Rationale for Condemnation. Poletown’sfailure to impose any binding obligations onthe new owners of property condemnedunder an economic development rationalewas not idiosyncratic. The same problem isevident in other states that permit economicdevelopment takings. The Kelo case currentlybefore the U.S. Supreme Court is remarkablysimilar to Poletown in this respect. As the dis-senting opinion in Kelo points out, “[t]hereare no assurances of a public use in the devel-opment plan [under which the owners’ prop-erty was condemned]; there was no signeddevelopment agreement at the time of thetakings; and all of the evidence suggests thatthe economic climate will not support theproject so that the public benefits can be real-ized.”47

Other states that allow economic develop-ment condemnations also fail to requireeither the government or the new owners toactually provide the alleged public benefits.48

Thus, Poletown’s failure is a systematic short-coming of the economic development ration-ale generally. It is not an idiosyncratic prob-lem limited to Michigan or to the justices inthe Poletown majority.

Why would such a systematic failure arise?It is difficult to know for certain, especiallysince neither the Poletown court nor courts inother states upholding the economic develop-ment rationale have ever explained their rea-sons for failing to impose binding obligationson either condemning authorities or the newowners of condemned property.

Nevertheless, it is possible to advance twotentative explanations. First, requiring a bind-ing commitment to the creation of specificeconomic benefits for the community mightseverely constrain the discretion of the newowners, thereby possibly leading to inefficientbusiness practices. For example, if GM hadbeen required to ensure that at least 6,000workers were employed at the Poletown plant,it might have been forced to forgo efficientlabor-saving technology. Courts may well bereluctant to intrude so severely on the newowners’ business judgment. While this is aserious problem with requiring binding com-mitments, it also provides a strong argumentagainst permitting economic developmenttakings in the first place. If there is no way toensure that the promised economic benefitsof condemnation are actually provided with-out creating major inefficiencies, this circum-stance supports the Hathcock court’s conclu-sion that economic development projects arebest left to the private sector.49

A second possible explanation is thatsome judges may have an unjustified faith inthe efficacy of the political process and thusmay be willing to allow the executive and leg-islative branches of government to controloversight of development projects. For exam-ple, the Poletown majority emphasized thatcourts should defer to legislative judgmentsof “public purpose.”50 Whatever the generalmerits of such confidence in the politicalprocess, it is seriously misplaced in situationsin which politically powerful interest groupscan employ the powers of government at theexpense of the relatively weak.51

Lack of Binding Obligations Increases theDanger of Abuse. In the absence of any bind-ing obligations to deliver on the promisedeconomic benefits, nothing prevents munici-

6

Such confidencein the political

process is serious-ly misplaced in

situations inwhich politically

powerful interestgroups canemploy the

powers of government at

the expense of the relatively weak.

palities and private interests from usinginflated estimates of economic benefits tojustify condemnations and then failing tomonitor or provide any such benefits oncecourts approve the takings and the proper-ties are transferred to their new owners.

Localities and businesses can circumventthe public use requirement simply by overes-timating the likely economic benefits of acondemnation. Municipalities may overesti-mate intentionally, or they may simply take aprivate business’s self-serving estimates atface value. Little prevents municipalities andprivate interests from abusing the system.Nothing in the Poletown heightened scrutinytest can ensure that miscalculations are avoid-ed in future cases. Both business interests andpolitical leaders dependent on their supporthave tremendous incentives to overestimatethe economic benefits of projects furtheredby condemnation. Courts are in a poor posi-tion to second-guess seemingly plausiblefinancial and employment estimates provid-ed by officials. Yet even if governments andbusinesses do not engage in deliberate decep-tion, there is a natural tendency to overesti-mate the public benefits and the likelihood ofsuccess of projects that advance one’s ownprivate interests.52 Whether corporate andgovernment leaders deliberately lie or honest-ly believe that “what is good for GeneralMotors is good for America,” the outcome islikely to be the same. This is a particularlyserious problem when large-scale condemna-tions benefiting major corporations are atissue, since such firms can easily generatemassive quantities of sometimes dubious“evidence” supporting their position.

Ignoring the Costs of CondemnationWhat is especially striking about the

Poletown decision is the majority’s failure toeven mention the costs imposed by condem-nation on the people of Poletown or the cityof Detroit as a whole. That omission not onlyfacilitated a human tragedy but underminedthe court’s ability to ensure that the takingsserved a public use in any meaningful sense.Even if we assume that economic develop-

ment is a legitimate public use justifying con-demnation, that rationale cannot and shouldnot justify condemnation in cases in whichthe resulting project imposes economic coststhat greatly exceed its benefits.

The Economic Costs of Poletown. ThePoletown case dramatically illustrates how thepromised economic benefits of condemna-tions often fail to materialize and are out-weighed by the massive costs. Not only did thenew GM plant create far fewer jobs thanpromised, but the limited economic benefitsthe plant did create were likely overwhelmed bythe economic harm the project caused the city.

The “public cost of preparing a site agree-able to . . . General Motors [was] over $200million,”53 yet GM paid the city only $8 mil-lion to acquire the property.54 In addition, wemust add to the costs borne by the city’s tax-payers the economic damage inflicted by thedestruction of some 600 businesses and 1,400residential properties.55 Although we have noreliable statistics on the number of peopleemployed by the businesses destroyed as aresult of the Poletown condemnation,56 it isquite possible that more workers lost thangained jobs as a result of the decision. If weassume, conservatively, that the 600 eliminat-ed businesses employed an average of slightlymore than four workers, the total lost workforce turns out to be equal to or greater thanthe 2,500 jobs created at the GM plant by1988.57 And this calculation does not considerthe jobs and other economic benefits lost as aresult of the destruction of numerous non-profit institutions such as churches, schools,and hospitals. Overall, even if we consider thePoletown condemnation’s impact in narrowlyeconomic terms, it is likely that it did the peo-ple of Detroit more harm than good.

The failure of the Poletown takings to pro-duce any clear net economic benefit for thecity has significance beyond the case itself. InPoletown, the magnitude of the economiccrisis facing Detroit and the detailed publicscrutiny given to the city’s condemnationdecision led the court to conclude that theeconomic benefit of the taking was particu-larly “clear and significant.”58 The court even

7

Even if we consider thePoletowncondemnation’simpact in narrowly economic terms,it is likely that itdid the people ofDetroit moreharm than good.

went so far as to say, “[i]f the public benefitwas not so clear and significant, we wouldhesitate to sanction approval of such a proj-ect.”59 If the claimed “public benefit” of evenso “clear” a case as Poletown ultimately turnedout to be a mirage, it seems unlikely thatcourts will do any better in weighing claimsof economic benefit in more typical cases inwhich the evidence is less extensive and lessclosely scrutinized.

Ignoring Costs in Other States. Those statesthat continue to permit economic develop-ment takings even after Poletown’s demisealso give little or no consideration to theharm they cause. In Kelo, the ConnecticutSupreme Court admitted that the plaintiffproperty owners in the case would suffer seri-ous harm if forced out of their homes andbusinesses.60 In addition, some $80 millionin taxpayer money had been allocated to thedevelopment project, without any realisticprospect of a return that rises above a tinyfraction of that amount.61 Yet the courtrefused to consider the significance of thosemassive costs, claiming “the balancing of thebenefits and social costs of a particular proj-ect is uniquely a legislative function.”62

Contrary to the Connecticut court, the polit-ical process often cannot be depended on togive due consideration to the “social costs” ofeconomic development takings; such con-demnations generally benefit the politicallypowerful, while the costs fall on the poor andpolitically disadvantaged. Yet the approachadopted in Poletown and Kelo is similar to thatfollowed in other states that permit econom-ic development condemnations.63

Nonmonetary Costs of Economic Develop-ment Takings. In addition to the economiccosts to communities and homeowners, eco-nomic development takings also inflict majornonpecuniary costs on their victims bydestroying communities and forcing residentsto relocate to less desired locations. As JaneJacobs explained in her classic 1961 study:

[P]eople who get marked with theplanners’ hex signs are pushed about,expropriated, and uprooted much as if

they were the subjects of a conqueringpower. Thousands upon thousands ofsmall businesses are destroyed . . . .Whole communities are torn apart andsown to the winds, with a reaping ofcynicism, resentment and despair thatmust be seen to be believed.64

Although “fair market value” may compen-sate homeowners and businesses for part ofthe financial losses they incur, it does not com-pensate them for the destruction of commu-nity ties, disruption of plans, and psychologi-cal harm they suffer.65 In recent years, scholarsfrom a wide range of ideological perspectiveshave reinforced Jacobs’s early conclusion thatdevelopment condemnations inflict enor-mous social costs that go beyond their “eco-nomic” impact, narrowly defined.66 The exis-tence of such large uncompensated costsstrengthens the case for stringent scrutiny ofeconomic development takings.

