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Localize Eminent Domain—A Commentary by Thomas Merrill

The following commentary was published on nytimes.com on November 12, 2009.

Localize Eminent Domain
By Thomas Merrill

Pfizer’s decision to abandon its New London facility conjures up two conflicting reactions.

Opponents of economic development takings, like the Institute for Justice, will say this confirms the folly of using scarce taxpayer dollars and the harsh instrument of eminent domain to subsidize particular commercial enterprises.

The lesson, they will say, is that local governments should concentrate on infrastructural investments — streets, parks, schools, policing — that benefit all residents and create a climate in which new enterprises are likely to flourish. Subsidies given to specific commercial enterprises to attract new jobs and tax revenues are inherently speculative, and are probably a negative sum game insofar as different communities compete against each other at the expense of making permanent public improvements.

Those who support urban redevelopment efforts will say that the very controversy generated by the Kelo decision and the artificially hyped political backlash are what killed off the New London project. The New London project was designed to capitalize on the Pfizer project, not to induce it. And it included a number of traditional public uses, like a marina, a walkway, a proposed Coast Guard Museum and public parking for the museum and the adjacent Fort Trumbull park.

Now, the entire project appears to have collapsed, leaving an eyesore. The economic downturn has much to do with this. But the expense and delay of litigation over the use of eminent domain and the negative publicity associated with the political backlash were surely significant contributing factors, as they surely were in Pfizer’s decision to pull out. So the legacy of the anti-eminent domain crusade, at least for New London, is a vacant Pfizer building and a desolate plot of ground next door.

I do not believe that this sad episode means we should overturn Kelo and ask federal judges to arbitrate questions about when eminent domain should be used. The solution is not to nationalize eminent domain, but to localize it. If a proposed project is one that will have primarily local benefits — like economic development — then local citizens should decide whether to pursue it, not some state redevelopment agency or the governor’s office.

Local residents will have a better idea whether a project is likely to succeed, and what impact it will have on those who are forced to move. It is particularly important that these projects be funded with local dollars — either local tax revenues or block grant monies that can be used for a variety of purposes — rather than federal or state grants controlled by people outside the community. The New London project was almost entirely funded by the State of Connecticut. This is the root cause of a series of calamities that now leave virtually everyone worse off.