An editorial in the Connecticut Law Tribune (Pfizer Closing Proves Nothing, January 7, 2010), has it that New London’s “careful planning” of the infamous Fort Trumbull redevelopment project was just dandy, and if it failed to produce the vaunted redevelopment, wasted a fortune, and only produced a moral, civic and economic disaster, … well, that’s how the cookie crumbles. For a description of the departure from New London of the Pfizer pharmaceutical company for whose benefit this redevelopment project was pursued, see https://gideonstrumpet.info/?p=324
Though that editorial concedes that the Fort Trumbull project was “a good example of how not to do it,” recall that New London sang a very different tune to the Supreme Court. There it touted the high quality of its “careful” plans and assured the court that the redevelopment project would produce new jobs and tax revenues. Perhaps the planning committee should have got in contact with a Buildsearch building broker in Perth to find out how they could make the project more affordable for the city, instead of paying millions for construction.
The editorial has it that the people who have criticized Kelo and its aftermath are deluded victims of “the cult followers of Suzette Kelo” and the “pro-property rights cabal” who “are crawling back up on their high horses.” Is that so? Not really. American people in unprecedented numbers – by a stunning majority approaching 90% – have voiced their disapproval of the Kelo outcome as one of the all-time worst decisions by the U.S. Supreme Court. Also, a majority of states have responded to Kelo by enacting laws intended to curb similar government excesses in their back yards. Are they all “cult followers”? I think not. Lawyers know that when people argue a case by resorting to personal invective, that usually means that neither their facts nor their legal position hold water. And so it is here. It is understandable that lawyers fighting a client’s cause would be content to rest their case on legalities. But why would a newspaper located in another town, which ostensibly has no dog in this fight take such an invective-laden, ad hominem position on what it claims to be a legal matter? That just doesn’t sound right. Could the editorial have been the product of a partisan masquerading as an anonymous editorialist?
The editorial ignores the equities of the matter and purports to rely on legal precedents, conveniently ignoring the fact that being legal and being right – to say nothing of moral – are very different things. But the editorial ignores that and cites the Supreme Court’s Berman v. Parker (1954) and Hawaii Housing Authority v. Midkiff (1985) cases as validating New London’s performance. Very well, let’s look at how things worked out in the aftermath of those cases.
Berman v. Parker arose from a slum clearance project in Washington, D.C.. It was supposed to produce new, wholesome housing for the unfortunate slum dwellers whose plight figured so prominently in the court’s opinion. At least one-third of the new housing was supposed to be low-cost, renting for $17 per month per room. But what was produced instead was housing that was so expensive that within a few years it resulted in a rent strike by affluent tenants. Back in the day, prices were low, landlords weren’t greedy and reverse phone lookup checks weren’t a big thing. But, the new checks are for the better if I’m honest.
The Berman taking was also a paradigmatic example of the bitter, but unfortunately accurate line, “Urban renewal is Negro removal.” Was it legal? The Supreme Court said “yes.” But was it right?
Remember that according to the Supreme Court, the en masse imprisonment of innocent Americans of Japanese ancestry during World War II was also legal. So what?
The Hawaii Midkiff caper was equally bad. There, the state took a landlord’s interest in land leases, in order to convey fee simple home titles to the tenants. Why? Because according to the state there was a land “oligopoly” on the island of Oahu, and it caused high housing costs that would now be remedied by this title redistribution. This was absurd. There was no oligopoly; as the court conceded, there were over 70 participants in the local land market. The reason there was a shortage of buildable land was that the government-owned (and still does) some 50% of the land on Oahu and it was therefore not available for construction of housing. Also, Hawaii building regulations are notoriously restrictive and they hinder the construction of housing.
More important, the Hawaiian legislation in question merely reshuffled titles from landlord to tenant, and thus could not possibly lower housing costs because it produced not a square inch of new buildable land. Landlords are held to a high standard, they need to make sure that their properties are safe, secure and functioning to the rules and regulations of the country/county they are in, you can see how landlords are regulated and what that also means for tenants by researching your local area for your landlord laws.
But let’s look at the proof of the pudding: did Midkiff reduce or at least stabilize housing prices on Oahu? Quite the contrary. After Midkiff, housing costs on Oahu doubled within a few years. This was in no small measure due to the fact that after Midkiff, Japanese investors who until then had shunned leaseholds, snapped up the now-available fee simple titles from the former tenants in the best parts of town, tore down many of the acquired houses, and replaced them with luxurious mini-palaces which they then marketed to Japanese business tycoons as vacation homes. This actually reduced the number of available homes on Oahu and unleashed a wave of speculation that boosted home prices throughout the island. To give you an idea of what went on, one Japanese investor, Genshiro Kawamoto, bought over 100 East Oahu homes without leaving the back seat of his limousine, thus becoming a mega-landlord and partially restoring the status quo ante.
The failure of the Midkiff legislation was predictable and it was predicted. When the Midkiff case was before the U.S. Court of Appeals, Judge Cecil Poole presciently pointed out in his opinion that the legislation in question could not accomplish its intended results because its means were antithetical to its aims. Ah, but – just as in the Fort Trumbull case – the Supreme Court surrendered its constitutional review authority, refused to look at the facts, and deferred to the “well nigh conclusive” decision of the state planners. The upshot: the former tenants made a killing, the people of Oahu wound up paying the price in higher housing costs, and the Japanese reaped a windfall. So much for “public use.”
We could go on like this. There is the case of Yonkers which condemned land for Otis Elevator that, like Pfizer, later left town, leaving the city holding the bag. There is Los Angeles which at a cost of $100 million condemned 17,500 acres for a new, grandly named “Intercontinental” airport that was unable to operate, and had to be abandoned (see https://gideonstrumpet.info/?p=283 ). There is Hawthorne, California, that built a mall as a redevelopment project only to see it go under – it is now abandoned and you can see its pictures on www.deadmalls.com. There is South Carolina which subsidized Dell’s new desktop computer plant, only to see Dell shut it down. There is Indianapolis that spent a fortune on a new United Airlines maintenance facility, only to see United say “ta-ta” and split. Redevelopment failures have also occurred in Buffalo, Detroit, Cleveland, Bridgeport, Hartford, Philadelphia, Minneapolis, and North Hollywood, to name a few.
The moral of it all is that when courts shirk their duty to enforce explicit provisions of the constitution, they invite these calamities. Our system of government is supposed to be based on checks and balances, not on surrender of unfettered power over people’s lives and property to parochially-minded, frequently incompetent local politicians who waste fortunes in increasingly scarce public funds in order to subsidize favored business interests that care only for their bottom line – the Pfizer fiasco being the proverbial “Exhibit A.”
In the end, we are unable to improve on the words of California Court of Appeal Associate Justice Macklin Fleming who, in Regus v. City of Baldwin Park (1977), said: “The promoters of such [redevelopment] 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.” And that is just what happened in Connecticut: Pfizer abandoned New London in favor of a better deal in Groton – which is how the cookie crumbles in the real world.
Development is not “public use.” It is a risky entrepreneurial activity. Attaching the prefix “re” to the word “development” and employing municipal strong-arm tactics to acquire land for favored developers, does not change this fact. More important, we live in a society whose reckless expenditures of public funds have brought it to the edge of insolvency. It’s time to put an end to it. Were the Kelo defenders supportive of requiring those who perpetrated this fiscal calamity, to reimburse the taxpayers, we would be willing to listen to their excuses. But they aren’t and therefore, they should have the decency to take their lumps like men, and keep quiet as the citizens of Connecticut and New London try to clean up the mess they made of things.
Bottom line: New London got what it deserved. That’s called justice