Economic Development Takings andInterest Group “Capture” and Rent-Seeking

Obviously, economic development takingsare not the only exercises of the eminentdomain power that are vulnerable to captureby interest groups seeking to use the powers ofgovernment for their own benefit (“rent-seek-ing” as it is known in the literature). Indeed,interest group capture of government agenciesand rent-seeking are serious dangers for a widerange of government activities.67 However,there are three major reasons why economicdevelopment takings are especially vulnerableto this threat: the nearly limitless applicabili-ty of the economic development rationale;severe limits on electoral accountabilitycaused by low transparency; and time horizonproblems.

Nearly Limitless Scope. As we have seen,the economic development rationale for tak-ings can potentially justify almost any con-demnation that benefits a commercial enter-prise. Obviously, such a protean rationale forcondemnation exacerbates the danger ofinterest group capture by greatly increasing

8

Although “fair market value”

may compensatehomeowners and

businesses forpart of the

financial lossesthey incur, it does

not compensatethem for the

destruction ofcommunity ties,

disruption ofplans, and

psychologicalharm they suffer.

the range of interest groups that can poten-tially use it. By the same token, it also increas-es the range of projects that those interestgroups can hope to build on condemnedland that is transferred to them. Both factorstend to increase the attractiveness of eminentdomain condemnations as a means of mak-ing political payoffs to powerful interestgroups.

Severely Constrained Electoral Accountabil-ity. Interest group manipulation of economicdevelopment takings could be curtailed ifpublic officials responsible for condemna-tions faced credible threats of punishment atthe polls after they approved condemnationsthat reward rent-seeking. Unfortunately, suchpunishment is highly unlikely for two impor-tant reasons. First, the calculation of the costsand benefits of most development projects isextremely complex, and it is difficult for ordi-nary voters to understand whether a particu-lar project is cost-effective or not. Studies haverepeatedly shown that most voters have verylittle knowledge of politics and public policy.68

Most are often ignorant even of basic factsabout the political system. Ignorance is likelyto be an even more serious problem in a com-plex and nontransparent field such as the eval-uation of projects promoted by economicdevelopment takings.

While the same danger may exist withsome traditional takings, these usually atleast produce readily observable benefitssuch as roads and bridges—public goods thatcan be seen and used by the average voter. Bycontrast, the alleged public benefit of eco-nomic development takings is a generalizedcontribution to the local economy that theaverage citizen often will not notice, muchless measure. Second, even if voters weremuch better informed, democratic account-ability for economic development takingsmay often be inadequate. Unlike with mostconventional takings, the success or failure ofa project made possible by economic devel-opment condemnations is usually apparentonly years after the condemnation takesplace. In the Poletown case, the GM factorydid not even open until 1985, four years after

the 1981 condemnations and two yearsbehind schedule.69 And not until the late1980s did it become clear that the plantwould produce far fewer than the expected6,000 jobs.70

By that time, of course, public attentionhad moved on to other issues, and in anyevent many of the politicians who hadapproved the 1981 condemnations were nolonger in office. Given such limited timehorizons, a rational, self-interested Detroitpolitical leader might well have been willingto support the Poletown condemnations evenif he anticipated that the expected benefitswould eventually fail to materialize. By thetime that became evident to the public, hemight well be out of office in any event. Inthe meantime, he could benefit from animmediate increase in political support fromprivate interests benefiting from the taking.

Why “Heightened Scrutiny” Was NotEnough

Unlike economic development takingsdecisions in some other states,71 the Poletownopinion was careful to avoid giving a blankcheck for all condemnations that might be saidto promote development, emphasizing that“[o]ur determination that this project fallswithin the public purpose . . . does notmean that every condemnation proposed byan economic development corporation willmeet with similar acceptance simply because itmay provide some jobs or add to the industrialbase.”72 Instead, the court held that “[w]here, ashere, the condemnation power is exercised in away that benefits specific and identifiable pri-vate interests, a court inspects with heightenedscrutiny the claim that the public interest is thepredominant interest being advanced.”73

Unfortunately, this “heightened scrutiny” testfailed to provide adequate protection againsteminent domain abuse, and in one crucialrespect actually made the situation worse.

The purpose of the heightened scrutiny testis to ensure that there is a “clear and signifi-cant” public benefit resulting from a condem-nation. Unfortunately, this created a perverseincentive to increase the amount of property

9

Unlike with mostconventional takings, the success or failureof a project madepossible by economic development condemnations isusually apparentonly years after the condemnationtakes place.

condemned rather than reduce it. Since thepublic “benefit” involved is the “bolstering ofthe economy,” the larger the commercial pro-ject served by a condemnation—and the moreproperty owners expropriated as a result—thegreater the chance that courts will find that theresulting economic growth is “clear and signif-icant” enough to pass the test.74

In fact, Michigan cases applying the height-ened scrutiny test displayed precisely this kindof bias in favor of grandiose projects benefitinglarge corporate enterprises dispossessing largenumbers of property owners. To be sure, courtsapplying the heightened scrutiny test havesometimes invalidated condemnations of smallamounts of property intended to benefit indi-viduals and small- to medium-size businesses.75

But in the main, Michigan courts applyingPoletown felt themselves compelled to upholdcondemnations of large amounts of propertyfor the benefit of major commercial enterprises.Thus, in 1989 the Michigan Court of Appealsreluctantly held that Poletown required it touphold the condemnation of 380 acres of pri-vate property in order to “transfer the propertyto [the] Chrysler Corporation for the construc-tion of a new automobile assembly plant.”76

Ironically, the court of appeals believed thatboth the Chrysler condemnation and Poletownitself constituted “abuse[s] of the power of emi-nent domain.”77 Nonetheless, it was forced tofollow Poletown and endorse the validity of thecondemnation of large amounts of property forthe benefit of Chrysler.78 A 1995 court ofappeals decision reaffirmed this holding.79 And,of course, in Poletown itself, the construction ofa large GM plant was held sufficient to justifythe displacement of 4,200 people and 600 busi-nesses.80

The Poletown heightened scrutiny test pro-tects property owners least precisely when theyneed it most: in cases in which substantialnumbers of people are displaced for the bene-fit of large, politically powerful interestgroups. Indeed, interest groups seeking toensure approval of condemnations underPoletown were well advised to plan large con-struction projects utilizing as much propertyas possible.

The failure of the heightened scrutiny testto curtail the danger to private property creat-ed by the Poletown decision is evidenced by theprevalence of private-to-private condemna-tions in Michigan. According to a recentInstitute for Justice study, from 1998 to 2002alone, at least 138 condemnation proceedingshad been filed in Michigan for the purpose oftransferring property to private parties; 173more were threatened.81 Michigan’s record inthis respect compares poorly with that ofother states. In the five-year period from 1998to 2002, only two other states had morereported condemnation filings for the pur-pose of transferring property to private inter-ests.82 The City of Detroit—the jurisdictioninvolved in both Poletown and Hathcock83—achieved the dubious distinction of filingmore condemnations for private ownershipthan any other city in the nation in the sametime period.84 Detroit condemnations includ-ed takings for casinos and sports teams, andone in which a developer with ties to themayor was able to obtain a condemnationthat resulted in the destruction of an entireAfrican-American neighborhood.85

The Institute for Justice figures may beoverly conservative. Because they were com-piled from news reports and court filings,they likely underestimate the prevalence ofcondemnations for the benefit of private par-ties.86 Many cases are unpublished, and manyother condemnations go unreported in thepress.87 Thus, we cannot know the true preva-lence of private-to-private condemnations inMichigan, nor can we be completely certainthat Michigan really is one of the worst statesin this regard. We can be reasonably confi-dent, however, that Michigan’s heightenedscrutiny requirement failed to reduce suchcondemnations to levels significantly belowthose observed elsewhere, including in statesthat lack heightened scrutiny.88

Condemnation Is Usually Not Necessaryto Solve Holdout Problems

The case for a categorical ban on econom-ic development condemnations is furtherstrengthened by the fact that they are usually

10

According to arecent Institute

for Justice study,from 1998 to 2002alone, at least 138

condemnationproceedings had

been filed inMichigan for the

purpose of transferring property to

private parties;173 more were

threatened.

not necessary to achieve their ostensibleobjectives. Large-scale development projectscan and do succeed without recourse to thecoercive power of eminent domain.

