Eminent Domain Abuse.

From Forbes:

Robbing Peter To Deed Paul
Daniel Fisher, 07.26.04


A Michigan case could put the kibosh on bureaucrats who use the power of eminent domain in creative ways.

That great rumble is coming from Michigan's Supreme Court--mighty enough, perhaps, to send ripples of reversal throughout the land. The decision, expected in late July, involves the strongest challenge yet to a 1981 decision known as "Poletown," in which the court allowed the city of Detroit to bulldoze an entire ethnic neighborhood to make room for a GM plant. A rollback could have impact well beyond Michigan's borders. Judges in other states have repeatedly cited Poletown in allowing the government to grab property from one private owner to give it to another. The Fifth Amendment requires victims of these seizures to be compensated. An open question is the extent to which the amendment limits the aim of such grabs to a narrowly defined public use.

The current case challenges plans by Wayne County, Mich. to build a 1,300-acre office/industrial complex next to the municipal airport. The county already owns most of the land but can't budge a few stubborn holdouts, including Edward Hathcock, an MIT grad who owns a 12-employee factory that makes millwork and kitchen cabinets. The plant, he says, sits dead square in the middle of the proposed project, and he doesn't want to move. Though the county offered him $360,000 for the factory and its 1-acre site (he paid $170,000 in 1985), Hathcock says it would cost far more to replace because of tighter building and safety regulations. Plus, he says, "I have customers who don't even know my phone number, but they know where I am."

The county, which won in the lower courts, says it isn't working for any particular private interest. But the potential payoff, it argues, is too great to be squelched by a few reluctant landowners. "If economic development is not the proper job of government, then it seems our elected bodies should just stay home," says Mark Zausmer, Wayne County's lawyer.

Stay home, says Dana Berliner, a lawyer for the libertarian Institute for Justice who filed a brief to overturn Poletown. She argues that condemnation should be reserved for building taxpayer-owned real estate like roads and police stations, or for ensuring that tumbledown houses, say, pose no physical threat. "It can't be used to play favorites between different owners," she says.

The Michigan Supremes--once dominated by Democrats, now with a 5-to-2 Republican majority--seem inclined to agree. Departing from normal practice, the judges asked the parties whether the precedent should be scrapped, leading a dissenting judge to describe the request as "a road map to an inevitable destination."

Hathcock's lawyer, Alan Ackerman, hopes so, although it might cost him work. "I'm writing myself a 40% pay cut," says Ackerman, who followed his father into a practice that pries more money out of the government in condemnation cases.