The Day, the New London, Connecticut newspaper has devoted considerable space this week to the aftermath of the Kelo case. An Editorial dated March 6, 2009, is entitled Lessons Learned From Fort Trumbull Controversy, but unfortunately it promotes the wrong lessons. According to The Day, those lessons are: (1) never pass the power of eminent domain to a non-elected entity, (2) there are times when cities, which lack open space, need to use eminent domain to obtain property for economic development, (3) when disputes heat up, never close the door to compromise, and (4) the city [of New London] needs to see successful development in the Fort Trumbull peninsula when the economy rebounds. In other words there is not a hint of remorse or concession that New London screwed up morally or fiscally. Rather, these folks make it clear that next time they mean to do the same thing, only more efficiently.
So let’s take a look at the Day’s laundry list. Item (1) is all about municipal politics. Item (2) babbles about “Open space.” What open space? The Kelo condemnation was filed ostensibly to rectify the adverse economic conditions in New London, and to build private commercial facilities that would hopefully generate more taxes, not any freakin’ “open space.” Item (3) easily makes the Top 10 list of outstanding bromides, and item (4) is an expression of an obstinate commitment to the immoral and in this case failed concept of redevelopment.
What’s missing here is any consideration of the immorality of setting out to take the property of A to give it – and we do mean give – to B for the latter’s profit, while undercompensating A. Whatever the motivation of people doing that may be, it stinks to high heaven. Missing also is any acknowledgement that “economic redevelopment” is an entrepreneurial activity that, like other business activity requires investment of money and the undertaking of business risks. But in these cases the people who undertake the risk have no “skin in the game” – they are risking other people’s money. We believe that the best comment on such doings was delivered by Associate Justice Macklin Fleming of the Califorina Court of Appeal in Regus v. City of Baldwin Park, 70 Cal.App.3d 968, 982 (1977), and we can do no better than to repeat it here:
“[U]nrestricted use of redevelopment powers fosters speculative competition between municipalities in their attempts to attract private enterprise, speculation which they can finance in part with other people’s money. When the extraordinary powers of legislation designed to combat blight and renew decayed urban areas are used as a fiscal device to promote industrial, commercial, and business development in a project area that is merely underdeveloped rather than blighted, competitive speculation may be turned loose. By misemploying the extraordinary powers of urban renewal a redevelopment agency captures pending tax revenues which it can then use as a grubstake to subsidize commercial development within the project area in the hope of striking it rich. Such schemes contemplate borrowing money by issuing bonds on the strength of assured future tax revenues, money which is then used to acquire, improve, and resell property within the project area at a loss as an inducement to business enterprises such as K-Mart to locate within the project area rather than in neighboring communities. In essence, tax revenues are used as subsidies to attract new business. The immediate gainers are the subsidized businesses. The immediate losers are the taxpayers and government entities outside the project area, who are required to pay the normal running expenses of government operation without the assistance of new tax revenues from the project area. * * *
“The promoters of such projects promise that in time everyone will benefit, taxpayers, government entities, other property owners, bondholders; all will profit from increased development of property and increased future assessments on the tax rolls, for with the baking of a bigger pie bigger shares will come to all. But the landscape is littered with speculative real estate developments whose profits turned into pie in the sky; particularly where a number of communities have competed with one another to attract the same regional businesses.
“At bench, City’s projected redevelopment plan possesses a particularly speculative cast in that the businesses it hopes to attract through redevelopment are primarily those of consumption rather than production, businesses such as hotels and shopping centers whose acquisition does not increase the total wealth of a region as a whole but merely redistributes the existing supply by capturing business from rival communities. The success of such strategy assumes the absence of effective counter-measures by rival communities targeted for displacement. Private enterprises may embark on such speculative competitive enterprises. Under present laws, public entities may not.”
So if the New London movers and shakers mean to engage in such ventures, let them do it with their own, not the public’s, money. Let them pay the true cost of doing business, and refrain from sticking the hapless taxpayers with the tab for their failed venture. Or at least, let them reimburse the public when their half-baked notions of development that, adding insult to injury, they sold to the U.S. Supreme Court as “careful planning,” fail as did this one, and turn into “pie in the sky.”
And let’s not hear any excuses about how it’s the fault of the declining economy. The Fort Trumbull project failed before the economy started faltering in 2007. Besides, prospects of a failing economy are some of the business risks that would-be entrepreneurs have to face.
Follow up. It turns out that this story is being peddled on the Internet as a case of New London’s remorse. Hah! Don’t believe it. Check out that The Day story for yourself and you’ll see that there has been no expresssion of remorse on the part of New London officials for doing what they did — rather it’s a case of feeling sorry that their ploy failed, and an expression of intention to do it more efficiently next time.
Second Update. The Day (the New London newspaper) reports that in a recent public forum on post-Kelo New London, Tom Londregan, the New London City Attorney “made no apologies for the city’s support of eminent domain by the New London Development Corp., and said if he were in the same position again, he’d pretty much advise the city similarly.” Ann Baldelli, He’s OK Wearing Brown Shoes, The Day, March 15, 2009 (Editorial columns).