The most common argument for eco-nomic development takings is that they arenecessary to facilitate economic developmentin situations in which large-scale projectsrequire assembling a large number of lotsowned by numerous individuals. If the coer-cive mechanisms of eminent domain cannotbe employed, the argument goes, a smallnumber of “holdout” owners could eitherblock an important development project orextract an extremely high price for acquies-cence.89

But as is suggested by the existence ofnumerous large development projects thatdid not rely on eminent domain, privatedevelopers have a variety of tools for dealingwith holdout problems without recourse togovernment coercion. In many cases, devel-opers can negotiate with individual ownersin secret or use specialized “straw man”agents to assemble the properties they needwithout alerting potential holdouts to thepossibility of making a windfall profit byholding the project hostage.90

A second mechanism by which developerscan prevent holdout problems withoutrecourse to eminent domain is by means of“precommitment” strategies or “most favorednation” contract clauses. The developers cansign contracts with all the owners in an areawhere they hope to build, under which theycommit themselves to paying the same priceto all. By this means, the developer successful-ly “ties his hands” in a way that precludes himfrom paying inordinately high prices to thelast few holdouts, because he would be legallyrequired to pay the same high price to all theprevious sellers.91

Finally, it is essential to realize that even ifthere is a small subset of desirable economicdevelopment projects that can be undertakenonly with the assistance of eminent domain,there is no way of confining the use of eco-nomic development condemnations to thoserare circumstances. Once the economic

development rationale is allowed to justifytakings, it can be and has been used by pow-erful interest groups to facilitate projectsthat either fail to provide economic benefitsthat justify their costs or could have beenundertaken without resorting to coercion orboth. The political power of the beneficiariesof condemnations is likely to be a far morepotent determinant of the decision to con-demn than any objective economic analysisof holdout problems.

Exceptions That Swallow the Rule? Assessing Possible

Exceptions to a Ban on Private-to-Private Condemnations

Hathcock and other decisions strikingdown the economic development rationalefall well short of a complete ban on private-to-private condemnations. In fact, Hathcocklaid out three scenarios in which such tak-ings will still be upheld:

1. Where “public necessity of the extremesort” requires collective action;

2. Where the property remains subject topublic oversight after transfer to a pri-vate entity; and

3. Where the property is selected becauseof facts of independent public signifi-cance rather than the interests of theprivate entity to which the property iseventually transferred.92

Those three categories deserve closescrutiny because, unless tightly constrained,they could let in by the back door the samekinds of abuses that the Hathcock courtsought to prevent by closing the front door.Moreover, at least two of the three exceptionsare not unique to Michigan but have coun-terparts in other states that forbid economicdevelopment takings. The Hathcock courtitself did not originate the three but con-sciously borrowed them from Justice Ryan’s

11

The politicalpower of the beneficiaries ofcondemnations islikely to be a farmore potentdeterminant ofthe decision tocondemn thanany objective economic analysis of holdout problems.

famous Poletown dissent.93 But unlike Ryanin 1981, judges in Michigan and elsewherenow face the task of ensuring that his threeexceptions stop short of swallowing the rule.

“Public Necessity of the Extreme Sort” The public necessity exception seems to be

the least problematic of the three, as theHathcock court was careful to confine it with-in narrow bounds. Quoting Justice Ryan’s1981 language, the court emphasized thatthis exception is limited to “‘enterprises gen-erating public benefits whose very existencedepends on the use of land that can beassembled only by the coordination centralgovernment alone is capable of achieving.’”94

As an illustrative example, the court cited theclassic case of a railroad that “must lay trackso that it forms a more or less straight pathfrom point A to point B” and is thereby vul-nerable to “holdout” problems such that “[i]fa property owner between points A and Bholds out[—]for example by refusing to sellhis land for any amount less than fifty timesits appraised value—the construction of therailroad is halted unless . . . the railroadaccedes to the property owner’s demands.”95

Even the strongest advocates of judicialenforcement of limits on public use concedethat the exercise of eminent domain is defen-sible in cases involving clear collective actionproblems of this type.96

The court was careful to indicate that thisrationale cannot be expanded to justify theuse of eminent domain for the purpose ofpromoting ordinary commercial develop-ment projects, such as the “business andtechnology park” at issue in Hathcock.97 “Tothe contrary, the landscape of our country isflecked with shopping centers, office parks,clusters of hotels, and centers of entertain-ment and commerce. We do not believe . . .that these constellations required the exerciseof eminent domain or any other form of col-lective public action for their formation.”98

Nevertheless, there is an important ambi-guity in the court’s holding here. Is the rele-vant question whether the project at issuefalls into a category that owes its “very exis-

tence” to “collective action,” or is it enoughfor the government to prove that the individ-ual project is impossible without the use ofeminent domain?99 Most likely, the govern-ment’s burden of proof would be consider-ably easier if only the latter had to be estab-lished, since it is always possible to argue thata given project could be implemented onlythrough use of eminent domain, especially ifthe relevant evidence is relatively complex.Indeed, often the only way to know for sure ifa project requires the use of eminent domainis to forbid its use and then see if the devel-opers go forward anyway, utilizing noncoer-cive means to acquire the property.

However, the court appears to adopt themore restrictive categorical view. At least, thisseems to be the best interpretation of its cate-gorical dismissal of the possibility that “shop-ping centers, office parks, clusters of hotels,and centers of entertainment and commerce”may require “collective public action for theirformation.”100 The underlying argument issound: although it is possible to imagine thata given shopping center or office park mightrequire the use of eminent domain, such insti-tutions are not as dependent on the need toacquire unique sites as roads or railways; thus,assuming a competitive market in land, theyare relatively unlikely to be undersupplied as aresult of collective action and holdout prob-lems.

Public Oversight and ControlHathcock’s second exception is much more

problematic and potentially more dangerousthan the first. Intuitively, the court’s conclu-sion that private-to-private takings are permis-sible “where the property remains subject topublic oversight” seems appealing.101 At leastin theory, such “oversight” could reduce thelikelihood that the power of eminent domainis being used to facilitate rent-seeking behav-ior by private interest groups. Several otherstates that ban economic development tak-ings follow a similar logic, concluding thatpublic oversight or “control” might justify anotherwise impermissible taking.102

But how much “oversight” is required? For

12

Governmentagencies

exercising thecondemnation

power are often“captured” by

powerful privateinterest groups

who use thosepowers for their

own benefitrather than that

of the generalpublic.

example, would the Poletown condemnationhave been permissible if GM had agreed toallow city officials to have a say in the man-agement of the new factory, thereby enablingthem to exercise a degree of influence over itseconomic impact on the city? What if the cityowned the factory itself but gave GM a 99-year lease at nominal rent?

A broad interpretation of the public over-sight exception would create two interrelatedrisks, one obvious and one less so. The obvi-ous risk is that a mere fig leaf of public con-trol could be used to justify a condemnationthat effectively left the property under thenear-total control of the new owners. Undersuch an approach, the court could have justi-fied the Poletown takings by requiring Detroitto conduct periodic inspections of the GMfactory, even if city officials were powerless toactually order GM to make any changes in itspolicies following the inspections.

A more subtle risk is the possibility thatoversight powers, however extensive in theo-ry, might prove inadequate in practice. Thelogic of the “public oversight” exceptionimplicitly assumes that officials will use theiroversight powers to ensure that the new own-ers actually produce the public benefits usedto justify condemnation. But this assump-tion clashes with the underlying dynamicthat leads to eminent domain abuse in thefirst place: the fact that government agenciesexercising the condemnation power are often“captured” by powerful private interestgroups who use those powers for their ownbenefit rather than that of the general public.If a local government is captured in this way,it is unlikely to impose meaningful account-ability on the new owners of condemnedproperty, even if its “oversight” authority istheoretically extensive. If, on the other hand,the political process has not been captured, itis not clear why the judiciary should requireany oversight beyond what legislative andexecutive officials have determined to be nec-essary. Thus, the public oversight exceptionposes serious dangers even if the degree ofoversight required by courts is relatively high.

