Mogk: Why Detroit needs eminent domain
Whatever application Jesse Hathaway’s Jan. 8 article, “Re-evaluating eminent domain,” has to the rest of the country, it has none to a city, Detroit, that is desperately in need of economic development to alleviate unemployment and increase its tax base.
The use of eminent domain for economic development is not available in Detroit or anywhere else in Michigan. While the U.S. Constitution permits the use of eminent domain for economic development, Michigan’s Constitution was amended in 2006 to prohibit its use to take property from one private owner for the transfer to another to achieve economic development, no matter how beneficial the transfer might be for the public good in alleviating unemployment and increasing the tax base. That is not the good news.
Eminent domain can still be used in Michigan to eliminate blight, thereafter allowing for private development, but blight is narrowly defined, requires a high level of evidence and must be proved separately on each parcel to be taken. As a result, the time and cost to use eminent domain to remove blight is a burden on Detroit and other distressed Michigan cities and interspersed properties that are not blighted can stop a future project.
Hathaway rehashes the Kelo case in New London, Connecticut, where eminent domain was used by the city and upheld by the U.S. Supreme Court as permissible under the U.S. Constitution to clear a largely distressed neighborhood to make way for a new research park that was never built.
Detroit’s experience has been entirely different.
The use of eminent domain in Detroit has resulted in large completed projects. The two most recent examples are the GM Hamtramck Assembly Plant and the Chrysler Jefferson Avenue North Assembly Plant. Both are 2 million square-foot facilities costing billions and directly employing thousands of auto workers and many thousands more in supplier plants and support businesses for the companies and their workers. These plants built nearly 30 years ago are the only ones left in Detroit and remain state-of-the-art today, continuing to produce the most advanced cars, including the Chevy Volt and the Jeep Grand Cherokee.
The GM plant resulted from the much maligned Poletown project spearheaded by Mayor Coleman Young.
The same economic criticism relied upon by Hathaway in concluding that it costs cities more to use eminent domain than is returned in economic value by the projects was used to deride the Poletown project. But, in Detroit’s case the criticism proved misplaced. The city has collected hundreds of millions of dollars of property and income tax revenue from the plants and their workers for the past three decades and there is more to come. Moreover, the property owners whose older homes were taken, many of which were blighted, received fair market value for them plus again as much in grants under the federal relocation act to buy better homes in less-blighted neighborhoods.
Detroit is in a land assembly straitjacket. It desperately needs to restructure its economic base and is facing high land costs and long delays in assembling development sites. Tens of thousands of vacant parcels and blighted buildings are checkered throughout the city, available for new economic development. The city owns a majority of these, but a substantial number are privately owned, many by speculators, requiring negotiated purchases.
For speculators, no price is too high and no time to negotiate too long, as learned by the Ilitch organization’s work in in assembling land for its new arena project. The organization has been assembling land for more than two decades, paid many times fair market value for a number of parcels and is still negotiating exorbitant prices with holdouts. Similar problems have been faced by the Henry Ford Health System’s long-term land assembly project south of Grand Boulevard and Marathon Oil’s acquisition of a buffer zone for its plant in Southwest Detroit.
What should be done?
Contrary to the thrust of Hathaway’s article, Michigan should amend its constitution and follow the lead of California, allowing eminent domain to be used for economic development, but protecting homeowners who have lived in their homes for at least one year. This addresses the major criticism of the Kelo case, not mentioned by Hathaway, that Mrs. Kelo was unwillingly removed from her home of many years.
Investors, speculators and absentee landlords would not be protected and would be entitled to fair market value for their property and not the exorbitant windfalls that they now command and receive.
Detroit leads the nation in the percentage of vacant land, blighted properties, unemployment and poverty. The one productive use that can be made of all of the vacant sites scattered over the city’s 138.9 square miles is urban farming. As valuable an alternative use as farming may be, the beleaguered residents of Detroit need a major revival of traditional urban uses, as well. Without the use of eminent domain, it is unlikely to occur.
John E. Mogk, professor, Wayne Law School