Poletown: In the Short Run it Was Outrageous – In the Long Run It was for Nothing

            In keeping with our promise to provide our readers with a bit of eminent domain history, here is the story of the Poletown disaster (Poletown Neighborhood Council v. City of Detroit, 304 N.W.2d 455 (Mich. 1981) – and a disaster was just what it was. As Carla T. Main, put it, “Poletown has acquired a kind of infamy in legal and social science circles, forever equated with the idea of government folly, gross waste, and a what-were-they-thinking sort of horror.” It was a redevelopment project in Detroit that destroyed an entire unblighted, integrated working-class neighborhood, consisting of 144 businesses, 1500 homes, two schools, a major hospital, and 16 churches. It displaced 3400 people. To what end? To provide General Motors with a “free lunch,” so it could build a new Cadillac plant on the cheap. And it wasn’t just GM’s doing – there was plenty of villainy in this caper to go around. This project was enthusiastically supported not only by the city and its Mayor, but also by the UAW and the local archdiocese. The federal government was also implicated when it ponied up some $138 million to help fund this caper. The total cost eventually came to more than $200 million. The excuse was that GM, whose Detroit Cadillac plant was getting long in the tooth, needed a new plant so GM let it be known that unless Detroit provided it with a vacant 500-acre plant site accessible to highways and railroads, and above all, cheap (cheap to GM, that is), including a hefty tax abatement, it would build the new plant outside of Detroit. 

            The city’s justification for this mass condemnation – where have we heard that one lately? – was that it had problems: unemployment was high (18.3%) and therefore Detroit had to keep the Cadillac plant in town. GM encouraged that attitude by promising that the new plant would provide 6000 jobs – a big deal to a city on the skids, although employment at the new plant would involve few new jobs. But like so many things about redevelopment, the optimistic promises did not turn out to be true. The contract between Detroit and GM committed GM to only 3000 jobs, “economic conditions permitting.” In fact, the latter figure was not achieved – employment at that plant hovered below 3000 most of the time, and  never mind the 6000-job fantasy. The City of Detroit was not revived. The geniuses behind these capers somehow never get it through their skulls that the adverse circumstances that cause their city to decline in the first place, are rooted in major post-World War II demographic mega-shifts that unless addressed will continue to be felt, whether a new plant is built or not. What these guys thus do is sort of like standing under a waterfall with a bucket hoping to stop the flow of water.

            And so, in spite of the Poletown caper the City of Detroit has continued to decline and eventually became the basket case of urban America. The construction of GM’s Poletown Cadillac plant did nothing to reverse that trend. Within the past year, Detroit’s population, that has been declining for years, fell below 1 million, as its inhabitants continue their out-migration to the suburbs. And why not? The city has become an urban jungle. Every year on “Devil’s Night,” the night before Halloween, young Detroiters amuse themselves by torching vacant, abandoned houses, burning down one or two hundred of them every year. Even so, Detroit still has thousands of empty, abandoned homes sitting around, decaying. Last time I was in Detroit, I saw abandoned blocks and — what was really shocking – grocery stores operated by armed shopkeepers behind locked doors. See Julia Vitullo-Martin, The Day the Music Died, Wall St. Jour., Jul. 20, 2007, at p. W11, commenting on the impact of the 1967 riot on Detroit’s decline.

            And as for General Motors, the Poletown caper did it no good in the long run. After consuming a fortune in public funds and years of shirking its duty to pay property taxes on the same basis as all other Detroit property owners, GM abandfoned its hearquarters building, and moved to the Renaissance Center on the waterfront. In spite of its Poletown Cadillac plant,GM is now on the ropes, facing bankruptcy – some of its bonds are selling for around fifty cents on the dollar, yielding over 20%, ten times the fed funds rate.  

            Still, there is something good to be said about it all. It took a quarter of a century, but the Michigan Supreme Court came to its senses and in County of Wayne v. Hathcock, 684 N.W.2d 755 (Mich. 2004) it overruled the Poletown case. But Detroit continues on its downward path, in spite its long history of trying redevelopment, most recently for sports arenas and gambling casinos which show no sign of reversing the city;s decline. It was Albert Einstein who defined insanity as doing the same thing over and over again, but expecting a different result each time. And that’s the way it goes in the wacky world of eminent domain.