This important point calls into question

the adequacy of even very stringent oversightrequirements. For example, Washington statecourts have adopted a “literal” definition of“private use” that forbids condemnationunless the government retains ownership ofthe condemned property or creates a right ofaccess for the general public.103 On the surface,such a requirement seems extremely stringent.Yet consider the possibility that under thisview the City of Detroit might have been ableto take ownership of the Poletown propertywhile simultaneously allowing GM to use theland in any way it saw fit. Although Detroit’s“public oversight” would have been veryimpressive in theory, in practice the situationwould be little different from what actuallyoccurred.

Unfortunately, the Hathcock court saysvery little about the amount and type of“public control” required for a condemna-tion to fall within the exception. Significant-ly, the court did hold that the condemnationin that case failed to meet the test because“[n]o formal mechanisms exist to ensure thatthe businesses that would occupy what arenow the defendants’ properties will continueto contribute to the health of the economy.”104 That statement implies that the necessaryoversight cannot be just a fig leaf but mustactually ensure that the public benefit thatjustified the condemnation—here, a contri-bution “to the health of the economy”—isactually achieved. If taken seriously, thatrequirement might invalidate not only tak-ings with minimal oversight provisions buteven those more extensive ones that seemunlikely to be used in a way that actuallyensures the achievement of the justifyingpublic purpose.

On the other hand, it is difficult to inter-pret the court’s statement with any great con-fidence. If taken literally, it contradicts thecourt’s own holding—stated just a few pageslater—that “a generalized economic benefit”is not, by itself, a valid public use under thestate constitution.105 The court’s formula-tion of the public control exception suggeststhat “economic benefit” could be a public useso long as there are adequate “formal mecha-

13

The public oversight exception posesserious dangerseven if the degreeof oversightrequired bycourts is relatively high.

nisms” put in place to ensure that the “bene-fit” is actually created.106 It is possible thatthe court merely meant to say that theabsence of such oversight mechanisms is suf-ficient to show that a condemnation does notpass muster. On that reading, the converseconclusion—that a condemnation that doesinclude such safeguards must be upheld—does not necessarily follow. A definitive inter-pretation of the court’s meaning must awaitfuture cases. One can only hope that thecourt will not interpret its decision in such away as to effectively gut the central benefit ofoverruling Poletown: the abolition of econom-ic development takings. And the same holdstrue for courts in other states that mightchoose to follow Michigan’s lead.

“Facts of Independent PublicSignificance”

Hathcock’s third exception is perhaps themost problematic of the three, even though,like the others, it makes considerable intuitivesense. The exception has special significance,however, because it has parallels in every otherstate. The basic idea behind the “independentfact” exception, as the court explains, is this:“the act of condemnation itself, rather than theuse to which the land would eventually be put,was a public use.”107 For that reason, the dan-ger of abuse on behalf of interest groups isminimized because it really doesn’t matterwhat the new owners of the property do withit, so long as the old, harmful uses of the con-demned land are done away with.

The court’s paradigmatic example of thistype of scenario is the removal of “urbanblight for the sake of public health and safe-ty.”108 As long as the blight is removed, it canbe argued, courts shouldn’t care about whathappens to the property afterward. Evencourts that have invalidated economic devel-opment takings endorse this reasoning. Forexample, the supreme court of Illinois, in amajor recent decision rejecting the economicdevelopment rationale, was careful to notethat “[c]learly, the taking of slums and blight-ed areas is permitted for purposes of clearanceand redevelopment, regardless of the subse-

quent use of the property.”109 All 50 states andthe District of Columbia have statutes thatpermit condemnation of “blighted” propertyfor redevelopment purposes.110

Unfortunately, this line of argument hastwo serious flaws that reveal the major dan-gers of Hathcock’s “independent facts” excep-tion: overexpansion of the definition of“blight”; and interest group exploitation ofthe condemnation process, even in areas thatreally are “blighted.”

Overexpansion of the Definition of Blight.The first danger is that the concept of “blight”is vulnerable to creative expansion. Earlyblight cases in the 1940s and 1950s upheldcondemnations in areas that closely fit thelayperson’s intuitive notion of “blight”: dilapi-dated, dangerous, disease-ridden neighbor-hoods. For example, in the famous Berman v.Parker decision, which upheld blight condem-nations under the federal takings clause, thecondemned neighborhood was characterizedby “[m]iserable and disreputable housing con-ditions.”111 According to studies cited by thecourt, “64.3% of the dwellings [in the area]were beyond repair, 18.4% needed majorrepairs, only 17.3% were satisfactory; 57.8% ofthe dwellings had outside toilets, 60.3% hadno baths, 29.3% lacked electricity, 82.2% hadno wash basins or laundry tubs, [and] 83.8%lacked central heating.”112

In the years since those early cases, manystates have expanded the concept of blight toencompass almost any area where economicdevelopment could potentially be increased.In the recent West 41st Street Realty case, a NewYork appellate court held that the TimesSquare area of downtown Manhattan was suf-ficiently “blighted” to justify the use of emi-nent domain to condemn land needed tobuild a new headquarters for the New YorkTimes!113 In City of Las Vegas DowntownRedevelopment Agency v. Pappas,114 anotherrecent “blight” decision, the Nevada SupremeCourt held that downtown Las Vegas is blight-ed, thereby permitting condemnation of prop-erty for the purpose of building a parking lotservicing a consortium of Las Vegas casinos.115

The Nevada Supreme Court held that down-

14

Many states haveexpanded the

concept of blightto encompass

almost any areawhere economic

developmentcould potentially

be increased.

town Las Vegas suffers from “[e]conomicblight [that] involves downward trends in thebusiness community, relocation of existingbusinesses outside of the community, busi-ness failures, and loss of sales or visitor vol-umes.”116

Obviously, virtually any neighborhood,no matter how prosperous, occasionally suf-fers “downward trends in the business com-munity, . . . business failures, and loss ofsales or visitor volumes.”117 If Times Squareand downtown Las Vegas are “blighted,” it isdifficult to think of any place that isn’t. Asthe definition of “blight” expands, so toodoes the rationale for economic developmenttakings. Almost any large commercial enter-prise can argue that condemning land for itsbenefit might help improve “trends in thebusiness community.”118 The road from theBerman-era cases to decisions like West 41st St.and Pappas exhibits a classic slippery-slopedynamic. That dynamic is difficult to guardagainst because it is virtually impossible todraw a nonarbitrary distinction between“blighted” and “normal” areas and becausepowerful political pressures are exerted bydevelopment interests that benefit from con-demnation.119

The same slippage that occurred in NewYork and Nevada is likely to recur inMichigan and other jurisdictions that followthe Hathcock approach unless courts makestrong efforts to guard against it early on.120

Numerous state courts have either adoptedvery broad definitions of “blight” or deferredto legislative and administrative definitionsthat reach a similar result.121 Moreover, in thevast majority of states, courts review blightdesignations by redevelopment agencies onlyunder deferential standards such as “arbi-trary and capricious” behavior, “abuse of dis-cretion,” or “clear error.”122 This judicial def-erence greatly increases the danger of abuse.

Abusive Condemnations in Truly “Blighted”Neighborhoods. The second danger posed bythe blight exception is perhaps even more seri-ous. Even in cases in which the condemnedproperty really is blighted under a narrow def-inition of the term, condemnation of property

often serves the interests of developers at theexpense of people living or running businessesin the area. Indeed, condemnations in trulyblighted neighborhoods have probably causedfar more injustice and misery than eitherPoletown-style economic development con-demnations in nonblighted areas or condem-nations driven by dubious expansions of thedefinition of “blight.”

