Kelo Three Years Later

Three years ago, the Supreme Court handed down its atrocious Kelo decision, which allowed local governments to take private land if they believed it could be developed in a way advantageous to the local economy. Steven Malanga reviews the results on Real Clear Markets:

Most Americans object to such takings because the intended uses of the land don’t justify violating property rights when the owner is unwilling to sell to government. But as [Jane] Jacobs observed, another important objection is that government planners often do a lousy job of anticipating the marketplace when they take property to be developed into something new. What I call mega-project ‘state capitalism,’ the grandiose schemes of politicians and their planners to invest public money in big projects like stadiums, downtown super-malls, and subsidized entertainment districts, has been on the rise for years, often with disastrous results which should have given the Supreme Court justices pause before they gave their blessings to seizures that “provide appreciable benefits to the community.”

Indeed, the very redevelopment project that sparked the Kelo lawsuit, an effort by the town of New London, Ct., to turn its Fort Trumbull waterfront into a haven for high-priced homes and 21st century jobs, has sputtered. The ground where Susette Kelo’s home stood is now barren, because the townhouses that the city-sponsored developer was supposed to build there have never gone up. Interest in the area isn’t very great and the developer hasn’t been able to get financing. In fact, what began more than a decade ago as an extravagant ‘public-private’ scheme to redevelop this whole area around tourism, research and development and luxury residential uses has produced little except ongoing construction on a $17 million Coast Guard station . . . .

Today, three years after Kelo, the game of public sponsored economic development subsidized by taxes, tax-free bonds, tax-breaks for favored businesses, and the threat of eminent domain, is alive and well, supporting everything from mega-projects like the massive 22-acre Atlantic Yards in Brooklyn, N.Y., to the efforts by the tiny California town of Hercules to take land away from Wal-Mart because the town fathers objected to the big box retailer invading their domain. Kelo has allowed local officials throughout the country to remain masters of eminent domain, and private markets continue to suffer as a result.