Large-scale condemnations to alleviateblight began with the “urban renewal” pro-grams of the 1940s and 1950s. Such takingsuprooted hundreds of thousands of people,destroyed numerous communities, and in-flicted enormous social and economic costs,with few offsetting benefits.123 A recent studyconcluded that the use of eminent domain in“urban renewal programs uprooted hundredsof thousands of people, disrupted fragileurban neighborhoods and helped entrenchracial segregation in the inner city.”124 By 1963,over 600,000 people had lost their homes as aresult of urban renewal takings.125 The vastmajority ended up living in worse conditionsthan they had experienced before their homeswere condemned,126 and many suffered seri-ous nonpecuniary losses as well.127 Morerecent blight condemnations have inflictedsimilar harms on communities and poorproperty owners.128

The sheer scale of forced relocations drivenby “urban renewal” condemnations dwarfsthe harms inflicted by economic developmentcondemnations in nonblighted areas. Al-though Poletown’s displacement of some 4,200people was regarded as extreme, it is worthnoting that the blight condemnation upheldin Berman condemned the homes of morethan 5,000 people,129 and this fact evoked littleoutrage or surprise among contemporaryobservers.130 Sociologist Herbert Gans esti-mates that, altogether, some one millionhouseholds were displaced by federally spon-sored urban renewal condemnations between1950 and 1980.131 Assuming, as economistMartin Anderson did, that the average house-hold size was equal to the 1962 national aver-age of 3.65 people,132 that means that federal-ly sponsored urban renewal condemnations

15

Large-scale condemnationsto alleviate blightbegan with the“urban renewal”programs of the1940s and 1950s.Such takingsinflicted enormous socialand economiccosts.

forcibly relocated some 3.6 million people.And this figure does not include blight con-demnations undertaken by state and localgovernments on their own initiative.133

This history points to a serious flaw in thelogic endorsed by Hathcock: that in blight casesthe disposition of condemned property is irrel-evant because “the act of condemnation . . .itself . . . was a public use.”134 As Herbert Ganspoints out, the key flaw in urban renewal con-demnations is precisely the fact that “redevel-opment proceeded from beginning to end onthe assumption that the needs of the site resi-dents were of far less importance than the clear-ing and rebuilding of the site itself.”135 As aresult, the residents of blighted neighborhoodssuffered massive harm, while their formerhomes were converted to commercial or resi-dential uses that primarily benefited developersand middle-class city residents.136 In the Bermancase, for example, only about 300 of the 5,900new homes built on the site were affordable tothe neighborhood’s former residents.137

Gans and other reformers recommendthat redevelopment programs be redesignedso as to create “benefit” for “the communityas a whole and for the people who live in theslum area; not for the redeveloper or his even-tual tenants.”138 However, such recommenda-tions are flawed because they assume thatbenefiting local residents and “the communi-ty as a whole” is the real purpose of blight tak-ings to begin with. In reality, such condemna-tions often deliberately target poor andminority property owners for the purpose ofbenefiting politically powerful developmentinterests and middle-class homeowners whoare expected to move in after the redevelop-ment process is completed. So many poorAfrican Americans were dispossessed byurban renewal condemnations in the 1950sand 1960s that “[i]n cities across the countryurban renewal came to be known as ‘Negroremoval.’”139 Urban elites deliberately focusedurban renewal condemnations on the poorand African Americans.140 Between 1949 and1963, 63 percent of all families displaced byurban renewal condemnations were non-white.141

Results like those should hardly surprise,given the forces unleashed once economicdevelopment condemnations are permitted.It is only to be expected that the condemna-tion process would target those least able toresist it politically, which in many cities islikely to be residents of poor and majorityblack neighborhoods.

This is not to suggest that the use of con-demnation can never be justified as a meansof alleviating blight. For example, it may bethe case that the elimination of blightinvolves a collective action problem since noone property owner in a blighted neighbor-hood will have a strong incentive to makemajor improvements on his own propertyunless others in the area do the same. If he isthe only one to make improvements, he isunlikely to recoup their full value because thevalue of his property will still be draggeddown by virtue of its location in a generallydilapidated area. On the other hand, if all ormost of the other owners make improve-ments on their holdings, the first owner canreap the benefits of increased land values inthe area even if he does nothing to improvehis own tract. Thus, some sort of centralizedcoercion may be defensible in such cases,although it would not necessarily have totake the form of condemnation.

Yet even if condemnation may be justifiedtheoretically in some cases of blight, theinterest group dynamics involved suggestthat real-world blight condemnations aremore likely to be driven by the needs andinterests of politically powerful developersand middle-class residents than those of thepolitically weak citizens of blighted neigh-borhoods. Thus, even if condemnation maybe justifiable in theory, it should still beviewed with great suspicion in practice.

In sum, even in areas where there is “real”blight—perhaps especially there—the condem-nation process is likely to be abused for thebenefit of private interests at the expense ofthe poor and politically weak. The Hathcockcourt—like its counterparts in almost everyother state—was arguably wrong to allow anapparent blanket exemption for condemna-

16

SociologistHerbert Gans

estimates that,altogether, some

one millionhouseholds were

displaced by federally

sponsored urbanrenewal

condemnationsbetween 1950 and

1980.

tions based on “facts of independent publicsignificance.”142 Future cases will determineexactly how much harm this exception will beallowed to cause.

Conclusion

The recent judicial trend toward increasingskepticism of economic development takingsis a positive development. County of Wayne v.Hathcock is in itself an important milestone intakings law. Even aside from its doctrinal andprecedential value, the decision to overturnPoletown has tremendous psychological andsymbolic significance. Defenders of nearlyunlimited condemnation power will no longerbe able to cite Poletown as a “landmark case”supporting their position.143 It is also signifi-cant that post-Hathcock Michigan is only oneof several states that have recently banned eco-nomic development takings.144

At the same time, Hathcock and other sim-ilar decisions are not a panacea for eminentdomain abuse; their longterm impact will inlarge part depend on future judicial interpre-tation. Only time will tell whether the excep-tions end up restoring Poletown by swallow-ing the rule. The new direction in public uselaw is a major step forward, but it is not theend of the road.

NotesThis Policy Analysis is derived in part from a forth-coming article in the MICHIGAN STATE LAW REVIEWSymposium on County of Wayne v. Hathcock. See IlyaSomin, Overcoming Poletown: County of Wayne v.Hathcock, Economic Development Takings, and theFuture of Public Use, 2004 MICHIGAN STATE LAWREVIEW 1005.

1. E.g., U.S. CONST., AMEND. V.: “ . . . nor shall pri-vate property be taken for public use without justcompensation.”

2. Hawaii Housing Auth. v. Midkiff, 467 U.S. 229,241 (1984).

3. THOMAS MERRILL & DAVID A. DANA, PROPERTY:TAKINGS 196 (2002).

4. See, e.g, Baycol, Inc. v. Downtown Dev. Auth., 315

So. 2d 451, 457 (Fla. 1975) (holding that a “‘public[economic] benefit’ is not synonymous with ‘publicpurpose’ as a predicate which can justify eminentdomain”); Merrill v. City of Manchester, 499 A.2d216, 217-18 (N.H. 1985) (condemnation for indus-trial park not a public use where no harmful condi-tion was being eliminated); In re Petition of Seattle,638 P.2d 549, 556–57 (Wash. 1981) (disallowingplan to use eminent domain to build retail shop-ping, where purpose was not elimination of blight);Owensboro v. McCormick, 581 S.W.2d 3, 8 (Ky.1979) (“No ‘public use’ is involved where the land ofA is condemned merely to enable B to build a facto-ry”); Karesh v. City of Charleston, 247 S.E.2d 342,345 (S.C. 1978) (striking down taking justified onlyby economic development); City of Little Rock v.Raines, 411 S.W.2d 486, 495 (Ark. 1967) (privateeconomic development project not a public use);Hogue v. Port of Seattle, 341 P.2d 171, 181-191(Wash. 1959) (denying condemnation of residentialproperty so that agency could “devote it to what itconsiders a higher and better economic use,” id. at187); Opinion of the Justices, 131 A.2d 904, 905-06(Me. 1957) (condemnation for industrial develop-ment to enhance economy not a public use).

5. County of Wayne v. Hathcock, 684 N.W.2d 765(Mich. 2004).

6. Poletown Neighborhood Council v. City ofDetroit, 304 N.W.2d 455 (Mich. 1981), overruledCounty of Wayne v. Hathcock, 684 N.W.2d 765(Mich. 2004).

7. Kelo v. City of New London, 843 A.2d 500, 511(Conn.) pet. cert. granted 125 S. Ct. 27 (2004).

8. Poletown, 304 N.W.2d at 464.

9. James W. Ely Jr., Can the “Despotic Power” be Tamed?Reconsidering the Public Use Limitation on EminentDomain, PROBATE & PROP., Nov.–Dec. 2003 at 31, 35.

10. Poletown, 304 N.W.2d at 458.

11. See, e.g., Prince George’s County v. CollingtonCrossroads, 339 A.2d 278, 287 (Md. 1975) (1975Maryland high court decision holding that“industrial development” qualifies as a legitimatepublic use).

12. See Ilya Somin, Michigan Should Alter PropertyGrab Rules, DET. NEWS, Jan 8, 2004, at 11 (briefdescription of the facts and background ofPoletown).

13. Poletown, 304 N.W.2d at 458.

14. Kelo v. City of New London, 843 A.2d 500, 531n.39 (Conn.) pet. cert. granted 125 S. Ct. 27 (2004).

15. See Aaron v. Target Corp., 269 F. Supp. 2d

17

1162, 1175 (E.D. Mo. 2003) (owner likely to pre-vail on claim that condemnation of shoppingcenter for transfer to Target so that Target wouldkeep its economic benefits in the city lacked pub-lic use); 99 Cents Only Stores v. Lancaster Redev.Agency, 237 F. Supp. 2d 1123, 1129-31 (C.D. Cal.2001), app. dismissed as moot, 2003 WL 932421(9th Cir. Mar. 7, 2003) (finding that condemna-tion to replace one store with another, morelucrative one, was not a public use); Ga. Dep’t ofTransp. v. Jasper County, 586 S.E.2d 853, 856(S.C. 2003) (holding that even a “substantial . . .projected economic benefit” cannot justify a“condemnation”); Southwestern Ill. Dev. Auth. v.National City Env., 768 N.E.2d 1, 9-11 (Ill.), cert.denied, 537 U.S. 880 (2002) (holding that a “con-tribu[tion] to economic growth in the region” isnot a public use justifying condemnation).

16. The eight states are Arkansas, Florida, Illinois,Kentucky, Michigan, Maine, South Carolina, andWashington. See cases cited in notes 5 and 15above.

17. See, e.g., Merrill v. City of Manchester, 499 A.2d216, 217–18 (N.H. 1985) (condemnation forindustrial park not a public use where no harmfulcondition was being eliminated); Opinion of theJustices, 250 N.E.2d 547, 558 (Mass. 1969) (hold-ing that economic benefits of a proposed stadiumwere not enough of a public use to justify con-demnation).

18. Poletown, 304 N.W.2d at 459.

19. County of Wayne v. Hathcock, 684 N.W.2d765, 786 (Mich. 2004).

20. Id. at 783.

21. Id. at 786 (emphasis in original).

22. Poletown, 304 N.W.2d at 464 (Fitzgerald, J.,dissenting).

23. Id.

24. Southwestern Ill. Dev. Auth. v. National CityEnv., 768 N.E.2d 1, 9 (Ill.), cert. denied, 537 U.S. 880(2002).

25. Owensboro v. McCormick, 581 S.W.2d 3, 8(Ky. 1979).

26. Id. (quoting 26 Am.Jur.2d Eminent Domain §34, at 684–85 (1966)).

27. Id.

28. Poletown, 304 N.W.2d at 458.

29. Id.

30. Daniels v. Area Plan Comm’n, 306 F.3d 445,466 (7th Cir. 2002).

31. See, e.g., Cincinnati v. Vester, 281 U.S. 439,447–48 (1930) (holding that “private propertycould not be taken for some independent andundisclosed public use”); County of SanFrancisco v. Ross, 279 P.2d 529, 532 (Cal. 1955)(en banc) (invalidating agreement that lackedcontrols over the use of the condemned propertybecause “[s]uch controls are designed to assurethat use of the property condemned will be in thepublic interest”); State ex. rel. Sharp v. 0.62033Acres of Land, 110 A.2d 1, 6 (Del. Super. Ct. 1954),aff’d 112 A.2d 857 (Del. 1955) (holding that “[t]hedoctrine of reasonable time prohibits the con-demnor from speculating as to possible needs atsome remote future time”) (emphasis in the origi-nal); Alsip Park Dist. v. D & M P’shp, 625 N.E.2d40, 45 (Ill. App. Ct. 1993) (holding that “[I]f thefacts” in a condemnation proceeding “establishedthat . . . [the condemnor] had no ascertainablepublic need or plan, current or future for the land,defendants [property owner] should prevail”);Mayor of the City of Vicksburg v. Thomas, 645 So.2d 940, 943 (Miss. 1994) (holding that propertymay only be condemned for transfer to “privateparties subject to conditions to insure that theproposed public use will continue to be served”);Krauter v. Lower Big Blue Nat. Res. Dist., 259N.W.2d 472, 475–76 (Neb. 1977) (holding that “acondemning agency must have a present plan anda present public purpose for the use of the prop-erty before it is authorized to commence a con-demnation action . . . . The possibility that thecondemning agency at some future time mayadopt a plan to use the property for a public pur-pose is not sufficient”); Casino Reinvestment Dev.Auth. v. Banin, 727 A.2d 102, 111 (N.J. Super. Ct.1998) (holding that when a “public agencyacquires . . . property for the purposes of con-veying it to a private developer,” there must beadvance “assurances that the public interest willbe protected”).

32. Poletown, 304 N.W.2d at 459.

33. Id.

34. Poletown, 304 N.W. 2d at 480 (Ryan, J., dis-senting) (noting that “there will be no public con-trol” over the GM plant scheduled to be built onthe Poletown site).

35. City of Detroit v. Vavro, 442 N.W.2d 730(Mich. Ct. App. 1989).

36. Id. at 731–32.

37. See id. at 731 (upholding a taking transferringproperty to the Chrysler Corporation for the con-struction of a new auto assembly plant despite

18

the fact that “Chrysler . . . has not entered intoa binding commitment with the City of Detroit toconstruct the [plant] following the city’s use ofthe power of eminent domain”).

38. Id.

39. Poletown, 304 N.W.2d at 459.

40. Id. at 467 (Ryan, J., dissenting).

41. See id. at 467–68 (citing statement of MayorYoung and reprinting letter from Thomas A.Murphy, Chairman of the Board, General Motors,to Coleman A. Young, (October 8, 1980)).

42. Id. at 480.

43. Id.

44. Id.

45. Marie Michael, Detroit at 300: New Seeds of Hopefor a Troubled City, DOLLARS & SENSE, July 2001.

46. Id.

47. Kelo, 843 A.2d at 602 (Zarella, J., dissenting).

48. See, e.g., Gen. Bldg. Contractors v. Bd. ofShawnee Cty. Comm’rs, 66 P.3d 873, 881-83 (Kan.2003) (upholding economic development con-demnation for purpose of building industrial facil-ity for later transfer to private owners with whomno development agreements had as yet beenreached); City of Jamestown v. Leevers Supermar-kets, Inc., 552 N.W.2d 365, 373-74 (N.D. 1996) (fol-lowing Poletown approach and concluding thateconomic development takings will be upheld solong as the “primary object” of the taking is “eco-nomic welfare”); City of Minneapolis v. Wurtele,291 N.W.2d 386, 390 (Minn. 1980) (holding, in acase endorsing the constitutionality of economicdevelopment takings, that “a public body’s deci-sion that a [condemnation] project is in the publicinterest is presumed correct unless there is a show-ing of fraud or undue influence”); Cf. Vitucci v.New York City Sch. Constr. Auth., 289 A.D. 2d 479,480 (N.Y. App. Div. 2001) (holding that an eco-nomic development taking passes muster despitethe fact that the property was originally con-demned to build a school, because “as long as theinitial taking was in good faith, there appears to belittle limitation on the condemnor’s right to putthe property to an alternate use upon the discon-tinuation of the original planned public purpose”).The Maryland Court of Appeals decision endors-ing economic development condemnations waspartly based on the fact that the government “willmaintain significant control over the industrialpark” that the new owner used the condemnedproperty to build. Prince George’s County v.

Collington Crossroads, 339 A.2d 278, 283 (Md.1975). However, the control in question involvedmerely the right to regulate the facility to ensure“health, safety, and welfare, control . . . hazardsand nuisances, and guidelines for assuring a highquality physical environment; and a guarantee thatpart of the project would be used as ‘open space.’”Id. It did not create a binding obligation to produceany actual economic benefits for the community ofthe kind that were used to justify condemnation inthe first place.

49. See Hathcock, 684 N.W.2d at 783–84.

50. Poletown, 304 N.W.2d at 458–59.

51. For more extensive analysis of weaknesses inthe political process that might justify strongerjudicial review, see Ilya Somin, Political Ignoranceand the Countermajoritarian Difficulty: A NewPerspective on the Central Obsession of ConstitutionalTheory, 89 IOWA L. REV. 1287 (2004) (showing howpolitical ignorance undermines common “coun-termajoritarian difficulty” arguments againstjudicial review); Ilya Somin, Posner’s DemocraticPragmatism, 16 CRITICAL REV. 1 (2004) (showinghow political ignorance and interest groupexploitation of the political process strengthenthe case for aggressive judicial review).

52. See STEVEN PINKER, HOW THE MIND WORKS421–23 (1999) (explaining how deception is moreeffective if those who seek to deceive actuallybelieve their own lies, as a result of which self-interested self-deception may be a commongenetic tendency of humans).

53. Poletown, 304 N.W.2d at 470 (Ryan, J., dis-senting).

54. Id.

55. Michael, supra note 45 at 25. The estimate ofthe number of businesses eliminated in thePoletown takings is in fact unclear. While MarieMichael cites a figure of 600, other sources citemuch lower numbers, in the range of 140 to 160.See Somin, “Overcoming Poletown,” (forthcom-ing) for a more detailed discussion of these con-flicting figures. If the lower estimates are correct,it would be much less likely that the number ofjobs lost from the businesses shut down wasequal to that created by the new factory. However,it is important to remember that the lost jobswere wiped out immediately, whereas the newones did not begin to appear for four years afterthe 1981 condemnations, and that the job lossessuffered from wiping out the businesses do notinclude jobs eliminated by the destruction ofPoletown’s churches, schools, and hospitals, northose lost as a result of the expulsion of over 4,000residents.

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56. At the time, opponents of the condemnationsclaimed that 9,000 jobs would be lost as a result ofthem. See John Bukowczyk, The Decline and Fall of aDetroit Neighborhood: Poletown vs. GM and theCity of Detroit, 41 WASHINGTON & LEE LAWREVIEW 49, 68 (1984). This estimate, like GM’sown promise that 6,000 jobs would be created,must be viewed with skepticism.

57. According to data compiled by the city, someone-third of the affected businesses closed downimmediately, while two-thirds of the remainder(approximately 40–45 percent of the originaltotal) relocated to other parts of Detroit. BRYAN D.JONES, ET AL., THE SUSTAINING HAND: COMMUNITY(1986). Even if we assume—implausibly—thatthose relocated businesses that stayed in Detroitcontinued to employ as many workers as before,the area would have suffered a net job loss if theapproximately 350 businesses that either shutdown or moved outside of the city employed anaverage of just seven workers each. And, obviouslythat does not even consider the job losses andother economic costs inflicted by the destructionof schools, churches, and other nonprofit institu-tions.

58. Poletown, 304 N.W.2d at 459.

59. Id.

60. See Kelo v. City of New London, 843 A.2d 500,511 (Conn.) pet. cert. granted 125 S. Ct. 27 (2004)(noting that two of the plaintiffs’ families have“lived in their homes for decades and others hadput enormous amounts of time, effort, andmoney into their property”).

61. Id. at 596-600 (Zarella, J., dissenting).

62. Id. at 541 n. 58.

63. See cases cited in note 48, all of which set high-ly deferential standards for evaluating economicdevelopment takings that take little or noaccount of social costs.

64. JANE JACOBS, DEATH AND LIFE OF GREATAMERICAN CITIES 5 (1961).

65. See generally MINDY THOMPSON FULLILOVE, ROOTSHOCK: HOW TEARING UP CITY NEIGHBORHOODSHURTS AMERICA, AND WHAT WE CAN DO ABOUT IT(2004) (describing extensive social and psycholog-ical costs of forced relocation); HERBERT J. GANS,THE URBAN VILLAGERS 362–86 (rev. ed. 1982)(same); BERNARD J. FRIEDEN & LYNNE B. SAGALYN,DOWNTOWN INC: HOW AMERICA REBUILDS CITIES20–35 (1989) (same); Cf. Thomas W. Merrill, TheEconomics of Public Use, 72 CORNELL L. REV. 61,82–85 (1986) (showing how the use of eminentdomain systematically imposes “uncompensated

subjective losses” because most property ownersvalue their holdings at more than their marketvalue).

66. See, e.g., Margaret Jane Radin, The LiberalConception of Property: Cross Currents in theJurisprudence of Takings, 88 COLUM. L. REV. 1667,1689–91 (1988) (making the case for limitationson the eminent domain power because of the con-nection between “personal property” and individ-uals’ sense of personhood and community); DavidR. E. Aladjem, Public Use and Treatment as an Equal:An Essay on Poletown Neighborhood Council v.City of Detroit and Hawaii Housing Authority v.Midkiff, 15 ECOLOGY L.Q. 671, 673–74 (1988)(same); Richard A. Epstein, Property, Speech and thePolitics of Distrust, 59 U. CHI. L. REV. 41, 62 n.60(1992) (criticizing Poletown as a “notorious” deci-sion that “sustained a takeover of a neighborhoodby General Motors that ignored huge elements oflosses to the private owners who were dispos-sessed” and arguing for strict judicial constraintson similar condemnations).

67. For a recent summary and analysis of the lit-erature on rent-seeking and capture, see DENNISC. MUELLER, PUBLIC CHOICE III 337–48 (2003).

68. See Ilya Somin, Political Ignorance and theCountermajoritarian Difficulty: A New Perspective onthe Central Obsession of Constitutional Theory, 89 IOWAL. REV. 1287, 1290–1304 (2004) (summarizing evi-dence of extensive voter ignorance); Ilya Somin,Voter Ignorance and the Democratic Idea, 12 CRITICALREV. 413, 413-19 (1998) (same).

69. JEANIE WYLIE, POLETOWN: COMMUNITYBETRAYED 214 (1989).

70. Id. at 214–5; Michael, supra note 45.

71. See, e.g., cases cited in notes 5 and 15.

72. Poletown, 304 N.W.2d at 459.

73. Id.

74. Id. at 458–59.

75. See, e.g., Tolksdorff v. Griffith, 626 N.W.2d163, 167–69 (Mich. 2001) (invalidating legislationthat allows condemnation of limited amounts ofproperty in order to build roads for the benefit oflandlocked property owners); City of Lansing v.Edward Rose Realty, Inc., 502 N.W.2d 638,643–46 (Mich. 1993) (invalidating taking of twoapartment complexes for the benefit of a cabletelevision company); City of Novi v. Robert AdellChildren’s Funded Trust, 659 N.W.2d 615,622–29 (Mich. Ct. App. 2003), App. granted 687N.W. 2d 297 (Mich. 2004) (invalidating condem-nation for the purpose of building a small spur

20

line for the benefit of a private corporation); Cityof Center Line v. Chmelko, 416 N.W.2d 401, 402,404–407 (1987) (invalidating condemnation of“two parcels of property” in order to facilitateexpansion of a “local car dealership”).

76. Vavro, 442 N.W.2d at 730.

77. Id. at 731.

78. Id. at 731–32.

79. See Detroit Edison Co. v. City of Detroit, 527N.W.2d 9, 11 (Mich. Ct. App. 1995) (reaffirmingVavro’s conclusion that approval of the Chryslercondemnations is required by Poletown).

80. Michael, supra note 45.

81. DANA BERLINER, PUBLIC POWER, PRIVATE GAIN: AFIVE YEAR, STATE-BY-STATE REPORT EXAMINING THEABUSE OF EMINENT DOMAIN 100 (2003), http://www.ij.org/publications/castle/. I should men-tion here that I wrote an amicus brief on behalf ofthe Institute for Justice and the Mackinac Centerfor Public Policy in the Hathcock case. However, Ihad no role in the preparation of the empiricalstudy discussed here.

82. Id. at 2.

83. The technical plaintiff in Hathcock was theCounty of Wayne rather than the City of Detroit;however, the purpose of the taking was to benefitDetroit by promoting development near theDetroit Metropolitan Airport. County of Waynev. Hathcock, 2003 WL 1950233 at *1–2 Mich. Ct.App. Apr. 24, 2003), rev’d, 684 N.W.2d 765 (Mich.2004).

84. Berliner, supra note 81 at 2.

85. Id. at 102–06.

86. Id. at 100.

87. Id. at 2.

88. Only one other state, Delaware, adopted thePoletown heightened scrutiny test. See WilmingtonParking Auth. v. Land with Improvements, 521A.2d 227, 231 (Del. 1987) (holding that “when theexercise of eminent domain results in a substantialbenefit to specific and identifiable private parties,a court must inspect with heightened scrutiny aclaim that the public interest is the predominantinterest being advanced”).

89. Merrill, supra note 65 at 72–81 (describing the“holdout” rationale for use of eminent domain).

90. See RICHARD A. POSNER, ECONOMIC ANALYSIS OF

LAW 43–44 (2d ed. 1977) (describing these meth-ods).

91. See THOMAS C. SCHELLING, THE STRATEGY OFCONFLICT 35-43, 120-31 (1960) (classic explana-tion of the ways in which tying one’s own handscan be an advantage in negotiations); see alsoDonald J. Kochan, “Public Use” and the IndependentJudiciary: Condemnation in an Interest-GroupPerspective, 3 TEX. REV. L. & POL. 49, 88–90 (1998)(explaining how precommitment strategies usedto prevent holdouts in corporate transactions canbe applied to economic development projectsthat might otherwise need to resort to eminentdomain).

92. Hathcock, 684 N.W.2d at 783 (quotingPoletown, 304 N.W.2d at 478–80 (Ryan, J., dis-senting).

93. See id. at 780-83 (relying extensively onPoletown, 304 N.W.2d at 478–80 (Ryan, J., dis-senting).

94. Id. at 781 (quoting Poletown, 304 N.W.2d at478 (Ryan, J., dissenting)).

95. Id. at 781–82.

96. See, e.g., RICHARD A. EPSTEIN, TAKINGS: PRIVATEPROPERTY AND THE POWER OF EMINENT DOMAIN162-69 (1985).

97. Hathcock, 684 N.W.2d at 783.

98. Id. at 783–84.

99. Id.

100. Id. at 783–84.

101. Hathcock, 684 N.W.2d at 783.

102. See, e.g., Ga. Dep’t of Transp. v. Jasper County,586 S.E.2d 853, 856 (S.C. 2003) (noting that a suf-ficiently high degree of “public control” can vali-date an otherwise illegal taking); Mfg. HousingCommunities v. State, 13 P.3d 183, 189–90(Wash. 2000) (en banc) (holding that Washingtonlaw requires a “literal” definition of forbidden“private use” under which the government mustexercise a high degree of control over the con-demned property in order to legitimate a taking,or allow the general public access to it after trans-fer to the new owners).

103. Mfg. Housing Communities, 13 P.3d189–90.

104. Hathcock, 684 N.W.2d at 784.

105. Id. at 786–87.

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106. Id. at 784.

107. Id. at 783.

108. Id. (citing Poletown, 304 N.W.2d at 478–79(Ryan, J., dissenting)).

109. Southwestern Ill. Dev. Auth. v. National CityEnv., 768 N.E.2d 1, 9 (Ill.), cert. denied, 537 U.S. 880(2002)

110. Hudson Hayes Luce, The Meaning of Blight: ASurvey of Statutory and Case Law, 35 REAL PROP.PROB. & TR. J. 389, 391 (2000).

111. Berman v. Parker 348 U.S. 26, 32 (1954).“Slum clearance” was upheld as a public use tojustify condemnation under the Michigan stateconstitution in 1951. In Re Slum Clearance, 50N.W.2d 340 (Mich. 1951).

112. Id. at 32.

113. West 41st St. Realty v. N.Y. State Urban Dev.Corp., 298 A.D. 2d 1, 3–8 (N.Y. A.D. 1 Dept. 2002),cert. denied, 123 S.Ct. 1271 (2003).

114. City of Las Vegas Downtown Redev. Agencyv. Pappas, 76 P.3d 1 (Nev. 2003), cert. denied, 124 S.Ct. 1603 (2004).

115. Id. at 12–15.

116. Id. at 13.

117. Id.

118. Id.

119. See generally Eugene Volokh, Mechanisms of theSlippery Slope, 116 HARV. L. REV. 1026 (2003).

120. On the history of blight condemnations andtheir gradual expansion over time, see Wendell E.Pritchett, The “Public Menace” of Blight: UrbanRenewal and the Private Uses of Eminent Domain, 21YALE L. & POL’Y REV. 1 (2003).

121. See Hudson Hayes Luce, The Meaning of Blight:A Survey of Statutory and Case Law, 35 REAL PROP.PROB. & TR. J. 389 (2000) (discussing numerouscriteria for blight applied by statutory definitionsand court decisions).

122. Id. at 409–13. Several jurisdictions do not allowreview of blight designations at all. Id. at 413–14.

123. See, e.g., JANE JACOBS, DEATH AND LIFE OF GREATAMERICAN CITIES 5, 270-90, 311–14 (1961) (describ-ing enormous social and economic costs of urbandevelopment takings); MARTIN ANDERSON, THEFEDERAL BULLDOZER (1964) (same); HERBERT J. GANS,

THE URBAN VILLAGERS: GROUP AND CLASS IN THE LIFEOF ITALIAN-AMERICANS 362–84 (2d ed. 1982) (docu-menting loss of community and economic harmscaused by condemnations); SCOTT GREER, URBANRENEWAL AND AMERICAN CITIES: THE DILEMMA OFDEMOCRATIC INTERVENTION 3–5 (1965) (describingvarious harms caused by urban renewal condemna-tions); Chester W. Hartman, Relocation: IllusoryPromises and No Relief, 47 VA. L. REV. 745 (1971)(describing extensive uncompensated losses sufferedby victims of urban renewal condemnations).

124. Pritchett, supra note 120 at 47.

125. Anderson, supra note 123 at 8, 54.

126. Id. at 57–70.

127. See generally MINDY THOMPSON FULLILOVE,ROOT SHOCK: HOW TEARING UP CITY NEIGHBOR-HOODS HURTS AMERICA, AND WHAT WE CAN DOABOUT IT (2004) (describing extensive social andpsychological costs of forced relocation); BERNARDJ. FRIEDEN & LYNNE B. SAGALYN, DOWNTOWN INC:HOW AMERICA REBUILDS CITIES 20–35 (1989) (same).

128. A 1994 summary of the evidence on redevel-opment takings concludes:

In essence, the powers and internal pres-sures [of the blight condemnation process]create a mandate to gentrify selected areas,resulting in a de facto concentration ofpoverty elsewhere, preferably outside thedecision makers’ jurisdiction. Numerouspast experiences indicate that the processhas been driven by racial animosity as wellas by bias against the poor. The net result isthat a neighborhood of poor people isreplaced by office towers, luxury hotels, orretail centers. The former low-income resi-dents, displaced by the bulldozer or anequally effective increase in rents, mustrelocate into another area they can—per-haps—afford. The entire process can beviewed as a strategy of poverty concentra-tion and geographical containment to pro-tect the property values—and entertain-ment choices—of downtown elites.

Benjamin B. Quinones, Redevelopment Redefined:Revitalizing the Central City with Resident Control, 27U. MICH. J.L. REFORM, 680, 740–41 (1994).

129. Berman, 348 U.S. at 30.

130. See, e.g., Pritchett, supra note 120 at 44 (noting

22

that “none of the briefs in Berman even men-tioned the fact that the project would uprootthousands of poor blacks”); cf. Id. at 37–41 (not-ing widespread contemporary support for earlyurban renewal takings despite recognition thatthousands of poor residents would be displaced).

131. Gans, supra note 123 at 385–86.

132. Anderson, supra note 123 at 54.

133. For example, New York City “uprooted”some 250,000 people between 1946 and 1953alone. Pritchett, supra note 120 at 37.

134. Hathcock, 684 N.W.2d at 783.

135. Gans, supra note 123 at 368.

136. Id. at 369–71, 378–81.

137. HOWARD GILLETTE JR., BETWEEN JUSTICE ANDBEAUTY: RACE, PLANNING, AND THE FAILURE OFURBAN POLICY IN WASHINGTON, D.C., 163–64(1995).

138. Gans, supra note 123 at 370.

139. Pritchett, supra note 120 at 47.

140. Id.

141. Frieden & Sagalyn, supra note 127 at 28.

142. Hathcock, 684 N.W.2d at 783.

143. Kelo v. City of New London, 843 A.2d 500,528 n.39 (Conn.), pet. cert. granted, 125 S. Ct. 27(2004).

144. See cases cited in notes 5 and 15.

23

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